The High Cost of the Coronavirus Shutdown

More than 150 well-known medical experts, scientists, teachers, nurses and others signed a letter last week urging this nation’s political leaders to shut down the country and start over in the effort to contain the coronavirus pandemic.

Contradicting Trump’s efforts to get the economy going again, they wrote, “The best thing for the nation is not to reopen as quickly as possible, it’s to save as many lives as possible.

“Right now, we are on a path to lose more than 200,000 American lives by November 1st. Yet, in many states people can drink in bars, get a haircut, eat inside a restaurant. . . and do myriad other normal, pleasant, but non-essential activities.”

The letter contends that the only way to halt the spread of the virus is to provide enough daily testing for everyone showing flu-like symptoms, hiring enough contact tracers to track all current cases and provide enough personal protective equipment (PPE) to keep every essential worker in the country safe.

In the meantime, they are demanding the continued closure of all “non-essential businesses” and limiting all restaurants to takeout service only. In addition, they are calling for all interstate travel to be banned, preventing everyone from leaving their homes except to get food and medicine or fresh air and exercise, and making the wearing of masks mandatory in all situations, even at home and outdoors. “If you don’t take these actions,” the letter warned, “the consequences will be measured in widespread suffering and death.”

RULE BY PANIC

The deliberately panic-inducing recommendations were made as the number of Covid cases reported nationwide topped 4 million, and the cumulative death toll continued to spiral upward towards 150,000 according to the tallies kept by Johns Hopkins University. CNN reported that it received an email from the federal Centers for Disease Control and Prevention (CDC) predicting that Covid “will end up as a Top 10 leading cause of death” this year, but still far behind heart disease and cancer which together account for more than half of total fatalities annually.

Another CDC report last week estimated that about 41% of US adults have at least one of five underlying medical conditions that puts them at significantly higher risk of severe illness if infected by the virus. They include chronic obstructive pulmonary disease (COPD), cardiovascular disease, diabetes, chronic kidney disease and obesity. Medical professionals have long recommended that individuals who suffer from one or more of these conditions should take extra precautions against possible exposure to the virus.

Nobody can deny that the risk of severe illness or death from the coronavirus is very real, especially for people who are elderly or who suffer from any of the other listed risk factors. But the very high economic, educational and social costs from the preventive measures the experts have recommended have been largely ignored by the media. It is politically safer, most Democrat elected officials seemingly believe, to keep rejecting the re-opening schools and houses of worship, insisting on the mandatory universal wearing of masks and banning all indoor public gatherings, even those planned with suitable precautions against spreading the infection.

EXTENDING THE EMERGENCY INDEFINITELY

New York Governor Andrew Cuomo, for example, has widely boasted about the results achieved by the draconian lockdown measures he ordered in March that halted the spike of coronavirus cases in New York City. Cuomo and other liberal Democrats were quick to order the lockdowns and slow to end them. At the same time, they have dismissed the often devastating, but sometimes hidden, economic and human costs of the shutdowns.

The one-time lockdown that was originally introduced by the White House coronavirus task force as a 15-day emergency measure needed to “flatten the curve” of hospitalizations and gravely ill patients on ventilators was first extended by 30 days. Cuomo then extended it indefinitely, crushing any prospects for New York City’s rapid economic recovery, inflicting irreparable damage on its small businesses, and imposing huge long-term educational and social costs on the city’s working class families and their school-age children.

In New York City, as long as Cuomo’s strict social distancing requirements remain in place, schools remain closed and indoor dining at restaurants is forbidden, the economic recovery of Manhattan’s business districts will be impossible. Social distancing makes the normal operation of high rise, high density office buildings impractical, as well as a return to full rush hour capacity of New York City’s vital subway system and commuter railroads. In direct response to this new reality, demand for prime office and retail space in the city has dried up, and is not expected to return any time soon.

NEW YORK’S UNIQUE QUALITIES ARE IN DANGER

The extended lockdown has closed many of the unique cultural and social attractions which made New York City a most desirable place for the world’s wealthiest people to visit and live in. All live performances in the Broadway theater district ended in March, and aren’t expected to resume until next year, at the earliest. The huge financial losses imposed on many of the city’s finest restaurants and most popular social venues make it unlikely that they will ever re-open.

Because medical science has gained a better understanding of how the virus spreads, the CDC and most pediatricians now say that it is not only possible but also necessary to discontinue some of the original school and business closures, until proper safeguards against infection are put in place. Nowhere is that need more urgent than in the heart of New York City, where the combination of high rents, forced closures and a decline of about 80% in the volume of daily commuters are rapidly wiping out large sectors of the local service and tourist economies, along with about 300,000 permanent jobs.

Real estate agents report that a large scale exodus of wealthy tenants from New York’s most luxurious apartments has been underway for months. Rents are plummeting. The chronic residential housing shortage which has plagued New York City since World War II has disappeared.

WEALTHY NEW YORKERS ARE “VOTING WITH THEIR FEET”

While the city’s wealthy have been able to flee the city for the comfort of their vacation homes, from which they can continue to work remotely, many of the city’s newly unemployed blue-collar and service workers don’t have that luxury. The luckier ones have been forced to relocate to cheaper housing in the suburbs. The unluckier ones have been driven out of the region entirely, or moved back into their parents’ homes.

The extended lockdown has had a crushing financial impact on thousands of small retail businesses and food establishments in the city and their employees. Previously, they had earned their livelihoods by serving the millions of workers who used to commute daily to their jobs in Manhattan’s business districts, many of whom are now likely never to return.

The disproportional impact of the lockdowns imposed by Governor Cuomo and New York City Mayor Bill de Blasio on the city’s economy is evident the federal Labor Department’s state employment report for June, which shows how many states have managed to keep the coronavirus outbreak largely in check without doing devastating damage to their economies.

NEW YORK’S ECONOMY SUFFERING THE BIGGEST LOSSES

Job losses in Northeastern states, where the lockdowns were imposed first, have been more severe than in the rest of the country. But New York stands out in the region due to the size and scope of the job losses it has suffered due to the stubborn refusal by Cuomo and de Blasio to ease their lockdown orders, even though the rate of new virus infections throughout New York State has fallen to near zero.

Over the last year, employment has declined by 15.3% in New York compared to 14.4% in Massachusetts, 13.4% in New Jersey, 11.8% in Rhode Island and 10.3% in Connecticut. According to the federal Bureau of Labor Statistics, New York has lost 52% of its leisure and hospitality jobs since June 2019 compared to 36% in Rhode Island and 34% in Connecticut. Manufacturing job losses in New York (12%) are more than double the rate compared to Massachusetts (5.4%), New Jersey (5%), Connecticut (4.9%), and Rhode Island (4.5%). Construction jobs have fallen by 16.8% in New York compared to 13.3% in Massachusetts, 9.5% in Rhode Island, 9.4% in New Jersey and 5.5% in Connecticut.

Cuomo doesn’t seem to want New York’s tourist economy to recover any time soon. He has required all travelers from 31 states entering New York to provide contact details to the state health department and he has threatened to impose $2,000 fines on all those who don’t self-quarantine for 14 days. Travelers from China, Brazil and several European countries who had helped to provide the city’s tourist industry with $45 billion annually, are banned from visiting. Before the March lockdown, the city’s tourist industry was expecting more than 67 million visitors during 2020, about one-fifth of them from foreign countries.

The restrictions have reduced the flow of summer tourists to New York State to a trickle. The occupancy rate in the city’s hotels, which is usually about 90 percent during the summer months, is now at 37 percent, with similarly devastating consequences in tourist areas statewide.

GYM OWNER DEFIES NEW JERSEY GOVERNOR MURPHY

New Jersey Governor Phil Murphy apparently abused his executive power to impose his will on the owners of the Atilis Gym in Bellmawr, New Jersey, Ian Smith and Frank Trumbett. In May, the two owners defied Murphy’s order that the gym must stay closed, even though they have gone far beyond CDC guidelines in restructuring the gym to prevent Covid infections.

The gym reopened in May, a move which led to an ongoing legal battle whether the governor’s order that non-essential businesses remain closed was constitutional. The gym remained open and receiving daily summonses violating the state order. Many people came by to offer support for the gym owners in their battle against the governor.

Smith claims that his records show that not one of the thousands of people who have visited and used his facility has tested positive for the virus.

The New Jersey Department of Health has made several attempts to enforce Governor Murphy’s order to re-close and lock down the gym, which the two owners had been able to overcome. Last week, the owners had the doors to the gym physically removed, and were prepared to live continuously inside the gym for two weeks before a county sheriff arrived and placed them under arrest for violating a civil order issued by a state judge at Murphy’s request.

In an interview with Fox News commentator Tucker Carlson, Smith insisted that Governor Murphy had exceeded his legal authority and said he is acting as a tyrant. Fox News legal analyst, former Judge Andrew Napolitano, stated that Murphy has no right to make up his own law on this matter and was acting on a personal whim. Napolitano confidently predicted that the arrest of the gym owners would be thrown out on appeal to a higher state court.

MANHATTAN’S SKYSCRAPERS ARE OBSOLETE

Parts of Midtown Manhattan still look like a ghost town, despite the fact that the city is now in Phase 4 of Cuomo’s re-opening process. Its skyscraper office towers are mostly empty. The crowds of gawking tourists and bustling commuters have disappeared from the sidewalks, and the formerly ubiquitous traffic jams on Manhattan’s streets are largely gone.

An article published last week by The New York Times depicted the stark sense of devastation which has overtaken one of the iconic buildings in Midtown Manhattan’s Rockefeller Center district. The former Time-Life Building, a 48-story skyscraper, which opened in 1959, stands on the west side of Sixth Avenue, across the street from the now closed Radio City Music Hall. The modernistic tower was designed as a workplace for about 8,000 office employees. These days, only about 500 people work there every day.

The offices in the building’s upper floor are mostly empty. Elevators are restricted to a maximum of four occupants. Employees are required to make reservations to enter the building in order to comply with social distancing regulations. At street level, the building’s upscale steakhouse, known as the Capital Grille, and a Men’s Warehouse clothing store known for custom-tailored business attire, have recently re-opened, after having been closed for months. They are both struggling to survive due to the almost total absence of foot traffic in what had been one of Manhattan’s busiest and most prestigious shopping districts.

The steakhouse used to be filled each day with well-heeled business customers who would frequently run up food and drink tabs of several hundred dollars on their corporate credit cards. The restaurant furloughed all of its bartenders and wait staff when was it closed in March. Since it re-opened a few weeks ago, its business has consisted of customers sitting at six tables set up on the sidewalk along West 50th Street, all served by a lone waiter.

A revealing measure of the extent of the area’s decline is the turnstile count of MetroCard swipes at the sprawling Rockefeller Center subway station whose three major lines connect it to lower Manhattan, Brooklyn, Queens and the Bronx. Last year, on the third Monday in June, 62,312 riders entered the station. On the third Monday of this year, the MetroCard swipe count was 8,032, an 87 percent decrease.

STREET LIFE IS DEAD

Another indicator of the drastic change in that area is the near total disappearance of the pushcart food vendors who had lent rich colors, accents and aromas to its street life. Before Covid, the mostly immigrant vendors crowded the sidewalks, hawking a variety of foods reflecting the diversity of the city’s ethnic culinary traditions, ranging from classic American hot dogs to shwarma to gyros, and everything in between. But on one recent Friday, a New York Times reporter could find only one hot dog vendor outside the former Time-Life building. The vendor, who called himself Ahmed Ahmed, said he had sold “maybe 10” hot dogs so far that day, whereas before Covid he would sell an average of 400, and because business was so bad, he might not keep coming back to his accustomed spot every day.

The office building’s decline started five years ago, when the Time-Life group was forced to downsize due to the general decline of the print journalism industry. After the company move to cheaper quarters downtown, the building was renovated and renamed, 1271 Avenue of the Americas by its owner, the Rockefeller Group. The tower re-opened last year and was rented out to new tenants, including Blank Rome, a law firm which formerly was based in the Chrysler Building on 42nd Street. One of the firm’s senior lawyers, Martin Luskin, said that one of the Time-Life building’s conveniences was its proximity to the famous Rainbow Room, a posh restaurant on the 65th floor of 30 Rockefeller Center, where he would enjoy entertaining clients. But today the Rainbow Room, also known as “30 Rock,” remains closed (outside dining is not an option), and Luskin conducts his meetings with clients from his home office in Westchester via video chat.

Upscale residential and hotel properties in the area, such as the 443-unit Executive Plaza on Seventh Avenue on West 51st Street, which had catered to wealthy tourists and business travelers, are also suffering from the emptying of nearby office buildings and the closure of Broadway theaters. Leasing agent Susanne Miller told the New York Times that the building’s owners are cutting their rents in the hope of attracting new tenants whose expensive leases elsewhere in Manhattan are soon to expire, and who are looking for a bargain in an area close enough to their offices to allow them to walk to work.

ANOTHER MANHATTAN REAL ESTATE CRASH

In interviews with the Times, veteran architect Robert A. M. Stern and Loews Hotels chief executive Jonathan Tisch compared the current downturn in Midtown Manhattan’s fortunes to the grim years of the late 1970’s, when the quality of life in the city was collapsing, crime was running rampant, and the chronically mismanaged city government was on the brink of bankruptcy. Stern noted that the city’s economy also “survived the market crashes of ’87 and ’89; it survived the dot-com crash of 2000. It survived [the financial crisis of] 2008.” But in each case, he added, that survival required the city’s real estate industry to develop new approaches.

Tisch said, “there are all kinds of challenges that are going to make our jobs of rebuilding tourism and New York City’s economy even tougher,” but he, too, was optimistic that, “we can survive this.”

The closest comparison these New York City business leaders could offer to the current Covid crisis was the 9/11 terrorist attack on the Twin Towers in 2001. But in that case, the city was able to recover quickly, inspired by a patriotic spirit fostered by Mayor Rudy Giuliani and President George W. Bush. All 23 Broadway theaters, for example, were able to re-open just two nights later, on September 13. Vigorous cleanup and reconstruction efforts downtown started immediately.

But this time, the sense of crisis surrounding the Covid virus is still being extended by Mayor de Blasio and the Governor Cuomo, despite the fact that it is now well under control in New York, hindering the recovery effort. Theaters are still closed, indoor dining at restaurants is still banned, and many of New York City’s most famous tourist attractions, such as the Statue of Liberty, the observation deck on the Empire State Building, and The Bronx Zoo have only recently re-opened to the public on a limited basis, but the city’s world renowned museums, which had been expected to re-open with the start of Phase 4 last week, are still closed due to Governor Cuomo’s last minute orders

That was a major disappointment for Brad Hill, whose company operates tourist concessions at the Ellis Island immigration museum and on Liberty Island. He had already spent about $60,000 to prepare their dining areas and gift shops to re-open in accordance with social distancing regulations. Now he is unsure whether the expense will pay off, and has said he is cutting back on his plans to rehire the 150 employees who usually work those concessions each summer, especially in light of the sharply reduced number of tourists expected to visit.

The destruction of the livelihoods of New York’s small businessmen and their employees must be added to the loss of more than 32,000 lives in New York due to the virus, and a nationwide total of 150,000 lives lost, now mounting rapidly once again.

THE HIGH COST OF PORTLAND’S CHRONIC VIOLENCE

New York is not the only great American city whose small business community is facing disaster due to the incompetence and cowardice of its local elected officials. A local Portland news outlet, The Oregonian, has documented the agony of that city’s downtown establishments since the night of May 30, when thousands of rioters ostensibly to protesting the cruel death of George Floyd in Minneapolis ran amok in Portland streets, breaking into and looting stores with no local police response.

Up until a few days before that night, most of Portland’s downtown was already deserted due to a coronavirus lockdown ordered by Oregon Governor Kate Brown. Tourists were afraid to visit while business offices were closed. Local traffic volume is down by an estimated 75% of normal compared to last summer, depriving downtown retail shops of the minimum number of customers they need to remain profitable. The only element of Portland’s downtown scene that seemed to be increasing was homeless encampments, further discouraging shoppers from venturing into the business district.

Now Portland’s agony is portrayed afresh every day in the national media by new footage of the previous night’s violent clashes between “peaceful protesters” and federal officers responding to their merciless attacks.

Eric Murfitt, the controller of Mercantile, a family-owned downtown clothing store that has been in business for 45 years, reopened his shop when the lockdown was lifted, but not for long. On the night of May 30, Murfitt watched the live video feed from his store’s video cameras showing looters trashing the premises, as calls for help to Portland police went unanswered. Cops who later came by to collect the videos have apparently made no effort to identify or arrest the vandals. Other local businesses like the Mercantile suffered similar damage. Their owners cleaned up their stores and boarded up their windows, but many will not re-open until they receive assurances from Portland police that they will protect them from future attacks.

Muffit says he supports the cause of racial justice, but has no sympathy for those who have used that cause to excuse their looting and violence. “The most important pressing thing on my mind is what city leadership is going to do to restore peace and order,” Murfitt said.

Meanwhile, Democrat leaders in Washington, such as House Judiciary Committee Chairman Jerrold Nadler, remain publicly in denial about the very existence of nationwide wave of anti-government violence. They keep spreading the big lie being promoted by the mainstream media that the nightly attacks by Antifa domestic terrorists in Portland are being provoked by the mere presence of federal personnel guarding the federal courthouse.

On Monday, Nadler refused to disavow the attacks. In a YouTube video interview with Austen Fletcher, Nadler insisted that the attacks are just a “myth that’s being spread only in Washington, DC.” The interviewer was amazed that Nadler continued to ignore the video footage seen daily which makes it clear that the protesters have been instigating the lawless violence by throwing Molotov cocktails at the building, tearing down its protective fencing, and trying to blind the federal officers with laser pointers.

A BOARDED-UP CITY

Nearly half of the stores in Portland’s downtown Pioneer Place shopping hub are closed. Most of the others are largely empty. They remain boarded up against the possibility of more looting attacks, so many potential customers don’t realize they are open for business.

Other downtown shop owners blame the lack of business on the negative image created by the widely publicized late night clashes between hundreds of violent protesters and federal law enforcement officials protecting the federal courthouse and Justice Center, a small area some distance from the main shopping district. During the day, local merchants claim, the streets of downtown Portland are safe, but their potential customers fear otherwise and don’t want to risk going there.

Adam Milne said he realized that he had to close his once popular eatery on July 9, after he finished business for that day with just $18.75 in total sales. As he walked through the empty streets of downtown Portland and its boarded-up storefronts, he realized that his old customers would not be returning anytime soon. He also said that many of his regulars began staying away when the number of homeless tents in Old Town spiked dramatically.

Portland Mayor Ted Wheeler has been in the national headlines in recent days for being caught up in the violent clashes between the protesters and federal officers, taking the side of the protesters and calling for the federal officers to leave. Wheeler’s spokesman has announced “Retail Renaissance” plan to clean up Old Town by “enforcing new guidance around tent camping and expanding local restrooms.  The Portland City Council has also voted to earmark $12 million in federal coronavirus relief money for direct grants to local businesses.

But Milne is not impressed. “I think eventually a plan will probably be created, but we need it fast,” he said. “Most of us can’t afford to pay our rent and be closed for six months while we wait for some sort of recovery. It’s a really immediate problem.”

MILLIONS OF SMALL BUSINESSES ARE DYING

Across the country, thousands of small businesses, such as restaurants, barber shops, gyms, and retail shops, rehired their fired workers beginning in mid-April, using money from the emergency $670 billion federal forgivable loan Payroll Protection Program (PPP), in the belief that the epidemic would soon be over. Now, many are closing and firing their workers again due either to shutdown orders from local and state officials or a lack of returning customers because the virus is now surging in many parts of the country.

Raymond Greenhill is the president of Oxford Information Technology Ltd., based in Saratoga, N.Y., which tracks financial data from all 32 million U.S. businesses of all sizes. He estimates that 1.85 million businesses nationwide were forced to close at least temporarily in March when the lockdowns began, and expects that the economic damage from the virus will ultimately result in the failure of at least 4.5 million American businesses, or about 15% of the total, by the end of this year.

Minority-owned small businesses have suffered a disproportionately high percentage of the total number of permanent closures because they typically have fewer financial reserves enabling them to weather the coronavirus setback and keep operating, An analysis of Bureau of Labor Statistics data found that 81% of black-owned businesses and 82% of immigrant-owned businesses that had been running in February were still operating in June, compared with 95% of other businesses.

Robert Fairlie, the economics professor at the University of California, Santa Cruz who performed the analysis, noted that black and immigrant-owned businesses tend to hire from their ethnic communities, so, “if the business owners are struggling and the employees are struggling, it’s a double hit to those communities.”

According to the latest available Census Bureau data, businesses with fewer than 500 employees accounted for almost half of this country’s private-sector employment. Small businesses also employ a majority of the workers in the restaurants and personal care segments of the economy which have been most affected anti-coronavirus social distancing and capacity restrictions.

The ebb and flow of the virus’ impact on small businesses is evident from Labor Department hourly worker data on roughly 500,000 employees in restaurants, retailers, and other Main Street businesses. It has shown signs of weakening again over the past month, after rebounding strongly in mid-April, when the PPP forgivable loan program took effect.

Overall consumer spending has weakened the most in small-business categories such as food and beverage, retail, health and grooming. It has fallen even more sharply where the rate of new coronavirus infections has been rising, such as Texas, Florida and Arizona, economist Michael Stepner of Opportunity Insights told the Wall Street Journal. “It’s hard for small businesses to weather the storm when they don’t know when this will be over,” he added.

FEDERAL EMERGENCY AID IS RUNNING OUT

As of July 21, about five million PPP loans, worth a total of $518 billion, had been granted by the federal Small Business Administration. But the program had been designed on the assumption that the steep collapse of consumer demand due to the virus lockdown would be followed by a swift and sharp rebound, the so-called “V-shaped recovery.” That recovery has been slower than expected, in large part due to the recent resurgence in new virus cases in dozens of states across the country.

As a result, many small businesses have already burned through their PPP loans, before their sales have recovered sufficiently to permit them to keep paying all of their normal complement of workers. Last week, Treasury Secretary Steven Mnuchin, who has been leading the administration’s Covid economic recovery effort said Congress should consider automatically forgiving PPP loans taken out by the smallest U.S. businesses and offer a second installment of forgivable loans to companies that are not yet able to keep paying all of their workers without additional help.

If Congress cannot agree to pass such an extension of PPP quickly, the rate of business failures will soon get much worse. Nearly one-third of the country’s small businesses reported to the Census Bureau at the end of June that they had less than one month’s worth of cash reserves on hand.

That is probably not enough to enable those companies to survive until the recovery fully kicks in. Many small retail and food companies have been struggling since April to remain open by switching to home delivery and curbside services, but with few exceptions, those strategies have proven to be net money-losing propositions for small businesses.

THE WORK OF A LIFETIME ENDANGERED

Chris Mittelstaedt, who owns a San Francisco Bay Area-based fruit and snack delivery business serving schools and offices called the Fruit Guys, saw his sales fall by 90% when the lockdown hit in March. He received $1.7 million in PPP loans and tried to keep his company going by switching to home deliveries and deliveries to hospitals, but it wasn’t enough to make up for the lost sales. After the PPP loan money was used up, he was forced to lay off nearly half of his 163 employees in July.

“We worked as hard as we could to bring business through the door, but the money ran out before the economy was able to catch up with it,” Mittelstaedt said.

It was a heartbreaking experience. “I was in tears… I spent every day for 22 years of my professional life building a family business with people I love,” but he either had to lay them off “or end up bankrupting the company,” he said. He stopped taking his own salary in February and still hopes to hire his workers back when the business fully recovers, but now thinks that might take as long as two years.

Republican and Democrat congressional leaders have just started to negotiate the terms of another stimulus measure to replace the initial emergency measures, such as PPP and a $600 weekly federal unemployment benefit that are now expiring. Congress has only a few working days left before it is scheduled to adjourn for its annual summer vacation lasting into September. At that point, many of the small business now teetering on the edge of bankruptcy will be gone forever.

APPLYING THE LESSONS OF THE PAST SIX MONTHS

But the current situation is far from hopeless. The original coronavirus emergency, which threatened to overwhelm our hospital systems and kill millions of Americans, was overcome. Some measures worked better than others, and with 20-20 hindsight, it is now obvious that some well-intentioned mistakes were made along the way.

Some valuable lessons have been learned from the coronavirus experiences over the past six months, with respect to medical knowledge about the virus, as well as the epidemic mitigation measures and emergency economic programs that were put in place.

The public health threat that the virus poses remains real. It is spreading rapidly across the country and to put it back under control, elected leaders must put the best interests of the American people above their political ambitions, by applying those lessons dispassionately.