A year after Gov. Murphy shut everything down, N.J. businesses are still reeling – NJ.com

The teens just started rehearsal with a guest dance teacher who drove down from New York into Cresskill on March 13, 2020. Getting ready for the 10 performances lined up through the summer, every second spent practicing counted.

But at 3 p.m., owner Anneliese Burns Wilson received the sudden call to shut down The Conservatory of Performing Arts by 5:30 p.m. for a few weeks to fight the coronavirus pandemic threatening the Garden State. Another tap shoe wouldn’t be heard in the studio for months.

After being turned away from vital federal loans, thousands spent equipping the studio with covid-safety measures, and picking up a part-time job to pay the bills while waiting nine weeks for unemployment, Wilson finally reopened in September, with a maximum of three kids in class at once.

She wasn’t sure the business would survive the pandemic. At this rate, she’s doesn’t know if it’ll survive the next few months either.

“It’s kind of a waiting game. Everyone is like, ‘You made it through the hard year!’ but we’re really not going to be out of the woods for another year or more,” said Wilson. “I don’t see any instant turn around in the fall, and there’s still so many variables.”

Sunday marked one year since Gov. Phil Murphy made the drastic move to shut down all non-essential businesses, on the heels of closing schools, restaurants, gyms, malls, and casinos, to fight the coronavirus pandemic. The sweeping mandates upended life for New Jersey’s 9 million residents, and immediately ravaged the economy, carrying through the tumultuous year.

The fears that the public health crisis will turn into a financial crisis set in a long time ago, and now the picture is becoming clear.

“It’s going to take a couple years for this kind of rosy picture to be in full color,” said Luis Portes, economics professor at Montclair State University. “This isn’t a hurricane we need to rebuild, this is something that we can return to as long as businesses are not closed, and that is going to be the key difference.”

Thankfully, economists say, the state was in a very strong position before the pandemic hit. With the lowest unemployment rates in decades and a strong workforce, consumer confidence was high and entrepreneurs were making their 2020 plans.

Among the first states to be hit with coronavirus, though, Murphy took aggressive measures to fight the outbreak, often ahead of the rest of the nation. In turn, it led to skyrocketing unemployment rates early on that continue to linger as a wave of uncertainty has settled.

The pandemic knocked New Jersey off its course, and the state is having trouble bouncing back. The state’s unemployment rate peaked at a historic rate of 16.2% and was 7.9% in January compared to the nation’s average of 6.7%.

And the leisure and hospitality industry took the worst hit, losing over 26% of jobs, and devastating tourist-driven economies like Atlantic City, which had the highest unemployment rate in the country in July.

It won’t get better until restrictions start to lift and vaccines ramp up, economists agree. But the economic road to recovery will be longer than the medical path, and could get worse if it’s not treated as seriously soon.

“As the numbers improve and we are confident that we can reopen further without a relapse in our virus numbers, we will continue to lift the restrictions, as we have done in recent weeks,” said Darryl Isherwood, a spokesman for Murphy’s office. “But the pandemic is by no means over and we must continue to be vigilant so that we can remain open once we take those steps.”

2020′S IMPACT

Once it became clear restrictions would last beyond two weeks, business owners and workers went into panic mode in April, when New Jersey’s economy “fell off the cliff,” recalled Jim Hughes, a top economist at Rutgers University who has been studying the pandemic’s economic fallout.

“I was on an online presentation one day, and none of the graphs worked any more because the April decline was so bad that they had to manually fix them. That was so bad and it left most forecasters flabbergasted,” he said.

The state lost 813,000 jobs in March and April, compared to the 410,000 it gained over the last decade. By far, it was the biggest decline in recorded history. Roughly 50% of jobs have come back in one year.

Laid off and furloughed residents flocked to the unemployment website, and the unprecedented flood of claims was too much for the state Labor Department’s aging infrastructure to handle at time. Thousands went weeks without income, delays that dug deeper holes in the economy, Portes said.

While it was bad, Hughes said, a worsening recession or even potential depression was dodged thanks to trillions of dollars in federal stimulus relief flooding the economy, which “has to be a positive.”

The $2 trillion CARES Act set the tone for what kind of relief would be needed early on, and was critical in expanding unemployment benefits and creating business recovery programs like the Paycheck Protection Program that proved to be critical lifelines to some. Two more stimulus packages followed.

However, recovery may not look equitable without special attention. Some kept their jobs, were able to save money on unemployment or are credentialed workers looking for work and are faring relatively well in the recovery. Others, however, are in face-to-face industries who will have a harder time returning to work and finding income, often living paycheck to paycheck.

Since March 2020, 14% of parents of young children said they quit their jobs to help with childcare, with women six times more affected than men, according to a Farleigh Dickinson University poll. Experts say Latina and Black women have been hardest hit by job losses, and undocumented immigrants have been excluded from every form of state and federal relief, including unemployment benefits, even if they pay taxes.

“That’s going to be a long term problem because all these jobs aren’t going to come back, and we’re going to have to see how businesses alter in the post-Covid world,” Hughes said.

“This is beyond my wildest imagination and it’s all become a reality,” said Tom Bracken, president of the state Chamber of Commerce, reflecting over the last year in a recent interview. “A lot of people lost everything they had and it’s going to take a real concerted effort to get that back.”

HOW ARE BUSINESSES COPING

Deborah Engel, a mom of three in Maplewood, was one of the many small business owners fighting for survival. For five years, she ran Work and Play, a co-working and childcare center, but it shut down in an early round of coronavirus restrictions.

She planned to reopen for that summer, and accepted enrollment payments for May. Once the length of the shutdown became clear, she applied and received money from the Paycheck Protection Program, which kept payroll going for eight weeks.

By July, Work and Play ceased operations, mostly due to strict childcare regulations and lack of space for social distancing. Plans to expand at the beginning of 2020 turned to cautiously pivoting to private office space and settling for less revenue.

“Without us knowing any information up front or about what was going to happen, it seemed like it was time to say goodbye. The pandemic gave me time to get closure and realize, there’s no way to make it work right now,” said Engel, who made ends meet through the other business she owns, General Store Cooperative, which stayed open as an essential business.

It was far from the only store casualty. Nearly 34% of the state’s small businesses have closed compared to January 2020, according to tracktherecovery.org, among the highest in the nation. And a staggering 52% of leisure and hospitality-related business remained closed, compared to January 2020.

The shocking statistic came despite the $13.7 billion in PPP loans distributed to New Jersey business owners like Engel, but didn’t make enough of an impact to help many storefronts survive. Wilson said she applied for PPP loan six times, and spent upwards of 75 hours applying for Economic Injury Disaster Loans.

Portes, the Montclair economist, said “we wouldn’t have seen a decimation of businesses” if grants were distributed more quickly, or if the applications process wasn’t so cumbersome.

“It’s sobering, because it really just smacks you in the face what this economic impact will be. It’s one thing to drive down Main Street, and it’s another to see these numbers in front of you,” said Michele Siekerka, president of the New Jersey Business Industry Administration. “The longer this goes on, the more difficult it will become.”

The lag in reopening continues to hurt businesses and employment, she pointed out. One year after effectively shutting down, New Jersey just got to the point of reopening many businesses to 50% capacity on Friday. Besides New York City, it’s the only place where patrons can’t sit at a bar.

The “extremely long pause mode” led residents to driving to Pennsylvania or Connecticut where businesses have higher capacities, Siekerka said.

Bracken noted at the start of the pandemic, the governor’s office held weekly meetings with business leaders for feedback. But as time progressed, he said, there was less communication, and the business community is now learning about new restrictions and reopenings from press releases.

And residents still feel like they don’t know what the plan is, Siekerka added. Murphy has moved the goalposts several times, including when restaurants owners had the rug pulled out from under them in July as indoor dining restrictions set to be lifted were pulled back.

“People have their hands frozen on their wallets right now,” she said. “The predictability and certainty, it’s needed for any company that needs to make a major investment in their facility or bring people back. And when do they do that? We don’t know.”

Wilson said at one point, she was weighing how much money it would cost to close and dismantle mirrors at her dance studio versus how much money would be lost waiting for new guidelines and betting on reopening. She lost about 55% of her income in 2020.

Business groups criticize Murphy’s “one-size-fits-all” approach rather than regional reopenings. There’s no reason why a spike in Essex County should keep businesses closed in Gloucester County, they say.

And in a hearing Friday where small business owners voiced concerns to Republican lawmakers probing Murphy’s handling of the pandemic, GOP senators agreed business owners are being ignored when data could show reopenings could happen safely.

“A lot of decisions don’t make sense to me. I wish there was more explanation as to why different restrictions are put in different industries at the different times,” Wilson said. “There doesn’t seem to be any logical reasoning there, so we fall through the cracks.

The Murphy administration maintains the regional approach wouldn’t work for a small and densely-populated state like New Jersey, and will “continue to monitor the virus trends and open portions of our economy as the numbers dictate,” Isherwood said.

THE ROAD TO RECOVERY

Portes said that “little by little, every restriction lifted will make a difference. Even opening to 50%, that is really big and will eventually show how much we are dependent on (reopenings).”

With more help from the state and federal governments, New Jersey’s economy could be back to “normal” in two or three years, while it will take a longer time to get back to our January 2020 standing, economists say.

Still, it’s unknown what the new normal will look like as worries remain that another coronavirus variant could bring another lockdown.

Experts say the only thing that’s for sure is the restructuring and investments New Jersey will have to make to keep the economy afloat. And it’s going to take some out-of-the-box ideas to succeed in a post-coronavirus world.

There’s still some simple tactics, like investing in workforce development to give new skills to laid off workers, or using vacant space for nonconventional shopping, like medical facilities in dying malls, Hughes said.

Bracken pointed out that reallocating 1% of funds in the state budget could be a game changer to small businesses. Out of the proposed $45 billion budget, about $200 million would go to small businesses, while the chamber is calling for $500 million.

“I assure you that will be oversubscribed, and in recovery, you want everyone who needs something to get what they need, so no one is left at the curb,” he said. “This would be psychologically and financially very beneficial to recovery.”

Isherwood said the Murphy administration “fully understand the challenges our business community is facing,” and will be deploying more financial aid in the coming months on top of the $250 million distributed in 2020.

Another stimulus bill could come in the form of infrastructure investment, which take longer to spill over into the economy but generated more jobs and invests in upkeep, Portes noted.

Regina Egea, president of conservative think tank Garden State Initiative, also proposed the idea of a tax holiday as out-of-staters flock to the Jersey Shore, and residents stay in the Garden State out of fear or traveling.

New Jersey is going to be in even higher competition with other “secondary” metro areas now that companies are fleeing New York City’s high prices for smaller cities with lower taxes and cheaper overhead costs, Hughes added.

While Engel’s business model failed in New Jersey, she’s adamant she won’t be leaving the state. Engel says she’s soul-searching and considering what next business she can create.

“At the end of the day, I’m an innovator, and I do think about what I’m going to do next,” she said. “I don’t think this pandemic will change me in how risky I want to be in my business decisions, but having financial stability is much, much higher on my list.”

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Sophie Nieto-Munoz may be reached at snietomunoz@njadvancemedia.com. Follow her at @snietomunoz.

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