Wednesday, April 24, 2024

Wilmington’s service industry is being demolished. What can Raleigh do to help save it? [Free read]

In order to combat Covid-19, state and federal government agencies have taken actions that will put both small businesses and their employees at risk. (Port City Daily photo / File)

WILMINGTON — Preventative measures to stall the spread of Covid-19 have had devastating effects on the economy and many are pinning their hopes for survival on a $1 trillion stimulus package that’s being reviewed by the White House and the Senate. Closer to home, however, there are plenty of questions for the North Carolina General Assembly — which is currently out of session until the end of April.

Related: DBA aims to keep downtown Wilmington businesses afloat during Covid-19 restrictions [Free read]

A major cause of economic damage has been the increased restrictions on public gatherings. Last week North Carolina recommended limiting gatherings to under 100 people. This week, stricter guidance from the Center for Disease Control and Prevention (CDC) recommended limiting gatherings to 50 or less, and even stricter recommendations from the White House put the upper limit — even for private events and in residences — at less than 10.

The White House has asked the country to make ‘shared sacrifices’ — but officials, including President Donal Trump and North Carolina Governor Roy Cooper, have also acknowledged that while for some U.S. workers this means shifting to working remotely, for others it will mean losing their jobs.

While many businesses are doing their best to stay open, transitioning to new delivery and take-out models or trying to operate with streamlined hours, the service industry is still likely to feel the impact more acutely than many other types of jobs. For the Wilmington region, which is in large part built on service industry jobs, that impact will be especially painful.

Major blow to the service industry

On Tuesday, Governor Cooper ordered all dine-in and bar areas to be closed to the public; the move allows take-out and delivery to continue, but the financial impacts on the food and beverage industry will be severe. Further, while the order is only in place through the end of March, it increasingly likely that government efforts to restrict public gatherings will continue (or increase) beyond that date.

While the order does not directly affect other service industry businesses, the increased restrictions on public gatherings are likely to have dramatic impacts. Coupled with growing pressure from government agencies from the White House to county departments to ‘flatter the curve’ — that is, slow the spread of Covid-19 — by avoiding public interaction, all service industry businesses, and their employees, are at risk.

To address this, Cooper’s executive order also relaxed restrictions on applying for unemployment, allowing benefits to be dispursed without forcing employees to wait a week or to hunt for another job when restaurants and bars are ordered to close major parts of their operation, and other businesses are shuttering in large part because of increased restrictions. The benefits can also be extended to some employees that have their hours cut. Part-time and seasonal employees may also be eligible if they have earned enough money at a particular job (more specific details are not yet available).

According to State Senator Harper Peterson, it’s his understanding that these restrictions are being relaxed for all service industry employees, not just those specifically in the bar and restaurant business.

Notably, independent contractors and self-employed workers (including musicians and other performers) are typically not covered. However, officials have noted that Gov. Cooper is likely to seek a federal disaster declaration which, if approved, could also extend unemployment benefits to these types of employees.

Unfortunately, the state program, run through the Department of Commerce, operates only as a stop-gap for people between jobs. It pays out relatively low benefits for short periods of time compared to other states —it wasn’t designed for a long-term pandemic crisis. It’s not just that the department was reportedly overwhelmed by phonecalls, with local restaurant workers saying the phone system and website had both ground to a halt — the problem is that the department is simply not prepared or designed to protect an entire workforce from the government-ordered restriction or shutdown of their industry.

Federal stimulus, local action?

Currently, both White House and Congress are discussing various nationwide stimulus payments, including a $1,000 payment to individual U.S. citizens (with some suggesting a family of four could receive up to $18,000 in eventual relief). The plan will also likely include loans for small businesses.

That’s likely to prompt a sigh of relief for many, but it remains unclear how long the shutdown (either direct or de facto, due to crowd restrictions) of the service industry could last. For those relying on state unemployment, that will be troubling.

North Carolina pays out relatively low (41st in the nation) benefits, with a weekly maximum of $350, and an average of around $260. It also pays for a relatively short period of time (only Georgia has a shorter average duration). At the same time, the state has amassed a $3.9 billion fund for its unemployment program.

According to State Representative Deb Butler, the governor’s office likely can’t extend the duration of benefits or raise the ceiling without legislation. Peterson agreed, noting that the benefits were already ‘paltry’ but that, especially in a crisis where employees lost hours or jobs through no fault of their own, something had to be done.

But, to do that, the General Assembly needs to convene — which it isn’t slated to do for over a month.

“We need to convene — we’re going to have to convene soon,” Peterson said, noting that a federal aid package might require state contributions, which the legislature would need to vote on.

According to Peterson, as well as Representative Ted Davis, there have been out-of-session discussions about addressing the state’s hardest-hit employees.

“House Speaker Tim Moore has informed me that there are many different directions that this can go, and he is presently working with others to find a way to help those businesses and employees affected by the closures while not ‘breaking the bank’ in the process,” Davis said.

According to Peterson, legislators are now working on the logistics of convening committees and the general assembly itself without violating the same restrictions on public gatherings that has made it necessary for them to take action.

Send comments and tips to Benjamin Schachtman at, @pcdben on Twitter, and (910) 538-2001

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