Ohio’s jobless rate has improved slightly since businesses began reopening. But as COVID-19 continues spreading through the state, one Central Ohio economist says the rest of 2020 will be difficult.
“As the economy continues to open up and people continue to go out, there will be a return of jobs. It will not be fast,” says Bill Lafayette, founder of Regionomics.
Almost 1.4 million Ohioans have filed for jobless beenfits, sending the state's unemployment rate soaring to a record 17.6% in April. In May, after businesses began reopening, that dropped to 13.7%.
Lafayette says the arts, leisure and hospitality sectors lost half of their workers during the shutdown. Those jobs will be slower to return that most.
“Even though restaurants are reopening, they’re reopening with severe limitations, and there are a whole lot of people who are still scared to go out of their house,” Lafayette says.
Lafayette says many small businesses such as nail and hair salons will struggle to keep going.
“They live paycheck to paycheck, just as many households do, and as their revenue has dried up they do not have the wherewithal to in many cases survive,” Lafayette says.
In recent weeks, COVID-19 infections have begun rising fast in Ohio. Lafayette sees more dire consequences ahead for businesses that are already struggling.
“If we get back into a condition where we have to, heaven forbid, shut the economy down again, that could be very serious,” Lafayette says. “But even if we don’t it’s going to be a long, slow slog back."
Lafayette says he would like to see state leaders use part of the state's Rainy Day Fund to help low-income workers. Gov. Mike DeWine has thus far avoided tapping into the $2.7 billion fund.
“The problem with the uncertainly that we’re facing now is that businesses can’t plan,” Lafayette says. “They can’t prepare. What if you’re a restaurant ordering all kinds of inventory because you’ve been allowed to reopen, and all of a sudden you have to shut down again? All that inventory is lost.”
Lafayette adds that consumers needs to regain their confidence that the economy is back.
“If you look at the consumer sentiment index, it has collapsed,” Lafayette says. “And until that comes back, we simply can’t expect a whole lot of consumer spending and a lot of return of jobs.”