Many Americans would say that the COVID-19 era was unlike anything they have seen before, and its impact on the economy is also different from a typical slowdown or recession.
Service sector companies are generally more immune to job losses in a recession. It has been almost 10 months since the initial spread of COVID-19 in the United States, and many employment sectors in the state have managed to recover or at least balance themselves after the initial attacks, but the leisure and hospitality sector is an exception.
The sector – which includes restaurants, hotels and recreation services, among others – dropped 43,500, or 15.6%, in South Carolina from December 2019 to December 2020 because of COVID-19. For the United States as a whole, the sector fell 22.8% in the period.
In a typical recession, including the Great Recession of the late 2000s, consumer spending falls on expensive items and the manufacturing sector falls, according to Matt Martin, regional executive at the Federal Reserve Bank of Richmond, based in Charlotte.
In the year, since December 2019, jobs in the manufacturing industry in the state were sustained with an increase of 0.7%, or the addition of 1,800 jobs. Construction jobs increased 5.3%, and professional and business services – another important sector to be monitored – now stand at 0.6%, or 5,300 jobs, year after year, according to data from the Bureau of Labor Statistics.
“If you look at consumer spending, in a normal recession, consumers stop buying cars, washing machines and other durable goods and kind of postpone those purchases,” said Martin. “We didn’t see it to the same extent. Instead, people stopped going to restaurants and stopped going to doctors’ offices and getting haircuts and things like that. This time, it hit different segments differently.”
Jim Mayes, who co-owns Carolina Grove in 1077 Alice Drive with his wife, Lisa, and son, Jim, said the deal took a huge hit with the initial spread of the virus last spring, similar to all restaurants. Having opened last spring, they closed the restaurant for a short time before reopening.
COVID-19 continues, but a business consultant Mayes works with, based in Atlanta, informed him that industry experts and economists think the second half of 2021 will be strong for restaurants and the industry in general. In that time, most Americans hope to have access to a vaccine, said Mayes.
Until then, the second round of the Small Business Payroll Protection Program through the U.S. Small Business Administration will be useful in cash flow and payment of employee salaries, he said.
With more and more people working from home since the pandemic began, it is also easy to see that the laundry / dry cleaning business is down across the country.
Gary Elmore owns Little’s Personal Cleaners, which has four locations in Sumter, and he attests to that.
The downturn in the industry involves customers who work from home and dress up to go to restaurants, churches or other events like weddings and funerals, he said. The first round of PPP last year helped Elmore keep employees on the payroll.
Across the country, jobs in laundry, dry cleaning and other personal services have decreased by 228,000 jobs since December 2019.
Elmore said his stores had to move and buy more comforters and bedding last year to make up for the losses.
The sector has been slowly falling for decades, he said, with people wearing more casual clothes now to work, unlike just a few decades ago, but when the pandemic hit, it was a significant drop.
Elmore said he takes it all in stride.
“But, I’ve been broken my whole life,” he said, “it doesn’t bother me much.”