The economic devastation wrought by the response to the COVID-19 pandemic is worse than the Great Recession a decade ago, Dayton-area entrepreneurs and business leaders said.
Although they don’t see a cause for short-term optimism, they say a bumpy recovery will be achieved in the long-term, the leaders, who have a finger on the pulse of the economy, told the Dayton Daily News.
“I would think when all is said and done, we’re going to have much greater unemployment and greater pain than 10 years ago with the Great Recession,” said Bill Burke, president and chief executive of Day Air Credit Union.
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Natalie Dunlevey, owner and president of National Processing Solutions, an Oakwood-based credit and debit card transactions processor, agrees.
“I can easily tell you that this crisis blows away the Great Recession from a decade ago,” she said. “The response from my clients and from friends I know who own businesses spans the gamut.”
The numbers Dunlevey sees tell at least part of the tale: So far, the credit card authorization numbers she sees are down about 20% from where they should be year-over-year, due primarily to closed retail and restaurants, some of which have been deemed “non-essential.” Restaurants have seen on-site dining prohibited, cutting into their financial foundation.
“Some have grabbed this crisis by the throat and have come out swinging,” Dunlevey said. “They pivoted their business operations in real time, came up with incredibly innovative marketing and are grinding through.”
She added: “Some may still not survive; however, it won’t be from lack of effort.”
Burke leads Day Air, which this year bought the naming rights to the downtown ballpark home of the Dayton Dragons. With the Dragons’ season and indeed all professional sports cancelled or postponed, a full return on that investment has been delayed.
“This government shutdown has really slowed the velocity of money,” he said. “That’s what’s hurting the economy.”
Velocity of money is important. People get paid, and they tend to “start transacting,” he said.
Much of that transacting has frozen for the time being. Money is being deposited into bank and credit union accounts — people are receiving stimulus payments — but “the funds are just staying there,” Burke said.
He believes the recovery will be slower than many would like. “It’s not going to be a ‘V’-shaped recovery where it rockets back up as fast as it came back down.”
Dayton attorney Nadia Lampton focuses on labor and employment law, working with management at manufacturing and other companies. The Taft Law attorney said her clients are eager to return either to full reopening or full-fledged production.
But she sees a number of potentially complicating factors on the horizon.
One possible issue is compensation for unemployed workers. The CARES Act passed by federal lawmakers adds $600 a week to state unemployment benefits from April through July.
This could create a disincentive for some workers in some sectors — including manufacturing — to return to their former jobs quickly, Lampton said.
“If they (employers) have a furloughed or laid-off workforce, recalling them is difficult when employees come to their employers and say, ‘No, I don’t feel safe coming back. I’m just going to stay on unemployment,’” she said.
“One of the motivating factors is they make more money with unemployment benefits. That’s an issue employers are already facing. Many of my clients are already dealing with that, and I think they’ll continue to deal with that,” Lampton added.
“We may find it difficult to have staff who want to come back,” said Dr. Robert Jensen, an oral surgeon whose Washington Twp. practice is closed except for patient emergencies.
Some employers find themselves in a tricky spot — caught between employees receiving benefits that may pay more than normal wages, while seeking federal Paycheck Protection Program loans that require them to keep staff on their payrolls.
“It’s really a boon for employees not to come to work, yet the PPP (Paycheck Protection Program) loan requires them to come back to work,” Jensen said.
Dunlevey said she can feel a “pent-up” urge among entrepreneurs to open their businesses.
“It’s like a racehorse biting at its bit, they just want to open it again,” she said.
“We should be as loyal as possible to small businesses, local businesses, because these are our friends and neighbors who are really hurting,” Burke said.
Marty Grunder, owner of Grunder Landscaping in Miamisburg, has been operating at about half-capacity since early April.
He’s ready to return to full capacity once the state unveils its recovery plan.“Everybody’s ready for a recovery,” he said.
He agrees that this economic crisis is probably worse than the last recession, but he sees key differences.
The Great Recession was “systemic,” stemming from a failure in banking and financial institutions, he said. But he thinks many businesses are poised for growth once they get the regulatory go-ahead to resume serving customers.
“This one, I think, short-term is worse,” Grunder said. “Long-term, I think the other one (the earlier recession) was worse.”
The fundamentals behind what was once a “roaring economy” are still there, Dunlevey said.
“You can’t keep a Daytonian down,” she said. “They’re going to figure out a way to be successful.”
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