After Reopening Arizona Early, Businesses and Employees Continue to Hurt

Arizona caterer Pat Christofolo has been orchestrating high-end events for over a quarter-century: A lavish spread for a wedding dinner, back-dropped by red rocks in Sedona, a holiday party for 1,000 in an airplane hangar, mezcal cocktails under the desert sky.

But all the events she was scheduled to host have been canceled as fallout from the coronavirus. Social distancing and stay at home mandates have shut down events across the United States and around the world as people strive to limit contact with others and slow the pandemic. And even as states reopen, people are still hesitant to plan large events.

“It has been complete devastation,” said Christofolo, who owns The Farm at South Mountain, a Phoenix wedding venue that boasts a trio of popular farm-to-table restaurants. She’s been forced to trim her staff from the seasonal high of 150 people to just a few.

Trickle-down hardship

Christofolo is one of many business owners across the state who have had to make cuts to payroll, leaving workers with reduced hours, furloughed, or laid off, with few job prospects on the horizon.

Arizona posted one of the sharpest unemployment drops in the country in May, falling from a historic high of 13.4% in April to 8.9% last month, according to the latest numbers from the Bureau of Labor Statistics.

But that drop still left May’s unemployment rate for the state at the highest point in almost nine years, and was twice the jobless rate that Arizona posted at the beginning of year, before the COVID-19 pandemic hammered the economy.

The biggest job gains came in hotel and food services jobs, according to data from the Economic and Business Research Center at the University of Arizona’s Eller College of Management. It said jobs in those categories rose from 178,500 in April to 216,900 in May.

Early open, early gains

“Huge difference because of usual suspects reopening, which include bars, restaurants, retail, and more,” said Elliott Pollack, economist and CEO of Elliott D. Pollack and Co., an economic and real estate consulting firm in Scottsdale.

University of Arizona economist George Hammond said the numbers reflect a bounce back from the stay-at-home order that was lifted in Arizona in May. But while the numbers are encouraging, he said the state’s economy still has a long way to go before it gets back to pre-coronavirus vitality.

“As we look forward, it will be a process of gradual improvement,” Hammond said.

The Arizona numbers, released Friday, mirrored national jobless statistics that were released early this month. The BLS reported that the national unemployment rate fell from 14.7% in April to 13.3% in May, bucking economists’ fears of an increase and leading President Donald Trump to tout the gain of almost 3 million jobs.

Arizona did particularly well in the May numbers report. Just four states – Mississippi, Kentucky, Indiana and Nevada – experienced sharper declines, and Nevada was coming off a bruising 30.1% rate to 25.3%. Arizona also posted the fifth-lowest jobless rate among states for the month, according to the BLS data.

Slow recovery

Lee McPheters, an economics professor at Arizona State University’s W.P. Carey School of Business, said the shifts in employment tracked the restrictions imposed by state leaders across the country in response to COVID-19.

“At the national and state level, consumer spending drives the economy, accounting for approximately 65 – 70 percent of all spending,” McPheters said in an email. “Due to layoffs and increasing risk from the COVID virus, retail spending in Arizona fell by about one third between March 15 and April 15. Restaurants took the greatest hit, with revenues down about 60 percent by mid-April.”

When those businesses started coming back, it was quickly reflected in the unemployment rate, said Amy Glaser, senior vice president at Adecco, a human resources and temporary staffing firm.

“Being one of the earlier states to return to work, Arizona has experienced a drastic improvement in unemployment from April to May coupled with upticks in industries including retail, automotive, and hospitality, as people start returning to work,” Glaser said in an email Wednesday.

“Though May’s unemployment rate for the state is still almost double that of last year’s, its quick rebound signals a strong optimism for a return to pre-COVID levels in the coming months,” she said.

Employment disparity

But while the outlook is optimistic, the gains are not being enjoyed evenly, said Elise Gould, senior economist for the Economic Policy Institute, who said white workers are benefiting disproportionately.

“An increase in jobs is a positive sign but a concern that isn’t broadly shared is the Black unemployment rate showed no improvement nationally, it actually increased,” Gould said.

Reports from the BLS show that, while the unemployment rate did decline last month for white workers, to 12.4% from 14.2% in April, joblessness rose among Black workers, from 16.7% to 16.8%. This is the highest unemployment rate experienced by Black Americans since the 2010.

Ignoring the facts

While he acknowledged that the joblessness rate had risen among Black workers during his campaign rally in Phoenix, Trump contributed to the rise in unemployment to the coronavirus. He also incorrectly took credit for gains made under the Obama Administration

“So, before the plague came in, we had the best of the everything,” said Trump. “Unemployment for African Americans, Hispanic Americans, Asian Americans had all reached the lowest rates ever recorded in the history of our country.”

Although Trump often takes credit for low unemployment numbers, most of the progress came when Barack Obama was president. Thanks to his work while in the White House, Black unemployment dropped from a recession high of 16.8% in March 2010 to 7.8% in January 2017.

The Associated Press contributed to this report.