HARTFORD, CT — The COVID-19 pandemic has caused greater damage to Connecticut’s economy than the 2008-2010 recession, according to a new survey.
The 2020 survey of Connecticut business produced by the Connecticut Business and Industry Association in partnership with the accounting firm Marcum LLP found that more than half of survey respondents cut hours, laid off employees, or imposed furloughs because of the impact of the pandemic and related government restrictions.
Connecticut lost 120,000 jobs over the two years of the 2008-2010 recession. In just two months in 2020 — March and April — 291,300 jobs were lost, representing 17% of the state’s pre-pandemic workforce. As of August, 54% of those jobs have been recovered.
The survey found that 86% of companies applied for a federal Paycheck Protection Program loan and 19% applied for one of the state’s emergency assistance programs. Only a quarter of firms expect sales growth in the next 12 months, with more than two-thirds seeing a decrease in orders and sales this year because of COVID-19 disruptions. Less than half of the companies expect to return a profit in 2020 — an historic low for this survey.
Asked about the most significant impact the pandemic had on their businesses, 69% pointed to the decline in their sales and revenues, 13% said reduced operations and job losses, and 12% noted the implementation of workplace safeguards to protect employees from contracting and transmitting the virus.
“From a P&L perspective, we are on track to be 60% down on sales,” one company said. “From a culture perspective, it’s decimated our workforce and made our talent vulnerable to the point that some are looking for employment elsewhere.”
CBIA President and CEO Chris DiPentima said small businesses — key to the state’s economic health — are “clearly struggling to get back on their feet as a result of the pandemic.”
“While Connecticut is recovering better than most states, this survey clearly illustrates there’s a lot at risk with our economy,” DiPentima said.
As far as employment is concerned, most firms expect their employment levels to remain stable over the next six months, with 20% forecasting growth and 20% a decline.
The survey found 86% of businesses were allowed to stay open during the first few months of the pandemic and those that weren’t allowed to reopen until the second phase in June “are struggling to survive.”
The industries struggling the most are the leisure and hospitality industry, which includes restaurants, bars, hotels, entertainment facilities, gyms, hairdressers, and salons that were forced to close or drastically restrict operations.
One survey respondent reported a 26% decline in sales in April because 2,000 of their bar and restaurant accounts closed. The state’s leisure and hospitality sector lost 87,900 jobs in March and April — 56% of its workforce — while other services lost 24,000 jobs. In contrast, financial activities lost 4% of its workforce and manufacturing employment declined 7%.
The pandemic has also changed how people work and where they work.
Of those who either furloughed or laid workers off, 41% reported difficulties bringing employees back to work, citing the $600 temporary weekly federal unemployment benefit, health concerns related to potential exposure to COVID-19, and childcare issues as the primary factors.
More than half of responding firms or 54% say their employees can work remotely. An average 40% of employees at those firms worked remotely at least through the second phase of the state’s reopening in June. And 72% of employees at those companies continued to work remotely through July—the significant increase reflecting the return to employment of those who were earlier laid off or furloughed. Over one-third will continue to work remotely for the foreseeable future.
Thirty-nine percent of respondents carry out temperature checks for employees and customers, 29% conduct regular health screening checks, and 10% test workers for COVID-19.
The survey was mailed in July to more than 6,600 executives throughout the state and 962 business leaders participated. The survey has a 3% margin of error. A majority of the businesses or 82% employ fewer than 50 people, about 9% employ between 50 and 100 workers, 5% employ between 100 and 249 workers, and 1% employ more than 500 workers.