A year later, COVID leaves lasting economic impact

Delaware restaurants have struggled through the pandemic’s restrictions, losing an estimated $1.2 billion in sales statewide. | DBT FILE PHOTO

Carrie Leishman can remember the exact moment she realized COVID-19 was more serious than she first thought.

She heard about the virus earlier than some Delawareans because she attended a restaurant industry event in Washington, D.C., that winter. By the time March 12, 2020, arrived and she visited Starboard owner Steve “Monty” Montgomery in Dewey Beach, she was already nervous.

“I remember talking with Monty about how much anxiety I had. Then the governor’s office called, and asked Monty to cancel the opening festivities. That was when I knew,” said Leishman, president and CEO of the Delaware Restaurant Association (DRA). “Later that week, I ended up sleeping in a different room than my husband because I knew I’d be taking calls all night from restaurateurs about what was going on.”

Delaware recorded its first positive COVID-19 case on March 11, and two weeks later, its first COVID-19 related death. In the year since the public health crisis started, Delaware witnessed abysmal records in hospitalizations and unemployment set, $927 million in unprecedented federal aid sent to the state to slow the economic freefall, and businesses run at half their capacity while working entire workflow systems.

By the time Gov. John Carney issued a stay-at-home order in late March, the state reported 10,790 unemployment claims were filed in one week, breaking the record high for claims within a single month. That record would later be broken again in April with 74,700 people filing claims, but the state has also been adding and shedding jobs throughout 2020.

“We have businesses who may never recover from this,” Minority Leader Sen. Gerald Hocker (R-Ocean View) said. “You talk to salesmen or restaurant owners, and they’re on the verge of losing possibly everything. In my district, people couldn’t open their establishments, and you have people go the 2 miles to reach Maryland and get served. It had a really negative impact, and it didn’t have to be.”

What’s next

The year was also marked by a wave of restrictions issued via executive orders, in most cases restricting capacity to maintain social distance. But now that 10% of the state’s population is vaccinated and positive cases and hospitalizations are dropping after the holiday surge, the next question is when will Delaware reopen for business?

The furthest the Carney administration has allowed businesses to reopen was 60% capacity last June, but many were rolled back to 30% in attempts to head off the winter COVID-19 spike. Last month, Carney amended his executive order to allow restaurants, retail stores and some entertainment venues to open at half their capacity limits.

Early June was the last time Carney publicly set a concrete date for lifting more restrictions: June 15 for Phase 2. Since then, he opted for more open-ended statements and focusing more on the “cavalry” – the vaccine – as the way out.

“When this first started, it felt like I was getting barraged by calls [from the business community] but part of my job was to take those calls and listen,” Carney told the Delaware Business Times this month. “I do get a lot of pressure from the business community, but it’s about changing the mindset, about having a level approach. I understand where businesses are, and how they must order enough products and have enough staff. But we just don’t know where we’re going to be in the future.”

Last June, Delaware reported around 150 new cases per day. But testing was not as widespread then as it is today. With scores of people now tested each week and the state’s positivity rate hovering around 4%, he said the state is “in a good place.”

The governor said a key advisor suggested outlining a new plan for businesses in April, but it was scrapped for being “too restrictive.”

“We know [COVID-19] is less widespread outdoors than indoors, and masks are the best defense. But look at Philadelphia. They were doing great, and they had a surge that they’re getting under control. It’s the same with the University of Delaware, and that might have been predicted with student behavior,” Carney said. “I know the restrictions can be exhausting, but we have to navigate this to come up with solutions that work and keep people safe.”

Business response

A year later, some business leaders acknowledged there was no plan to manage a global pandemic but criticized the Carney administration for being slow to act first and now slow to encourage an economic recovery.

“Many businesses and workers are still struggling,” said Zoe Callaway, the executive director of A Better Delaware, an advocacy organization that focuses on business growth. “In the first months, businesses were crying out for help and the state wasn’t listening. They were told they weren’t a priority as livelihoods were being lost.”

Callaway argues that with costly regulations and taxes every year, Delaware businesses already have the odds stacked against them.

“The biggest lesson from the pandemic is that our small businesses are responsible for an enormous number of jobs in our state and they’re very fragile,” she said. “It’s time to let people get back to life by opening 100% and keeping in place the safety measures that we’ve practiced for a year now.”

Leishman said that restaurants had been hit as hard as she feared a year ago. Looking at gross receipts, Delaware’s restaurants lost $1.2 billion in revenue since last March and many took advantage of federal and state relief programs.

“We’re far from recovering, and we won’t be as long as we’re on subsidies. We’re in a vital transition piece, existing in one piece or another because we can’t open fully,” she said. “We need the state government to step up and put forth a plan to open businesses more fully with safety measures. We need to be open based on facts, not fear.”

At the statehouse, Hocker criticized the Carney administration’s lack of communication with lawmakers and using executive power to hold business back. In response, he and his Republican colleagues filed a bill that would restrict the governor’s ability to declare a state of emergency for more than 30 days without the General Assembly’s approval. Current law allows the governor to renew a state of emergency without end, which Carney has done each month for a year, allowing for enforceable public restrictions.

“We were kept totally in the dark. It’s hard to tell someone who’s losing everything that it’s because of the will of one person,” Hocker said. “Some people look at this like a dictatorship. We see this as needed because it shouldn’t be dependent on the will of one, but the will of many.”

Delaware State Chamber of Commerce President Michael Quaranta takes a more optimistic look as the state enters the pandemic’s second year, noting that people know a lot more about the virus and preventative measures today.

“It’s easy to lead when times are normal. Some industries have been hit hard, so there’s always going to be questions about the choices [Carney] made. But you must balance that with the limited information he had, or any of us had at the time,” Quaranta said. “Balanced with that, I think he’s done a good job as any of us could have.”

Light at the end of the tunnel

President Joe Biden announced last week that every adult American would have access to a COVID vaccine by the end of May. With two vaccines well into distribution and a deal to ramp up production of the new Johnson & Johnson vaccine, University of Delaware epidemiologist Jennifer Horney is optimistic that it can be done.

“All the data on vaccines seems to be trending positively, and with the growth in the number of vaccines delivered every week, there’s a lot of great news right now,” Horney said. “People are looking forward to spring and wanting to go back to some semblance of a normal. I think that will drive people to get the vaccine.”

As of March 11, Delaware had administered around 287,000 doses of the vaccine. Large-scale vaccination events are working more smoothly now that the Delaware Division of Public Health unveiled an online appointment system. Public health officials are focused on vaccinating teachers and childcare providers next, and are working to target other essential worker categories, such as grocery store and poultry processing plant workers.

Carney said that when he was first elected governor, he had no idea what the biggest crisis of his tenure would be. But it’s possible his legacy may be Delaware’s response to a global pandemic that breached the small state’s borders.

“I’d like people to remember this as we tried to do the right thing for everyone, not sacrificing health for a strong economy and vice-versa,” Carney said. “The thing about being governor is you have to walk the walk, and that’s why I’m not vaccinated yet. I hope people see that we followed science, and when this ends, we’ll work toward having a strong economy for the success of others.”