Businesses, workers reeling as coronavirus outbreak brings record high Delaware unemployment claims

It is difficult to grasp on just how much damage the coronavirus pandemic will ultimately to the economy nationwide and here in the First State, but we are starting to get an initial sense of the scope both in hard numbers – and anecdotally.

Delaware Public Media contributor Jon Hurdle spent the week talking with businesses and workers affected – and looking at the available data.

Greg Vogeley laid off 43 people from his three Delaware restaurants when they were forced to close by the coronavirus, and he’s pretty certain that the company will be permanently downsized even when it reopens.

Vogeley, owner and operator of Hockessin-based Drip Café, a full-service restaurant and caterer, shut the doors of his Market Street, Wilmington espresso bar on March 16 and did the same with another branch in Newark four days later. Now, he’s trying to make some kind of a living offering takeout and delivery services from the Hockessin location which, like thousands of restaurants around the country, is not permitted to offer sit-down service during the pandemic.

Vogeley estimates that his revenue has fallen by at least 75 percent, forcing him to lay off all but seven of his 50 employees, since Gov. John Carney ordered the closure of bars, restaurants, hotels and non-essential business in an effort to slow the spread of the virus.

The worst part, Vogeley said, is losing nearly all his workers, albeit temporarily, and at a time when he was about to celebrate being in the business for seven years.

Credit Delaware Public Media

“I love my employees and I’m trying to do everything I can to stay open,” he said. “My heart is with them and their families and trying to keep them out of the unemployment line as long as I possibly can. It kills me to think that 43 people who trusted me are no longer receiving a paycheck. No local restaurant owner wants this to happen to their people. It’s just gut wrenching.”

Even when the state lifts its ban on sit-down restaurants, Vogeley does not expect to reopen the Wilmington location.

Those jobs are among 20-25,000 in Delaware restaurants and food-service establishments that are expected to be lost in the shutdown, according to the Delaware Restaurant Association, a trade group. The losses would represent about half of the industry-wide work force in 2019.

Karen Stauffer, a spokeswoman for the group, said hospitality workers accounted for the “vast majority” of new claimants for jobless benefits.

For the week ending March 21, reported on Thursday, the number of new claims in Delaware soared to 10,790, the highest level in 30 years of Department of Labor records. The latest number for just one week was higher than for any whole month since 1990, and exceeded a monthly high of 8,948 at the peak of the 2008-09 recession.

“The weekly claims for unemployment insurance benefits, for the week March 15-21, 2020 exceeded the number of claims received in any months over the past thirty years,” DOL said in a statement.  

National data, issued at the same time, showed that 3.2 million people filed first-time claims for unemployment benefit in the same week, far exceeding the previous record from 1982.

In Delaware, it’s not only hospitality companies that are being hit by the shutdown of non-essential businesses.

Newport-based milliCare Floor and Textile Care, which provides carpet-cleaning services for large institutions in the mid-Atlantic region, has lost about half of its regular $600,000 a month in revenue because many clients’ buildings are closed, said President Chip Rankin.

Credit Delaware Public Media

He said he hasn’t laid off or furloughed any of his approximately 100-strong work force and hopes to find enough demand from his customers over the next two weeks to avoid any reductions.

“Hopefully, I can guarantee my people all the hours that they want,” Rankin said.

But if revenue doesn’t start to recover after the next two weeks, he warned that he will have to consider layoffs or reduced hours.

He’s hoping he can hang on until his customers decide to reopen their buildings. At that point, Rankin is expecting a surge in demand because clients will want their premises sanitized to prevent any resurgence of the virus.

For now, the remaining revenue is coming from institutions such as utilities and IT support centers that are open because the government deems them essential. Therefore, companies like milliCare that provide services for them are also considered essential, he said.

But there are no such cushions for workers like Dani Keenan, head bartender at the Christiana site of Eggspectation, a restaurant chain. Keenan lost her $750-a-week job when the restaurant closed on March 16, the same day Gov. John Carney ordered the closure of sit-down restaurants, limiting their operations to take-out and delivery only, in an effort to slow the spread of the virus.

Now, she gets just $45 a week as a part-time cashier operating the restaurant’s take-out operation, and is expecting another $167 a week in unemployment benefits – together amounting to a reduction of more than two-thirds of her regular income.

Keenan’s finances are further strained by the fact that her boyfriend, also a bartender, has been laid off too, leaving him without his regular wage of $500-$600 a week, she said.

For the next month, the couple will be able to pay their $950 monthly rent on the house they share in Stanton, but only by “cleaning out” their savings, she said. For now, they are devoting whatever income they get to feeding themselves and Keenan’s six-year-old daughter.

Keenan, 35, a senior in dietetics at the University of Delaware, said she has tried to find work elsewhere, including at Amazon, but has been unsuccessful. “I’ve applied at 15 different grocery stores and I haven’t gotten any calls from anyone. We just can’t find work right now,” she said.

National estimates of job loss from the virus run well into the millions. They include a state-by-state forecast by the Economic Policy Institute, a think-tank, whichprojected that Delaware will lose 16,700 jobs, or 4.2 percent of its private-sector workforce, by June. It noted that 26.4 percent of those jobs are in the hospitality, leisure, and retail industries, which are being bludgeoned by the epidemic.

In Ocean View near Bethany Beach, Ocean Vayu Yoga has seen a drop in revenue of about 75 percent since closing on March 17, said husband-and-wife owners, Justin and Kim Cavagnaro. They are able to keep some money coming in by offering online classes but that has been a limited success because many of their older clients have been unwilling to adapt to online instruction.

For now, they are able to pay rent on their studio and keep up mortgage payments on their house but only by stopping paying themselves for giving the online lessons, and by laying off six yoga teachers who work as contractors, and so would be unable to claim jobless benefits.

Justin, also a glassblower, and Kim, a jeweler, are unable to sell their artwork at the high-end shows that normally contribute to their income but are now shut because of the virus. Justin said he would consider using his experience as a house painter if such work was available but would feel uneasy about it because of the prospect of coming into contact with other people carrying the virus.

At the Henlopen City Oyster House and the Blue Hen restaurant, both in Rehoboth, revenue has sunk to zero and all 82 employees have been furloughed, said co-owner Chris Bisaha. He said he initially offered carry-out food service after closing on March 22 but only to get rid of inventory, and has since stopped doing so because it’s not financially worth it.

Bisaha said he can survive for now, given that he and his partner own one of the buildings, and are asking the landlord of the other for flexibility on rent during the pandemic.

He’s hoping the state lifts its shutdown order by May 15. He thinks he can survive until then, and is hoping he will be able to revive the business during the economically crucial summer season.

Bisaha fears for his laid-off employees, who will be getting much less in benefits than they do in wages, and for the wider economy, which will slow or contract because consumers are unable to spend.

“It’s 82 people out of work, 82 people who can’t spend money,” he said.

Back in Hockessin, Vogeley expressed his shock over the dramatic closure of the business that has dominated his life for seven years, and worried about its future.

“I’ve done my job over the last seven years and it just got swept out from underneath me,” he said. “We’ve all poured our hearts and souls into this business. This is not a game, these are our lives.”