The second wave of the Covid-19 pandemic is causing a second wave of job losses across the Buffalo Niagara region.
It is not nearly as severe as the catastrophic job losses that the region suffered during the first wave, when much of the economy shut down for weeks. But over the past three weeks – ever since the state imposed new "orange zone" limits on businesses across much of Erie County and "yellow zone" rules on parts of Niagara County – nearly 15,400 local workers have lost their jobs.
That means the number of people losing their jobs during the second wave of the pandemic is almost double the already elevated pace of job losses during the lull in Covid-19 cases this summer and in early fall.
It also means that the region’s slow recovery from the spring lockdown has ended long before the jobs lost during the first wave were recovered and that the decline has started anew. New data shows that the job market's recovery was only about three-quarters of the way back when the Cuomo administration imposed the latest orange zone restrictions last month.
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Preliminary data released Thursday by the Labor Department showed that the region lost 200 jobs from October to November – the first time jobs hadn't grown from one month to the next since the recovery started in May. We are down about 40,000 jobs from where we were a year ago. That's a lot, and since the November jobs report is based on data collected during the middle of the month – before the orange zone restrictions took effect – it's only gotten worse since.
"We've stalled out," said Julie Anna Golebiewski, a Canisius College economist, who believes the three-quarters recovery in place during October and November was probably about as good as it was going to get, given the continued limitations on travel, restaurants and so many other crowd-gathering activities because of the Covid-19 pandemic.
"Until we see vaccines become more widespread, we are going to be in a place of stagnation – at best," she said.
The orange zone restrictions pushed the stagnant job market over the precipice. In just the last three weeks, roughly as many new jobless claims were filed as during the previous six weeks from Oct. 11 to Nov. 20.
Since the state shifted most of the region into the orange zone during Thanksgiving week, the number of people filing for unemployment benefits for the first time has doubled in Erie County and jumped by 43% in Niagara County.
Workers across the Buffalo Niagara region now are losing their jobs at a pace that hasn’t been seen here since the end of June, when the state was in the middle of the reopening process.
The latest spike isn’t a surprise. It coincides with the Cuomo administration’s move to stop indoor dining at restaurants, limiting most to far less lucrative takeout and delivery options just as falling temperatures make outdoor dining problematic. It also coincides with restrictions that closed gyms, hair salons and other personal services businesses for three weeks.
The good news: Some of the damage was short-lived, with gyms and salons permitted to reopen this past Monday at reduced capacity. That was apparent in last week's jobless claims, which fell by 38% across the Buffalo Niagara region to a still elevated level of just under 4,000. It’s also likely that the pace of job losses has eased a bit more this week, and that many of those hair salon and gym workers have returned to their jobs, undoing some of the damage done since Thanksgiving week.
But that doesn’t ease the financial pain they endured by going without a regular paycheck for three weeks, since unemployment benefits only replace a portion of a worker’s average earnings.
With less money coming in, the odds are good that those 15,400 workers who recently filed for unemployment weren’t spending as much as they normally would – and that sends powerful ripples through the region’s entire economy. Stores suffer from lower sales. Holiday shopping plans get pared back. Non-essential services are scrapped.
Nine months into the Covid-19 pandemic, displaced workers are now on even thinner ice. While the lowest-paid workers often earned more than their regular paycheck from unemployment and the supplemental $600 weekly payments that were available through July, the safety net has eroded.
And so have the bank accounts of many of those workers, who saved some of their stimulus windfall. While savings actually grew during the early days of the pandemic, those accounts now are being drawn down steadily, said Jaison Abel, an economist at the Federal Reserve Bank of New York’s Buffalo branch.
“Some of that saving that had been accumulated has started to erode,” Abel said.
A report this week from the JPMorgan Chase Institute found that the median household checking account balance soared by 65% in April after the stimulus checks began arriving. But since May, balances have steadily dropped, especially for lower-income families, according to the analysis of checking account balances of 1.8 million families through October.
The reopening of gyms and hair salons came after the Cuomo administration determined that those businesses were responsible for a tiny fraction of the spread of Covid-19 cases.
With Cuomo’s own data indicating that 74% of the Covid-19 cases are coming from household interaction, it will be a harder sell for Albany to impose new shutdowns as a matter of routine course to control the spread of the virus. It is not businesses that are spreading the virus, it is the everyday behavior of individuals.
Most businesses, with the exception of those that attract large gatherings, have shown that they are able to operate safely, either by adopting new safety measures, limiting capacity or allowing employees to work from home. Even bars and restaurants – the target of some of the most draconian restrictions – account for just 1.4% of Covid-19 cases, according to the state data.
“You’re calibrating the risk level of the economic activity,” Cuomo said last week. “The only reason you would close the economy is because it would overwhelm the hospitals.”
So a lot is riding on the vaccines that are just starting to roll out. But it likely will be late spring or summer before enough people can be vaccinated to have a big impact.
"It's really a question now of whether we can get out of the orange zone and into the yellow and hang on until the vaccines are here," said Fred Floss, a SUNY-Buffalo State economist.
