On March 25, 2020

Coronavirus job loss likely to exceed Great Recession

By Art Woolf

We are in the first weeks of what will probably be the fastest and largest employment decline in Vermont’s history. The economy will be in much worse shape than I imagined just a week ago.

Today there are 314,000 jobs in Vermont. By May, we will have lost 28,000 of them. That’s more than 8% of all the state’s jobs. By contrast, during the Great Recession of 2007-2009, Vermont lost 4% of its jobs. And that loss unfolded over a period of two and a half years, not two or three months.

During the Great Recession, more than 60% of the job decline was in manufacturing and construction. The job losses we are now experiencing will be concentrated in the services sector.

Here’s how I see the situation unfolding:

Restaurants and bars

Vermont has 20,000 jobs in restaurants and bars. Bars are all closed and restaurants can only offer takeout. That will probably have a small impact on fast food restaurants. Other restaurants that offer takeout and sit-down service will be affected more and most sit down only restaurants have already closed.

Restaurants will have no need for waitstaff or bussers. They won’t need as many cooks or dishwashers, although that will depend on the type of restaurant. Fast food restaurants will probably keep on most of their cooks and dishwashers, but other types of restaurants will employ a lot fewer. My guess is that overall, employment in the restaurant industry will fall by 50%.

Hotels

Hotels, motels, and inns employ about 15,000 people. April and May are not important for the tourism economy, but business travelers and others won’t be coming in the numbers they usually do. Based on what is happening now in the hotel industry, I expect an 80% employment decline by the end of spring.

Retail

Other parts of the services sector, retailing in particular, will also be adversely affected. L.L.Bean and REI, which have stores in Vermont, have announced a total shutdown of all brick and mortar stores nationwide. I expect other national chains and many locally owned stores to follow suit, or at least cut their hours and staff, with at least 5,000 people losing their retail jobs as stores try to reduce costs as sales plummet.

Manufacturing

Job losses may also hit manufacturing as employers close for public health reasons and because of lower sales. For example, the Big Three U.S. automakers are all shutting their plants and Nissan, Honda, and Toyota have all announced at least some closures.

Vermont businesses supplying parts to these companies will probably also shut down or significantly reduce employment.

Who’s hiring?

Costco and Walmart have announced increased hiring nationally, and local supermarkets will be hiring to deal with their increased sales. As people buy more goods online, FedEx and UPS are also likely to add workers. But those additional jobs won’t be nearly enough to make up for the job losses elsewhere.

Add all those together and by the end of April or May 28,000 workers will lose their jobs. Vermont’s unemployment rate will spike from the current 2.4% to nearly 10%, higher than it was at the peak of the Great Recession and probably higher than at any time since the 1930s.

I hope I am wrong.

Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.

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