Echoing what many small businesses all across the region have been saying individually with every passing day, Benton Harbor’s Kinexus Group says that the Covid-19 pandemic has had “a significant and growing negative impact on small businesses in Southwest Michigan.”
According to Opportunity Insights, a group that measures the health of small business, and information gathered by Kinexus Group, roughly one-third of small businesses in Berrien, Cass, and Van Buren Counties were closed either permanently or temporarily at the end of July, pointing out just how devastating COVID-19 has been to the southwest Michigan economy.
Kinexus Group measures labor market data and trends on a monthly basis as part of its efforts in workforce, economic, and community development.
The President and CEO of Kinexus Group, Todd Gustafson, says, “This figure equates to over 750 establishments in Berrien, Cass, and Van Buren Counties, with over 500 of them in Berrien County alone.” Gustafson adds, “This is a significant increase and a very alarming number to look at because small businesses are the heart of southwest Michigan and unfortunately, it doesn’t stop there.”
While there is no new data for Berrien, Cass, and Van Buren Counties, since that time, statewide data shows that the number of small business closures had increased to 38-percent by the day before Thanksgiving.
Gustafson contends, “There is reason to believe our local economy is faring somewhat better than the rest of Michigan. Large cities and college towns have borne the brunt of lasting small business damage during the pandemic.” He goes on to say, “With our region benefiting from its hot real estate market, tourists from Chicago looking to get away from the city as cases increase nationwide, and resourceful business owners who have adapted to the shifting market due to the pandemic, it is likely that around one-third of local small businesses continue to remain closed. Unfortunately, at this time it is unknown how many of these closures are permanent, although the number is likely increasing every week.”
Although every sector has been impacted by the pandemic, the Leisure and Hospitality and other private service-providing sectors have been hit particularly hard. The combination of business shutdowns and broader declines in consumer demand due to the virus resulted in significant layoffs at establishments such as restaurants, hotels, and movie theaters. As of October, there were approximately 5,500 payroll jobs in the Leisure and Hospitality sector in Berrien County, which was a decrease of 2,100 (or 28-percent) from the same time a year prior.
Doing the math, Gustafson says, “To put these losses in context, total payrolled employment in Berrien County was down an estimated 4,800 jobs in October from the same time last year, and the Leisure and Hospitality sector accounted for over 40-percent of those job losses.”
There were also significant job cuts in other private service-providing sectors such as Healthcare and Retail as primary care physicians, dentists, banks, hair salons, and shop owners were forced to lay off staff or shutter their doors, but none was quite as affected as Leisure and Hospitality, one of the region’s core sectors.
The public sector has also seen significant job losses both regionally and around the country, as states and municipalities have been forced to trim staff and cut employee pay in order to address budget shortfalls resulting from the pandemic.
Job declines in that sector have been driven largely by layoffs in public education, which accounted for over one-third of all government employment in Berrien County prior to the pandemic. Sagging postsecondary enrollment and the adoption of virtual instruction have resulted in local school districts and postsecondary institutions laying off support staff such as custodial and food service workers. In October of 2020 there were 7,700 total payrolled public sector jobs in Berrien County, a decrease of 1,000 (or 11.5-percent) from October of 2019.
Gustafson ends on a somber note, telling us, “It is also worth noting that while these sectors have seen the most layoffs regionally due to the pandemic, others could see notable job losses on a more delayed timeframe. As long-term unemployment, the ongoing surge in new COVID-19 cases, and the resulting shutdowns persist and drive down consumer demand, local businesses in other industries that have proven more resilient thus far such as real estate and manufacturing could become susceptible to job cuts.”
The Kinexus Group says that as policy makers in Washington and Lansing debate relief packages and stimulus programs, another trend is also popping up. While some sectors struggle to stay solvent, others are clamoring for people as the supply chain disruption continues.
Gustafson reports, “While we are seeing job losses in some occupations, we also see 1,250 jobs listed on the local Michigan Works website.” He notes that in large ports across the country, boats are lined up waiting to be unloaded, but not enough truckers and transportation services are available to move products to market. The Kinexus Group CEO points out, “A manufacturer who cannot get a part for a machine and loses production can see a significant loss in a single day or week,” and adds, “The nature of work is changing, and policy makers also need to consider how we will retrain the workforce going forward.”
Kinexus Group is an organization that invests its time and resources into inspiring positive economic change one individual, one business, and one community at a time. For more information, you can visit online at http://www.Kinexus.org, follow along on Twitter @KinexusGroup or “like” them on Facebook @KinexusGroup.