Economists and business owners said Monday that Gov. Jay Inslee’s order for state residents to stay at home will land hard on a local economy already reeling from weeks of closures and declining business.

The order, which closes the physical locations of all nonessential businesses in the state, seemed largely supported by business leaders as a critical step in minimizing the economic fallout of the pandemic.

“We can’t allow certain nonessential activities to undercut our collective efforts to mitigate the spread” of the coronavirus, said Jon Scholes, CEO of the Downtown Seattle Association.

But the short-term impacts could be massive. Coming on top of an earlier order that closed gyms, recreational and entertainment venues, and many bars and restaurants, it almost certainly means another round of layoffs, including some in higher-wage sectors such as manufacturing, that raises new fears about the depth of the coming recession.

Even before the governor’s order, “all the forecasts [were] for an unprecedented number of jobs lost,” said Jacob Vigdor, an economist at the University of Washington who has studied the Seattle-area economy. “So shutting down those operations — that’s just one more hit to local economies.”

It may also be the last straw for some smaller business that had managed to hang on despite the slowdown in business and the enforced closures–among them, restaurants that had switched to take-out only business.


“It’s going to be another nail in the coffin for our retail food sellers,” said Lindsey Echelbarger, who, along with his son, Nicholas, owns and operates several small shopping centers in Edmonds and Lynnwood. Both now wonder how much longer they’ll be able to make their own mortgage payments on those properties. “There’s a finite pot of money.”

But just how much of an impact Inslee’s stay-at-home order will have is difficult to predict, economists say, in part because they don’t know how long the new order will be in effect or how many businesses would have shut down even without the order.

Hours before the governor’s order was issued, Boeing announced it was suspending production at its Puget Sound facilities. Many retailers, including Starbucks and Nordstrom, had already suspended some or all frontline operations as consumers were withdrawing from in-person commercial transactions.

To some degree, the governor’s order “is just speeding up what was already happening and what was already going to happen,” said Jeffrey Shulman, a professor of marketing at the University of Washington Foster School of Business. Consumers “would have been sheltering in place on their own later,” he added.

What is clear is that governor’s order plays into a substantial broadening of the economic consequences of the coronavirus that will leave no part of the regional economy unchanged.

So far, those impacts have been felt most heavily in public-facing sectors, such as hotels and food service, arts, entertainment, and recreation, which consumers began avoiding early on out of fears of contracting COVID-19, the illness caused by the novel coronavirus. Those sectors have seen the heaviest layoffs so far.


Combined, those sectors accounted for around 140,000 jobs and around $4.5 billion in payroll in King County in 2018, according to data from the state employment security department. That’s around 10% of the county’s total labor market and about 3.6% of the total wages.

Here’s what Gov. Inslee’s new ‘stay-at-home’ order does and doesn’t restrict

In this next wave of impacts, Vigdor said, more closures and layoffs can be expected in other sectors. He said those most vulnerable include most bricks-and-mortar retail, which represented around 100,000 jobs and around $4 billion in annual compensation in 2018, along with wholesale services (64,000 jobs and $6 billion in wages), and transportation (50,000 jobs, $3.5 billion in wages).

The greatest impacts will likely be manufacturing, which employed 105,000 people and generated around $9.4 billion in wages in 2018. Of that, around 45,000 jobs and $5.2 billion in wages came from manufacturers involved in transportation, such as Boeing and its suppliers.

Boeing has stated that its shutdown will last for 14 days, and that its workers will be compensated for two week’s worth of shifts. But some industry analysts expect the shutdown to last longer than 14 days and also expressed concern for some of the suppliers that produce parts for the Everett plant and must now decide whether to keep their own production lines running or send workers home.

“I would say obviously they’re expecting the worst and probably planning for the worst,” said Ken Herbert, an industry analyst with investment bank Canaccord Genuity.

Depending on how long the global shutdown lasts, even if Boeing is able to restart quickly, it may find there is far less demand for its aircraft.


“Some of those [airlines] who had orders in for airplanes might be liquidated by the time this is all over,” Vigdor said. “We are looking at a hard reset of the global economy, and that’s a button that’s never been pushed before.”

On the more positive side, Vigdor and other economists say, certain sectors will help buffer the local economy during the shutdown.

Grocery stores, healthcare, and government, representing around 350,000 jobs and $22 billion in wages, are all expected to remain strong.

And, critically, the Seattle area benefits from a disproportionately large share of tech workers and other workers with data-related jobs, such as finance and insurance, who largely have been able to work from home. Those sectors represent around 150,000 jobs and around $29 billion in wages.

Because many of these so-called “information” workers will continue earning wages during the shutdown, they will be essential in helping restart the economy when the outbreak is over, Vigdor said.

“Our road back looks looks easier than for other parts of the country that are still more reliant on things like manufacturing, or sectors where people who actually do have to show up to a factory or an office in order to get work done,” he said.


The big question is how long before those high-wage workers will be able, or will  feel safe enough, to start pumping their incomes back into the economy.

“The distinction between a shutdown that lasts for a few weeks and a shutdown that lasts for a few months or maybe even a year” will be enormous, said Vigdor, who compares the economic impacts of the coronavirus to that of a natural disaster like a hurricane or an earthquake.

“Are we looking at the tropical storm?” he said. “Or “are we looking at a Category 5 hurricane?”

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