CORONAVIRUS
As the economy craters, workers
and business owners wonder if any
stimulus package can save them
BY ALANA SEMUELS/SAN FRANCISCO
Sonia BautiSta waS living paycheck to pay-
check in one of the most expensive regions of the
country when the coronavirus hit, and her finances
went from bad to disastrous. Her employer, the Pal-
ace Hotel in San Francisco, a four-star luxury prop-
erty owned by Marriott, told her that business had
slowed and it didn’t need her anymore, just when her
husband had his job in a hotel cafeteria cut from five
days a week to two. “I don’t know how I’m going to
pay the rent,” says Bautista.
Workers and businesses across the country are in
similarly dire straits as consumers practice social dis-
tancing to prevent the spread of COVID-19 and fol-
low recommendations—and, in some cases, orders —
to stay home.
Bars and restaurants are seeing business slow to a
halt, hotels and event venues are experiencing mas-
sive cancellations, theme parks are shutting down,
and airlines are slashing flights. Economists say the
sudden stop in spending could strike a bigger blow
to the global economy than the terrorist attacks of
Sept. 11, 2001, since nobody knows when it will be
safe for people to go out again. Compounding the
crisis is the hit to the service sector. In past down-
turns, people continued to get haircuts and eat out,
but since most service jobs cannot be done remotely,
the sector is in peril. “The next two weeks are going
to see a very sharp increase in unemployment,” says
Michael Hicks, an economist at Ball State Univer-
sity who calculates that 1 in 6 U.S. workers—almost
17%—is at risk of being laid off.
The economic crash is hitting hourly workers
who get paid only if they show up to work, but it’s
also creating a quandary for small businesses whose
income has dried up while bills continue to roll in.
“Restaurants, theaters, bars—all of us run on a very
thin margin,” says Dan Williams, executive director
of PianoFight , a San Francisco arts venue, restau-
rant and bar with 25 part-time employees. “We were
hoping to make money this week to pay for things
we already bought.” But PianoFight’s restaurant rev-
enue dropped 85% during the second week of March,
and its theater revenue dropped 95%, Williams says.
He and his three co-owners launched a crowdfund-
ing campaign on PayPal to ask for donations, say-
ing they needed to raise at least $50,000 to survive
the next four weeks. Williams and his co-owners
worry that they’ll need to take out a loan to keep
the business afloat, but with the uncertainty around
the coronavirus, they’re worried about the ability
to repay it.
Countries around the world are already experi-
encing a significant contraction in economic activity
that will likely last through the first half of the year.
JPMorgan economists predicted that the U.S. econ-
omy would shrink by 4% in the first quarter and as
much as 14% in the second quarter, while the econ-
omy of the 19 nations using the euro would contract
by 15% in the first quarter and 22% in the second.
Economic activity will start to expand again in the
second half of the year, they said—even sooner in
China as life there starts to normalize.
“I’m most concerned about the sudden stop in
the economy and the fact that businesses are being
required to shut down,” says Mark Zandi, chief
economist at Moody’s Analytics. “Many small busi-
nesses across the country have no cash cushion.”
The pain is spread across industries. Powell’s
Books, a beloved Portland, Ore., bookstore, said it
was laying off some workers permanently; MGM
Resorts International said furloughs and job cuts
would begin soon; truckers at the Port of Los Ange-
les lost their jobs as international trade slowed. Doz-
ens of TV shows and films have halted production,
leaving people like Zoltan Olgyay, a Los Angeles–
area set builder for HBO’s Barry, jobless. Normally
if a show shut down, Olgyay, a 30-year veteran of
AFTER THE
MELTDOWN
38 time March 30, 2020
^
Businesses like
this San Francisco
restaurant are being
forced to close as
social distancing
to avoid COVID-19
takes hold
