How the coronavirus changed Washington state’s economy

While some of the state’s industries are thriving, others are still in a tailspin.

People walking on a street with two U.S. flags flying

During the pandemic, large corporations, online businesses and the wealthy have thrived, but many others are worse off a year later. As the pandemic continues to close small businesses, force people into unemployment and shut down entire segments of the economy, wealth inequalities are widening. (Frank Franklin II/AP)

It seems so long ago and yet just like yesterday when countries around the world began initiating shutdowns in response to a deadly virus we knew almost nothing about. Companies shifted millions of employees to telework. Schools closed. Offices and storefronts were shuttered. In-person events were canceled. For a while we wondered if these changes would be temporary. They were not.

Frontline workers at hospitals, grocery stores and food processing plants had to continue working and face exposure to COVID-19. Some businesses figured out how to quickly pivot to online services or sales, or retool to manufacture personal protective equipment. Over time, some businesses, such as hair salons and retail shops, have partially reopened. Until recently, many remained closed entirely, such as music venues and fitness facilities. The travel and hospitality industries have been in a tailspin while the tech industry is surging.

One year later, in this historic economic downturn, we’re seeing how industries and communities face vastly different impacts from the pandemic. 

The Washington State Department of Commerce’s economic recovery dashboard shows several interesting trends in the state:

  • Some industries are thriving while others are barely hanging on. Manufacturing is, by far, the hardest hit, a result of the steep drop in aerospace manufacturing, and it continues to decline. The leisure and hospitality industry — which includes hotels and restaurants — is also struggling, but is slowly beginning to recover. Construction, an industry usually among the most vulnerable in a recession, is largely back to pre-pandemic levels. Fortunately, some sectors of our economy are actually growing, including retail (primarily e-commerce) and information technology, both of which are outperforming the United States average, according to the Economic and Revenue Forecast Council's January update.
  • A disproportionate percentage of Pacific Islander, Black and Latino workers are filing unemployment claims. This correlates to the industries where a disproportionate share of those in the workforce are people of color, such as the service sector. The people more likely to be caring for our children, tending to the sick, serving food, stocking groceries, cleaning streets and keeping daily life moving are struggling the most.
  • People are currently spending 14% less time out and about than before the pandemic. This means we’re not driving, ride sharing or taking public transportation as much. Significant numbers of people working from home means fewer stops to coffee shops, lunch spots and dry cleaners. Even where it is possible to shop or eat out, some people no longer have the financial means to do so, while others are choosing to limit activities until they feel safer.

Going forward, some industries and communities will rebound quickly and come back even stronger, while others will fall behind — the so-called K-shaped recovery that experts and observers have speculated about.. We must be intentional about pursuing economic recovery measures with an equity focus, both from a demographic and geographic perspective.

The Department of Commerce has directed nearly $1 billion in COVID-19 relief funds to hard-hit businesses, families and communities. Our small business grants have helped support nearly 13,000 small businesses around the state as they try to stay afloat, while we’ve worked with local partners to provide rent assistance to nearly 30,000 households. In addition, we’re developing strategies to support businesses and nonprofits that have historically been most underserved, many of them because of language or cultural barriers. 

The need for help continues. The governor and state Legislature approved additional COVID-19 relief funding that, combined, will fund $280 million for business grants and technical support and nearly $370 million for rent assistance. But the scale of the economic impact remains unprecedented. We need additional federal support in order to meaningfully help all who have been hit hard by the pandemic.

Beyond direct financial assistance, broadband and child care are the most urgent needs for employers and families. Regardless of the changes yet to come, any path to an equitable recovery will mean more people working and learning from home and more parents and guardians needing affordable child care options.

The economic hit is unlike anything the state has experienced before. If we are to build back stronger, we must confront the inequities within our workforce and communities that have been exposed. The future of work is coming into focus more quickly than the investments we’ve made into helping everyone be part of it. We will continue to track data by industry, region and population in order to steward investment of state and federal funds in ways that strengthen communities and provide equal access and opportunity to recover and rebuild.

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About the Authors & Contributors

Lisa Brown

Lisa Brown

Lisa Brown is the director of the Washington State Department of Commerce.