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Coronavirus Economics Editor's Notebook News

Editor’s Notebook: Are we approaching the point of no return for Delaware businesses?

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Peter Osborne
DBT Editor

You have to wonder if this is ever going to be over.

There’s a growing sense of impatience among many members of the business community that it’s time to just reopen because we have only a few dozen people hospitalized throughout the state. Businesses are running low on federally backed loan proceeds and we’re now in Month 5 of a pandemic that many businesses told us they could only survive for three months.

One of the big problems – as has been the case for the past five months – is finding that delicate balance between public health and preserving a strong economy.

Let’s focus on the beach for a second. On one hand, you have some businesses whose only chance for survival depends on the next four weeks and Gov. John Carney still hasn’t gone to Phase 3. On the other hand, we have a bunch of people flooding our beaches, including teenagers (and, to be fair, families) that have watched every movie on Netflix and are sick of looking at the same four walls. And that’s already translating into 100% occupancy at some hotels.

The Rehoboth-Dewey Beach Chamber of Commerce has reported that 76 businesses in the resort area have seen a collective $205 million loss in year-to-year revenue over the first seven months.

“That’s just the tip of the iceberg,” Carol Everhart, the CEO of the Rehoboth Beach-Dewey Beach Chamber of Commerce, told Delaware Business Times. “That’s just showing the difference in revenue for only 76 of our businesses that answered the survey … I’m highly suspicious that 30% of businesses will close their doors.”

As of July 30, hospitalizations are inching up in Delaware and the percentage of people who have tested positive is trending back near that magical 5% range that puts you back on other states’ quarantine lists. Part of the problem is that you can’t be sure about the accuracy of some of the charts and graphs because the data points keep shifting and the lab backlogs in some cases are over a week, making contact tracing more difficult. It leaves you wondering what the delayed test results are going to indicate.

Down at the beach, you can’t walk 10 feet without running into someone under the age of 25. That’s important when you consider the results of a survey that the University of Delaware did in late spring of its students. They indicated they’d pay attention to masking and social-distancing requirements in class, but they weren’t likely to do so socially.

I will admit that there’s about $500 worth of dorm “essentials” in my basement that we thought my freshman daughter would be taking with her to college in Washington, D.C., this fall. I will also admit that I told her two months ago that I was pretty sure classes were going to be online this fall and I told her a few weeks ago that it was likely her school wasn’t going to actually put four girls in a two-room quad. And I wasn’t surprised when she didn’t exactly embrace the idea that she wasn’t going to be able to visit friends who happened to be assigned to other dorms.

This gets to my frustration about the big hole in the story we wrote about UD’s decision to move most classes online that starts on page 6. We talked to the university. We talked to local merchants. We talked to hotel owners. But we couldn’t get landlords to return our calls.

Why? Because they signed one-year tenant leases with students last fall with move-in dates of June 1. All we wanted to ask them – and yes, I think we all know the answer going in – is whether they’re going to allow students taking online classes to opt out of those leases with no financial penalty.

I’m sure many of you are thinking, why should they? Are their lenders going to allow them to escape their loan payments? We don’t know because they wouldn’t return calls and so far, we’ve seen no indication from state leaders that they’re going to step in and help.

I firmly believe that restaurants are committed to following the rules.  Nobody wants Newark to become the next hot spot. But how do you survive with far fewer students on campus and no parents or alumni coming in for football weekends?

I once worked with a sports agent named Ron Shapiro who preached “trust but verify.” I think he would be as skeptical as I am that the state could receive 1,000 complaints from local residents and conduct more than 300 inspections in Delaware and not find a single situation deserving of an enforcement action.

Jamie Mack, who oversees the state’s inspection team, cited these numbers at the governor’s press conference on July 28, just a few weeks after telling me that it was time to move from education to enforcement. The state confirmed those statistics July 30. The risk we run here is that the governor or Newark City Council steps in to completely shut down the bars and restaurants as a way to prevent another outbreak.

Like most everyone else, I worry about how businesses throughout this state are going to survive. There’s no sign the governor is going to move to Phase 3 anytime soon. The anger at him by many in the state is palpable and I can’t help but think about what’s next, including how many more Delawareans are getting laid off or furloughed this week (or already did July 31) because PPP money ran out or so much revenue has been lost?

The governor and his staff have done a good job of staying on message – Wear your masks. Practice proper social distancing. We’re a small state but talking about only 62 hospitalizations or only 581 deaths in making the case for reopening seems pretty insensitive to those who have lost friends and family. 

The time has come to have a public dialogue about what more the state and federal government can do to protect our businesses without putting public health at further risk.


– Peter Osborne

[email protected]

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1 Comment

  1. Susan W. Green August 5, 2020

    Peter, you and I, along with many others in this area, grew up professionally being told that every problem could be solved and every challenge had that magical “golden ring” if we worked hard enough. And that mantra was proven correct over and over for over 25 years. That is…until the golden ring tarnished. Your article brings home critical issues, yet without that “golden ring” it’s incomprehensible to understand the true implications. Based on 20 years of believing any problem can be solved if we just work hard enough, imagine big enough, collaborate and network enough. I still believe that the “silver ring” is feasible. There is enough brain-power in this area/country/world to find it. We can’t give up hope. Of course, I still believe in the magic of Christmas also. Thanks for your article and reminding us of the reality of the situation.

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