Last week, state economists confirmed what Oregon Business & Industry and our members have been experiencing for several weeks now: The COVID-19 pandemic has hit the private sector incredibly hard. Indeed, economists noted that the current COVID-19 recession is the worst since the Great Depression.
Gov. Kate Brown’s decision to act early with her Stay Home, Save Lives orders, and closure of many businesses, was incredibly tough, and the economic impact has been huge. But, as we move into the reopening phase, we also have to say that, from the perspective of protecting public health, the governor’s orders appear to have been effective. Recent data from the Institute of Disease Modeling in Washington state show that her Stay Home order prevented nearly 70,000 COVID-19 cases in Oregon, and our state did not see our health institutions overwhelmed with cases, as happened in other states.
However, we cannot ignore the tremendous economic damage that has resulted from Gov. Brown’s orders. Thousands of businesses went dark for weeks, either because they were ordered to by the governor, or because they could not operate safely in a COVID-19 environment. As counties slowly reopen, businesses are struggling to get back on their feet and many are reopening with scaled back operations so they can meet the social distancing mandates from the state. Sadly, many have closed permanently, particularly in the hard hit restaurant and hospitality industries. Every corner of the state has felt the impact.
The most startling statistic of all: close to 400,000 Oregonians filed for unemployment in the two-month period beginning March 15, putting our unemployment rate at close to 15%. The vast majority of those jobs were in the private sector, representing employees of businesses that closed or cut back due to the Stay Home order. That number is more than twice the net job loss in the Great Recession a decade ago, and it represents families across Oregon struggling to get by financially in this scary time.
The next phase of the crisis will be equally tough. The staggering loss of business activity and private-sector jobs will translate to a loss of government tax revenue and inevitable cuts in public programs. Last week, state economists projected a $2.7 billion gap in the state’s current budget, due largely to a loss in personal income tax and business tax revenue, and they said the overall shortfall could be as much as $10.5 billion through fiscal year 2025.
Now is the time to remind state leaders that Oregon will do well only when Oregon businesses thrive and grow. And that is what we must focus on now – a thriving business sector – as we climb out of this COVID-19 recession.
Oregon is an income tax-dependent state. When jobs are lost and salaries disappear, people don’t pay taxes, and that results in less money for public services like education, social safety nets and public safety. We saw it happen a decade ago with the Great Recession: first, we lost private-sector jobs, and that was followed by a loss of tax revenue and subsequent cuts to public programs. It became clear then – and we need to remember now – that strong businesses with great jobs are the bedrock of our economy. In a crisis like this, we must focus on bringing those private-sector jobs back, so that everything — and everybody — gets lifted and all of our economy, the public and private sectors, can survive this crisis and ultimately thrive.
Over the next months, as we move from the reopening into an economic recovery phase, OBI will do its best to make sure that our state’s policy leaders understand that rebuilding Oregon’s economy must start with repairing the damage that’s been done to business and restoring our ability to employ Oregonians in quality jobs. We will advocate for programs to help all of you who have been hit by the impacts of this crisis, and push back on new mandates that will make it harder for you to get back on your feet.
The OBI board, and our 1,600 members, are looking forward to the day that we can put this crisis behind us. But we know that day is probably a long way off. In the meantime, we are committed to working with our state leaders and partners across Oregon to ensure a robust economic recovery, one that focuses first on building a strong business community.
Karen Vineyard is a market executive at Bank of America and has served as the chair of the OBI Board of Directors since 2020.