Coronavirus Closures Lead to Layoffs

March 12, 2020

Yesterday, the World Health Organization officially classified coronavirus as a pandemic, causing the Dow Jones Industrial Average to plummet by nearly 1,500 points. This rapid decline in the market has reversed more than a decade of expansion for the U.S. economy while companies around the world suffer from border closures and shutdowns. As a result, employees in many struggling industries are facing layoffs as business as usual grinds to a halt. 

For instance, the Port of Los Angeles has laid off 145 drivers and sent many more workers home without pay since there are no enormous cargo ships from China to unload. Travel agencies in major hubs like Atlanta and LA have also let employees go due to increasingly strict constraints on international flights. With large events closing at a rapid pace as well, an Orlando stage-lighting company says that it has laid off 100 people from its nationwide staff of 500 employees. Meanwhile in Seattle, a hotel closed an entire department as reservations dried up completely. Economists say that similar layoffs and time-reductions could spread across the country if the COVID-19 outbreak continues to get worse.

“We will definitely see an effect on jobs from the coronavirus, and it could be pretty large in leisure and hospitality,” said labor economist Julia Pollak. “The first thing we’ll see is a reduction in hours. We hear many reports of employers canceling staff everywhere except in health care.” The cancellation of South By Southwest in Austin, Texas, caused 50 people directly affiliated with the festival to lose their jobs, but the overall impact on the community will reach much further. After all, restaurant servers and bartenders work overtime during South By Southwest as hotels become packed with travelers from all over the globe. With that business now gone, though, many hospitality employees stand to lose out on a major source of their annual income. 

Questions:

  1. Why are workers in industries like travel and hospitality especially vulnerable to layoffs as fear of the coronavirus spreads?
  2. How will the closure of a major event like South By Southwest impact workers across the city of Austin? 

Source: Abha Bhattarai, Heather Long and Rachel Siegel, “The First U.S. Layoffs from the Coronavirus Are Here,” The Washington Post, March 11, 2020.

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