Yesterday (March 19th), Pennsylvania Governor Tom Wolf released an order mandating the closure of physical operations at all “non life-sustaining businesses” beginning at 8:00 PM, with enforcement beginning on Saturday, March 21. The unprecedented move is intended to slow the spread of the COVID-19 virus, a global pandemic that surely won’t be news to anyone reading this post. The Governor’s order included a specific list of business types that were ordered to close physical operations, and it was organized by the familiar taxonomy of NAICS Codes.
As Pennsylvania and other states cope with the massive public health impacts of the COVID-19 outbreak, governments and private employers will enact policies that affect not only people’s physical health but also their financial and economic well-being. Quite rightly, the short-term priority is public health. But we also know that in addition to health and social impacts, there will be economic impacts. At Fourth Economy, we’re working to provide timely analysis of how those effects are likely to play out, so that we can better understand the people, jobs, businesses, and organizations that are at risk from the economic impacts of the pandemic.
In Pennsylvania, the first step in that analysis is understanding which businesses and workers are directly impacted by the Governor’s order. Of the 342,000 private businesses in Pennsylvania, 167,800 fall into industries that will not be allowed to continue physical operations. (How many of these can operate remotely is unknown.) A further 21,800 fall into industries that have limited operations. (Most in the latter category are restaurants, which will cease dine-in services.)
Number of PA businesses by physical closure status:
The graph below shows the number of employees in each major industry sector, organized by closure status. Those shown in red work for businesses that will not be able to continue physical operations. Those in yellow work for businesses with limited operations (again, mostly restaurants). Four major sectors — Retail Trade, Professional Services, Construction, and Manufacturing — account for over half of employees whose businesses will close physical operations. Outside of restaurant workers, about 35.5% of the Pennsylvania workforce not directly impacted by closures are employed at hospitals or other health care facilities.
This does not mean that all those businesses whose employees are shown in red above will need to stop work altogether. Indeed, some workers are already working remotely (including our staff at Fourth Economy), and many shown in red above will likely transition to telework. Although this preliminary analysis does not account for the increasing numbers of teleworkers, it offers a first glimpse at who is affected.
Going forward, we will attempt to model which businesses will likely be able to continue operations despite the physical closure, as well as which jobs will be most affected by shutdowns. But it’s obvious from the outset that lower-income, hourly workers — many of whose jobs will not accommodate remote work — will face significant financial challenges.
To be clear, we are adamantly not suggesting that the economic ramifications of this order make it a bad idea or poor policy. Public officials worldwide, including the Governor, are facing impossibly difficult tradeoffs with no clear precedents to guide them. They are no doubt aware of the economic impacts of their decisions. In addition to preventative orders like the closure of businesses, we are seeing a variety of proactive economic policies designed to help people cope with the looming economic impacts. As we all work to manage the reality that we are now dealing with, we will seek to provide further analysis that can help to inform both immediate and future-looking efforts and minimize the long-term costs of this crisis, especially for those most at risk.
We’d love to hear from you.
What information would you find helpful as your community responds to the impacts of COVID-19? Drop us a note.
Governor Wolf's order was amended on March 20th. In the amended order, 18 industries were categorized differently than in the original order.
The above analysis was edited to reflect those changes.
A few methodological notes:
In order to attach numbers to the industry codes included in the closure order, we merged 2018 QCEW data with the NAICS codes listed in the press release.
Some employment numbers in specific industries are not disclosed statewide. Employees in those specific industries were omitted from the above analysis.
This analysis includes only private-sector employees. It does not include government employees.