It has been one year since the state of New Jersey began battling COVID-19. It has wreaked havoc on the economy and, more heartbreaking, resulted in the loss of 22,000 lives. Various industries have suffered, some greatly, while essential businesses were fortunate to operate, with restrictions, and serve the needs of residents.
The combined responses of state and federal government and their respectful agencies continue to be critical throughout the ongoing crisis. Trillions of dollars in aid have been distributed to businesses, residents and non-profit organizations through various endeavors, including the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Additionally, the work of business associations and philanthropic organizations, not to mention the dedicated work of the healthcare sector, has been invaluable in helping businesses and residents survive, get back on their feet, and recover.
Though the efforts of government have been both praised and criticized, it is understood that the entire nation and world have not experienced such a devastating pandemic and related economic downturn in over 100 years. Therefore, the work of experts – both in the public and private sectors – was one of immediate response in uncharted waters.
A look at the employment numbers reveals how devastating COVID-19 has been. According to a Rutgers Regional Report titled “Coronavirus Economic Impact Continues: The Year or Contraction (2020) Yields to the Year of Rebound (2021),” the nation ended 2020 with a total loss of 9.4 million jobs, nearly double the 5.1 million jobs lost in 2009 (the last year of the Great Recession of 2007 to 2009).
Meanwhile, New Jersey ended the year with a total loss of 336,400 jobs, over 31% less businesses in operation than in January of 2020 and an unemployment rate of 7.6%, recovering from its peak of 16.8% in June. It was a quick recovery, but one must realize that New Jersey’s unemployment rate at year’s end was one of the worst in the nation and the improving numbers had a lot to do with individuals dropping out of the labor market all together. Also, in February 2020, the month prior to the pandemic’s initial punch, the state’s unemployment rate was just 3.8%. This pandemic marked the end of the 10-year, six-month-long economic expansion that started in 2009.
The low point in job losses during the pandemic was in April, when 831,000 positions in the state were eliminated. Meanwhile, US employment contraction for the month of April 2020 was 20.8 million. Luckily, there was a significant bounce back two months later when 4.8 million Americans returned to work. This was a new all-time high in job growth, according to the Rutgers report. New Jersey mirrored this bounce back with the creation of a record 132,000 jobs in July.
At press time, the New Jersey Department of Labor reports that $22 billion in unemployment benefits have been distributed to New Jersey workers since the start of the pandemic. This represents nearly 2 million residents seeking jobless benefits, or 42% of the state’s pre-pandemic labor force.
Gov. Phil Murphy and his administration have been working this past year to provide residents and businesses with the resources and aid they need to combat and survive the pandemic. He has outlined these initiatives, along with numerous executive orders, at daily COVID-19 press briefings in Trenton and visits throughout the state.
Of great importance was the creation of the COVID-19 Information Hub at www.covid19.nj.gov, which directs users to the various forms of assistance available. His administration also created the Restart and Recovery Commission, which, consisting of 21 experts in the fields of healthcare, business, finance, academics, and economics, have been charged with advising the administration on the timing and preparation for New Jersey’s recovery from the COVID-19 shutdown.
Murphy also announced the formation of the Restart and Advisory Council, a council of leaders from various industry, community, and faith-based groups and institutions, to work in conjunction with the Recovery Commission and advise state leadership on economic issues impacted by the pandemic.
For businesses, assistance has come from the New Jersey Economic Development Authority (NJEDA), which at press time, has supported nearly 55,000 small businesses and has distributed more than $240 million in economic relief since last March. Tim Sullivan, NJEDA CEO, comments that while COVID-19 was “first and foremost a health crisis, it brought with it an economic crisis we have not seen for generations. Unemployment skyrocketed, and small business owners had to make heart-wrenching decisions that will affect their livelihood for years to come.”
Part of the NJEDA’s $240 million in economic relief included the three-phase Small Business Emergency Assistance Grant Program, which delivered more than $211 million to over 42,800 businesses. There was also the Small Business Emergency Assistance Loan Program, which was funded with $10 million in NJEDA funds to provide low-interest working capital loans of up to $100,000 to businesses with less than $5 million in revenues. Approximately 152 businesses have been approved for loans under this program.
The NJEDA also introduced the New Jersey Entrepreneur Support Program, an initiative that encourages continued capital flows to new companies by providing 80% guarantees for working capital loans. To date, this program has supported investments in 13 companies with more than $2 million in guarantees.
The challenge for New Jersey is how quickly the programs have been oversubscribed, with the overall number of small businesses receiving aid representing a small fraction of total small businesses in the state.
Sullivan says the recent passage and signing of the New Jersey Economic Relief Act of 2020 is an important step in restarting the economy in a stronger, fair and more equitable way. “It represents a new approach to economic development that invests in job creation and innovation, in our underserved communities, and in our Main Streets,” he says.
More than 150,000 businesses throughout the state benefited from the US Small Business Administration’s PPP, an initiative that, part of the CARES Act, was created to help businesses keep workers employed.
According to John E. McWeeney Jr., president and CEO of the New Jersey Bankers Association, banks in the state processed more than 157,000 PPP loans totaling $17.3 billion (from March until August 8, 2020, the date of program closure). Since the program reopened again on Jan. 11, 30,827 loans have been made in the state, valued at more than $2.9 billion.
However, making PPP loans hasn’t been the only way New Jersey banks have assisted customers during the pandemic. According to McWeeney, “Whether it was by ensuring customers had access to their monies through banking by appointment and digital banking services, processing huge volumes of economic impact stimulus payments, working with both consumer and commercial borrowers to defer loan payments on thousands of loans, or processing more than 157,000 PPP loans, New Jersey banks have been there for our customers and communities.”
He says state banks also provided millions of dollars in charitable contributions to not-for-profits groups.
Looking to the future, McWeeney says, “You can expect New Jersey banks to be leading the charge on the economic front of our battle with COVID-19.
Business groups such as the New Jersey Business & Industry Association (NJBIA) have been front and center in getting the economy back on track. In fact, that has been the key focus of NJBIA since the pandemic hit.
According to NJBIA President and CEO Michele Siekerka, “At the very height of the [first wave] of the pandemic, our staff went into 24/7 assistance mode. We were the call center for New Jersey businesses, not just NJBIA members, fielding thousands of calls. There was great confusion on whether businesses were essential or not and how or if they could operate. One thing we knew for sure was that all manufacturing was deemed essential and that was because NJBIA made the case for them.”
The NJBIA team quickly pivoted to delivering vital information including the creation of a Coronavirus Resources and Recovery page (www.njbia.org/recovery), which is providing one-stop connections to critical business-related links from state and federal departments and other sources to help guide businesses through the pandemic’s economic and health challenges.
NJBIA’s Events Team began hosting webinars on COVID-19-related topics in addition to taking its standard and well-known events into the virtual realm. “We stood up hundreds of webinars,” Siekerka says. “Staff reskilled and up-skilled in order to be technology savvy and deliver events in a virtual world so that our members didn’t miss a beat.”
The association also founded the New Jersey Business Coalition, a group of more than 100 business and non-profit groups that have been collaboratively moving their reopening agenda forward. “Not only did we advocate for certain policies at the state and federal level, sending 37 letters to our policymakers since March 2020, we also developed a Recovery and Reinvention Framework on the business reopening process. Our ability to have facilitated that collaboration and bring those policy issues and documents – with all the best practices in vertical industries – to the forefront, was significant,” Siekerka says.
Further, NJBIA was instrumental in setting up smaller vertical coalitions, like the Salon and Spa Coalition and the NJ Dance Schools Coalition, to ensure these industries, employing tens of thousands of jobs across the state, were included in reopening plans along with other ‘indoor activities’ back in July.
NJBIA also established the Healthy Business Certification Program, in which more than 100 businesses (to date) have gone through training on the best practices of identifying, reducing, eliminating and reporting hazards associated with their workplaces. The best practices are derived from OSHA, CDC and WHO guidance. Now, the New Jersey Department of Labor is providing business grants to those interested in taking the program.
Additionally, the association created an HR Support Center platform that provides employers with the most up-to-date HR information, a host of timesaving tools and resources, and live professional consultations. According to Siekerka, the service was established because of the tens of thousands of calls NJBIA received throughout the pandemic, the majority centered around HR guidance issues.
Siekerka says she would be remiss if she did not mention the work of NJBIA’s Government Affairs team that “worked tirelessly this past year. … They were and continue to bring boots-on-the-ground information and data to our policymakers.”
Whether those policymakers were listening was a different story. Talking specifically about the Murphy administration, Siekerka recalls, “They would listen to [our recommendations], say ‘Thank you,’ but go on with their own agenda.
“I commend the governor for his vigilance early on regarding the healthcare side of the pandemic, with its initial shutdown and plan to flatten the curve,” Siekerka says. “However, the governor always says, ‘Public health drives economic health,’ but when the public health numbers regarding COVID-19 cases were coming down, the economic numbers were not going up.”
Siekerka says more transparency concerning the governor’s decisions, which have prolonged full businesses re-openings, was and still is needed, to a degree. She explains, “Businesses need predictability and certainty. We need to know where the goal post is. Are we on the five-yard line? Are we at the other end of the field? It seems the goal post continues to move.”
Expressing his own frustration with the Murphy administration is Ralph Albert Thomas, CEO and executive director of the New Jersey Society of Certified Public Accountants (NJCPA). As a member of the New Jersey Business Coalition, he too reveals that when interacting with the Murphy administration: “You meet with their teams and staff and sort of get the head bobs, and then at the end of the day, it’s like we never met. We make recommendations, but nothing happens.”
Early on during the pandemic, NJCPA fought hard to have the state extend the April 15 tax-filing deadline to July 15, to be consistent with the IRS’s extended deadline. “We were sitting on pins and needles regarding New Jersey because all other states, for the most part, extended their deadlines. New Jersey didn’t do so until the 11th hour,” Thomas recalls.
The society also fought to have its industry considered essential as CPA clients were dealing with Paycheck Protection Program (PPP), stimulus package and other related issues. “It came down to the nitty gritty, and it caused a lot of ‘agita,’ but we finally got there,” Thomas recalls.
Thomas and NJCPA members believe small businesses got the “short end of the stick” when it came to the initial round of PPP loans, and he still feels they are being neglected. “There is still frustration out there. We should have been incentivizing small businesses to open back up. We have to focus on what we can do to stimulate growth in the small business community,” he says.
Since the beginning of the pandemic, hospitals have been coping with the roller coaster ride of COVID-19 spikes, plateaus and decreases. Latest figures on the state’s COVID-19 dashboard reveal there have been more than 61,000 hospitalizations due to the virus, out of 633,731 confirmed cases in the state. At press-time there have been 19,606 COVID deaths in the state, plus 2,187 probable. These numbers bring to mind the time, early on during the pandemic, when hospitals in the hardest hit areas of the state were using refrigerated trucks as temporary morgues because their own facilities were filled to capacity.
All of this has had a devastating impact on hospitals. Cathy Bennett, president and CEO of the New Jersey Hospital Association, comments, “The pandemic has taken a significant toll on our entire society, and our healthcare heroes and facilities have been the first in line to feel this impact.”
A mid-year analysis of financial data, released in October by the Center for Health Analytics, Research and Transformation (CHART) at the New Jersey Hospital Association, showed that nearly 60% of New Jersey hospitals were in the red and had an average statewide operating margin of negative 4%. There was a continued loss of revenue from the suspension of elective procedures at COVID-19’s peak in the spring and a slow rebound of patients returning to hospitals. Hospitals were also coping with rising expenses at the same time.
As for a recovery, Bennett says, “The road ahead demands that we invest in the resiliency of our systems and our people. … For our facilities, resiliency means policies and funding that ensure our healthcare system is intact and ready for our next emergency. The pandemic has brought the defects of how we fund and pay for healthcare in this country into stark focus. Our payment structures must evolve so that the next public health emergency doesn’t require our hospitals to balance saving lives with potential layoffs.”
The restaurant industry has always been among the hardest hit business sectors throughout the pandemic. According to Marilou Halvorsen, the outgoing president and CEO of the New Jersey Restaurant and Hospitality Association, approximately 40% of restaurants in the state have closed since the pandemic began – many permanently – while others are waiting for warmer weather to reopen and provide outdoor dining.
Pre-pandemic, the industry employed 350,000 people. When the pandemic hit, 85% of these workers were furloughed or laid off, with just 25% to 30% having returned, according to Halvorsen.
In the early stages of the pandemic, Halvorsen says she had a difficult time reaching the Murphy administration to discuss reopening efforts. However, this past February, executive orders and legislation were signed that puts the industry back on the road toward full capacity dining, however slow.
The first step Murphy took last month was to increase indoor dining capacity from 25% to 35%. It was back on March 21, 2020 when Murphy issued Executive Order 107, which among other things, prohibited indoor dining, while just allowing take-out service.
On June 15, restaurants were allowed to offer outdoor dining. There was a glimmer of hope on June 26 that restaurants could offer indoor dining at 25% capacity, but the governor rescinded that order. That took effect on July 2, just before the July 4th weekend.
“That was the nail in a lot of restaurant owners’ coffins because many did not have two nickels to rub together at the time. They bought inventory with their personal credit cards or personal savings. They were onboarding employees, and then they get a ‘No. I’m sorry’ from the governor? We were angry,” Halvorsen recalls.
Also last month, the governor signed legislation that expands opportunities for restaurants, bars, distilleries and breweries to operate outdoors until Nov. 22, 2022 regardless of whether COVID-19 indoor operating restrictions are lifted.
According to Halvorsen, “This bill gives us some predictability and an opportunity for restaurants to plan forward. It also gives guests a choice because it may take some time before people are comfortable with [dining indoors].”
She says the legislation also gives restaurants the ability to hire more employees because they will have that expanded footprint. “This bill is a win-win for everyone: for the business community to expand their profit levels and recoup what they have lost; for guests to be able to have dining options; and for economically devastated residents who may now have employment opportunities as restaurants expand and hire.”
Finally, Halvorsen, who leaves her post this month to join the American Hotel and Lodging Association as vice president of state relations and government affairs, adds that the state needs to spend more dollars on promoting tourism. Noting that Philadelphia spends more money than the entire state of New Jersey in this area, she comments, “We need to make an investment to get people back in our hotels, visit our attractions, and dine in our restaurants.”
Governor Murphy manufacturers in the state essential early on during the pandemic, with a number of companies shifting to the production of PPE. According to John Kennedy, CEO of the New Jersey Manufacturing Extension Program (NJMEP), there were some 300 firms in the state working on a variety of PPE.
He commends the governor for “making the right call” in labeling the industry as essential. “The governor understood the value of maintaining the supply chain, and we proved him correct,” Kennedy says. “That confidence was repaid because everyone generally had enough to keep them protected, medicated and fed. That does not happen without manufacturing.”
Asked how the industry faired overall, Kennedy responds, “Most firms held their own and quite a few expanded, but all struggled to some extent due to the virus affecting staff. It was not an easy time for anyone, but many manufacturers were pushing because they knew how important they were in providing some form of normalcy for all.”
A sense of normalcy is what everyone in the state, nation and world is seeking. When will that return?
Siekerka, who says she is a pragmatist, explains that 2021 will be a year of transition from the virus. “It is going to take us a long time to get 70% of the New Jersey population vaccinated in an effort to achieve herd immunity. … Business will pick up again as warmer weather approaches, but if 70% of the population is not vaccinated by the fall, I fear we are going to be moving right back to a place where the economy will still be super challenged.”
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