Connecting state and local government leaders
The situation offers a window into the pressures the disease outbreak could create for local economies. Government officials are scrambling to come up with relief programs.
SEATTLE — From Chinatown to Pike Place Market and the University District, small businesses here are seeing fewer customers, and in some cases closing their doors, as the coronavirus outbreak stokes public health fears and disrupts people’s plans and daily routines.
“Everyone’s losing money, I believe, not only me,” said Ben Chen, who owns a noodle restaurant called Luosifen and two tea shops in the Chinatown-International District—a hub for the city’s Asian-American communities and home to an array of eateries and stores.
The new coronavirus has been dealing businesses like Chen’s a harsh financial blow.
Around 11 a.m. on Tuesday, he was alone at the counter of his tea shop on King Street. He didn’t have any customers and said he planned to close his restaurant temporarily beginning on Wednesday, estimating that business was down 80% to 90% since the virus began to spread. Business fell sharply after people started to die in the region from the new coronavirus, he said.
Rent for the restaurant alone is about $7,000 a month, according to Chen. He said he has about 10 workers and hadn’t worked out a plan with them yet for getting through the slowdown. He also explained that it wasn’t just labor costs and the other expenses required to keep a business open that were driving him to shutter his restaurant.
“The other thing that’s more important is the danger,” he said. “I don’t want my help to get sick.”
King County, where Seattle is located, saw some of the nation's earliest known Covid-19 cases. The region is now experiencing one of the worst virus outbreaks in the country, with the highest number of deaths associated with the disease. Most of those deaths are linked to patients at a nursing home east of Seattle.
As the nation buckles down for what increasingly looks like a protracted battle to control Covid-19, the respiratory illness that the new coronavirus causes, there are growing concerns about how bad the economic fallout will become for small businesses.
There are also questions about how far employers and the government will go to support hourly workers who see their shifts cut, or who adhere to quarantine guidelines that can call for people to stay home from their jobs and school and to avoid public places.
In Seattle, many of the office workers and other employees who would normally flood into parts of the city on weekdays are following government officials’ pleas to work from home, drastically thinning the ranks of potential customers who might eat lunch out or buy a morning cup of coffee.
At the same time, people are calling off travel plans, and event cancellations are piling up, as governments seeking to stop the virus’s spread adopt new restrictions on group gatherings.
Washington’s governor, Jay Inslee, this week announced a temporary ban on events with more than 250 people in King County and two neighboring counties. In King County, even smaller events will be restricted unless organizers take steps to limit “close contact” among participants.
Downtown Seattle Association president and CEO Jon Scholes said on Wednesday afternoon that his group knew of roughly two dozen businesses, mostly restaurants, in Seattle’s downtown area that had closed either permanently or temporarily due to the virus-driven slump in sales.
There’d been at least a couple hundred layoffs among restaurants, he said, adding that this figure was likely an underestimate and would rise.
Hotel occupancy rates had plummeted from around 75% to 40% by last week, Scholes said. But he added that the current occupancy rate is probably closer to 20% or 30%.
The Port of Seattle said Wednesday that plans had been scuttled for two cruise ships to stop in the city in early April. Cruise season here generates nearly $900 million in business activity and supports 5,500 jobs, according to the port.
“I think we’re in uncharted territory. We’ve just seen a severe reduction in business volume for, particularly, restaurants, retail and hotels,” Scholes said. “This is really unprecedented.”
The city of Seattle and the state of Washington are both offering programs meant to help businesses that are seeing their finances shaken by the coronavirus.
President Trump has pledged that the federal government will offer more assistance as well. And congressional lawmakers are working on broad legislation to provide economic relief.
Some small business aid has also materialized from within the private sector. Online retail giant Amazon, which is headquartered in Seattle, announced a $5 million small business relief fund to provide cash grants to businesses located near its offices that need assistance.
But around Seattle this week, business owners, especially those with restaurants, were ill at ease—concerned about covering rent and labor costs with cratering revenues. That said, at certain establishments, managers and workers did describe business as not too different from normal or said that sales were slower than usual, but had not collapsed entirely.
Around the corner from Chen’s restaurant, is Hood Famous Cafe + Bar. Anton Coleman, the manager, said business there was down about 7% from February. “Normally you would have to fight for a table in here,” he said. But on Tuesday morning, the small cafe was mostly empty.
Coleman said he’s not nervous about his own health working at a public-facing job, but that a concern for him and others is that there is an unfair stigma that exists around businesses in the Chinatown-International District. (The new coronavirus was first detected in China last year.)
Hood Famous employs about three bakers, 10 baristas, and a three-person night time bartending staff, at the shop where Coleman works.
He said it was still not at the point where management is discussing closing the store, or sharp cuts to employee hours. But if the falloff in sales dips to 15% or 20%, he said, it’s possible that could change and they may consider options like closing on certain days of the week.
“We will be kind of assessing week-by-week how things look,” Coleman said. “We’re trying to be mindful of our employees.”
At Seattle’s famous Pike Place Market, which draws about 10 million shoppers each year, Josh Cook was standing by one of the fish vendor stalls, where fresh seafood sat on ice. Cook is one of the workers who does a fish-tossing routine that is an attraction at the market.
“We’re still throwing fish,” he said. But he said that workers are not letting market visitors get in on the act and catch the fish themselves right now. “Just because we want to limit the risk.”
March, which falls between the winter holidays and the summer tourist season, is not usually a top month for the market. Still, Cook said it was clear that foot traffic was down. “We’ve been doing alright,” he said. But he added: “You can’t even lie, it’s definitely been slower.”
Nearby, at Left Bank Books, a collectively owned bookshop, Lindsey Baggette, one of the collective members said she and a coworker had just been discussing what would happen if people like themselves, who work at the store, start getting sick with the virus and they are forced to close the shop for some period of time. “We’re worried about it,” she said.
Although she did mention one possible upside for booksellers. “I’ve heard that people have been buying more books,” she said, “because they think they’re going to be stuck at home.”
Businesses in the University District, where the University of Washington’s main campus is located are also feeling repercussions from the virus, although some seemed to be on fairly solid footing this week.
The university—like others across the country—has asked instructors to hold classes and exams remotely. The policy went into effect on Monday and is set to last at least the end of the current academic quarter on March 20.
Isadora Moch, the manager at Red Light, a vintage clothing and costume store along the district’s main drag, said she hadn’t noticed a dip in business. “I feel like it’s getting busier,” she said. “Sales have been up.” But she added that the, “scare’s only beginning.”
For other businesses along University Way, the outlook was more dire. “We’re ready to close the door,” Jason Li, owner of the restaurant China First, said Tuesday. “It’s terrible right now,” he added. “If it continues getting worse, I have to shut down.”
Li said that his rent is close to $5,000 a month. Paying that expense and his workers isn’t easy under regular circumstances, according to Li. “It’s hard,” he said. Li said that an initial step for him might be to switch over to opening only around the weekend.
John Khalil, who owns Cedars of Lebanon, a small restaurant that serves up food like kebabs and falafel, has also seen business drop.
“You can see, really empty,” he said, gesturing to the vacant tables that filled his small eatery. Over the course of about 15 minutes, two customers did stop by for to-go orders.
As of Tuesday, Khalil said his plan was to stay open. He and his wife are the only employees, although his kids pitch in some as well. “I’m not going to run away,” he said. But he also noted that the longer sales are depressed, the tougher it will become for businesses like his to survive.
“We are praying and hoping that it will go away as soon as possible,” he said. “Otherwise, you’re going to lose your house, you’re going to lose your car payment, your going to lose your restaurant because you’re not paying rent. A lot of really bad things could happen.”
A small business relief package that Seattle Mayor Jenny Durkan unveiled earlier this week allows for a deferral of certain taxes and utility payments. It also calls for expanding a “small business stabilization fund.” Seattle’s Office of Economic Development says the city will funnel $1.5 million of one-time Community Development Block Grant money into that account.
Guidelines for the program say that businesses that fall under certain low- to moderate-income thresholds, have five or fewer employees, and meet other criteria will be eligible for grants of up to $10,000 from the fund that they can use to cover operating expenses.
But Durkan emphasized in a statement on Thursday that there’s only so much the city government can do on its own to smooth the economic damage that is materializing.
“Our small businesses have been devastated in recent weeks, and we know the crisis will be felt for months,” the mayor said. “It’s why I’ve been urging the president to declare a national emergency to provide even more relief to individuals and businesses.”
“We cannot do it without more resources from our state and federal government,” she added.
The state has also put together a business assistance program. It is waiving financial penalties for businesses that file tax reports or pay their taxes late due to complications with Covid-19.
And it is moving to make its unemployment insurance program more flexible.
For instance, if a business needs to shut down temporarily because an employee has fallen ill with Covid-19 and other employees need to be isolated or quarantined, workers may be eligible for unemployment benefits, and the business could get relief from related costs.
At the federal level, a law that Trump signed last week included provisions that could enable the Small Business Administration to provide an estimated $7 billion in loans to small businesses and other entities, according to a Democratic summary of that measure.
Trump is calling for an increase in funding for SBA loans to aid businesses affected by the virus and he's pushing for a temporary suspension of Social Security payroll taxes. The president has also put forward plans for the U.S. Treasury Department to defer tax payments for certain businesses that are being harmed by the disease outbreak.
Scholes, with the Downtown Seattle Association, said that for many small businesses, the prospect of an SBA loan is unlikely to be very enticing right now given the level of uncertainty they’re facing. “They’re not looking for more debt,” he said. “That’s not that helpful.”
“We’ve got to get cash into the hands of workers and small businesses,” Scholes added.
Li, the owner of China First, the restaurant in the University District, more or less agreed. “If you get a loan, you have to pay it back,” he said. “I think they have to directly send us a check.”
Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.