A row of vacant storefronts on F Street in Old Town Eureka. | Photo by Andrew Goff.

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Four months into California’s partial economic shutdown, local businesses and workers find themselves in a precarious position. An untold number of businesses have gone under, and residents are filing for unemployment in record numbers.

Struggling businesses have been offered economic lifelines via the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act along with help from local agencies such as the Arcata Economic Development Corporation (AEDC), the Redwood Region Economic Development Commission (RREDC) and the North Coast Small Business Development Center. However, much of that assistance has come in the form of emergency or “bridge” loans, which leave small business owners saddled with additional debt at a time when many have little or no revenue coming in. 

The local workforce, meanwhile, is losing jobs by the thousands. From March, when the state and local shelter-in-place orders went into effect, through June, 18,996 people in Humboldt County filed initial claims for unemployment benefits. That’s roughly two-and-a-half times the number of claims filed throughout 2019 (7,654) in a third of the timespan.

Many of these newly unemployed locals have been receiving $600 weekly benefit checks through the CARES Act, but that subsidy is scheduled to end on Saturday. Analysts predict that sending out-of-work adults off such an “income cliff” could prove disastrous for families struggling to pay rent and other bills. (Lawmakers in Washington, D.C., have been haggling over another coronavirus bill that could include more stimulus checks, but so far no deal has been reached.)

Local economic development folks say there have been scattered success stories in Humboldt County, and emergency aid measures have managed to keep many businesses afloat. But in interviews with the Outpost they expressed concerns about what will happen over the next six months as loans become due, bills pile up and, by all indications, the coronavirus continues to wreak havoc on the economy.

Scott Adair, the county’s economic development director, said Humboldt County received a little over $13 million in CARES Act funding, and next week staff will take a proposed budget for those funds to the Board of Supervisors for approval. The proposal will include creating a series of grants under the name “Business Restart and Recovery Program.”

“We recognize there are a lot of emergency loan opportunities, but some [business owners] just can’t — or they’re hesitant to — take on more debt,” Adair said. “From a business perspective, it’s still borrowing money.”

If approved, this program will allow local businesses to apply for funding that doesn’t have to be repaid. “We’re hoping that, rather than laying off more people, businesses can tap into this funding to retain workers, even if it’s just [to conduct] deep cleaning or get them training.”

For the first 90 days of the economic shutdown, the county was tracking local revenue and job losses, permanent business closures, disaster loan funds and more. But Adair said those data, which were largely based on self-reporting from local businesses, didn’t capture the full scope of the economic impacts. Only 818 businesses completed the county’s survey — a fraction of the roughly 3,000 businesses that exist in the county’s unincorporated region and the 7,000-plus businesses total, including those within city boundaries.

During those 90 days, the 818 participating businesses reported 2,355 COVID-19-related job losses and $44,137,241 in lost revenue while partner agencies gave out 1,459 disaster loans.

“Now we’re exploring, as this becomes a long-term economic crisis, how can we implement better measures to measure the impact?” Adair said. “We’ve been looking at outside consultants and agencies who work with local governments.”

Staff can track various indicators such as sales tax revenues, transient occupancy taxes, unemployment data and more, “though that reporting happens in arrears,” Adair said. “It’s sort of a snapshot backwards.” Finding real-time data is challenging, especially when the situation can shift suddenly, as it did when Gov. Gavin Newsom reinstated some restrictions early last week.

Humboldt County’s unemployment rate stayed near-record lows last year, hovering around three percent, but it exploded in March and April, along with the rest of the state’s. Faced with this unprecedented demand, the state’s unemployment agency has been plagued with delays and flooded with complaints from people who can’t even reach the agency on the phone, much less get their jobless claims processed.

Meanwhile, Humboldt County’s civilian labor force shrunk by some 2,300 people, or about 3.7 percent, from April to June, according to preliminary data from the state’s Employment Development Division (EDD). 

“In a general way, you can think of the labor force trends as an indicator of public confidence in the job market,” said Randy Weaver, a labor market consultant with the Eureka office of the EDD. “I often refer to the labor force trend as the ‘hope index.’ Until the advent of COVID-19, both the state and Humboldt County’s labor force saw growth because job seekers saw hope for employment for themselves in the growing economy.”

Judging by the latest numbers, then, Humboldt County’s hope index has crashed, though Weaver said the labor force trend isn’t a foolproof measure of consumer confidence. 

Leila Roberts, director of the North Coast Small Business Development Center, said some businesses that have managed to stay open have struggled to lure back employees who’ve been getting those $600 CARES Act checks each week. “But the reality is, once that additional [benefit] expires, I personally am very concerned about what impact we’ll see on people’s economic security,” Roberts said.

The Smart Business Resource Center in Eureka has been helping local businesses fill vacant positions. The agency reported to the county that it provided employment counseling and guidance services to more than 3,700 people during the first 90 days of the shelter restrictions. 

Roberts said help is also coming from the recently formed COVID Economic Resilience Committee (CERC), a collaborative effort between public and private entities working to coordinate resources and respond to local businesses’ needs.

Roberts said she’s hopeful that the county’s planned business grant program can alleviate some of the financial pressure faced by local business owners, but she said she can’t imagine that even $20 million could begin to cover the amount of debt that’s been incurred through federal, state and local relief programs, not to mention traditional lines of credit and even credit cards.

“When the six-month or some other forbearance period is over — and businesses may or may not be operating — what happens?” Robert asked rhetorically. “One of the things we talk our clients through is [finding] that balance between securing emergency cash flow while recognizing that the future is uncertain.”

“That is the tough thing,” agreed Susan Seaman, program director at AEDC (and Eureka’s mayor). “Right now there are a lot of programs to help carry people through this initial stage, but we are very concerned about what happens when that stops.”

Her agency is working with the governor’s office to distribute 400,000 face coverings and almost 3,000 gallons of hand sanitizer to businesses on the North Coast, eliminating at least one expense. And she noted that the U.S. Small Business Administration has stepped forward to make six months’ worth of payments for borrowers who’ve taken out a 504 or 7(a) loan.

Both AEDC and RREDC provide loans to businesses that, for a variety of reasons, are unable to secure funding through traditional sources such as bank loans. Many are startups, just getting their ventures off the ground. “In that respect they feel more vulnerable,” Seaman said. “I think that some of those businesses that are pretty new, this is a lot to take.”

Many people have framed the COVID-19 pandemic and the government’s response as a choice between businesses and people — profits versus health. Seaman said the issues can’t be divided quite so neatly.

“I always say, there is nothing more personal than business,” she said. Her voice quavered as she talked about the emotional investments people put into their business ventures. “It’s heartbreaking when they stand to lose — I mean, they put everything into it. It’s a lot like having a kid. You worry about it day and night. Every accomplishment is a massive accomplishment. And when something happens, it just hurts you to your core.”

Gregg Foster, the executive director of RREDC, said many of the 60 or so businesses in his agency’s portfolio are struggling, but most have adapted and are surviving. 

“Our smaller retail clients seem to be holding on okay, but they’ve all let people go,” he said. Like others we spoke with for this story, Foster said he’s worried about what’s coming down the pike. 

“From a business perspective, our response both locally and nationally has been for these businesses to take on more debt,” he said. “This is an imperfect and in some cases deadly cure. … My hunch is that in the fall, November and December, there’s gonna be some crisis there. Capital dries up, [business owners] can’t borrow more and will just give up.”

Foster noted with a touch of bitterness that other countries in the world have managed to get the COVID-19 pandemic under control and are now reopened for business. 

“Internationally, the United States is a basket case,” he said, and like Seaman, he suggested looking beyond the people-versus-business dynamic. “Being pro-mask and pro-social-distance is pro-business,” he argued. “That’s the best thing you can do. Right now, the only method we have to control the virus is individual — personal responsibility. That’s the only tool we have. That’s how you can help business, be pro-business: wear that mask and social distance.”

Looking farther down the line, Foster said local economic development folks have been talking about possible ways to emerge from this crisis in a strong position. So many people have been working remotely, and some major corporations, including Twitter, have said employees can just keep on working from home, permanently. A portion of these people might prefer to live somewhere quiet and rural like Humboldt County, Foster suggested.

The pandemic hasn’t caused change; it’s accelerated it,” he said. “Are we ready?”

Adair, who always likes to emphasize the positive, said some local businesses have taken advantage of the shutdown to remodel, renovate or expand. 

“But it’s certainly still a crisis,” he acknowledged. “It’s one of the worst economic crises we’ve seen in our time.” Addressing it will require public-private collaboration, he said. “The government and banks alone won’t be able to resolve it. We have to work together to come up with a solution and find fixes. And there will be fallout and losses along the way. But what we can do is figure out how to build strong recovery.”

And in the meantime, wear masks and maintain social distance.