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Continued restaurant closures could mean 21,000 lost jobs by summer

Tuesday, March 24, 2020 by Chad Swiatecki

A prolonged shutdown of area restaurants into the late spring and summer months is projected to result in 21,000 lost jobs throughout Travis County, with $738 million in total lost wages. Those figures come from an analysis of restaurant industry data that federal officials are using to determine the size of an aid package to help restaurants closed because of the pandemic.

Brian Kelsey, director of research for the Capital of Texas Media Foundation, used data in a letter from the National Restaurant Association to the federal government to calculate what would happen under a three-month closure of local restaurants by local authorities.

Kelsey said there’s no way to reliably measure how restaurants will fare while operating as takeout- or delivery-only businesses in the short term, but said it is expected that 15,000 direct restaurant industry jobs would disappear during a three-month shutdown. An additional 6,000 jobs would be lost in businesses related to the hospitality industry, such as supplies and equipment sales.

The nearly three-quarters of a billion dollars in lost wages would result in a loss of $86 million in total tax revenue for state and local coffers. “Twenty-one thousand is not an insignificant number of jobs for the industry and the county and it’s going to have a fairly drastic effect on not only that industry, but all industries in Travis County,” Kelsey said.

“You have to direct this info at a couple of different angles. There’s the immediate impact of a relatively low-wage workforce that is mostly living paycheck-to-paycheck in a lot of places and can’t lean on savings to pay rent and everything else, so there’s going to be immediate income effects there.”

Since the outbreak of the coronavirus locally, some lobbyists in the restaurant and entertainment industry had sought relief in the form of an exemption or delay in holdings for state sales taxes and mixed beverages. Last week the state comptroller’s office decided those payments would still be due as normal.

Kelsey said that temporary move likely wouldn’t have amounted to much in the face of months of lost revenue, with federal loans, the possibility of local direct grants to some businesses and possible rent freezes being better options.

“For most small restaurants it would help to hold off on paying some taxes to the state, but that’s not a significant amount of money compared to the sales they’re going to lose over this closure period,” he said.

Stephen Sternschein, co-owner of the Empire Control Room and Garage music venue, agreed with Kelsey and said possible savings of his monthly tax check to the state, which can total up to $20,000, will likely be small compared to the level of aid that will be needed from the federal level.

“It sends the message that this crisis is so broad, there’s a realization that that would’ve helped us currently, but they’re leaning on the federal government to take care of it,” Sternschein said. “With the option of letting the feds handle everything, the states are backing off from making really significant moves. What concerns me is the level of support we’ll get, and my fear is we’re all going to apply for these things and they’ll hand out like $1,000 for each person and as businesses we’ll get another $1,000 or the equivalent to that. It doesn’t equate to the loss for us or put us in a position to reopen and be in business again.”

Matt Smith, co-owner of the Austin Winery, said he’s held on to his small staff even though closing the tasting room has cut his revenue by 75 percent. An emphasis on retail sales in recent weeks has helped make up for some of the loss, but Smith said several months without booking for business meetings, bridal and baby showers, and other gatherings would likely force him to trim back his staffing.

“It’s going to be tough. I don’t know if a lot of people realize … (how many) Austinites got laid off last week,” he said. “I think a lot of people who work nine-to-five jobs don’t view service and hospitality people’s careers as careers and are removed from what that means.”

The Capital of Texas Media Foundation is the Austin Monitor’s parent nonprofit.

Photo made available through a Creative Commons license

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