WyoFile: Businesses Large and Small Reel from Virus’s ‘Kick in the Teeth’

WyoFile: Businesses Large and Small Reel from Virus’s ‘Kick in the Teeth’

Two women cross a street in downtown Rock Springs in February. A brewery recently laid people off as it switched to curb-side service to avoid drawing crowds as the nation takes efforts to stop the spread of COVID-19. Wyoming’s state and local economies are going to take big hits as efforts to stop the virus intensify, economists and local business leaders around the state say. (Andrew Graham/WyoFile)

Originally reported by Andrew Graham – WyoFile

UPDATE: On Thursday, March 19, Gov. Mark Gordon and the state’s chief public health officer issued an order closing many businesses statewide, driving deeper economic impacts in an effort to slow the virus’s spread in Wyoming. Read the order here—Ed.

Bitter Creek Brewing in Rock Springs laid off employees and switched to curbside delivery and pick-up orders only for the brewpub’s food this week. With a dining and bar area too small for social distancing, owner Jane Caller preferred to take precautions for her customers and employees, she said.

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“We might as well bite the bullet, do it,” Caller said. “I wanted my employees to be able to get unemployment [insurance] if they could. I told them to please say they’d been laid off for the virus and as directed by the government that [said] it did not want people coming into restaurants.”

Small businesses like Caller’s all around ‘the small town with long streets,’ as Wyoming is often referred to, are already reeling from the effort to stem the spread of the highly contagious COVID-19 virus.

On Monday, Gov. Mark Gordon announced the creation of five task forces, including one focused on helping businesses and the economy. “It is not about closing everything, it is about doing things in creative ways to help maintain services and connections between people,” Gordon said.

But around the state, business leaders and local politicians said their downtowns were under the gun from a pandemic response that necessitates curtailing economic activity to protect public health. Two University of Wyoming economists predicted spreading and prolonged impacts to each of Wyoming’s cornerstone industries.

Gordon appointed State Auditor Kristi Racines to head the new task force. Racines is still gathering information, she said, but the initial reports are grim. “We have a lot of problems,” she said. “We have schools that are closed, we have businesses that can’t pay their bills or employees. We have employees that can’t pay their rent.”

A spokesperson for the Department of Workforce Services said their offices are seeing increased applications for unemployment insurance. In Laramie, Rawlins and Jackson alone there was a “significant increase” in such requests, Ty Stockton said.

Though workforce centers are open, the agency is asking people to apply for unemployment insurance through its website to minimize interactions at offices. There is also a phone number, but call times are “really, really long right now,” Stockton said.

Racines hopes to help small businesses apply for federal government loans and is working with the Wyoming Business Council to explore what assistance they can provide, she said. Other steps her task force can take will become clearer with time and broader federal and state action, she said.

“It’s a little bit hard to find the silver lining here,” Racines said. “I’m not saying there won’t be one, but no one will be left harmless from this. It’s really important to look how we come out of this and what do we want to look like in two months or six months or years.”

In Rock Springs, Caller was still calculating the layoffs, she said, but they would include the majority of her front-of-house staff — servers, hosts and bartenders. Some of those staff include parents whose children suddenly don’t have school to go to, Caller said, and she wanted to give them the opportunity to collect unemployment insurance and stay home.

“You don’t want her seeing people and going home to her kids every night,” with the possibility of contagion, Caller said of one server and mother.

Like much of Wyoming, Sweetwater County has been on the precipice of economic decline as the pivotal coal industry retracts. To officials there, COVID-19 seems like the world is just piling on.

“Talk about getting hit while you’re down,” Rock Springs mayor Tim Kaumo said in an interview Tuesday. “We’re already seeing a 38% decrease in sales tax,” from the contracting energy industry, Kaumo said, “and shoot we see businesses shut down such as this is going to do, and that’s a double whammy.”

Regardless of what industries they rely on, Wyoming’s regional economies all appear to face tough blows. In Jackson, the lucrative ski industry crashed to a halt over the weekend when the area’s ski resorts closed. Shortly on the heels of those closures, Teton County’s public health officer issued an emergency order closing all nonessential businesses beginning on Wednesday. Restaurants were allowed to stay open if they closed dine-in services and followed strict procedures.

Skiers flock to Snow King Mountain in Jackson on March 14 after the Jackson Hole Mountain Resort closed. Lines that long at the Town Hill haven’t been seen in years. (Angus M. Thuermer, Jr./WyoFile)

Anna Olson, the president of the Jackson Hole Chamber of Commerce, hopes the economic blow there would not be prolonged. April and May are slow months for Jackson tourism, she said, but if the response to COVID-19 doesn’t show results soon, tourists may start canceling planned summer visits to the area’s famed national parks.

The tourism industry is “definitely going to need the flattening of the curve and the sense of returning to normalcy to come in the April, May time frame,” she said.

A workforce services office in Jackson received 70 visits on Monday and Tuesday, Stockton said, though it’s not certain all are related to COVID-19 closures, he said.

In Laramie, the University of Wyoming moved classes online and told most students not to come home from spring break — an instant blow to bars, restaurants, retailers and service providers downtown.

“Downtown businesses’ reliance on the student population just means that we are seeing a quicker decline and until school is back we may see a longer recovery,” Laramie Main Street Alliance director Trey Sherwood said. The group is a nonprofit that supports local businesses in the city.

The organization initiated a drive this week encouraging Laramie residents to purchase gift cards to local businesses that can be redeemed down the road. “It helps [businesses] with cash flow,” she said. “Give it to a first responder or health care worker.”

Coal Creek, a coffeeshop in downtown Laramie popular with students, has pushed tables against the window and is only offering to-go orders. A few young people defied COVID-19 worries for lattes on Wednesday afternoon, but a barista said business was slow. (Andrew Graham/WyoFile)

Kaumo is encouraging a similar initiative in Rock Springs, he said.

Whether such localized efforts can stop small businesses with slim margins from laying off workers or even shutting doors is another question.

“These small businesses, they can’t go more than a month or two [without sales] without shutting their doors,” Kaumo said. While the mayor is echoing official recommendations that people maintain their distance from each other and minimize trips out of their homes, he is leery of ordering businesses to close right now, he said.

“That’s a tough call and I’m for less government in your life,” he said. “If you can operate and pay your employees my suggestion is keep your doors open and do what you can. The question is: How long this can take and how long you can go without revenue?”

Big Fish and Long Term

The virus and the response to it are sparking a global economic slowdown that will not have a quick recovery, University of Wyoming economist Rob Godby said. Efforts to stop the virus will not be short term, he said.

“This is going to probably be a pretty deep recession just because of the amount of activity that is being stopped,” he said. “Deeper recessions are harder to recover from.”

Main street businesses aside, each underlying sector of the state’s economy will be damaged, Godby said. The keystone energy industry is already tottering. Low prices for oil and gas and low demand for coal, coupled with more sudden demand drops as the economy comes to a halt might push some oil, gas and coal companies over the edge, Godby said.

“This is going to be really hard on Wyoming,” Godby said. “It’s really kicking our energy sector in the teeth.”

Electricity usage is already showing signs of dropping, he said. “We don’t know how low it’s going to go, but that will persist as long as the recession and recovery are going on,” he said.

Gas prices have been very low for months, stunting production.

Oil prices plummeted last week as the result of a price war between Russia and Saudi Arabia, two global oil producers. The impacts of that war are likely going to be exacerbated by an economic slowdown and associated drop in demand for oil, Godby said. “If the price war ended tomorrow the price won’t go back up tomorrow,” he said.

Coal country recently emerged from a wave of bankruptcies, in which several mines in the Powder River Basin moved into new, and new-to-Wyoming, hands. Godby questioned whether smaller companies across all three energy sectors have the cash flow to weather a recession.

“Unless you’re a major [company], you’ve been running on a lot of debt for a long time now,” he said.

Spreading sickness and the closure of companies that supply mines, oil and gas wells could also harm the sector’s ability to keep up production, he said.

“On the plus side, the country needs electricity and will need it whether we’re sitting at home watching Netflix or back at work,” he said. “It’s not like all the coal plants are going to close tomorrow.”

The state and the nation are seeing a sudden shift in the human behavior that drives economic activity, Jason Shogren, another UW economist, said.

“Everybody’s going to get nailed,” he said. “It’s just people being people, so everything’s going to get hit.”

Olson, the Jackson chamber of commerce director, cited data that showed upticks in park travel after both the September 11 terrorist attacks and the 2008 economic crash. Godby and Shogren did not have optimistic expectations for the travel industry, the state’s second largest, however.

Unlike recessions of recent memory, “this particular recession doesn’t mean that people move from flying to Europe with the family to driving to Yellowstone,” Godby said.

“It all depends on how long it lasts and how bad things get,” he said.

Both community-level interventions like the gift-card initiative and broader statewide assistance programs will be needed as the impacts broaden, Shogren said.

“They always say ‘small town with long streets,’ and now is the time to prove it,” he said.