Category Archives: Business and Economy

Stay-at-Home Costs vs. Health Benefits

By Dick Hall-Sizemore

There is a fierce debate going on in this country.  One side is anxious to ease the restrictions imposed on the population in an effort to slow the spread the coronavirus and “open up the economy.” The other side, concerned about a resurgence of the disease and related deaths, wants to go slower.

Underlying this debate is the question of the economic damage resulting from the shutdowns and stay-at-home orders.  The President says, “We cannot let the cure be worse than the problem itself.”  Many commenters on this blog voice the same sentiment.

Implicit in these arguments is the assumption that, at some point, the cost to the economy outweighs the value of the lives lost. No one really wants to admit this because that would be putting a value on human life, which is morally anathema. Continue reading

Latest Data Supports Continued Reversal of Shutdown

The red line shows the number of confirmed and suspected COVID-19 patients in Virginia hospitals. Graph credit: John Butcher

by James A. Bacon

We’re a week into Phase 1 of relaxing the COVID-19 lockdown, and there is no sign of an acceleration of the virus. To the contrary, the virus seems to be receding. It may be too soon to reach definitive conclusions — there is a one- to two-week lag between an infection, the display of symptoms, testing, and hospitalizations — but so far, all signs are positive.

The most reliable indicator is COVID-19 hospitalizations, and the daily number is trending down strongly, as can be seen in the graph (courtesy of John Butcher) shown above. Since May 15, the count of confirmed and suspected COVID-19 patients in Virginia hospitals has declined from 1,511 to 1,384. Meanwhile the number of new hospitalizations yesterday dropped to 36 — the lowest number in 25 days. The number of deaths remains significantly below previous peaks.

The one disconcerting note in the numbers comes from nursing homes. The number of nursing home patients confirmed to have COVID-19 has increased markedly over the past week — from 1,427 five days ago (the first day for which the numbers were reported) to 1,886 yesterday. Whether that reflects an increase in testing at long-term care facilities, an increase in the number of nursing homes sharing data, or an actual spread of the virus is impossible to determine from the published data on public dashboards. Continue reading

Pass the Coppertone

Virginia Beach, 2016. Photo credit: Kerry Dougherty

by Kerry Dougherty

Virginia Beach is back.

Well, sort of.

At his press conference yesterday Gov. Ralph Northam bent to pressure from irate local politicians, desperate resort businesses and an increasingly disgruntled public by announcing that city beaches could reopen in time for Memorial Day.

“This is the tonic people need right now,” an ebullient Beach Mayor Bobby Dyer told me last evening. “People have been confined for months. Beaches to the north and south of us are open. This had to happen.”

Northam had promised a decision on beach openings on Monday. But Dyer became worried Saturday night when he saw a newspaper photo that seemed to show throngs of people shoulder-to-shoulder on the beach.

“I was down there from 2 to 4 on Saturday and it wasn’t like that,” Dyer said, explaining that when shot with a long camera lens, perspective on crowd size can be distorted. Continue reading

A Sad Serenade

I met Alex in the Kroger parking lot this morning when I was making my weekly grocery-store run. It was a beautiful sunny day. Joggers, walkers and cyclists were out everywhere, and Alex was serenading passers by with his accordion. A home-made sign said he was out of work and needed money for rent. His wife and little girl were sitting nearby in the shade. I tossed him a dollar and he briefly played a sad song.

Alex has a slight accent, and I asked him where he is from. Moldavia, he said, a former republic of the old Soviet Union bordering on Romania. He plays the piano for a living and he worked at restaurants. Now the restaurants are closed, he’s unemployed, he applied unsuccessfully for assistance from social services, and he’s out of money.

If I had had a notepad on me, I would have gone all journalist on him, but I didn’t, so I didn’t. But he did allow me to take his photo (which I botched by letting the sun shade his face). Let Alex from Moldavia serve as a reminder of the hundreds of thousands of economic victims of the COVID-19 epidemic and the business shutdown put into place to fight it. We don’t see many of them. They usually don’t advertise their presence. But they’re out there. We cannot forget them.

— JAB

Northam’s Indefensible Philosophical Premise

by James A. Bacon

Virginia tax revenue fell $700 million in April compared to the same month a year ago, a 26.2% drop. That decline, of course, reflects the nose dive in the economy that generates tax revenues. In response to this news, according to the Richmond Times-Dispatch, Governor Ralph Northam made a telling comment yesterday that sums up his approach to the COVID-19 epidemic:

As anticipated, this is the first monthly revenue report to reflect the significant negative impacts of COVID-19 on the health of our commonwealth’s finances. We are facing an unprecedented health and economic crisis, and we must combat this virus before we can begin to repair our economy. My top priorities continue to be protecting the health and safety of all Virginians.

Northam is hardly alone in holding these sentiments. They are shared by most Democratic elected officials, a few Republicans, almost the entirely of the news media, and much of the public. The belief that “we must combat this virus before we can begin to repair our economy” is driving public policy in Virginia and many other states.

Thank you, Governor, for stating the philosophical principle at stake so plainly.

There are so many flaws in this reasoning, it’s hard to know where to begin, but I shall address the most obvious. Continue reading

Fear, Uncertainty, Doubt, and the Domino Effect

Image credit: New York Times

by James A. Bacon

More than 600,000 Virginians have filed for unemployment claims since mid-March, when the COVID-19 epidemic started hitting Virginia and Governor Ralph Northam’s emergency decrees shut down large sectors of the economy. That’s roughly one person out of seven in the state’s workforce. After the first wave of closings, the number of new jobless claims has been shrinking. One can hope that we have seen the worst. Once federal helicopter money floats to earth and Northam shifts to a cautious, step-by-step rollback of the virus-control measures, one can hope, businesses will start rehiring.

Richmond economist Chris Chmura expects the national economy to contract at an annualized rate of 18.4% rate in the current economic quarter, another 1.0% in the third quarter, and then to begin growing again. “Employment at utilities, professional services and company headquarters should be back to 90% of pre-coronavirus levels by the fourth quarter,” she writes.

I hope Chmura is right. Judging by the snapback in the stock market, a lot of people seem to agree with her. I’m not counting on it. There’s a lot more bad news to come out.

That bad news comes in two categories — events we can reasonably predict, and events we don’t see coming. Let’s start talking about the kind of news we can predict. Continue reading

Shades of “Shovel Ready”

Joe Sparatta

by James A. Bacon

Unemployment in the United States is the highest it has ever been since the end of the Great Depression. But good luck luring people back to work, at least in the short term. Many people can make more money on unemployment than when they were working.

Joe Sparatta, chef/owner of the Heritage and Southbound restaurants in Richmond, says his line cooks are making $960 a week on unemployment. “None of them want to come back because I can’t pay them that,” he told the Richmond Times-Dispatch. “I don’t blame them.”

The RTD explains:

Unemployment benefits vary based on an individual’s pay while employed, but the typical benefit is on the higher end, which maxes out at $378 a week. Under the CARES Act, the federal government has kicked in an additional $600 a week for workers through July, making the maximum amount available to laid-off workers $978 a week for up to four months.

For many Richmond-area restaurant workers — and workers of all fields — bringing in what amounts to just over $50,000 a year is more money than they’ve ever made.

Paying people not to work is a classic case of government policy making things worse. This moronic measure will go down as the COVID-19 recession’s analogue to “shovel ready projects” in the past recession. Actually, it’s worse.

Continue reading

WTJU Podcast: COVID-19 and the Economy

By Peter Galuszka

Here’s is the twice-monthly podcast produced by WTJU, the official radio station of the University of Virginia. With me on this podcast  are Nathan Moore, the station general manager, and Sarah Vogelsong, who covers, labor, energy and environmental issues across the state for the Virginia Mercury, a fairly new and highly regarded non-profit news outlet. Our topic is how Virginia is handling the economic fallout from the COVID-19 pandemic.

Will Northam’s COVID-19 Restrictions Wreck Virginia’s Economy?

by James A. Bacon

Governor Ralph Northam is one of four governors in the United States to be slapped with an “F” rating by the Committee to Unleash Prosperity, a think tank associated with supply-side economists Stephen Moore and Art Laffer.

Northam joins Governors Phil Murphy of New Jersey, Tom Wolf of Pennsylvania, and Tony Evers of Wisconsin, in the estimation of the group, for putting their state economies, state budgets, and even state populations in peril through continued shutdowns. 

The report assesses how the 50 governors have handled the shutdowns by measuring how restrictive and damaging their edicts have been for their state’s economies. States the report:

It may not seem of much consequence whether a state has opened in April or a governor like Ralph Northam has decreed that the Commonwealth of Virginia will stay closed down to the middle of June. But the start date emphasized in this study matters a lot. A recent study by Laffer Associates finds that states that open up earlier will have substantially better economic recoveries than states that stay closed for another month or so. …

Continue reading

Screwing Workers On Safety and Liability

A GRTC bus driver in better times

By Peter Galuszka

At 4:30 a.m. on April 27, about 100 workers of the Greater Richmond Transit Company — half of the total – failed to show up for work.

Worried about the health of its membership, Local 1220 of the International Amalgamated Transit Union demanded additional safety measures such as full personal protection equipment, time and a half hazardous pay, limits on the numbers of passenger and testing.

GRTC management threatened to fire workers who stayed away from work but agreed to talk. A resolution may come at a May 19 board meeting.

Indeed, stories are showing up throughout Virginia and across the country as workers most likely to be exposed to COVID-19 often have the least protection and no guarantees their employers will provide testing, hospitalization and sick pay.

In Timberville near Harrisonburg, workers at a Pilgrim’s Pride poultry plant worry that they are required to work at less than six feet –- considered safe distancing –- from each other. In Norfolk, non-union workers at a General Dynamics ship facility were required to do electrical work until they refused, citing exposure threats and a death. Continue reading

Free Western Virginia from a Shutdown Designed for Eastern Virginia

Map credit: Virginia Department of Health. Click for larger image.

by James A. Bacon

The impact of the COVID-19 virus in Virginia varies widely by age and medical condition, afflicting some groups far more than others. That foundational reality gave rise to a key principle, which, I suggested four days ago, should guide Governor Ralph Northam as he deliberates about how, and how fast, to roll back his emergency shutdown measures: Public action should focus on protecting the most medically vulnerable members of society while allowing the least medically vulnerable to return to normal life and work as quickly as possible.

Today I explore a second principle: Recognizing that the virus is far more prevalent in some regions of the state than others, emergency restrictions should be tailored to the unique conditions of each region. Measures that are suitable for Arlington (1,106 confirmed cases) are not suitable for Dickenson County (zero confirmed cases).

The map above, taken from the Virginia Department of Health COVID-19 dashboard, shows the incidence of the virus per 100,000 population. (Click here to view the interactive map directly and view the data for each locality.) The virus has penetrated the population of the eastern half of the state to a much greater extent than the western half. Virginia’s Appalachian counties in Southwest Virginia, especially those off the Interstate 81 corridor, have barely been affected.

It is legitimate to ask, as several Southwestern legislators have, why draconian lockdown standards that may (or may not) be appropriate for the eastern part of the state should apply to western Virginia where the disease is far less widespread yet the economic pain is just as prevalent. Why kick these counties when they’re down? Continue reading

Needless Ban on Elective Surgery Shrank the Economy

by Hans Bader

The economy shrank in 2020’s first quarter by a rapid 4.8% rate. Economists say the second quarter will be far, far worse, thanks to coronavirus. The virus’s spread triggered state lockdowns closing or restricting many retail establishments. Even before the lockdowns, fear of the virus shrank sales by discouraging people from leaving home.

But that wasn’t the biggest single reason the economy shrank. No, the biggest decline was in healthcare, due to state governments’ bans on elective surgeries and other elective procedures. The healthcare sector is 18% of the economy. As University of Michigan economist Justin Wolfers notes, “Nearly half” of the shrinkage in the economy was due to “the delaying of elective procedures. It’s a strange reality that in the midst of a pandemic, we have a healthcare-led recession.” How ironic!

Statewide bans on elective surgery never made any sense. In cities and counties hit hardest by the coronavirus, it can make sense to temporarily delay elective surgeries to make beds available for coronavirus patients. But it doesn’t make sense to ban elective surgeries in a state’s other regions, where the coronavirus hasn’t really spread yet. That financially devastates hospitals. Banning most surgeries leaves hospitals without the revenue they need to operate, and forces them to lay off some of the very medical staff they may need to treat future coronavirus patients. Continue reading

Why Northam Is Such An Important Governor

By Peter Galuszka

This is a bit like throwing chum at a school of sharks, but here is my latest in Style Weekly.

I wrote an assessment of Gov. Ralph Northam that is overall, quite positive. My take goes against much of the sentiment of other contributors on this blog.

They are entitled to their views but, to be honest, I find some of the essays shrill and not really fact based. If Northam wants to delay elective surgeries at hospitals for a week or so, some want to empanel a grand jury.

An acute care health facility in Henrico County becomes one of the most notorious hot spots for coronavirus deaths and it is immediately Northam’s fault even though the care center has had serious problems that long predated the governor’s term in office.

He’s a trained physician who served as an Army doctor in combat during the Iraq War yet he is vilified as being incompetent and incapable of understanding the COVID-19 pandemic.

It’s like the constant repetition of the “Sins of Hillary” on Breitbart and Fox News about emails and Benghazi.

Like him or not, Northam is bound to be one of the most consequential governors in Virginia history given the gigantic problem of the pandemic. He’s not a showboat salesman like Terry McAuliffe nor a smarmy, small-time crook like Robert F. McDonnell.

Anyway, here’s the piece.

Hey, It Could Be Worse

Click for more legible image.

Between March 4 and April 18, unemployment claims in Virginia amounted to 10.9% of baseline jobs, according to this map issued by the Virginia Economic Development Partnership. That’s horrendous, but things could be worse. The U.S. average is 14.3% — and the Old Dominion’s job loss is less than half that of Michigan’s at 23.9%. (With the evaporation of 21.3% of Georgia’s jobs, you can better understand why the Governor Brian Kemp is taking big risks to roll back the shutdown and salvage the economy.)

VEDP President Stephen Moret provides this explanation for the Commonwealth’s less-dire circumstance: “Virginia is doing better than most other states in large part because we have a larger-than-average proportion of our total employment in professional jobs and federal government-related jobs that are less sensitive to social distancing policies.”

— JAB

Notes from the Right Wing Echo Chamber

By Peter Galuszka

On Wednesday, I was standing next to the Capitol grounds in Richmond watching brightly decorated cars and pickups drive on 9th Street, their horns blaring.

I was attending the drive by protest rally on assignment for Style Weekly and happened to speak to Jason Roberge, a Spotsylvania County resident who is one of several Republicans hoping to oust U.S. Rep. Abigail Spanberger, a former covert CIA officer who represents the 7th Congressional district.

Roberge was there to protest what he says is Gov. Ralph Northam’s “terrible job” in temporarily shutting down businesses to prevent the spread of the COVID 19 virus. The rally was part of a series of protests across the country that are being set up on cue from right-wing activists.

Roberge told me: ”I hear he’s (Northam’s) down on North Carolina beach while this is going on.” As he spoke the House of Delegates was holding a special session under an outdoor tent nearby while the Senate presided at the Science Museum of Virginia.

Northam at the beach? It turns out that the conservative echo chamber has been peddling a story, firmly denied by Northam’s office, that he was at his house in Manteo, N.C. not far from the beaches at Nags Head during the special General Assembly session. Continue reading