GRAND FORKS — Businesses in accommodation and food industries seem to be taking the brunt of the impact of the coronavirus pandemic in terms of job and financial losses, and income from March will not be able to be recovered for those companies.
According to David Flynn, an economist at the University of North Dakota, the accommodation and food industry has lost about 5,500 jobs across all counties in the state, which represent just shy of 29% of all new claims for unemployment insurance. There have been more than 19,000 initial claims since the first case of coronavirus was reported in the state on March 11. Last year, North Dakota’s total unemployment claims stood at 23,479.
Financial losses for the accommodation and food industry stood at about $30 million for March, Flynn noted.
“I highlight that sector for one reason. Those claims and losses that occurred in that sector are best thought of as complete losses," said Flynn, who added that those businesses will see sales increase when restrictions are lifted and people feel safe to venture out of their homes again. Still, those losses are permanent and can’t be made up, and stand to continue as long as the situation persists.
Flynn made his remarks at a video conference hosted by UND, where he addressed the economic impacts of the pandemic on the region.
Grocery stores stand in stark contrast to the food industry, as shoppers in the region see empty shelves and turn to social media to find out what shops are stocked with necessary items.
“People are buying more, using it down, buying more, using it down,” said Flynn. “Maybe (they are) making fewer trips, but possibly buying more because of precautionary motives.”
Though they also have taken a hit, oil, manufacturing and construction industries are in a boat better fit to navigate the storm. The oil industry in particular has seen a 50% decrease in the price of crude oil, as Saudi Arabia and Russia engage in a price war over the product.
Despite global concerns, oil stands to make a comeback when the coronavirus recedes and air travel picks up and people begin driving more frequently, according to Flynn.
“I don't think it will take as long to recover for the state of North Dakota,” Flynn said. “We're a more mature industry.”
Job losses in the oil and mining sector stand at about 1,400, or about 7% of initial unemployment claims, said Flynn. That number could rise however, and Flynn said he is waiting on future unemployment reports to better gauge the industry. Oil companies have more experience with sharp declines, and workers may not necessarily up and leave the state, he said.
“I think more people understand the boom/bust cycle, including the workers,” said Flynn. “I don't know that you'll have nearly the same degree of exodus (of workers), that you did in the past.”