Nine months into the crippling COVID-19 pandemic, the economy is girding for more pain, as the virus continues to spread at levels not seen since it exploded here in the spring.
As cases, hospitalizations and deaths rise, increased safety measures meant to slow the virus’ spread are being imposed. It’s a bitter pill that comes with familiar side effects. With more people staying home, business will suffer and any recovery will lose momentum.
There will be continued pressure on small and medium-sized businesses, the mainstay of Long Island’s economy, says Martin Melkonian, professor of economics at Hofstra University.
The professor says an accelerating infection rate could mean “further shutdowns in sectors that have already been badly bruised, such as hospitality, movie theaters and recreation places.”
Melkonian predicts we probably won’t see any relief until next year.
“Many are in deep trouble,” he said. “There are lost wages and some benefits are running out. There is pressure on consumer spending and household spending will continue to be down.”
Because of shrinking tax revenue, local and state governments have severe fiscal deficits, and Melkonian said state and local governments cannot run deficits.
“It will mean layoff of central workers, teachers, first responders and people who are crucial to the well-being of Long Island,” he said. “Those sectors are going to be hurt.”
Without substantial new stimulus aid from the federal government, Melkonian says the situation will remain dire.
“It has to be done and is not being done adequately,” the professor said. “Had the CARES program not been forthcoming, we’d be in a much worse state, but a lot of that stimulus has already disappeared and in this new phase thus far, we don’t see the necessary stimulus.”
As the second wave of the virus descends on the area, Long Island Business News spoke to industry leaders to ask what they are expecting. We posed these three questions:
What are you and your business doing as you confront the second wave; are you applying what you have already learned to what’s coming?
What would you like to see in terms of a new federal stimulus package for your business and for individuals, and will that be enough to forestall economic collapse?
Have state, local and federal leaders done enough to combat the pandemic and what do you want them to do now?
Here’s what they said:
Nassau County Industrial Development Agency
The Nassau IDA is continuing to distribute Personal Protection Equipment kits to small businesses so that unlike the first wave, they can have a supply of PPE prior to any restrictions. Working with County Executive Laura Curran and Hempstead Town Supervisor Don Clavin, we have distributed thousands of PPE kits to small businesses. We are now reviewing the possibility of working with BOCES and local school districts to get them PPE that will be needed going forward.
I think that the federal government must enact a stimulus package before the end of the year which incorporates stimulus checks of at least $1,000 for individuals and $5,000 to $10,000 for small businesses. There also should be national standards on restrictions and shutdowns to recognize the need to keep the businesses open and functional.
State and federal governments must do more to help struggling businesses. A federal program to provide grants, not loans to small and moderate sized businesses is critical. While low-interest loans are helpful, many businesses on Long Island are already needing to pay back earlier loans and increasing their debt by even a 1% interest burden will be devastating. Governments need to better recognize the impacts that restrictions and shutdowns have on the businesses and the overall economy. Safety and public health needs include the survival of each business and their owners and employees.
In mid-March, Gettry Marcus communicated with our professionals and clients that we would work remotely. It was a seamless transition for us from a technology standpoint as our firm had already been using cloud-based applications and communications tools like Zoom and MS Teams. For those who prefer to work from the office, which are a handful, they are required to follow the guidelines in our return-to-office handbook. We have learned when it comes to COVID-19, we must remain vigilant. We have also found that we can effectively service and meet our client needs as a distributed workforce.
The following initiatives, if implemented quickly, should go a long way to forestall an economic collapse from the oncoming second wave. Even with a vaccine, the economy will be impacted by COVID-19 for at least another 12 months, if not longer. We need to get through the next six months and the economy will get better.
Initiate a second $500 billion or larger SBA PPP Forgivable Loan program that covers 50% of payroll and other operating expenses for four months. These loans should be geared towards smaller businesses. Businesses can apply for a forgivable loan up to $1 million for the first three days, loans up to $2 million for the next three days and loans up to $3 million for the next three days, and so on until you reach the maximum loan amount or exhaust the total amount. This allows a smaller business a head start. All banks must participate in the program and not cherry pick their clients.
A business which received an initial SBA PPP loan can only apply for a second forgivable loan after nine days from the start of the second loan program.
Amend the IRS code to allow expenses that are related to any forgivable loan to be 100% deductible. It makes no economic sense to forgive a loan and not be able to deduct the associated costs. You are giving with one hand and taking it back with the other.
Cross-reference all SBA PPP loans against the IRS database to make sure applicants have filed tax returns before issuing any loans.
Extend the pandemic federal unemployment insurance to reinstate an extra $600 per week for three months. After the three months, give employees an extra $300 per week for three months if they are working and not collecting any state unemployment.
Issue residential rent vouchers for $1,600 per month for three months, or until a vaccine has been administered for three months, whichever is later, for unemployed people, which can only be used to pay rent, redeemable only by their landlord. Tenants who receive these vouchers can be evicted if they do not forward them to their landlord.
Federal, state and local leaders have not done enough to combat the pandemic. It is a difficult situation for everyone and there is no playbook to go by. Stop acting like children and realize no one has all the answers. We are all Americans and lives are at stake.
Initiate national or regional standards that are uniform and applied consistently, firmly and fairly to all people. Put some real teeth into the laws. Coordinate the federal, state and local supply of PPE and a regional vaccine distribution plan that avoids long waits and instills confidence so everyone feels comfortable in getting a vaccine.
Oxford & Simpson Realty Services
The hotel sector has been the hardest-hit sector in all of real estate, even retail. Hotels don’t have 10-year leases like office buildings or shopping centers. So as an owner, you feel the impact that next day. What we did in the first wave, we gave over 1,000 free rooms to visiting nurses and I would do that again in a second, because they came in and helped in a trying time, putting themselves on the frontlines to help us get through it.
We have learned a lot of things, but most of all we learned that you cannot be too careful. For example, going forward we would take people’s temperature before they came into both office properties and hotel properties, because you’re sharing elevators, you’re sharing space, the absolute minimum is the mask because we know what that does. We went out and purchased all kinds of equipment to sanitize the rooms. We put in special HVAC units that have more fresh air coming into the space.
The restaurant sector and the hospitality sector, which involves airlines, hotels, restaurants, have been unfairly hit harder, so I would strongly recommend a stimulus package. The jobs that are created off the hotel industry, when people travel here and the money they spend everywhere, has a multiplying effect that we’re all losing. So there should be extra stimulus for the areas that hit the hardest and put it in the form of an accelerated depreciation. And I would bring back the restaurant write-off expense for businesses, so that people are inspired to go out to restaurants.
So we know the government hasn’t done enough because they got caught with a pandemic that they’d never seen in their lifetime, so now they have the experience. With the experience, they should create some technology tied in with people’s phones that when someone tests COVID positive, there’s some sort of communication to all the people that are around them so they get notified and not leave it up to the individual that tested positive. There’s got to be better communication for public safety out there to share when something happens. The hospitals have the data and to me, that data has got to be passed on because too many people are carriers and then when people become spreaders there should be some sort of fines that are issued, not just shutting down a business and taking away their liquor license, because people are dying. If someone is in a challenged environment and you’re sharing the same space, I just think more enforcement is necessary to protect people’s lives.
Bohlsen Restaurant Group
It has been a tough year for everyone and the Bohlsen Restaurant Group has gotten through it with a mixture of pivots and positivity. We are always preparing for the business we can do while still being nimble enough to adjust when the landscape changes around us. Like any smart business, our response to the challenges has been multi-faceted. We have worked hard at being efficient and putting all our energy towards the core elements of our business: hospitality, retaining and supporting tenured employees, quality food and a safe and clean environment.
We hit the ground running in June because we were able to keep our management teams intact throughout the lockdown and spent several weeks together planning on how we could maximize outdoor dining. Now, we focus on preparation for any further restrictions we may see in the coming months. Unfortunately, take-out and delivery business for our high-end restaurants accounted for only 10% of normal weekly sales, which barely covers any of our operating costs. We cannot control what happens from here, so we will continue to do what we have done with success: operate in as safe a work environment as possible, shower our guests with hospitality and provide an amazing dining experience. I think the restaurant industry is in the unique position of giving people one of the only ways in which they can relax and enjoy themselves during this pandemic. It is the true ‘staycation’ for so many who cannot get away during COVID.
I think the most important element to any federal stimulus package is the money to keep the people in our industry employed or, if they are unable to work, to help them cover their bills. If our employees cannot work and they also cannot get the help they need, then they may be forced to leave our industry entirely and that would be the last nail in the coffin for many restaurant operators.
We continue to hope that politics will get out of the way of financial relief for our industry. The fact that they have not been able to agree on a second round of funding yet is very alarming.
I think the horse has left the barn for many restaurants in New York, meaning they have sustained enough economic damage that they cannot survive another shutdown without some major assistance from the state and federal government.
I am not an expert in the field, so I must go by what the experts say. If I look around, I will say we have not done a good job keeping the pandemic at bay, but I also do not know if there is a way to do that without shutting down the entire nation for an extended period.
I would love for the governmental agencies to find a way to allow businesses to remain open while providing financial aid to those at high risk, allowing them to stay home until this is over and those healthy enough to keep the economy off of life support.
Gina Coletti and Bob Fonti
Suffolk County Alliance of Chambers
Like in biblical times, this COVID-19 virus is like the horde of locusts taking out everything in its path. While we anxiously await the arrival of a vaccine here are some of the steps and plans that we are setting in motion:
Since the beginning, we worked closely with our business partners in government to create a coordinated plan in our “Just the Facts” Zoom calls. We have brought in school districts, authorities, nonprofits, real estate attorneys, foreclosure experts, bankers, housing representatives and medical experts who assist us with issues that may parallel the business challenges, supply chain experts, etc.
We employed a summer marketing intern to manage the distribution of 10,000 masks and thermometers donated by the governor’s office. We have identified local suppliers and established a list of local chamber members to provide supplies. We continue to communicate by sharing information with all the chambers by blasting and posting their updates and have established a centralized hub by providing a COVID-19 page on our website. Suffolk County provided an opportunity for chambers and small businesses to receive gratis PPE supplies.
We have reimagined curbside pickup in our “Virtual Downtown” with the creation of My Local Pickup. This free service is offered to our Suffolk County Alliance of Chambers members in good standing via a special My Chamber App promotion.
Although state, local and federal leaders have done a lot to combat the pandemic, in order for them to survive, we need them to continue to adhere to the three c’s – cooperation, communication and collaboration – with an eye on the bottom line and from the bottom up.
The next challenge is reclassifying the size of a small business. Currently, the federal and state governments classify small businesses as having 500 employees or less. The average small downtown business has 10 to 25 employees, mostly closer to 10 or less.
In many cases, small business disposal income is nonexistent and cannot compete with companies that have better bottom lines and more disposable income. They are living on vapors and extinction can happen without evaporation. Some businesses have pivoted and adapted, but the next shut down may be the last one. Help must be on its way, however, politics has played a role in the dysfunction in Washington and we are fortunate there was more local coordination.
Although the first stimulus package had good intentions, it was half-baked and missed important ingredients by excluding 501c-6’s, the chambers of commerce which are the support systems to the local small business community. They too need to have an equal opportunity to survive. They say all politics and business is local. We are partners that rely on one another at times like this. A quote from Benjamin Franklin said it best: “We must, indeed, all hang together, or assuredly we shall all hang separately.”
Long Island African American Chamber of Commerce
At the Long Island African American Chamber of Commerce, we have fully embraced the use of technology using such tools as Zoom and conference calls for meeting with our corporate partners and accessing resources for our members. Our small business owners are continuing to operate in a cautious manner utilizing social distance and Personal Protective Equipment to ensure safety for themselves in the customer base. We have learned from the first wave that we can continually engage with our customers and apply the proper practices to ensure everyone’s well-being, and at the same time expand our reach through the use of technology.
I would like to see a second round of stimulus for smaller businesses that may not have qualified for the last stimulus packages due to the size of their businesses. Many people do not know that a large number of businesses in America are sole proprietorships and did not qualify for relief under the Payroll Protection Program. The federal stimulus package for individuals is the only way we can get the economy on track. When millions of Americans are with income due to the nature of the economy; continued economic collapse will be unavoidable. We can’t predict when the economy will fully recover, but the next stimulus will be a great confidence booster for America.
I think local, state and federal officials can do more, but as we are well aware, resources have been strained on the state and local level. Hopefully, the local, state, and federal government will form better communication channels, because government has to work together when we have a crisis at the local, state, and federal level. As a country we have no choice but to do better and bounce back with the resiliency that our great nation has become known for throughout the world.
Aside from the obvious of working with our (commercial property) tenants, creating programs to assist them through this, we’re trying to keep our customers and employees safe. We encourage our tenants to be nimble and react to pivots that may enable them to keep revenue flowing, while being safety minded. We stay on top of information as it becomes available and get it to our tenants in case they haven’t heard of progressing developments of government assistance and scientific advancements. We’ve also spoken to financial advisors familiar with the government programs and are willing to talk to our tenants, some at no charge, to discuss best practices and strategy to manage their financial needs.
I found the first stimulus very helpful but was disappointed in the difficulty the smaller businesses had getting the funding and some of the rules that first came out that were changed, like the time to use the payroll assistance or the percentage allowed for expenses. I’m hoping there is another stimulus and the government listens to feedback the business community has given so funds get to the people that need it most.
I don’t think large companies with tremendous track records of profit should be able to tap into government funding equally to the small guy. They may get funding but only if they can prove the need. Emergency programs are meant to keep small businesses that line the streets of our communities open and get them to the other side of this pandemic.
I also hope there is something for landlords that can prove they have given assistance to merchants, as the real estate taxes and overhead must be paid even if rent collections are much lower. Landlords must help local merchants get through periods of large revenue reductions, so if they’re helping keep merchants alive, they may also need help.
Banks were helpful but only for very small time windows of three to six months, so maybe banks can be more helpful to landlords and receive some type of tax benefit from the government in a form of relief as a benefit for reworking mortgages. Banks will be made whole and will also make more interest on the money if they allow landlords a bit more time to repay the loans by adding a year to the back end of a loan.
I’d like to see some relief from the insurance companies since there is so much less exposure as traffic is reduced due to the pandemic, so is the risk of accidents and such. They could provide some credit from premiums paid during the last six months if there was no claim made by that landlord for the last 10 years on a property, or reduce the premiums in line with risk reduction in a thought-out formula. During the lockdown I had shopping centers with six stores that were totally closed. I would think logic says that the risk is reduced during that period.
I’m not going to pass judgment on our leaders, there is too much of that going on and it creates more divisiveness, but I would like to see a proactive course by our country’s leaders to join forces and allow the science to guide us. Based on proven science, put forward a plan and ask all Americans to join together. Here is what science tells us will help all Americans get back to the life we love. This plan is designed to keep the virus spread decreased instead of reacting to spikes, maybe this avoids lockdowns or shutdowns.
I would ask our president to meet with all governors and develop a plan that can allow for the best path back to normalcy. Then all politicians jointly in unison, issue a plea to ask Americans to take steps and not make it a political issue. If there is science behind it that proves this plan is the best way to get through the next year till a vaccine is safe and available. Then let’s all make the best efforts we can for the safety of our friends and family, but do it all together as one United States of America.
Randi Shubin Dresner
President and CEO
Island Harvest Food Bank
Unfortunately, with many crisis responses under our belt, Island Harvest Food Bank activated its Emergency Response Center in March in anticipation of a large number of people seeking supplemental food support due to the COVID-19 pandemic. Since then, we have assisted more than 300,000 families on Long Island through over 1,000 food distribution events conducted in partnership with federal, state and local government, school districts, businesses, and through our network of member agencies. Because of our ongoing response work, we can adequately forecast the need for food among food-insecure Long Islanders. After the 2008 recession, it took two years for the food-insecurity rates to peak and then another 10 years to return to their pre-recession rates. We expect the same if not worse now.
From a nonprofit perspective, we would like to see additional resources to purchase more perishable food, including fresh produce, dairy products, and meat, to be distributed among the populations we presently serve. Also, with so many people out of work or with reduced hours, and others who are home because they are impacted personally by the coronavirus, assistance directly to individuals on Long Island who are struggling to put food on their tables would be a great help, too, since many families face the additional burden of living in a region with an already high cost of living.
We’ve always worked cooperatively with our elected leaders, especially in times of crisis. In fact, so many reached out right away to offer us assistance. And, both our county executives have provided much-needed assistance in so many ways. Federal funding available through the Town of Hempstead has enabled us to create a specially designed home delivery program to provide food support to homebound Hempstead residents. Governor Cuomo’s Nourish NY initiative brings surplus agriculture and dairy products to help food-insecure New Yorkers while assisting the state’s agriculture and dairy business. The USDA’s Commodity Supplemental Food Program helps us to support low-income Long Island senior citizens. And another supports families with specially designed healthy food boxes with premier products that also support our nations agriculture industry. The federal government also lifted many of the burdensome requirements of the congregant aspects of the Summer Feeding Program in order to ensure that we can reach all Long Island children impacted by this pandemic. In fact, this act helped us to provide more than 165,000 meals this summer.
We sincerely hope that support at these levels from our elected leaders continue and hopefully grow as the unprecedented demand for supplemental food assistance is likely to continue throughout 2021 and even into 2022.
Adina Genn contributed to this report