UPDATE, March 10: Adds information about Amazon's fund to help nearby small businesses and Gov. Jay Inslee's announcement about additional support for businesses and workers.
For the Seattle region, the novel coronavirus presents a significant public health challenge — and also a threat to people’s livelihoods.
The economic impact is already being felt. Hotels face cancellations, restaurants have empty tables, and a major economic driver for Seattle, the Emerald City Comic Con, which was set to start this week, has been postponed. Large employers including Microsoft and Amazon have asked employees to work from home, limiting commerce near their campuses.
For Laura Schneider, the economic fallout can be measured in how many kids showed up to play Pokémon this past Sunday at her business in West Seattle, Meeples Games. She had canceled Sunday Pokémon events because the person who leads the games is a teacher who wanted to avoid a large crowd of kids amid the outbreak. But some kids showed up to play anyway.
“We have seen a drop-off of all of our organized play events,” Schneider said. “I expect that to get worse in the coming weeks.”
That’s what concerns her. The store has 11 employees, many of them young, trying to afford to live in an expensive city. Schneider said she’s planning to keep them occupied for now, even if customer traffic continues to dry up.
“We’re going to be painting and organizing and sorting cards and just doing everything so that they don’t lose their hours,” she said. “I’m very worried about them.”
And there’s reason to be concerned. Stocks plummeted Monday, as fears over the outbreak’s spread deepened. The Standard and Poor’s 500 Index dropped 7.6 percent.
“The uncertainty of it is what makes this difficult to get a handle on,” said Dick Conway, an economist who is now retired but for many years published the Puget Sound Economic Forecaster. “The fall in the stock market is just staggering, which means that there’s a lot of concern out there about the economy.”
Conway concludes that “it wouldn’t take a heck of a lot” to tip our region into a recession. He estimates that even a 3 percent drop in consumer spending would do that, given that consumer spending makes up about 70 percent of the economy.
So while people have been rushing to Costco to stock up on toilet paper, hand soap and canned goods, Conway thinks other businesses will be hurt as everyone hunkers down to avoid catching the illness.
“We will probably see the effects in the service industries, like restaurants and concerts and even personal services, getting haircuts,” he said.
Annaliese Vance-Sherman, regional labor economist for the Washington Department of Employment Security, said it’s too early to quantify the potential economic impact, and employment data for March will not be available until mid-April.
“I think we will see layoffs as a consequence of coronavirus,” she wrote in an email. “I’m specifically thinking of businesses such as restaurants and travel-related businesses that rely on face-to-face interactions. Depending on how this plays out as summer approaches, we may also see relatively anemic seasonal hiring.”
One group keeping close tabs on the situation is the Seattle Metropolitan Chamber of Commerce.
“Right now we’re hearing from hospitality businesses who are really worried about being able to keep their employees on with significant loss of revenue due to people staying home and practicing social distancing,” said Markham McIntyre, executive vice president of the chamber.
He said the Seattle Foundation has started a relief fund to help businesses and workers, and the chamber is working to shepherd other resources as needed.
There are also a handful of state resources for both employers and workers — things like banks that can provide no-interest loans, or utilities that might be able to defer bills. Gov. Jay Inslee on Tuesday announced new rules that will allow for more flexibility for unemployment assistance for people affected by temporary layoffs, isolation and quarantine amid the coronavirus outbreak.
McIntyre said it’s unclear whether those resources are enough to meet the need now, and officials are worried about long-term recovery.
“How do we get businesses back on good footing,” he said, “and how do we get back to helping those local businesses grow?”
A drop in cruise ship traffic also would hurt Washington state. The Port of Seattle said it’s “reviewing its options” with regards to cruise ships scheduled to begin sailing from the city in April. But the Centers for Disease Control and Prevention is now urging travelers, particularly those with underlying health conditions, to defer all cruise ship travel worldwide.
Port of Seattle spokesman Peter McGraw said a decision on what to do will likely come sometime this week.
“We’re in daily contact with state, local and federal officials,” he said. “The safety and health of cruise passengers, employees and our community and first responders — that always comes first. That’s why we’re actively reviewing multiple options about the launch of the 2020 cruise season.”
McGraw said ultimately a decision to cancel sailings would be made by the CDC in conjunction with the U.S. Coast Guard. The cruise season normally runs from April through October, with seven cruise lines sailing ships to Alaska. It generates about $900 million a year in business for the region.
Some businesses in the region have the financial heft to ride out the economic impacts of the coronavirus outbreak. Microsoft and Amazon have said they will continue to pay hourly workers, such as baristas and shuttle drivers that serve their campuses, which are emptier as more people work from home. Amazon also announced a new $5 million Neighborhood Small Business Relief Fund that will offer cash grants to small businesses near its Seattle campus, in part to help them pay and retain employees and stay current on rent.
But many smaller employers don’t have the resources to do that.
Kirsten Martin holds the Linder Gambal Professorship in Business Ethics at George Washington University. She said companies can get creative in how they approach this kind of sudden downturn.
“There’s shared burdens where everyone takes a hit,” she said. “It doesn’t have to be that you either fire people or you keep them fully employed. There’s ways in which you can say, 'I’m going to pay you 50 percent of what I normally do to try to keep you afloat, but I’m also taking a hit by doing that as well.’”
At Meeples Games in West Seattle, owner Laura Schneider is doing what she can to look out for her employees.
“Meeples Games doesn’t have big coffers,” she said. “We’re doing the best that we can do and trying to plan ahead, but I foresee a hardship.”