It’s tough to style hair over the internet.
So until customers feel comfortable in public spaces, Erin Freer will be struggling to keep her two Blo Blow Dry salons alive — which means serving a smaller clientele, maintaining pandemic protocols as much as possible and juggling finances.
Oh, and stoking an upbeat outlook in the face of potential disaster.
“I would hope that by August and September, the kids can be back in school, people will be going back to their offices and events will be starting up,” she said. “Maybe six months from now, we’ll at least be rounding the curve.”
Enormous economic damage has been done to households and businesses since the pandemic struck in March. Since then, there has been a strong but only partial recovery.
And now the outlook is roiled by three large uncertainties: A new administration that is proposing massive aid to businesses and households that may or may not be approved, a vaccination rollout with no clear completion date, and a virus that is killing thousands of Americans each day while mutating unpredictably.
The short term is bleak, said economist Abbey Omodunbi of PNC Financial Services.
“Things are likely to get worse in the Atlanta economy before they get better,” he said. “We expect conditions to start getting better by spring, but that is if we get the vaccinations ramped up at a good pace.”
Some obstacles to a recovery have been lowered. More than 90% of the state’s licensed child care programs are operating — up from just 30% last spring, according to Amy Jacobs, commissioner of the Department of Early Care and Learning. The state has dispersed $92 million in federal CARES Act funding to keep those centers afloat, she said. That means more parents can go to work.
But the big hurdle is still COVID-19 and with millions of vaccine doses still to go, a lot of businesses may not make it to the fall.
After plunging during the pandemic-triggered shutdowns, Georgia’s economy is still 93,200 jobs shy of its pre-pandemic level. The state has gained ground for eight consecutive months, but the expansion has been lopsided, with gains mostly in white-collar tech and blue-collar warehouse positions, while sectors such as hospitality and retail struggle. In a worrying sign, weekly jobless claims rose in January.
“The recovery is happening in two different worlds,” said former Federal Reserve economist Claudia Sahm. “Jeff Bezos and tech — they’re doing great. And most of the jobs that have come back are the high-wage jobs.”
In Georgia, jobs paying $60,000 or more have grown by 6%, according to the Opportunity Tracker at Harvard University. In contrast, the number of jobs paying $27,000 or less is down 20%.
That is why the housing market has been so strong, said Bill Adams, president of Adams Realtors in Atlanta. “The people being hurt are mostly renters.”
Potential homebuyers are often professionals working from home who realize they don’t need to be close to an office or who are suddenly anxious to have more space, he said. “I hear often about homes getting multiple offers. And I think 2021 will be a solid year for real estate.”
Some entrepreneurially minded people see opportunity.
Nathan Bufford, an Atlanta-based business consultant, says he’s had calls from many people pushed by the pandemic to start their own businesses — especially if they have an idea that works online.
The internet permits a startup — a graphic designer, a t-shirt maker — to take ideas to market with a minimum of investment, he said. “COVID has people thinking that they cannot rely on a nine-to-five job. It’s a mental reset.”
But the larger story is one of pain.
Since the pandemic began, the Georgia Department of Labor has processed more than 4.3 million applications for unemployment benefits. Roughly a half-million Georgians are still out of work and searching for a job.
More than half of Georgians making $50,000 or less a year lost income during the pandemic, according to a survey from the Census Bureau. Among people making $25,000 or less, about two-thirds lost income.
Steve Davis, 60, lost his job last summer on a merchant’s loading dock. He received several weeks of federal pandemic relief until that $600-a-week program ended. He applied for regular state benefits in September. The Columbus man was still waiting in late January for the payments — but his case needed reviewing and the Department of Labor has a backlog of tens of thousands such cases.
Meanwhile, Davis says he’s had a couple job interviews, but hasn’t heard back. “My sister has been helping me out. Otherwise I’d be homeless.”
He finally started to receive his payments a few days ago, he said.
The pandemic has been hard on small businesses and hard on companies that rely on in-person transactions — and hardest on those that are both.
About 170,000 Georgia businesses received about $14.4 billion in loans from the federal Paycheck Protection Program, supporting 1.4 million workers, according to the Small Business Administration.
For some it was a lifeline. For some, it was not enough.
Nearly 32% of the small businesses that were open in Georgia a year ago are not open now, although it was impossible to say how many were closed for good, according to researchers at Harvard.
Of the small businesses still open, more than half said their business had been hurt — 28% said badly — by the pandemic, according to a Census Bureau survey. About 10% said they had cut staff in the previous week.
Forced to shut down last spring, Total Row, a rowing-centric fitness studio in Buckhead, tried virtual classes, which was helpful to members, but not a sustainable business model, said co-owner Lauren Smith.
Now, it is open and offering smaller — and fewer — in-person classes.
Total Row is not eligible for PPP funds because it relies on contractors and doesn’t have the required percentage of W-2 workers, said Smith. But unlike many small business owners, she has been able to subsidize losses from another source of income — her work as an attorney specializing in divorces and mediation, which has remained steady.
Total Row had aimed for community rather than volume and after the pandemic hit, some members continued to send money, even though they weren’t comfortable coming to work out, she said.
“Right now, we are not looking to grow,” she said. “We are just trying to hang on.”
Big companies too have been pounded — especially those in travel, hospitality or bricks-and-mortar retail. But large firms often have deeper reserves, more access to credit and government support.
Coca-Cola, which lost millions of dollars in sales for events canceled by the pandemic, last month announced plans to lay off 17% of its employees. The company also said it is cutting 500 jobs in Atlanta.
Hyatt Regency and Omni Hotels have each laid off hundreds of workers in Atlanta.
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
Delta Air Lines, one of the state’s largest employers, suffered record losses last year. The latest round of federal pandemic funding includes nearly $2.9 billion in grants and loans to Delta. Still, the Atlanta-based company has cut 18,000 employees via buyouts and early retirements. About 10,000 other employees are on unpaid leave.
In late December, Congress passed an extension of pandemic jobless benefits. The Biden administration has proposed a $1.9 trillion relief package, with much of the money aimed at small businesses.
Help for small businesses is crucial to local communities, said Michael Starling, economic development director for the city of Dunwoody. “Every dollar is critical to them. And if we lose them, it will be difficult to get them back.”
Dunwoody is passing along $5.5 million in federal pandemic grants to 60 local businesses, including restaurants, nail salons and fitness studios, Starling said.
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
While only a few local businesses have closed, many are just scraping by and need help. And a rapid turnaround isn’t in the cards, he said. “I think the next six months will be similar to the last six months.”
Getting to the other end of the pandemic is what it’s about, said Freer at Blo Blow Dry.
A year ago, she had 35 employees. All were furloughed when non-essential businesses closed. She brought back most of them when she received a PPP loan, then went through another furlough when business didn’t pick up.
Over the past few months, she started bringing them back and is now up to about 26 employees. But none works as many hours as they want and Freer herself isn’t getting paid. Still, she’s managed to pay the rent each month.
“I’m an optimist and I want to believe things will get better,” she said. “I am not thinking that the next few months are going to be fun. But you look at controlling whatever you can. And you look at surviving.”
A lopsided recovery
Hot jobs, blue- and white-collar: The surge of pandemic-triggered online shopping has meant hiring in warehouses, trucking and other logistics jobs. The ability to work from home has meant a surge in demand for techies, especially software developers.
Not so hot, blue- and white-collar: The dramatic drop in everyday socializing and business travel has meant widespread cuts in hotel and restaurant jobs. The large number of companies who are working from home has meant less demand for office support staff.
Georgia small business and the pandemic’s effect
Severe negative impact: 27.5%
Moderate negative impact: 43.6%
Little or no effect: 21.5%
Moderate positive effect: 6.2%
Large positive impact: 1.2%
Georgia small business, previous week
Added employment: 2.6%
Cut jobs: 9.9%
No change in jobs: 87.5%
Census Bureau survey, January
How we got the story
AJC reporter Michael E. Kanell has chronicled the impact of the pandemic on companies, employment and the overall economy in a series of stories since March. This article draws on interviews with small business owners, workers, entrepreneurs, economists and government development officials, in addition to economic data that tracks spending, hiring and business openings.