The COVID-19 public health crisis has triggered a significant economic downturn in a matter of weeks. In the interest of public health, state and local governments nationwide have forced “nonessential” businesses to shut their doors, and as businesses in the retail trade, personal services, and food and accommodation sectors temporarily close, unemployment has skyrocketed.

In the first six weeks of mandated social distancing measures, more than 30.5 million people filed first-time unemployment claims, and that number is expected to grow. Forecasts of second quarter 2020 unemployment rates now are at double-digit levels and reaching as high as 32 percent. A Siena Research Institute survey of New York residents reveals that 37 percent of respondents are concerned about layoffs as a result of the health crisis.

While economists and policymakers largely believe the short-term impacts will be dire, some note that the economic recovery has the potential to be robust. The national economy was strong immediately preceding the crisis, including historically low unemployment rates. Once social distancing restrictions are eased, businesses will begin to reopen and employees that have been temporarily furloughed or laid off can return to their jobs. For this recovery to be efficient, however, businesses that have been temporarily shuttered must survive and be ready to reopen once the immediate health threat has passed.

Economic Development Organizations (EDOs) are stepping into a new role in the COVID-19 crisis to help ensure that businesses have the capacity to reopen and rehire their employees. “EDOS are the economic first responders” is how Steve Hyde, president and CEO of the Genesee County Economic Development Center (GCEDC), describes it. EDOs are now on the front lines, helping companies navigate the economic fallout of the public health crisis. Mandatory shutdowns are requiring businesses in sectors such as tourism, hospitality, retail, and personal services to hibernate, and companies that have been deemed to be providing essential services are still operating but are facing challenges including supply chain disruptions and the implementation of new health and safety regulations. Governments at all levels are rolling out assistance programs designed to help businesses survive the crisis and companies of all types are turning to EDOs to help them navigate these newly established programs. EDOs are working to ensure the success of their client companies and the restoration of local economies.

“EDOS are the economic first responders”

In the earliest stages of the economic fallout, EDOs have taken on three new duties: providing up-to-date information; offering pivot assistance to companies working to meet COVID-related demand; and strategic planning for the post-COVID-19 recovery period.

1. Source of Information

EDOs are becoming the go-to, real-time aggregator of information and resources through their websites, email lists, and social media accounts. They are sending out the latest information on relief programs, state and local regulations, and funding opportunities on a daily basis. Marsha Gordon, president and CEO of the Business Council of Westchester (BCW), hosted a webinar that brought together accounting and legal consultants to inform members about the implications of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act for their businesses. The Business Council opened these resources to all businesses in the Westchester community, not just their membership rolls, and Gordon notes that they have received a month’s worth of traffic in just a few days.

Andrew Kennedy, president and CEO of the Capital Region-based Center for Economic Growth (CEG), and his staff spent the days immediately following the passage of the CARES Act working with local banks and companies to help interpret key provisions of the Act, develop application processes for aid and lending programs, and connect businesses with lenders that will help them secure available funding. The Genesee County Economic Development Center and the Business Council of Westchester have also been working to help clients prepare applications and interceding on their behalf with local banks.

At the state level, new regulations have rolled out quickly and companies are finding they need assistance to navigate them. Steve Hyde and staff are working with Genesee County manufacturers and Empire State Development to help companies interpret the guidance on essential businesses as designated by the New York State on PAUSE executive order. GCEDC and other EDOs have worked with clients to request designation as an essential business, allowing these companies to continue operations. By securing the designation and avoiding a complete shutdown, these companies can keep employees on payroll and retain at least some of their customer base. Hyde notes that “if these companies had shuttered, customers may have gone elsewhere and never returned, impacting the long-term viability of the company.”

Companies also have reached out to local EDOs for guidance on how to handle the health crisis occurring within their own workforce. For example, one of the nation’s virus outbreak clusters occurred in New Rochelle, NY, a community whose businesses are served by the Business Council of Westchester. BCW fielded a call from a company trying to understand health, safety, and employment protocols when workers tested positive for the coronavirus.

2. Pivot Assistance

For some businesses, the COVID-19 crisis presents opportunities. Pivoting quickly to adjust to the changed business environment means that companies often need access to equipment, additional funding, briefings on industry protocols, and introductions to new customers. EDOs are often the first call companies make for this kind of troubleshooting and strategy assistance.

When New York State needed medical and personal protective equipment (PPE), the Business Council of Westchester made connections between state leaders and local companies that could fulfill the demand for PPE and other medical equipment. A client in the local biotech incubator developing a ventilator-related technology was introduced to hospitals that could use that specific technology at this critical time. When a local company changed its production line to manufacture facemasks for health professions, BCW connected it directly with hospitals and other customers. Another client needed a truck to bring food from the food bank to the community action site, and BCW’s Gordon made the calls to make it happen.

Companies also have reached out to local EDOs for guidance on how to handle the health crisis occurring within their own workforce.

The Center for Economic Growth serves as the Capital Region’s Manufacturing Extension Partnership center and has been earmarked for additional funding to support small businesses in the most recent federal coronavirus relief package. A local distillery and a soap company each saw the need for additional hand sanitizer at the beginning of the crisis and started production. CEG helped secure funding to acquire bottling equipment for their new product lines. A handful of companies looking to start manufacturing personal protective equipment reached out seeking regulatory guidance and assistance in acquiring materials. CEG also is working with another company that is exploring production of medical equipment in compliance with specific Food and Drug Administration manufacturing requirements.

3. Plan For the Recovery

Over the past few days, state and federal COVID-19 status briefings have included talk about planning for a restarting of the economy. On April 13, New York Governor Andrew Cuomo announced a partnership with Massachusetts, Connecticut, Pennsylvania, New Jersey, Delaware, and Rhode Island to collectively develop a strategy for regional economic recovery. While currently acting in triage mode, EDO first responders acknowledge that they, too, need to start preparing for the recovery phase.

Like many of their individual business clients, EDOs acknowledge that they also need to pivot to meet the challenges of a changing economic environment. Pre-COVID-19 strategic plans focused on business attraction and development; EDOs now need to shift quickly to the retention of local businesses and employment. Genesee County Economic Development Center is actively working to position itself to be impactful when the recovery period starts by bringing together community leaders for precisely such planning.

The Business Council of Westchester is still in triage mode, but the organization is now starting to build partnerships with leaders from local businesses, nonprofits, and educational institutions and will start discussions about recovery planning in coming days. Gordon foresees many discussions about how the workforce and business landscape have fundamentally shifted in the wake of the pandemic. She also stresses the importance of trying to maintain a sense of normalcy whenever possible. The BCW is continuing to organize networking events over virtual platforms to keep its community informed and connected so that all businesses will be as prepared as possible to participate in recovery efforts when the time comes.

When discussing plans for the recovery, Kennedy notes that the Center of Economic Growth is contemplating how to best position the community for working remotely. Shelter-in-place orders have forced employees and employers to adopt and implement remote work arrangements. Once such arrangements are shown to function as desired, typical constraints that have geographically tied employers and employees together may evaporate. As a result, workers once needing to live in larger, expensive metropolitan areas, such as New York City and Boston, may consider locating instead in smaller areas, making places such as the Capital Region newly attractive.

Conclusion

While the COVID-19 outbreak has triggered a public health and economic crisis on a scale never seen before, EDOs acting as first-responders is not a new concept. EDOs are often one of the first calls business owners make after a community has been hit by natural disasters such as hurricanes, tornados, and wildfires. They take leadership in developing economic-recovery strategies from public health crises such as the SARS outbreak in Toronto and the Zika virus in Miami. As federal, state, and local governments begin to plan for their economic recovery, New York’s EDO leaders will continue to play an important role in developing the programs and support that will be required for regional employers to get back to business.

For More Information:

Business owners seeking assistance should reach out to their local EDO. The New York State Economic Development Council (NYSEDC) is the principal organization representing New York’s economic development professionals and EDOs. Ryan Silva, NYSEDC’s executive director, has been working to “prepare our members to have the infrastructure they need when the economy is turned back on.” NYSEDC maintains a list of New York State assets and a directory of COVID-19 resources for local communities and businesses.  Visit http://www.nysedc.org/ for more information.

ABOUT THE AUTHOR

Laura Schultz is director of fiscal analysis and senior economist at the Rockefeller Institute of Government