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By Roy Rasmussen Updated on October 13, 2021

The Coronavirus Impact on Business: A Regional Breakdown

The coronavirus impact on business varies significantly by region. Here’s a breakdown to help you gauge the effect on your company. 

We’ll look at:

  • Coronavirus business impact local, state and national trends
  • The impact in New England
  • The impact in Middle Atlantic states
  • The impact in the South
  • The impact in the Midwest
  • The impact in the Southwest
  • The impact in the Rocky Mountain states
  • The impact on the West Coast
  • The impact in Alaska
  • The impact in Hawaii

Read on to learn how the business impact of the pandemic may affect regions relevant to your company, market and customers.

Coronavirus Business Impact: Local, State and National Trends

Recovery from the initial impact of the COVID-19 pandemic has been uneven across the country, according to data on small business closings collected by ecommerce provider Womply, graphically interpreted by Harvard-sponsored nonprofit Opportunity Insights and analyzed by investment site Visual Capitalist. 

Among major cities, San Francisco leads the list of cities hit hardest, with the number of small businesses open down 49% as of the end of September 2020, compared with January 2020 levels. New Orleans and Honolulu come in next, down 45% and 41% respectively. Other top cities with small business shutdown increases between 32% and 37% include:

  • Washington, D.C.
  • San Jose, Calif.
  • Portland
  • San Antonio
  • Sacramento, Calif.
  • Boston
  • Oakland, Calif.

Other areas are experiencing more rapid recovery. Omaha, Neb., Miami and Phoenix have bounced back to nearly pre-pandemic levels of small business opening, down 13%, 19% and 23%, respectively. Overall, on a national level, about a quarter of all small businesses haven’t reopened.

A map of the U.S., including Alaska and Hawaii, is plagued by the coronavirus.

State and National Unemployment Data

State unemployment data published by the Bureau of Labor Statistics and analyzed by the University of New Hampshire fleshes out this picture on a state and national perspective. 

Between February and November, the nation lost 10 million jobs, 6.5% above pre-pandemic levels. Hawaii leads states hardest hit, with losses still at 15.2%, followed by New York at 10.3%, Michigan at 9.8% and Massachusetts at 9.4%. At the other end of the scale, unemployment levels are only down 0.4% in Idaho and 0.5% in Utah. Nationally, 28 states have lost more than 5% of their jobs. October and November saw unemployment increases in 17 states and decreases in 32, illustrating the unevenness of the recovery.

Regional Factors Driving Recovery Rate Differences

Why are some areas recovering faster than others? Each region has its own nuances which can’t be boiled down to a universal formula, but some general factors can be identified.

Regions that host highly impacted industries have been more vulnerable to the disruptive effect of the pandemic. The leisure and hospitality sector has been hardest hit, which helps account for the high business closing rates in San Francisco, New Orleans and Honolulu, all heavily dependent on tourism, including small business conference hosting. 

For example, in San Francisco, small business closings reached 65% above January levels in September in the hospitality sector, compared with 49% in general.

In general, across all states, businesses providing accommodation and food services have accounted for the highest losses. Local and state government sectors have been heavily impacted, partly because of educational cutbacks caused by school closings. 

The health-care and social services sector has lost workers who provide labor services, such as ambulatory health-care workers, nursing providers and social assistance workers. This last category includes child day-care workers, who have lost work because of parents staying home to watch children. 

Other industries suffering heavy losses include administrative support and waste management.

At the other end of the spectrum, the finance and insurance industry has returned to prepandemic levels nationally, though it lags in a majority of states. Other industries that have weathered the pandemic well include transportation and housing, real estate and construction.

Local and state government policies also may help account for regional differences. For example, 4 of the top cities experiencing the largest business closure rates (San Francisco, San Jose, Sacramento and Oakland) are in Northern California, which has had some of the tightest lockdown policies in the nation throughout the year. Idaho and Utah, which have suffered the least unemployment rise since the pandemic began, also have some of the least restrictive lockdown policies.

Now let’s look at a regional breakdown:

Coronavirus Business Impact in New England

Among major New England cities, Boston has seen the largest decline in small business openings, down 33% in September 2020 from January 2020 levels. This has been accompanied by a 9.4% unemployment increase in the state of Massachusetts from February to November. Neighboring New Hampshire has seen a comparable 9.1% unemployment rise. Other New England states have had lower rises in unemployment:

  • Vermont, 8.2%
  • Rhode Island, 8%
  • Maine, 7.6%
  • Connecticut, 6.1%

The high business closure rate in Boston stems from a ripple effect, said Christopher Carlozzi, Massachusetts state director of the National Federation of Independent Business, speaking to the Boston Herald. Workers who would normally be out dining and shopping during the workday are staying home, reducing revenue for restaurants and stores.

Coronavirus Business Impact in the Mid-Atlantic States

In the mid-Atlantic states, Philadelphia leads cities in business closings, which rose 24% from January to September. New York City comes in next at 21%. On a state level, Pennsylvania saw a 7.7% rise in unemployment from February to November, while New York rose 10.3%, while neighboring Rhode Island saw an increase of 8%.

Philadelphia’s struggle with small business closures stems from a high concentration of businesses in affected industries, particularly food and accommodation, which accounts for 14% of local small businesses, according to a report published by the city’s Office of the Controller

In New York, Manhattan has borne the brunt of about half of business closings, reports The New York Times, as the slowdown of office work, absence of tourists and exodus of wealthy residents have combined to cripple businesses that depend on commuters. New York restaurant and bar owners were fighting a legal battle with the state to lift restrictions on indoor dining imposed in December.

Coronavirus Business Impact in the South

In the South, New Orleans, heavily dependent on tourism, leads cities that have been hardest hit by the pandemic. Small business closings rose 45% from January to September, while closings in the leisure and hospitality industry rose 72%. Miami and Tampa, Fla., other southern tourist spots, have suffered a similar trend but on a less drastic scale, with Miami losing 23% of small businesses and 38% of leisure and hospitality firms, while Tampa has lost 22% in general and 45% in hospitality. Other southern cities heavily impacted by business closings include:

  • Baltimore (28% loss)
  • Atlanta (26%)
  • Louisville (23%)
  • Memphis (21%)
  • Nashville (21%)
  • Jacksonville (18%)
  • Charlotte (18%)
  • Raleigh (16%)

At the state level, Southern states have generally seen lower unemployment numbers than New England and the Middle Atlantic. The increase in unemployment rates between February and November ranged from a low of 2.4% in Mississippi and Alabama to a high of 9.1% in Delaware.

Coronavirus Business Impact in the Midwest

In the Midwest, major cities suffering small business closings between January and September are led by:

  • Detroit (28% decline)
  • Chicago (27%)
  • Cleveland (26%)
  • Indianapolis (25%)
  • Milwaukee (22%)
  • Minneapolis (21%)
  • Columbus (21%)

Lower down the list, Wichita, Kansas City, Mo., and Omaha have experienced declines of 15% or lower.

As these numbers illustrate, Midwestern states with more urban populations, such as Michigan and Illinois, have felt the economic impact of the pandemic more strongly than their rural counterparts. 

On the statewide level in the region, rises in unemployment rates from February to November ranged from 3.4% in Nebraska to 9.8% in Michigan. Eric Thompson,University of Nebraska-Lincoln economist, told to the Chicago Tribune this was largely the result of states with agricultural economies being less disrupted by social distancing restrictions. However, industries such as restaurants still face struggles similar to those elsewhere in the nation.

A map of Texas, with a thermometer in its mouth, is looking sick.

Coronavirus Business Impact in the Southwest

In the Southwest, cities which saw the most small business closings between January and September were topped by:

  • San Antonio (34% loss)
  • Austin, Texas (32%)
  • Houston (30%)
  • Tucson, Ariz. (27%)
  • Oklahoma City (26%)
  • El Paso (25%)
  • Tulsa, Okla. (23%)
  • Albuquerque, N.M. (23%)
  • Fort Worth, Texas (22%)
  • Dallas (21%)
  • Phoenix (19%)

Patterns in these cities resemble those in other areas. For example, San Antonio’s leading industries include some hardest hit by the pandemic, topped by trade, education, health services, professional services and hospitality.

At the state level, unemployment has been higher in New Mexico, which saw a 7.6% increase between February and November, than in Arizona (3.1%) and Texas (4.4%). In response to a spike in COVID cases, the New Mexico state government issued heightened restrictions on small businesses in November.

Coronavirus Business Impact in the Rocky Mountain States

In the Rocky Mountain states, major cities suffering small business closings between January and September were led by:

  • Denver (26% decline)
  • Colorado Springs (23%)
  • Salt Lake City (18%)

In Denver and Colorado Springs, drops in tourism helped contribute to these losses. Denver suffered a 56% decline in the hospitality and leisure industry. Statewide in Colorado, the tourism industry had seen a record year in 2019, employing 181,400 workers. In March of 2020, this evaporated, thanks in part to a ban on downhill skiing.

However, in other sectors, Colorado unemployment averaged a rise of just 4.7% between February and November, consistent with relatively low rises in unemployment throughout the Rocky Mountain states. Idaho enjoyed a national low rise in unemployment of 0.4%, followed by Utah at 0.5%. Nevada with its tourist-driven economy suffered the largest rise in unemployment in the region, seeing a 7.6% increase.

Coronavirus Business Impact on the West Coast

On the West Coast, major cities hit by small business closings between January and September were concentrated in Northern California, but included other large population centers:

  • San Francisco (49% increase in closings)
  • San Jose (35%)
  • Portland (34%)
  • Sacramento (33%)
  • Oakland (32%)
  • Bakersfield, Calif. (31%)
  • Seattle (28%)
  • San Diego (28%)
  • Los Angeles (27%)
  • Fresno, Calif. (26%)

At the state level, California saw the greatest increase in unemployment from February to November, with a rise of 8%, followed by Oregon with 6.4% and Washington with 6.1%. In California, local, county, regional and statewide restrictive measures imposed since March have had the heaviest impact on the leisure and hospitality, retail, transportation and warehousing, personal care and child-care industries. State restrictions have been divided by region, with areas from Sacramento and the Bay Area south under stay-at-home orders as of the beginning of January 2021.

Coronavirus Business Impact in Alaska

Anchorage, Alaska’s most populous city, has suffered small business losses similar to those plaguing other major population centers. A survey by the nonprofit Anchorage Economic Development Corporation found 9% of local businesses had already closed permanently, while 14.5% feared closing. As in other parts of the country, closing rates were high in the tourism and hospitality industries. The finance, insurance and real estate sectors also suffered.

At the state level, this corresponded with a 6% increase in unemployment between February and November.

Coronavirus Business Impact in Hawaii

With its heavy dependence on tourism, Hawaii has been hit hard by the pandemic. Honolulu saw a 41% increase in small business closings between January and September, including a 39% increase in the leisure and hospitality industry.

Statewide, unemployment rose 15.2% from February to November, highest in the nation. On a positive note, Hawaii saw the nation’s highest unemployment rate decrease in November, according to Bureau of Labor Statistics data, though its resulting unemployment rate of 10.1% remains high.

Plan for Adjustments to Regional Impact

Being aware of how the COVID-19 pandemic affects the economy in regions affecting your market can help you adjust your business planning accordingly. Depending on your situation, this may involve anything from adjusting your business model to expanding or relocating into different regional markets. 

You also may need to make adjustments to your financial planning. If you require business financing resources such as a short-term loan, Fast Capital 360 is here to help.

Roy is a respected, published author on topics including business coaching, small business management and business automation as well as an expert business plan writer and strategist.
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