As the coronavirus pandemic disrupts lives and livelihoods, communities, and economies, what lies ahead for Portland? Led by an increase in remote working and a surge in delivery of goods and services, the digitization of life, work, and business will deepen. “Normal’ life will not be a return to the life we had before the virus.
Even after the stay-at-home orders are modified or lifted, many communal activities will be curtailed. Those that bring together a crowd in an enclosed space, like restaurants, music venues, sporting events and transit will be hit the hardest and for the longest time.
"In early March... it wasn’t uncommon to hear predictions of a relatively quick, “V-shaped” recovery once the state’s economy reopened. But more than two months later, as the reopening finally gets underway, such upbeat forecasts have all but vanished.
"Indeed, forecasts now suggest a recovery that will be anything but V-shaped. The Congressional Budget Office predicts that the national economy, which shrank by an annualized rate of 4.8% in the first quarter, will shrink by an astonishing 40% in the second.
"That sets the stage for a recovery...that is likely to stretch well into 2021 or beyond and have far-reaching impacts.” Paul Roberts, Seattle Times, May 10, 2020.
Without the deep pockets of national and global firms, Portland’s local independent businesses are at greatest risk of failure. We are already witnessing the closure of beloved long-operating restaurant and retail establishments.
At the same time, Portland is highly dependent on the global and national economy that we have scant control over. To prevent avoidable COVID-19 related local economic devastation, we must deploy smart, decisive strategies.
Here are five actions Portland can take to ease the local economic impacts on businesses and their workers:
1. City and County Must Invest in Making Local Changes to Safely and Incrementally Open Our Local Economy
About 1 in 5 Oregon workers—380,000 people—have filed for unemployment claims. Sixty-two thousand gig workers, independent contractors, and others are waiting to receive their benefits.
Governor Kate Brown announced that Oregon counties that apply for and obtain approval can relax the statewide stay-at-home order and allow certain businesses to open, using new rules of worker and customer engagement, starting May 15. If COVID 19 cases flare up, these “new normal” guidelines will be reversed.
What does this mean for Portland and Multnomah County? The guidelines for lifting current restrictions set out a percentage of residents’ participation in a testing and contact tracing program The numbers make it tough for Multnomah County, as well as the other populous metro-area counties, Washington and Clackamas, to meet the governor’s threshold for relaxing existing COVID-19 restrictions. But we now know what we need to do:
The City and County must prioritize their budget expenditures to invest in testing and contact tracking capacities required by Governor Brown to meet the threshold for a safe opening of our local economy.
2. Create Jobs Now, When They Are Needed Most: Fast-Track 5 Years of Planned and Paid-For City Construction Projects
We must again do what worked in 2009. With a goal of spurring creation of nearly thousands of construction jobs, as mayor I worked with City Commissioners Randy Leonard and Nick Fish to create Portland’s first-ever local economic stimulus package to fast-track dozens of City shovel-ready public works construction projects valued at hundreds of millions of dollars. The list comprised public works projects that addressed the backlog of either infrastructure maintenance or infrastructure improvements, funding street paving, sewer reconstruction, bridge repair, and other infrastructural projects. From November 2007 to 2008, Oregon had lost 12,500 jobs in the construction industry, and Multnomah County construction industry had contracted 6.3%. Most of the projects were already in the city's capital improvement budget and would have been completed over the next five years regardless. But by accelerating construction schedules, we saw that Portland would be able to get better deals on construction bids in a soft economy and save money because the projects would therefore not be subject to inflation. Ordinarily, at the time, construction costs tick up about 6 percent a year while a project sits on the books. Portland must do this again.
3. Lay Groundwork Now for Accelerated Exports of Local Products and Services
Budget cuts. Revenue options. Regulatory choices. Every day, the City and County are making decisions, or not, among some very tough choices. The actual impact of those decisions on workers and businesses, especially locally owned businesses, is key to hastening our recovery.
We need clear-eyed analysis and expertise. Our local efforts need to be informed not only by what we can observe but also by real-time data. I know that collecting data does not exactly reassure or inspire the soul. But it is vitally important that we know how global and national trends are playing out locally.
For example, based on the 2018 business tax collection data, the City and County know, on a firm-by-firm basis, which businesses located within the City of Portland are exporters of locally made goods or are from a locally headquartered professional service firm. Export sales from these local firms bring much-needed new money back into the Portland economy.
We need to leverage existing data to gain traction in a changing business landscape. We need to be informed and ready to seize opportunities. Other parts of the nation and world are going to be opening up their economies and existing supply chains. We need to make sure that local businesses will compete to supply them.
Convene a greater Portland export promotion council. It is likely that COVID-19 will not be extinguished everywhere in the world for several months and possibly years. That could mean existing international suppliers for US-based firms will be looking for more reliable domestic ones. Portland is a city of makers, of experts, and we need to help our local firms be ready to compete in this new domestic market. The proposed council will pool knowledge from existing exporters in the Greater Portland area for mutual benefit with non-competitor regional businesses.
4. Buy Local
Export as much as we can and buy as much locally owned and produced goods and services as possible. This is how, in these uncertain times, we keep ourselves as economically resilient as possible.
We need to develop an economic platform that meets our local needs, one that combines with Portland’s minority- and women-owned business development programs and supports the Community Benefit Agreement initiative. I am inspired by Oakland’s Local and Small Business Enterprise Program, which: “...aims to provide economic opportunity for all residents and businesses, stimulate economic development, and nurture a stronger, local economic base. The program specifies requirements for the city’s contracting and purchasing...”
As an example, we should consider a 5% preference bidding score preference on City requests for proposals (RFPs) to businesses that are headquartered within Portland. This could apply to all City supplies and services procurement opportunities under $100,000 and professional service contracts over $100,000 (threshold amounts noted are illustrative).
5. Provide Legal Support for Local Business Lawsuits Unfairly Denied Interruption Insurance Claims
For years, firms have been paying for business interruption insurance. Currently, the business insurance industry is taking the position that coverage in a typical commercial insurance policy do not cover losses caused by COVID 19.
Claims are being denied even when a business interruption policy does not exclude for viruses like COVID-19.
Ian Birk, an attorney with Seattle-based Keller Rohrback law firm, is preparing to sue insurance companies. Birk maintains that the insurance companies must, “...cover what the policy says they cover, not what they wish retroactively they could cover or not cover because of its financial consequences.”
The City and County and local businesses have a strong shared interest in seeing to it that insurers pay the claims they should.
If these lawsuits move forward, and at the appropriate time, the City of Portland should file an amicus brief in support of local businesses to provide courts with relevant, additional arguments that consider the citywide impacts to Portland workers and business owners.