Pandemic fuels Dayton region employment decline

Other regions are worse off

The Dayton area’s year-over-year employment decline in June wasn’t as bad as other parts of Ohio, which local experts attribute to Wright-Patterson Air Force Base and the region’s growing economic diversity.

But the economic harm from the COVID-19 pandemic cuts deep in the Dayton region, crossing every industry sector except federal government employment, according to an analysis of the most recent U.S. Bureau of Labor Statistics data. Now, surging COVID-19 cases across the country are threatening the fragile economic recovery.

“Locally we have lost as many jobs in the last four months than we did in a three-year period of the Great Recession,” said Richard Stock, director of the University of Dayton Business Research Center.

The Dayton Daily News Path Forward initiative examines the region’s most pressing problems, with an eye toward finding solutions. This story is a snapshot of how the Dayton region’s industry sectors are faring in the midst of the pandemic and what officials say would help them navigate the challenges they face.

Education jobs declined the most in June, with a 34 percent drop, and the region’s state government employment went down nearly 16 percent. Employment declined by more than 13 percent for local governments. The transportation, warehouse and utility sectors also declined by more than 13 percent, and the battered leisure and hospitality sector dropped by nearly that much.

“We can’t classify how the economy, as a whole, is performing, because there’s such a mix between how the pandemic has affected different industries,” said Erik Collins, director of community and economic development for Montgomery County. “Some companies are having a lot of success, but many others are struggling to stay in business.”

The Dayton region’s June unemployment rate was 10.7 percent and Ohio’s was 10.9 percent, the worst since the Great Recession and its aftermath, according to preliminary BLS data that is not seasonally adjusted. By comparison, the June 2019 unemployment rate in the Dayton region was 4.3 percent.

New jobless claims in Ohio ticked up in the first week of July to 35,422 after several weeks of decline, and as of Aug. 1 the state had sent about $10.7 billion in unemployment checks to nearly 1.3 million unemployed Ohioans over 20 weeks.

Nationally new jobless claims began rising again in July and the economy shrank 9.5 percent from April to June, the largest quarterly decline in Gross Domestic Product in the 70 years that the government has published data.

“There is less chance of a V-shaped recovery,” Stock said, referring to the sharp upturn some had hoped for when the state’s mandatory business shutdown ended in late May. “Certain sectors will recover. There is some talk about a square root shape, where some will recover and others will be slower.”

Companies and individuals staying disciplined and focused on their safety efforts is critical for a recovery, said Jeff Hoagland, president and chief executive of the Dayton Development Coalition.

“We need to be safe. Please social distance, please wash your hands, please wear your mask,” he said. “That is one strong way that will allow the economy to keep open.”

Wright-Patterson cushioned impact

June employment totaled 360,900 in the Dayton metropolitan area, which is made up of Montgomery, Greene and Miami counties. That is an 8 percent decline compared to June of last year, when 392,200 peopl were.

As bad as those numbers are, Ohio overall and all other metropolitan areas fared worse, except Springfield, which saw a 6 percent year-over-year decline. Employment in the Cincinnati metro region, which includes Butler and Warren counties, declined 8.2 percent.

The Cleveland MSA was worst in the state, with a 12.4 percent decline, followed by Youngstown, with 11.9 percent fewer jobs and Akron with a 10.9 percent decline.

“Northeastern Ohio is really hurting,” said Stock, noting that that region had far worse declines in leisure and hospitality jobs, as well as greater declines in manufacturing than the Dayton region.

The northeastern region’s decline in professional and business services was more than twice the Dayton region’s 6.1 percent decline, which Stock said illustrates the large local impact of military contracting jobs associated with Wright-Patt. Federal government employment in the Dayton region rose one-half percent, also an indicator of the base’s role in bolstering the local economy.

“It matters. That’s for sure,” said Stock. “I think for a variety of reasons, that will continue to be a source of stability for the foreseeable future.”

Unlike many area companies that closed down or reduced operations in the spring due to the pandemic, the the base stayed the course, said Stacey Geiger, spokeswoman for the 88th Air Base Wing.

“During the COVID-19 pandemic, Wright-Patterson AFB has successfully been able to continue operations to support the warfighter and execute the mission while protecting the workforce,” Geiger said. “This steadiness occurred due to a well-constructed operations continuity plan with a focus on workforce health and safety and the optimization of technology to allow for increased telework opportunities.”

The success the base had with using technology for telework and collaboration with off-base partners “has driven a re-look at how many organizations on the installation approach telework, with a potential of increased telework opportunities well beyond COVID-19,” Geiger said.

The region’s success in winning jobs during previous federal Base Realignment and Closure rounds continues to pay dividends, Hoagland said.

He said more than 30,500 employees now work at the base, a figure that does not count contractors working off base. It is the state’s largest single-site employer.

The direct, indirect and induced economic impact of Wright-Patt totals $15.54 billion in the 14-county Dayton region, according to a 2019 economic analysis commissioned by coalition.

“It is the intellectual capital of the United States Air Force,” Hoagland said.

Manufacturing alters operations

The coalition and local economic development officials are redoubling efforts to help existing companies get what they need to survive the downturn. In July the Ohio Tax Credit Authority approved job creation tax credits to two local companies, Resonant Sciences of Beavercreek and Pella Corp. of Troy.

Pella plans to open a new window and door manufacturing plant in Troy, adding 428 jobs by 2025, and Resonant Sciences will expand its aerospace hardware manufacturing facilities, adding 30 jobs.

“Our bread and butter is helping our existing industry continue to grow,” said Julie Sullivan, the coalition’s executive vice president of regional development.

Many of the region’s manufacturers stayed open throughout the shutdown because they were deemed essential. Companies revamped their facilities to keep workers safe from infection and also had some employees, particularly on the administrative side, work from home.

“We were really busy when the COVID hit and (we) sent everybody home with pay for a week and slowly called everyone back,” said John Bertsch, president and chief executive of Detailed Machining Inc. in Sidney.

He and other manufacturers said loans from the federal Paycheck Protection Program proved hugely helpful.

“We are now caught up, and for the last few weeks we have seen a slow recovery,” Bertsch said. “In the last few days we have picked up some new work from new customers and are starting to see more coming in”

Dayton region manufacturing jobs declined 1.4 percent in June, compared to 6 percent in Ohio and 5.8 percent in the U.S.

The Dayton Region Manufacturers Association sent out a survey using Dayton Daily News questions in July and got responses from several members, said Angelia Erbaugh, president of the group.

“You can glean that everyone is concerned. They are being nimble and reacting to and trying to get ahead of the situation, and making changes in their processes and schedules to accommodate workforce and customer issues,” Erbaugh said.

Respondents said automotive and aerospace companies are seeing some declines in business, but those that have more diverse product lines are doing better.

Manufacturers are concerned about a flattening or slowing of growth due to the resurgence of COVID-19 and they worry about keeping their own employees healthy.

“If new projects do not start very soon and the resurgence causes another shut down, we will need more stimulus to survive,” said one survey respondent. “Wear your masks. It’s not a matter of rights, it’s a matter of defeating COVID-19 and getting the economy back on track and our lives back to normal. The sooner we do that the better off we all will be.”

Restaurants, hotels and tourism stagger

Local restaurants, hotels and the arts took a major hit from COVID-19 as their businesses are so dependent on people mixing with others in close quarters.

“The question I have no answer to is which industry sectors are going to get better more quickly?” Stock said. “The short answer is, it’s clearly going to be a while before leisure and hospitality comes back.”

The Dayton region shed 12.6 percent of its leisure and hospitality jobs in June compared to June 2019, but the region still fared better than the state, which lost 28.4 percent of those jobs during the same period.

“Every industry is facing distressing financial situations. The hospitality, travel and tourism industries have been especially hard hit by the pandemic,” said Jacquie Powell, president and chief executive of the Dayton Convention and Visitors Bureau. “Federal relief packages are essential for the future of these industries.”

The bureau’s June survey of local tourism sentiment found residents eager to return to local attractions and to patronize local restaurants and businesses, as long as they feel safe from infection.

She said 68 percent said they planned to visit a local attraction or museum in the next three months. In addition to continuing to recruit trade shows and other large events for the future, the bureau has now created multiple “Daycation” itineraries and launched a Visit Dayton app.

Credit: Thomas Gnau

Credit: Thomas Gnau

While some employees are returning to downtown office and commercial spaces, the first floor stores, salons and restaurants continue to struggle, said Sandy Gudorf, president of the Downtown Dayton Partnership.

“Many of them are being very creative, very innovative in how they are pivoting their businesses,” Gudorf said. “Many of them are being just downright feisty, just doing everything they can do to sell another meal or attract another customer.”

Real estate and commercial development begin rebound

On the bright side for downtown Dayton, the major projects like the Arcade and Fireblocks continue to move forward, but at a slower pace, said Gudorf.

“There may be some realignment of what’s coming on first but overall they’re moving forward. Some of that realignment for example surrounds the hospitality industry,” she said. “The overall landscape for our major projects looks good.”

Construction and mining, which are combined in the BLS data, declined 9.4 percent in the Dayton region, more than in the state or U.S.

“We’re seeing a healthy pipeline of activity in commercial development, although we are seeing fewer commercial permits right now compared to the same time period in 2019,” Collins said of Montgomery County.

Building permits for commercial were down 40 percent in Montgomery County, he said, and residential declined 21 percent during the first six months of the year compared to the same period last year. But Collins said the overall value of the permits in Montgomery County has grown 45 percent to $169 million.

Local home sales rebounded in June after declining in April and May. June sales increased by 6 percent compared to June 2019, but new listings are down by 7.6 percent, contributing to record low inventory, according to Sham Reddy, president of Dayton Realtors.

“It looks as if the summer and fall months will continue along the path we’ve seen recently,” Reddy said. “Multiple offers and bidding wars on many homes is not uncommon, and with mortgage rates as low as we’ve ever seen, I expect that buyers will wish to take advantage of the sales environment.”

Universities look warily to fall semester

Uncertainty caused by the increase in COVID-19 cases has officials at area universities and colleges looking at options for fall, and all of them plan at least some online component, said Cassie Barlow, president of the Southwestern Ohio Council for Higher Education.

Credit: Jim Noelker

Credit: Jim Noelker

Local higher education and K-12 schools stopped in-person classes last spring during the shutdown. Cutbacks in overhead and other costs were common, some had layoffs or furloughs, and all worked to boost their online classes.

“I would just applaud the universities for pivoting so quickly,” Barlow said. “Some of them it was a matter of days before they went online and started to instruct.”

State funding cuts for public universities have already been announced, and Barlow said educators are wondering if enrollments will take a hit. Federal CARES Act funding will offset some costs.

At Wright State University, the plan is to reopen this month with 70 percent of classes online. About 30 percent of classes will be in-person or have in-person components where necessary, such as nursing classes where some things must be hands on, said President Susan Edwards. She expects the in-person classes will meet in shifts to reduce the total number of people on campus.

Classrooms are being modified to allow for more social distancing and video taping for online learning. The rooms will be cleaned in between sessions.

Wright State is providing portable Wi-Fi spots and laptops for both Wright State and Sinclair Community College students, Edwards said. She said COVID-19 testing and contact tracing will be in place for students and staff who have symptoms.

“I have no doubt that we are going to be able to continue to educate people,” Edwards said. “As we get used to the new normal, we are having to evolve.”

Hospitals lose money, incur new costs

The reopening of schools has hospitals worried about growing COVID-19 cases exacerbated by the annual rise in influenza cases, said Sarah Hackenbracht, president and chief executive of the Greater Dayton Area Hospital Association.

She said hospitals are learning to provide care with continually changing requirements and dealing with financial challenges of lost revenue, along with the cost of safeguarding employees and patients.

Hospital facilities in the 10-county region lost $370.4 million in revenue and saw expenses rocket up by $34.6 million during the pandemic, Hackenbracht said.

Dayton region employment in the health and social assistance segment declined 6.6 percent in June, slightly more than statewide and in the U.S., according to the BLS.

Non-essential medical procedures were halted last spring as the state struggled to flatten the curve of COVID-19 cases, leading to layoffs, furloughs and lost revenue. Hackenbracht said staff are returning as demand grows for those non-essential procedures.

“Our current operating mode is in a recovery state,” Hackenbracht said, praising the collaboration that is occurring among hospitals, including those who are direct competitors.

“I would classify our near-term outlook for our hospitals as very positive.”

Local government revenues decline

Local governments across the region are struggling with plunging income tax revenue, leading to a 13.1 percent decline in jobs for June compared to a year ago.

“In talking with my colleagues across the region, everybody’s revenues are off quite a bit,” Dayton City Manager Shelley Dickstein said. “The one frustration that we all share is that the (the rule for CARES Act) federal funding that was passed on to help with the COVID impact has not allowed us to use it for revenue replacement.”

Stock said state and local governments haven’t recovered from being “trimmed to the bone” during the Great Recession and federal assistance would help them avoid cuts in services to their residents.

“It’s not just the urban areas. It’s also the small towns and villages,” Dickstein said, adding that the city projects a $12 million loss in revenue in the current budget.

Both Montgomery County and the city of Dayton took early action to cut budgets before the revenue hits became clear. Dayton limited all but essential spending, suspended capital equipment purchases, froze hiring, abolished 100 vacant positions and used a voluntary separation program to get 96 people to retire, Dickstein said.

The county’s nearly $30 million in budget adjustments included a hiring freeze and cutting economic development grants and capital reinvestment projects, spokeswoman Brianna Wooten said.

The county also is seeing a social services impact, said Wooten, with food stamp recipients increasing by 10,493 to a total of 80,085 during the 16-week period ending July 16. Medicaid recipients rose 16,419 to 149,272 during that period, she said.

Diane Shannon, the city of Dayton’s management and budget director, said the Dayton region’s economy was strong coming into the pandemic, but the near-term outlook is filled with uncertainty.

“With 70 percent of our economy consumer driven, if the consumers are not engaged, if they are not buying, we have a self-reinforcing mechanism there,” Shannon said. “We need assistance in the short run. In the long run, we need the vaccine and therapeutics.”

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