Apr 22, 2020

Survey: 35% of Wisconsin businesses could close permanently if shutdown continues for 3 months

Source: Wisconsin State Journal

More than a third of Wisconsin businesses say they will be forced to shut down permanently if the state’s economic shutdown — implemented to slow the spread of COVID-19 — persists for more than three months, according to a new survey.

The results come as Gov. Tony Evers’ Safer at Home order finds itself before the Wisconsin Supreme Court after the Republican-controlled state Legislature filed a lawsuit Tuesday seeking to suspend the order. The order was issued to maintain public safety amidst the pandemic, but also has resulted in skyrocketing unemployment statewide.

The survey, which was conducted by the Madison Region Economic Partnership (MadREP) and the eight other regional organizations in the state along with the Wisconsin Economic Development Corp. and UW-Oshkosh, is meant to help the state, regional economic development organizations and chambers of commerce identify businesses most in need of financial aid in order to stay in operation.

Ultimately, MadREP president Paul Jadin said the study underscores the need for immediate relief for many businesses, as well as difficult decisions ahead on how to allocate financial aid.

“You’ve got the issue of, what will a certain amount of money do for a business that’s going to sink anyway? Or what will a certain amount of money do for someone who’s clearly going to survive under any circumstances?” Jadin said. “So it’s that third group that that you want to target and you want to make sure you’re targeting them with the right amount of money. In other words, what percentage of all these business truly could survive if you gave them X amount of dollars?”

The survey, which yielded results from about 1.3% of businesses in the state, asked companies to detail how many employees have been laid off, whether the business can keep up with typical bill and supply payments, what aid the business may need and how long it can feasibly stay in business under current circumstances.

Survey results show that 8,795 jobs were lost in the early days of the state’s Safer at Home order, which Evers announced in late-March and which closed down many nonessential businesses in Wisconsin in an effort to reduce the spread of COVID-19.

Respondents also reported losing $95 million in inventory, $126 million in income, $26.6 million in lost wages and productivity income and $404 million in other financial impacts, according to the survey.

“The conditions reported here represent companies’ efforts to adapt to changing conditions,” Jeffrey Sachse, director of UW-Oshkosh’s Center for Customized Research and Services, said in a statement. “These impacts are certain to rise when we revisit these companies in a month, two months and six months’ time. The assistance that these companies require and the effects felt throughout the state’s economy are both unprecedented and continuous.”

In addition, more than 40% of respondents said they could not report specific impacts at the time of the survey, meaning the financial impact is expected to be much greater.

The survey also found that most respondents reported a 25% to 50% decrease in worker productivity among those working from home as a result of the disease.

The survey will continue to track the economic impact of COVID-19 in the months ahead.

In an effort to begin assisting businesses, WEDC created the Small Business 20/20 assistance program and has made efforts to unlock federal disaster loans.

“Small businesses are being hit especially hard by the pandemic,” WEDC CEO Melissa Hughes said in a statement. “Our Wisconsin Ready effort will provide additional guidance and resources as we begin our state’s recovery efforts.”

In addition to financial assistance, Jadin said business owners need clarity on when — and how — they can begin to return to normal operations.

“What they need as much as the money in some circumstances is a way to guarantee that they can reopen and still practice safe distancing,” Jadin said, adding that standardized rules for businesses to follow as they begin to reopen needs to be established statewide.

Last week, Evers announced the extension of the statewide stay-at-home order through May 26, meaning school buildings will stay closed through the end of the school year and most nonessential businesses will remain shut down past Memorial Day.

The order included some eased restrictions on golf courses, craft stores, libraries and landscapers among other changes starting April 24, the date the original order was set to expire.

On Monday, Evers announced the “Badger Bounce Back” plan, which mostly aligns with guidelines unveiled last week by the Trump administration and aims to reduce the number of COVID-19 cases and deaths to a point that the state can begin a multi-phase process of reopening businesses.

Despite pressure from GOP lawmakers to reopen the economy, Evers and public health officials say the state first needs more testing, expanded contact tracing, more protective equipment and a two-week decline in state cases.

On Tuesday, the Republican-controlled state Legislature asked the Wisconsin Supreme Court on Tuesday to suspend Evers’ order. The lawsuit asks the conservative dominated high court to issue a temporary injunction suspending the order.

Evers argued the lawsuit as nothing more than a “power grab by legislative Republicans.”

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Mitchell Schmidt