More than 400,000 workers in the Puget Sound region are in industries facing immediate risk due to impacts from the coronavirus pandemic, and more than 500,000 additional workers are in industries facing near-term risk, says a white paper commissioned by the Seattle Metropolitan Chamber of Commerce and released Wednesday.
The region’s economy is experiencing “an economic shock that will take many months and beyond to recover from,” with impacts likely to result in wage reductions or at least temporary layoffs in about 40% of the approximately 2 million jobs in King, Pierce and Snohomish counties, according to the study by the Seattle-based research firm Community Attributes Inc. (CAI).
“Many of these jobs will start again once the virus threat has passed and the economy starts up again,” the study says. “Not all businesses will survive this challenge.”
The CAI study says the Puget Sound economy is in trouble due to declines in consumer and business spending, event cancellations, tourist visit reductions, supply-chain and trade disruptions, real estate and economic uncertainty and government tax challenges.
Because Washington and its cities rely heavily on sales taxes, they should pursue new revenue sources, the white paper says.
“Washington state’s dependency on retail spending and business revenues will see immediate impacts in March and throughout the second quarter of 2020,” the study says, mentioning hotel and convention center taxes as particularly vulnerable. “State and local revenues will decline in 2020, as government spending increases to serve immediate needs. Difficult budget choices will play out in” the third and fourth quarter.
Seattle can expect to collect at least $110 million less in general-fund tax revenue this year, the city’s budget director said Monday.
Meanwhile, a report released Wednesday by Moody’s Investors Service says the crisis stands to increase costs for Puget Sound local governments, “though state and federal support will offset some of the likelihood of a widespread reduction in credit quality.”
Property taxes should be a relatively stable source of revenue, with property value declines likely to lag behind other trends. “Yet issuers heavily reliant on economically sensitive sales and hotel taxes related to tourism and business travel will take a revenue hit,” the report says, predicting an initial spike in sales tax collections as households stock up and then a plunge based on the economic slowdown.
King County Executive Dow Constantine has estimated that the county will ultimately spend about $50 million on emergency efforts related to the pandemic, the Moody’s report says.
CAI and Boston Consulting Group identified industries at immediate and near-term risk due to the coronavirus crisis, such as the restaurant sector and the retail sector. They estimated there are 419,000 workers in the immediate-risk industries, including retail salespersons and supervisors, cooks, waiters and waitresses, cashiers, dishwashers, bartenders and stock clerks, mostly making $15 to $25 an hour.
Most workers facing immediate and near-term risks work in King County, as opposed to Pierce and Snohomish counties, the CAI white paper says. Nearly all qualify for state unemployment insurance benefits, but there also are large numbers of gig workers who, as independent contractors, may not be eligible for the same benefits.
Industries related to household supplies and groceries may temporarily see extra demand, but all Puget Sound industries will be negatively affected, the white paper says.
The CAI white paper recommends that government leaders loosen lending and monetary policy; ensure that tenants and borrowers get rent and debt-service relief; and send cash assistance to households and small businesses.
Seattle City Councilmember Alex Pedersen wrote a letter to the city’s budget director Tuesday suggesting that City Hall consider deferring “non-essential and expensive” capital projects, such as the First Avenue Streetcar project. Yet, the CAI white paper recommends that governments continue spending on infrastructure projects because such investments “support communities directly” and create jobs.
The white paper says Washington and its cities, which will soon encounter budget shortfalls due to the pandemic, must seek “new funding sources and new approaches to revenue management.”
Seattle City Councilmembers Kshama Sawant and Tammy Morales are calling for a $500 million-a-year tax on large corporations to fund coronavirus help in the short term and housing in the long term.
“The City Council should immediately pass an Amazon tax of at least $500 million to address the coronavirus-related emergency needs of our community,” Sawant said this week.
“This is hard. This is painful. And this is the time to rally together,” Chamber Executive Vice President Markham McIntyre said in a statement.
“We are 2-3 weeks ahead of many other areas across the country. Our collective response to the crisis will be the model for other communities. Let’s continue doing everything we can to help the businesses and workers who are particularly vulnerable to the outbreak and its economic impact, and let’s stick together,” McIntyre said.