The 2020 pandemic has changed life for everyone, but people hold out hope for the future. Scientists around the world are testing an estimated 80 vaccine candidates, and several promising treatments are being tested on live patients.
Even so, the economic fallout from nearly worldwide shutdowns has yet to be fully assessed. The rising unemployment rates in the United States tell only one part of the story. According to some reports, actual layoffs, furloughs, and firings may be worse than the unemployment system is able to track, because millions of people are unable to file for various reasons.
Then, there’s the ripple effect, where businesses that have remained open throughout the shutdowns have relied on dwindling sales to keep their doors open. Eventually, many small businesses will run out of cash reserves, loans, and sales.
How long will it take for the economy to stop shedding jobs as governments lift their stay-at-home orders?
Las Vegas Suffered a Double Whammy
As a city that relies heavily on tourism, Las Vegas may take longer to recover from the pandemic than a manufacturing city like Elkhart, IN.
Most people have never heard of Elkhart, but it’s considered one of the leading centers of manufacturing among mid-sized American cities. As demand for products and components returns, factories will re-open or resume normal operations.
Even if tourists begin flocking to Sin City in normal numbers again, the city has already lost many months’ worth of critical revenue. And unlike many tourist destinations that depend on seasonal travel, in 2019 Las Vegas received about 3.4 million visitors every month.
Every month of shutdown across the country has cost the Las Vegas economy billions of dollars that won’t ever be recovered.
Contracting Jobs Should Recover Well
Regular maintenance work must continue for buildings, real estate, and infrastructure. Any work that had to be deferred because of shutdowns will be scheduled as soon as someone can pay for it.
If there’s a bright side to the timing of the pandemic, it’s that it occurred before most of the northern hemisphere began experiencing warm weather. Air conditioning systems are vital to desert communities and states like Nevada.
And some companies that were putting off necessary repairs and maintenance had an opportunity, provided they could cover the costs, to take care of things before re-opening for business.
Home and commercial construction did not completely halt during the pandemic. Recent forecasts predict that the Las Vegas housing market is still healthy. Construction workers and other specialists should see steady work for the rest of the year, barring an unforeseen downturn.
The Casinos Have Plenty of Money
Barron’s and USA Today looked at the casino industry in March and estimated that Las Vegas’ main revenue machines can survive anywhere from eight to 16 months with no revenue.
But Las Vegas casinos have been laying off employees to make those estimates realistic. In other words, having the cash on hand to stay in business doesn’t include paying everyone’s salaries. Essential employees have been paid through the crisis but many workers are on unemployment.
It’s hard to feel sympathy for wealthy investors who don’t have to worry about paying their rent or mortgage, but 2020 will mark one year everyone hopes they get back to business sooner rather than later.
The casinos have similar maintenance costs to many other types of businesses. They must pay taxes, keep the electricity on, pay for landscaping maintenance, cover insurance, mortgages, rents, and other incidental fees.
None of these costs have been covered by federal assistance for businesses. Every company that hopes to re-open has to find ways to pay these bills.
Shopping Center Futures Look Less Certain
America’s shopping mall industry was overbuilt. In December 2017, Axios ran a story quoting a Credit Suisse expert who estimated about one-fourth of America’s remaining malls would close within five years.
The “Retail Apocalypse” has seen the closure of 20,000 to 30,000 stores across the country over the past few years. Now, the pandemic has caused even more of them to close and no one knows how many will open up again.
The retail industry is divided among national chains, regional chains, and local businesses. All three sectors have been contracting because of competition from online retail, including drop-shipping, in-store pickup, and home delivery options offered by large and small online retailers.
The Small Business Administration’s emergency Payment Protection Program is already out of money, and thousands of businesses that were approved are still waiting for their cash. Even though many real estate owners are working with tenants to defer rents, Las Vegas may end up with fewer retail stores than at the beginning of the year.
Nevada’s Labor Force Looks Healthy
One long-term consequence of the high mortality COVID-19 brought to some communities is that many experienced workers have been lost to their local economies.
Nevada has been one of the lucky states with relatively fewer infections. If Nevada pulls out of the crisis sooner rather than later, employers won’t have to replace too many workers.
Every death hurts a family and at least one business. We mustn’t minimize the emotional and economic impact of these losses. But the point of the shutdown was to protect as many people as possible from future infection until we can find effective treatments and vaccines.
On the other hand, everyone who has yet to be infected remains as vulnerable to the disease as before the crisis began. Even one missed infection can start the whole process over again.
Nevadans must pay close attention to their health and err on the side of caution when feeling symptoms like coughing, fever, and difficulty breathing. No matter how unlikely it might be that someone contracts COVID-19, Nevadans will have to be vigilant and honest with themselves about how they are feeling.
Social Distancing Will Last a Long Time
Some businesses have managed to adapt to social distancing very well. This has been great for people buying groceries. It may be inconvenient to stand in lines waiting, or to follow one-way arrows in shopping aisles, but we need to keep our distance because an estimated 60% of infected people may show no signs of the disease at all.
While some people question the value of shutdowns and social distancing, this latest statistic proves beyond all doubt that until we can treat the disease, we must assume one of the two people standing closest to us is infected even if they show no signs.
Recovery depends on how long it takes the industry to find an effective treatment or vaccine. Gilead’s Remdesivir looks very promising and, if approved for widespread treatment, it may help end the long-term crisis for the world.
What Happens When Jobs Return?
Vegas may be in a better position than some cities to return to normal. But it could also be worse.
The tourists that a vacation and convention city like Las Vegas depends on are relying on savings more than ever just to pay their bills. They may defer their 2020 vacations until next year.
Likewise, many conventions have already been canceled or rescheduled. We don’t know how many of them will survive. Some organizations have begun experimenting with online conferences and that format may continue.
If the convention industry doesn’t recover quickly, that will mean fewer service jobs in Las Vegas.
By the same token, even though many casinos have re-opened, they still don’t know what to expect. If more tourist are hesitant to visit Las Vegas, then even the casinos will have to make some hard decisions.
Companies that can bring back their entire workforces are certainly trying to do so. But many businesses just barely scraping along have had to re-hire fewer employees than they let go.
What happens to those workers who can’t find jobs?
How long will extended and enhanced unemployment benefits be paid by the government?
While many people’s concerns are focused on the day-to-day, the long-term picture for Las Vegas remains clouded.
There is good reason to be hopeful that the industries the city depends on can survive this crisis, maybe even thrive somewhere down the road.
Thanks to government assistance, most of the unemployed should be able to cover housing and food costs for the foreseeable future. Those expenditures will help fuel the weakened economy. And even tourism may recover some of its lost vitality quickly.