Minnesota workers will feel a lot of pain and misery from the coronavirus — even if they don’t get sick.
It’s not really a question of which sectors of the economy get battered, “but what sectors are not going to be hurt,” said University of Minnesota economist Timothy Kehoe. “Because most are going to be.”
At the front of that list is anyone who gets close to people, like dentists or hairdressers. And anyone whose job involves large numbers of people getting together somehow — bartenders or pilots, for example.
Many such workers were already facing a loss of work. Then, Minnesota and many other states and cities ordered the closure of bars, restaurants and other places where people gather, until the threat of the coronavirus fades.
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Minnesota Department of Employment and Economic Development Commissioner Steve Grove said the shutdown decision made sense from both a health and long-term economic perspective.
“It is not an easy decision to close down any business, let alone the scale at which these closures will affect our economy,” he said at a news conference this week. “But the longer term economic effects of not doing so would be far worse.”
Minnesota’s unemployment rate has hovered around 3 percent lately. It’s sure to rise. The rate ranged between 8 and 9 percent with the Great Recession and the economic downturn of the early 1980s.
The hospitality sector may be the leading victim of COVID-19 now. But other sectors are in major trouble already, too — entertainment, personal services, travel, among them.
Hairstylist Danielle Harju stopped working even before the state shut down salons. She can’t keep much distance from people when cutting hair.
“I have young kids at home. They're out of school,” she said. “And, you know, we just don't know enough about this thing. I don't want to bring it back home.”
Lighting designer Nicole Fierce said everyone she knows in the live entertainment sector is without work with the cancellation of concerts, plays, corporate and other events that bring together large groups of people. That means a loss of work for sound and video crews, stagehands and many other people from concession workers to janitors.
“This is the scariest thing I've ever been through. I hate the idea that I've literally just lost 22 years worth of a career for at least the next three months,” she said. “My job is 100 percent surrounded by the idea that people gather. And without that, my career is nothing.”
Some industries are doing OK so far, and may not struggle much as long as the virus doesn’t get really out of control, said Myles Shaver, a professor of strategic management at the University of Minnesota’s Carlson School of Management.
“Sectors that might feel less pain or not as much pain initially, they're supplying the goods and services that we can continue to consume at a distance or they're supplying the goods and services that are really important for us to keep on functioning: food, medical supplies, energy, those types of things,” he said.
Many white-collar workers can get their duties done at home with a laptop, isolating themselves from the coronavirus. But many people still have to show up at work to get things done — whether they’re laboring in meatpacking plants, stocking grocery stores or making windows, pacemakers and myriad other things. Those workers are often in close contact with co-workers and other people, putting them at greater risk of catching and spreading the coronavirus.
And U of M economist Kehoe notes that it’s possible the government could order everyone to stay home.
“So, any industry where you can't work online and it's not deemed as essential, once they start putting in the lock down, all those industries are going to be affected,” he said.
Mark Wright, director of research at the Minneapolis Federal Reserve Bank, also expects tremendous economic hurt.
“It will affect many service aspects of the economy,” he said. “We're hoping that it will not spill over to affect manufacturing or agriculture or some other forms of services like financial services.”
He expects rough times at least through the middle of the year.
“Our hope is that it will return to something approaching normal by the end of the year,” he said.
Kehoe expects a recession but also sees a possible rebound this year, if the government provides appropriate economic help and stimulus.
“There's no reason we couldn't be rolling again by the end of the year,” he said. “That's what my hope is.”