Economic NewsJune 04 2020
Covid-19 Economic Impact on Solano Economy
On May 22, California EDD Labor Market Information Division released its most recent data on labor force and employment figures. The numbers reflected what most expected, rapidly increasing unemployment numbers and related job losses. During the last two recorded months, March and April, the unemployment rate increased from a healthy 3.9% to 14.9%. This is slightly above the national rate of 14.7%, but below the California rate of 15.5%. In the County, this reflects an increase of the unemployed by 22,100 people. Unemployment ranged from a low of 12.2% in Benicia to a high of 16.6% in Vallejo. For clarification purposes, this is the rate of unemployment for residents of Solano County, regardless of where they work.
EDD also analyzes the loss of jobs within the County by industry sector. Over this same period, Solano County shed 17,000 nonfarm jobs. The table below shows both the number of jobs lost by sector, as well as the percentage of jobs lost. Similar to most economic areas nationwide, the hardest hit sectors include Leisure & Hospitality, Trade, Transportation & Utilities, and Services Sectors. The common theme of afflicted industries; companies with personal customer interface, or “store front” businesses. It’s obvious to most, that Covid-19 and related health and safety policies are preventing these much-needed traditional transactions from taking place, from restaurants, bars, hotels, and retail stores, to financial, tax, insurance and healthcare operations.
The pie chart below illustrates the share of job losses in each sector of the total job loss in the County. When viewing these shares of job loss, it’s clear to see that our retail, restaurant, hotel, and business service industries make up nearly 75% of total job loss in the area. Conversely, sectors such as Construction and Manufacturing, both important industry clusters in our region, were relatively stable. One thought is that this shows the truly startling effects of Covid-19 and the necessary “stay at home” policies. Another is how we may see numbers stabilize or even improve during the coming months as the economy begins to open up and the figurative barrier that exists between business and customer starts to lessen. An optimistic view would be that as businesses reopen, if roughly half of those lost jobs come back in the hardest hit subsectors of Retail, Food Services and several service categories, the unemployed rate could see a relatively quick reduction, possibly to a single digit number in the coming few months (albeit high single-digit).
Longer term, the effects of Covid-19 are expected to linger for several quarters as many economists are predicting. Consumers will continue to be cautious returning to businesses that are reopening to the public. This “caution” is an important factor, because it is the length of time that demand will be muted that will determine the depth of the recession or the degree of impact on national supply chains, government, and the finance industry. The situation however is extremely fluid, with a fear of second wave of Covid-19 infections on one side of the spectrum, and a possible approval of a viable Covid-19 vaccine on the other, and as we have seen in recent weeks and days, a lot in between.
This is where regional organizations such as the Solano EDC can continue to be a service, pivoting to provide needed information to companies moving through these transitional times. As an economic region, companies are in need of assistance with funding/financing, public programs, logistics, real estate, and workforce issues. While contraction is broadly seen in the local economy, there are also significant opportunities for growth, and the EDC is playing an important role in these areas.
The Solano EDC is a private non-profit organization created to improve the economic health of Solano County. Solano Economic Resource Center (SERC) is a division of the EDC and provides economic research and marketing services for organizational partners, investors, and local jurisdictions in Solano and beyond. For inquiries please contact Robert Burris at email@example.com .