COVID and the local economy: what comes next for small business?

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As the COVID-19 pandemic threatens to stretch well into a second year, the economic impact worldwide is massive — and that economic impact is also being felt here in Switzerland County.

  The county government and others continue to try and work through fiscal shortages that were caused by the closing of Belterra Casino and Resort for a three month period in the midst of the pandemic; and now, as the year comes to a close and with local businesses facing the post holiday letdown in customers, shoppers, and purchases, here in Vevay and in Switzerland County there are some tough times ahead.

  Jon Bond, President of the Switzerland County Economic Development Corporation, said that he and others have been tracking the economic damage being done here as the pandemic causes businesses to change their way of operation or close all together.

  In the past few weeks, the community has seen the closing of longtime business Swiss Alps Printing and the Ridge Winery Tasting Room; as well as the (expected) temporary closings of the Ferry Street Fudo Restaurant and the Swiss Perks cafe. Add to that earlier closings of Patron’s Restaurant and the Bizarre Ladies gift shop; and a dent is being made in the core small businesses here in Vevay and the county. COVID is not the sole reason for those closings, but the pandemic does play a big role in the financial well being of small, locally-owned businesses.

  The recent sale of the Schenck Mansion Bed and Breakfast to a family that will turn it into a private home also removes a tourist destination from the community.

  “Back in the beginning when it became clear that it (COVID) was something that was going to be around for awhile, there was a group called CHMURA that’s an economic group that does economic research,” Bond said. “They have put out a list of what they basically called the ‘Vulnerability Index’ of communities that were the most vulnerable to negative impact from the coronavirus crisis; based on their economic make up and other things that they had put together. I believe Switzerland County came in nationally, as number nine in the country for vulnerability to this type of crisis. That was early. I think that came out in the Spring or Summer, so obviously we know a lot more now than we did then about how restrictions were going to play out and different things — but that was based on a mixture of employment and how much of it was in the hospitality industry and things like that.”

  In fact, on CHMURA’s website, the company ranks every county in the nation in terms of vulnerability economically because of the pandemic, and Switzerland County ranks ninth nationally with a rating of 233.56 —well above the national average of 100.

  Ohio County doesn’t fare much better, coming in 11th nationally with a ranking of 230.65.

  By comparison, Gilpin County, Colorado ranks first with an index of 348.83; followed by Love County, Oklahoma at 309.31 and Denali Borough, Alaska at 275.00.

  On its website, CHMURA explains that: “The Vulnerability Index is a measurement of the negative impact that the coronavirus crisis can have on employment based upon a region’s mix of industries. For example, accommodation and food services are projected to lose more jobs as a result of the coronavirus (over half of jobs lost, on average) compared to utilities and education services (with mild or no job contractions).

  “The average Vulnerability Index score is 100, representing the average job loss expected in the United States. Higher scores indicate the degree to which job losses may be greater—an index of 200, for example, means the rate of job loss can be twice as large as the national average. Conversely, an index of 50 would mean a possible job loss of half the national average.

  “ The Vulnerability Index only measures the impact potential of a region related to the mix of industry employment. The index does not take into account variation due to a regions’ rate of virus infection, nor does it factor in local government’s policies in reaction to the virus. For example, a region with a high Vulnerability Index may have little to moderate job losses if the region has only slight infection rates and local government imposes few restrictions. On the other hand, a region with a low Vulnerability Index may still incur large employment losses if the local rate of infection is high or local government restrictions are especially stringent.”

  The website continues:

  “The index is based on a model of potential job losses due to the COVID-19 outbreak in the United States, with the forecast updated on April 15, 2020….The forecast model assumes employment in industries in each county/region would change at a similar rate as employment in national industries. The projection estimates that unemployment in the United States could increase by 22 million due to COVID-19, with over half of the jobs lost in hotels, food services, and entertainment industries….Note that job losses referred to here are expected to be temporary for the length of the crisis. Consequential economic shocks are not incorporated into this model.”

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  “This is a unique type of economic circumstance because it’s impacting specific sectors as opposed to the entire economy,” Bond said. “We’ve got the highest unemployment that we’ve seen in a very long time, but only in certain sectors. We’ve got employers out there in other areas who need workers so badly that they can’t produce what they need to produce, because they can’t find the people to do it. We’ve got manufacturers who need workers right now here; but in the hospitality industry there have been all these layoffs.”

  Bond said that even Belterra hosted a job fair a couple of months ago for the positions that they needed, after having to make reductions in the ones that, by state law, they couldn’t have on site. In the business district specifically, I think a lot of those same things come into play. If you’re reliant on foot traffic to keep your business open, and even when you can get the people in, you can only have so many in at a time. It just makes it difficult.”

  Bond said that in the metropolitan areas of the country, the first businesses to shut their doors were the higher end restaurants, because those types of businesses have such a high overhead and they couldn’t provide the same type of dining experience without allowing people into their restaurants — so they shuttered their businesses.

  “I think that here in Vevay, we had folks who did the best they could,” Bond said. “There for a long time they weren’t open at all, and then they were able to open under whatever the rules were at the time. As for what the future holds, I think the next few months are going to be critical and are going to be tough times for our local businesses. Those cold winter months are usually the hardest ones, anyway.”

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  Along with the issues of the pandemic, another factor weighing heavily on local business here is the rising impact of online shopping via the Internet. People choosing to shop online has a particularly devastating impact on small, local, community business.

  “It definitely does,” Bond said. “That’s a real challenge for a lot of our local businesses. That option was there. People were getting a lot of pressure to distance and stay home. If they had the option of shopping from their keyboard, I’m sure they did it. Now for the businesses that we have who were able to sell what they have online, assuming that they were set up and able to do that — they had a fighting chance at capturing some of that, but that’s not a very high percentage of our businesses, unfortunately.”

  Now, as the nation is just a few weeks from the one year anniversary of the pandemic beginning to impact all segments of society; and with vaccines just now being rolled out and provided to specific groups of people to begin with; what is the ongoing economic impact going to look like?

  “The real danger is — does it become the new normal for folks,” Bond said. “I think there are different schools of thought out there. I was just listening to an author this weekend who’s written a whole book on this, and he thinks that this pendulum will swing back in the other direction just as hard as we come out of this, and people will be yearning for that interaction again, and we’ll see folks out places and venues where people can come together will be a more popular thing. But there’s also a belief that kind of a distance approach to living is here to stay, and everyone is going to need an online presence to do business in the future.”