Seattle: The Unfolding Economic Impact of COVID-19
The Seattle-Tacoma-Bellevue, Washington metropolitan statistical area (MSA) is where the novel coronavirus pandemic gained its toehold in the United States. So, it’s not surprising that business leaders there have a notably bleak view of COVID-19's impact on their businesses.
In a proprietary survey of business sentiment conducted by ThinkWhy, 17.6 percent of Seattle-area business leaders say their company’s communications protocol during the crisis has been either poor or very poor. Forty-one percent say the coronavirus will have a negative impact on their business for years to come. Survey respondents also have gloomy views about the virus’s adverse impact on the local labor market, rating the harm at 7.5 out of a possible 10, with 10 being worst. They’re also skeptical about the ability of the U.S. economy to quickly rebound from the crisis, rating chances of that at just 5.3 out of 10.
Initial Force of COVID-19 Leaves Seattle with Bleak View
Indeed, business leaders in Seattle have the most negative view of all leaders in the six U.S. MSAs that ThinkWhy Research surveyed about the impact of COVID-19 on their communities. We collected data from 500 business leaders from March 14 through March 19. The businesses surveyed have from 21 to more than 3,000 employees and represent every major industry.
Prior to the onset of the pandemic, Seattle was ranked the 3rd healthiest market in the country on ThinkWhy’s LaborIQ™ Rankings Index. The high ranking was driven by strong job gain, healthy wage growth and the area’s highly educated talent. But then COVID-19 struck. In January, Washington state experienced the country’s first known case of coronavirus, as well as the first death. Gov. Jay Inslee issued a mandatory stay-at-home order on March 23, putting a stop to all but essential business. As of March 28, Seattle’s King County had 2,161 cases of coronavirus and 144 of the state’s 195 deaths.
Even large companies in the Seattle area whose organizations dominate industries have fallen victim to the pandemic. Boeing had to shut down its Puget Sound facilities on March 25 for 14 days because an employee died from the virus. Out of 70,000 local employees, 25 are confirmed to have COVID-19. Facebook has shut down its offices after a contractor tested positive, and Amazon and Microsoft are making employees work from home. Twitter and Google also are requesting that all employees able to work remotely do so.
Seattle Businesses Worry About Funding and Preparedness
ThinkWhy Research survey results highlighted that Seattle business leaders expect to be most negatively impacted by “Reduced Time and Attendance of Employees” (53.3 percent) and “Decreased Foot or Online Traffic” (47 percent). Interestingly, just 55.9 percent of the leaders say they plan to revise revenue expectations because of COVID-19, a surprisingly low response compared to that of business leaders in other metros. Unique among the six MSAs, Seattle leaders also rated “Increased Sales” as the outbreak’s top positive impact, perhaps because online retailers, like Amazon, are based in the area.
Seattle’s employment landscape is dominated by Trade, Transportation and Utilities, comprising 18.8 percent of the area’s total employment. The MSA is also a major technology hub – Microsoft calls the area home – with Professional and Business services making up 14.4 percent of its total employment. The U.S. Bureau of Labor Statistics put the metro’s unemployment rate for January at 2.8 percent. For the week ending March 21, though, the U.S. Department of Labor reported that initial jobless claims in Washington state skyrocketed to 133,478, up from 14,240 in the previous week.
Most Seattle business leaders agree that their companies are doing everything they can (73.5 percent) to slow the spread of the virus, compared to just 44.1 percent of them who say the government is doing enough. But only 55.9 percent of respondents say their company was prepared to handle the challenges posed by COVID-19. And along with the poor marks on their companies’ communications protocol from 17.6 percent of the Seattle respondents – the worst marks among business leaders in all the MSAs surveyed – just 60.0 percent state their company’s communications during the crisis has been good to very good. (The percentage in other MSAs was much higher.) This question is telling because it’s important for companies to communicate effectively with their employees and stakeholders, especially during a time of crisis.
“Our business strategy will not change, but our initiatives will be delayed,” a Seattle technology executive responded. “As a positive, this does show me that our company is able to communicate and take care of our employees in a time of crisis. It’s important to show them we care.”
Added the director of operations for a Seattle healthcare facility, “Keeping employees and patients safe will involve eliminating elective surgery for a time, closing clinic operations and replacing in-person visits with virtual visits and enhancing sanitation protocols. All of this negatively impacts margins, but it is the right thing to do.”
Asked to name the biggest negative business impact from the crisis, Seattle business leaders said, “Reduced Ability to Secure Loans.” It’s too soon to predict how that sentiment might be affected by the passage of the $2 trillion coronavirus relief package, which President Trump signed into law on March 27th. The measure includes $350 billion in federally guaranteed loans and grants to small businesses, as well as a $500 billion lending program for mid-sized to large companies.
Results of the ThinkWhy Research survey from the other MSAs profiled are listed below:
- San Francisco-Oakland-Hayward, California
- New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Las Vegas-Henderson-Paradise, Nevada
- Miami-Fort Lauderdale-West Palm Beach, Florida
- Los Angeles-Long Beach-Anaheim, California
ThinkWhy continuously monitors and forecasts industries and MSAs to measure the impact on the labor market.
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