The spread of the coronavirus has forced the Sacramento region to shutter schools, sports venues, shops, restaurants and other elements of public life considered normal just days ago. But the economic impact of these closures is expected to hit some sectors of the region’s workforce harder than others.
One person, Kathleen Gramsgibbs, contacted us to say:
“I am worried about all the hourly wage folks who are not working - vendors at sports' venues, hotel and motel housekeeping, baggage handlers, staff at closed facilities like Disneyland, school custodians and teacher's aides, etc.”
She went on to ask what the federal government is doing to address this.
Another reader, Brianna Walah, asked:
“Won't the economic impact of shutting down multiple countries have more of a negative impact on people than the virus itself?”
We spoke with two regional economists to answer these questions and get a better understanding of how the closures could impact our economy. One said parts of the workforce are at significant risk, though it’s too early to say how many jobs could be lost.
“We have a very large service sector industry in Sacramento, much larger than typically in most other diversified economies,” said Sanjay Varshney, a Sacramento State economics professor. “So, that is clearly going to have a major impact on the workforce that we have in the Sacramento region. In many ways that might be actually a little bit more significant than what you might see in some other economies that are less dependent on the service sector industry.”
While the Sacramento region has long been considered a ‘government town,’ and continues to have a sizable public sector workforce, Varshney said 75 percent of the region’s economy is dependent on jobs outside government.
And compared with other areas, the Sacramento region doesn’t have as many tech jobs or manufacturing jobs, the type that would be less dependent on customers showing up in person.
“As a result, our economy is a lot more dependent on leisure and hospitality, which typically is your restaurants and your dining and everything else outside for entertainment,” he said.
As for whether the shutdowns will have a greater negative impact than the virus itself, that’s a difficult question to answer. Varshney said he feels some people are working themselves “into a frenzy” and hoarding food, actions that can make matters worse.
“I suppose that is probably true for some specific individuals who are not directly affected by the virus and suffer a large economic loss,” added Jeff Michael, executive director of the Center for Business and Policy Research at the University of the Pacific in Stockton. “But I do not think it is generally true about the economic and virus impacts.”
Who else is at risk of losing jobs? The region’s large number of gig economy workers, often defined as independent contractors such as rideshare drivers.
“Especially given the situation where we are discouraging people from going out anywhere,” Varshney said.
Rideshare driver on the brink of homelessness
Evelyn Williams is one of many gig economy workers already affected. She supports herself and her two sons by driving for Uber and Lyft. Williams said she lives at an extended stay motel in south Sacramento, but with rideshare requests drying up, she’s started calling homeless shelters because she’s worried she won’t be able to afford the $515 weekly payment at the motel.
“This coronavirus has impacted my livelihood greatly. Before the outbreak, I was averaging $1,000 to $1,200 a week,” Williams told CapRadio. “Last week was my worst. I got $459. It’s been dwindling down because less people are using it because of the outbreak and the fear.”
“We’re homeless if our government, if our governor doesn’t address people like myself that do also need help — we’re on the streets,” she added.
Who is hiring?
There are some businesses that are hiring. Michael, of the University of the Pacific, said Amazon and grocery stores “are looking to hire a lot of people very quickly as malls and restaurants close,” as they receive a flood of online food and supply orders.
“These are important jobs at the moment, and could make sense for some people displaced from hospitality and retail. But they won’t be hiring nearly enough to make up for the wave of lay-offs happening now,” he said.
Resources for California workers affected by coronavirus shut downs
Local, state and federal governments are responding to help affected workers.
Last week, the city of Sacramento passed a $1 million economic relief package for local businesses such as restaurants, stores and day cares. Sacramento Mayor Darrell Steinberg said it will provide zero-interest loans of up to $25,000. Business owners can apply here starting March 18 at 5 p.m.
Workers affected by the coronavirus have several options to apply for financial assistance through the California Employment Development Department, as outlined at this EDD website.
If your employer has reduced your hours or shut down due to COVID-19, you can apply for an Unemployment Insurance claim. It provides partial wage replacement to workers who lose their jobs or have their hours cut through no fault of their own. Eligible recipients can receive benefits from $40 to $450 per week.
Also, if you’re unable to work because you have COVID-19 or were exposed to it, you can file for Disability Insurance through the EDD website. In addition, if you’re unable to work because you are caring for an ill or quarantined family member with COVID-19, you can file a Paid Family Leave (PFL) claim.
Today, California Gov. Gavin Newson announced the launch of a new comprehensive website, www.covid19.ca.gov, to highlight steps people can take to stay healthy, along with resources for applying for paid sick leave and unemployment assistance.
Federal relief in the works
On Wednesday, the U.S. Senate passed a bill to guarantee paid leave benefits to many workers. It was already adopted by the House and now goes to President Trump.
Also this week, the White House discussed sending money directly to Americans, a move both economists we spoke with supported.
“This should be more effective than a payroll tax cut that was an original focus of the Trump administration,” Michael said. “The checks need to be approved and implemented as quickly as possible.”
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