Summit County economic experts share bleak predictions including estimated job loss of nearly 10,000
Nearly 9,500 jobs and $369 million in earnings.
That’s what Summit County’s economy stands to lose over the next 18 months as a result of the coronavirus in the most optimistic of the three scenarios presented to the County Council Wednesday by the county’s two highest-ranking economic experts.
Jeff Jones, the county’s economic development director, noted that scenario could change with good news about progress in the fight against the global pandemic.
But Jones estimated around 7,000 jobs were lost almost immediately as the economy ground to a halt in March, and another 2,000 jobs or so are likely to vanish in a second wave.
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The losses represent about 1/3 of the county’s total 31,500 jobs.
“I wish I had better news,” he said.
Jones predicted the county could lose about $500 million in total earnings and $780 million from its Gross Regional Product as a result of the pandemic, while Chief Financial Officer Matt Leavitt estimated that, using Jones’ job-loss numbers, the county could see a $2.7 million reduction in sales and use tax annually.
Jones predicted county earnings would revert to 2014/2015 levels, while the total Gross Regional Product would approach 2016/2017 levels, drops of 23% and 22%, respectively.
Jones’ models range from what he sees as a reasonable best case, in which 80% of hospitality jobs are lost, to the worst case, in which 90% of hospitality jobs are lost along with 30% of retail jobs. In the latter scenario, the county could see a contraction of 11,407 jobs and a $442 million hit to earnings.
Normally, the economy sheds around 5,000 jobs during the shoulder season, with seasonal layoffs starting in early March and continuing until slowly reversing course in May. Jones said it appears unlikely the normal hiring process will begin this year.
Jones also shared a metric called an economic vulnerability index from a third-party economics and analytics firm.
Of the more than 3,000 counties in the United States, Summit County has the 28th highest vulnerability index, just behind Pitkin County, Colorado, home to Aspen Snowmass Ski Resort.
“The COVID-19 Vulnerability Index is a measurement of the negative impact that the coronavirus crisis can have on employment based upon a region’s mix of industries,” Jones wrote in a staff report. “For example, accommodation and food services are projected to lose more jobs as a result of the coronavirus compared to utilities and healthcare.”
The index does not take into account infection rate or the government response to the pandemic, Jones said. Summit County has one of the highest infection rates in the state and the county government has effectively shuttered the area economy.
Summit County stands to lose more than twice the jobs as the national average, according to data presented by Jones from Chmura Economics and Analytics and JobsEQ.
All of this adds up to a bleak picture for both private and public sectors.
Leavitt offered the council historical context from the Great Recession while noting the two crises are different, especially in how immediate the economic shutdown has been in 2020. Recessions, by their definition, can take six months before governments realize they’re happening and start to react.
The recession hit the county for approximately 18 months, Leavitt said, from the fall of 2008 to the spring of 2010. But it wasn’t until five years after its onset, in 2012 and 2013, that revenues began to return to pre-recession levels.
In that period, Leavitt estimated the county lost $7.1 million in sales taxes.
In a staff report, Leavitt wrote that there are indications the COVID-19 economic crisis may be worse than the 2008 recession.
Additionally, Leavitt indicated expenses could increase as counties grapple with the pandemic. Respondents to a survey sent to an association of local government finance officials indicated they anticipated local governments and agencies would spend 1%-3% of their operating budgets within the first six months of the crisis. For Summit County, that’s $600,000 to $1.8 million.
He said the county has tried to ensure the Health Department’s funding is not reliant on sales tax revenues, which might be susceptible to a situation like this pandemic.
According to his report, county functions supported by sales tax revenues include public safety, public works, elected officials, human resources, information technology and facilities.
County Manager Tom Fisher said the county is already considering belt-tightening measures and will present recommendations to the council Wednesday.
Fisher has instituted a hiring freeze except for essential services and indicated he was looking at each opening carefully.
He has not considered furloughing or laying off employees, he said, options he will seek to avoid.
The county employs a total of about 380 people in a given year among seasonal, full-time and part-time positions, Fisher said.
He said he would be carefully reviewing compensation increases including merit raises, cost-of-living adjustments and 401k matching as potential areas for savings.
Councilors also suggested capital projects might need to be delayed, though they did not go into specifics.
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