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Pandemic hits state economy hard, but Nebraska once again better off than most

When Krysette Long reopened her men’s hair salons after a two-month pandemic-forced shutdown, she saw some long-haired clients, as well as victims of “corona-cuts” — guys who in the interim had tried to cut their own hair.

“We fixed those as best we could,” said Long, owner of the Men’s Salons at Aksarben Village and at Lakeside. “We had some shaggy guys, taking off a lot of hair.”

But such shearing was nothing compared with the haircut the Nebraska economy has taken in the face of the coronavirus pandemic.

Since the virulent bug sparked the nation’s biggest economic downturn since the Great Depression, more than 121,000 Nebraska workers have filed for unemployment — among them more than 4,100 hair stylists and cosmetologists.

But even amid such economic carnage, it still could have been much worse. As has been the case with many past national economic calamities, Nebraska has not been hit as severely as most of the rest of the nation.

While roughly one in 10 Nebraska workers filed initial claims for unemployment between mid-March and early May, that was almost half the national average. Relative to workforce size, only two states had fewer claims than Nebraska.

And though Nebraska reached its highest unemployment rate on record in April, that figure likewise ranked third lowest in the country.

Economists and business leaders say there are a number of reasons Nebraska has fared so much better.

Nebraska’s diverse economy is heavily weighted in some industries that have been only lightly affected by coronavirus-tied lockdowns, among them food production, insurance and financial services. Conversely, the state’s economy is less dependent on some industries currently being slammed, including tourism and oil production.

“When you think about it, Nebraska’s economy produces a lot of necessities,” said University of Nebraska-Lincoln economist Eric Thompson. “Food production is essential, and the demand will be there even as people have to cut back.”

It’s likely that another factor was at play, too: Nebraska’s social distancing measures were not as restrictive as those in many states.

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Governors across the country have had to perform a balancing act, as limitations on gatherings hindered the virus’s spread but also disrupted business activity.

Gov. Pete Ricketts was one of only seven governors to shun a statewide stay-at-home order, instead tailoring restrictions to regions of the state based on a plan first drawn up by pandemic experts at the University of Nebraska Medical Center.

“I think (Ricketts) has done a pretty good job threading the needle here,” said James Blackledge, the CEO of Mutual of Omaha.

Leave no doubt, though: The virus has inflicted severe damage that continues to flow through the Nebraska economy. Even under the best-case scenarios, there likely won’t be a full job recovery until sometime next year.

State officials and business leaders are now focused on the long road back.

Though it’s not yet clear that the virus has peaked in Nebraska — particularly in the Omaha area, where cases have surged in the last month — Ricketts has begun the process of reopening the state.

Restaurants, hair salons, dental and medical offices in much of the state were able to resume operations earlier this month, with some limitations. Ricketts announced Thursday that bars, movie theaters and reception halls can reopen June 1 in 89 counties.

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Bryan Novak gives Alex Shekhtman a haircut at the Men’s Salons at Aksarben Village. The salon is open after a two-month shutdown.

The lifting of restrictions may already be making an impact. The total number of Nebraskans collecting unemployment has dropped in two of the past three weeks.

Looking further ahead, some state business leaders see opportunities for Nebraska to leap ahead economically in the post-pandemic world.

The coronavirus is expected to create lasting and fundamental change in the business world, from consumer spending patterns to where and how people perform their jobs. With change comes uncertainty but also opportunity, said David Brown, CEO of the Greater Omaha Chamber of Commerce.

“Our goal is not just to reclaim what we lost, but to accelerate the trajectory,” he said.

The Nebraska economy was humming along quite nicely entering March. Its biggest obstacle was not unemployment but a shortage of skilled workers needed to fuel job growth.

But as the virus began to quickly spread across the country, Ricketts became one of the first governors to adopt a public health recommendation limiting gatherings to 10 people. It had the overnight effect of shutting down many bars and restaurants, and closures of salons and other businesses where people closely interact soon followed.

By the end of that first week, more than 15,000 Nebraskans had filed for unemployment, about 30 times the number who file in a typical week. And each subsequent week has brought another wave of newly laid-off and furloughed workers.

Looking at unemployment filing data by industry and occupation, you can see how the virus’ economic impact rippled through the Nebraska economy.

The first two weeks, the highest job losses were in hospitality — mostly restaurants, bars and hotels. Creighton University economist Ernie Goss said he recently talked to a representative of an Omaha hotel that had employed 255 people in food services. That number is currently down to four.

The next two weeks, Nebraska’s biggest job losses were in retail. Then the two weeks after that, the hardest-hit area was health care and social assistance, a category that includes medical, dental and day care workers.

Now over the past three weeks, the greatest job losses have been in manufacturing.

While factories have not been directly affected by the restrictions intended to stop the virus’s spread, they’ve become a collateral casualty, as the general slowing of the economy has started to curb demand for goods. Construction and real estate are now being similarly affected, too.

“It’s a strange recession,” Goss said. “Normally, manufacturing leads the recession. Now manufacturing is lagging by a substantial amount, with leisure and hospitality being the drivers.”

Unemployment filings suggest that across the state, more than one in four workers in hospitality were thrown out of work. The downturn has also cost jobs for roughly one in four service workers, one in five in arts, entertainment and recreation, one in eight in retail and one in 10 in construction and manufacturing.

Only a handful of industries have been largely spared. Layoffs have hit only about one in 50 workers in banking and insurance and very few within government.

Reflecting the stability of the insurance industry, Blackledge said Mutual of Omaha has not had to lay off workers and at this point is still projecting that it will need to add roughly 300 employees by the end of the year.

Mutual also moved quickly and mostly seamlessly to working remotely after a worker at its headquarters became one of the first people in Omaha to test positive for the coronavirus. Today, out of more than 5,000 employees who work for the iconic Fortune 500 company, only about 150 are going into the office to work.

The fact that the company could still see net job growth amid the pandemic “is remarkable when you think about it,” Blackledge said.

It’s still possible that sectors that haven’t been directly bitten by the bug could feel its effects eventually because of ripples in the economy. State and local governments have yet to fully respond to lower tax collections due to reduced retail sales and lower incomes.

“One thing we learned in this process — which we already knew — is how interconnected our economy is,” said Bryan Slone, president of the Nebraska Chamber of Commerce and Industry.

One way this unique recession hasn’t differed much from most past ones: Nebraska is once again riding it out better than most states.

During the Great Recession a decade ago, Nebraska by percentage suffered only about half the job losses of the rest of the country. One study coming out of the recession ranked Omaha as the least affected among the nation’s 100 largest metro areas.

This time, only Utah and South Dakota as of early May had lower rates of new unemployment claims. The rate in Nebraska was one-third that of the hardest-hit states of Georgia, Kentucky and Hawaii.

When state unemployment estimates for April were released Friday, Nebraska’s 8.3% rate likewise was third lowest, behind only Connecticut and Minnesota, and well below the 14.7% national rate. Unemployment rates aren’t based on jobless claims but on a monthly survey of U.S. households.

Each state in the pandemic has its own unique economic story.

Nebraska is buoyed by a workforce that’s doubly weighted to insurance underwriting and claims processing and even heavier in food production. Utah already had one of the nation’s lowest unemployment rates entering the downturn.

On the negative side, Georgia is a major airline hub suffering from the sharp decline of air travel, and Hawaii is heavily dependent on tourism.

Another plus for Nebraska was that its small businesses were quick to take advantage of the massive federal loan program created to help them retain and pay their workers. One study rated the state’s level of participation in the Paycheck Protection Program as the top in the nation.

It also might not be coincidental that Utah, South Dakota and Nebraska were among the states that shunned statewide stay-at-home orders. A recent study by Creighton’s Goss found that states with such restrictive measures had on average lost more jobs than those without.

Besides tailoring rules to regional conditions within the state, Ricketts has used the availability of hospital beds and ventilators, rather than cases and deaths, as his primary guide in setting coronavirus restrictions. While Nebraska has seen above-average numbers of cases because of major outbreaks in several meatpacking plants considered essential, the state’s per capita death toll as of last week ranked 35th nationally.

Slone said he thinks that the way Ricketts handled restrictions has helped economically. Governors who handed down blanket restrictions in many cases unnecessarily restrained business operations, he said, particularly in areas that had few cases of the virus.

“The idea of shutting down businesses deemed to be nonessential arbitrarily created unemployment in other states,” Slone said. “I think Nebraska did that better.”

Regardless of what restrictions states have had in place, almost all are beginning to loosen them now. And in Nebraska, the moves appear to be making an economic difference.

While the state announced last week that another 6,000 Nebraskans applied for unemployment, the total number receiving benefits was down almost 10,000 from its high three weeks earlier.

“It’s very, very bad, but there are bright spots,” Blackledge said.

Slone thinks that Nebraska’s unemployment numbers should improve rapidly after July, when a stimulus bill provision that adds $600 to regular weekly unemployment benefits is set to expire. He said that has had a distorting effect on jobless numbers, as low-wage workers have been able to make more money on unemployment than on the job.

He’s even predicting that by the end of this year, some sectors of Nebraska’s economy will once again be back to confronting shortages of skilled workers.

But there can’t be a complete economic rebound until people again have the confidence that they can safely sit down to eat in a restaurant, mingle in a bar or climb aboard a plane.

“As we slowly open the spigot, we have to rebuild that trust,” Slone said.

In addition, the threat remains for a second wave of infections next fall and winter — an outbreak some see as inevitable as restrictions are loosened. Until there’s a vaccine, the virus remains in charge.

But there will come a time when the pandemic passes, and some Nebraska business leaders are already preparing for that day.

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Last week, the Greater Omaha Chamber released a playbook to help businesses in the months ahead as they think about operating in “the next normal.” The plan also included creation of a task force that’s looking for ways to accelerate the region’s economic growth.

The first job of the task force will be helping those out of work pick up the pieces, either by helping them find new jobs or by training them for new careers.

But the task force will also seek to take advantage of profound and lasting changes to the business climate that are expected in the wake of the pandemic.

Both workers and employers in recent weeks have grown used to getting business done remotely, and many more will choose to adopt that as a permanent way of operating going forward. Without need for big offices and employment centers, that means that both companies and employees can choose to locate anywhere.

And the pandemic has illustrated the pitfalls of putting businesses in densely packed urban centers like New York City.

A recent analysis by Moody’s Analytics said such cities may be seen as risky for some time, prompting the next generation to choose smaller cities. Moody’s mentioned Omaha and Des Moines as cities that could benefit from such a trend, citing their lower density and relatively high levels of education.

“Firms will need to follow these workers,” the report said.

Slone believes that people in larger cities who have had the opportunity to work from home may now rethink their two-hour daily commutes. Nebraska tends to benefit when people make such quality-of-life assessments.

“You can have a quality career and still make it to all your kids’ games,” Slone said. “There is an enormous opportunity for Nebraska to be successful.”

Tim Burke, CEO of the Omaha Public Power District and the chairman of the Omaha chamber’s board, said businesses that have seen disrupted supply chains may also choose to move manufacturing back from overseas — another opportunity for a low-cost manufacturing state like Nebraska.

“If we do it right,” Burke said, “we think we can be one of the areas that comes out of this growing the fastest.”

On a much smaller scale, Long similarly sees her hair salons rebounding from the virus and thriving into the future.

She remembers the scared look on her employees’ faces when they were forced to close down shop in March. But through the Paycheck Protection Program, Long was able to get a forgivable loan that let her bring back all furloughed workers who wanted to return.

Since May 4, when her stylists — now wearing required masks — were able to resume cutting hair, business has been good. In fact, it’s so good that Long is actually employing slightly more people now than before the pandemic.

“We are rebuilding and starting over — that’s what it feels like again,” she said. “We are all super happy to be back at work and taking care of everyone.”


Our best staff photos of May 2020

Photos: Our best staff photos of May 2020

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Small-town Nebraska newspaper, hammered by loss of revenue, finds new life with new owners

LINCOLN — Over 140 years, the Stanton Register has detailed the history of its northeast Nebraska circulation area, from the advent of electricity in 1903 to the violent twin tornadoes that roared past in 2014 and the devastating flood of 2019.

But late last month, with advertising revenue drying up as businesses closed because of COVID-19, the owners of the 600-circulation weekly newspaper decided to call it quits.

“All of advertising basically disappeared, or a large portion of it,” said editor and publisher Dani Hadcock, who had owned Stanton County’s only newspaper since 2016. “We had subscribers telling us, ‘I just can’t afford to renew my subscription because I’m out of a job.’ ”

But the Register didn’t die.

After reading of the newspaper’s impending demise, Carrie and Wade Pitzer of Neligh, whose four-year-old media company covers six communities in Antelope and Knox Counties, stepped in.

The Pitzers used to live just south of Stanton after they were married in 2000, and Carrie Pitzer, the president of Pitzer Media, said she couldn’t bear to see an institution disappear in a community where their family built their foundation.

“Stanton is the only legal paper in the entire county,” she said. “We couldn’t let them lose their only paper.

“If you lose your school or you lose your newspaper, you start losing ground as a community.”

Amazingly, when the Pitzers called to offer their help, the former owners asked them to take over the Register — at no charge.

Hadcock, who had worked for the paper since her freshman year of high school, said it was more important to keep the stories coming than to squeeze out a few dollars for a business that was making only $3,000 to $5,000 a year before the virus hit.

“I grew up here. So we’re into telling our town’s story. I didn’t want to see that die,” said Hadcock, who has three teenage kids and works another job as an ombudsman for a Navy support center in Omaha.

All across the nation, newspapers are struggling with falling ad revenue as businesses shut down or scale back because of the pandemic.

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In a small farm town like Stanton, population 1,511, ads purchased by the mom-and-pop businesses along main street are the revenue mainstays, as are ads related to the local school, which closed down, and county fairs and town festivals, which are on hold.

A recent survey of the state’s 163 newspapers found that revenue was down from 10% to as much as 70%, with only a couple of papers saying they were doing better than before COVID-19, according to Dennis DeRossett, executive director of the Nebraska Press Association.

“I think people are holding their breath and hoping that July and August will start to show improvement, or it will be very, very bad,” he said.

In Stanton, the locals are liking the changes to the Register already launched by the Pitzers.

There’s a Facebook page and other social media platforms pumping out news. The parade for graduating seniors from Stanton High School was streamed live online by the Pitzers, and every senior was interviewed for a video posted online. The annual newspaper section for graduating seniors included full-color photographs for the first time.

“They’ve done some really good things,” said Seth Pohlman, who runs an insurance agency in Stanton and figures that he’s saved every copy of the Stanton Register.

“I was born and raised here, and I just like history,” he said. “The previous owners did a really good job, but it’s been a godsend that the Pitzers came in.”

Jodie Arens, the activities secretary at the high school, said saving the newspaper also means that local sports will continue to be covered.

Carrie Pitzer said she was shocked when the newspaper was offered to them free of charge. But she said the offer shows the depth of commitment to local news by the previous owners.

The second edition of the Stanton Register under the new owners rolled off the press last week, and Pitzer said she’s already signed up some new subscribers.

She said it will take a commitment by the community, and its advertisers, to keep the newspaper running, but she’s already getting offers from some local residents to help write stories or take photos. Adding the social media outlets, like a Facebook page, is essential, Pitzer added, because that’s what people want these days.

“If we can change from being a newspaper to news source, I think the future is very bright,” she said. “It’s old-fashioned journalism presented in a high-tech way.”

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Is Nebraska ready to get back to (something approaching) normal?

If the May 4 openings are any indications, not all Nebraskans will jump to take advantage of the relaxed coronavirus rules announced late last week by Gov. Pete Ricketts.

Three weeks ago, some restaurants stuck with takeout rather than reopening, and not all barbershops and salons embraced the new rules immediately.

Some churches continued to meet remotely, with some only now planning to begin meeting in person.

The steps Ricketts announced Thursday will allow residents of 89 counties to return to bars; gather in groups of up to 25, rather than a maximum of 10; and go to zoos, theaters and concerts. All, of course, come with capacity limits and requirements for spacing patrons.

Whether the timing is right is too soon to tell. Ricketts said that new cases of COVID-19 and hospitalizations have remained stable across most of the state since May 4 and that it’s time to strike a balance between containing the virus’ spread and allowing people to resume a semblance of “normal life.”

“We need voluntary compliance … and so far, Nebraskans have been great,” he said. “If we (stretch) that too long and don’t loosen up restrictions, we’re going to see people abandoning them.”

It’s a balance every state — and likely every household — is weighing. In Iowa, Gov. Kim Reynolds announced similar rule relaxations Wednesday.

According to a new Kaiser Family Foundation poll, most Americans say it’s likely that they will go to a doctor, dentist or other medical appointment in the next three months.

But far fewer are likely to stay in a hotel, fly in an airplane or attend a concert or sporting event.

The poll also indicates that Americans are divided along party lines when it comes to reopening, with Democrats much more likely to say that businesses and other parts of the economy reopened too fast and Republicans inclined to say they did so too slowly.

In Nebraska as a whole, new daily case counts appear to have peaked at 677 on May 7 and drifted downward to about 300 — or fewer — last week.

Dr. Ali Khan, dean of the University of Nebraska Medical Center’s College of Public Health, said it appears that Nebraska had no major increases in COVID-19 between May 4 and May 19.

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The Nebraska National Guard directs people at the drive-thru testing site at the CHI Health Center. New daily cases in Douglas County hit a new high a week ago, and hospitalizations have almost doubled in the past two weeks.

“There’s been bumps in the road, but as a whole, we’re lower now than we were then,” he said.

But epidemics, like politics, are local.

While hot spots in Hall and Dakota Counties have cooled, the Omaha metropolitan area remains a point of concern.

Cases in Douglas County, identified through increased testing, have surged with outbreaks in meatpacking plants. New daily case counts for the county so far have peaked at 199 on May 16. Last week, they hovered between about 100 and 150 a day. But with testing still not universal, some cases could be missed.

In addition, the percentage of available hospital beds in the metro area had dipped to 28% as of Saturday. And only 26% of intensive care unit beds were open. Ricketts had set a threshold of maintaining at least 30% of both before relaxing restrictions.

Adi Pour, director of the Douglas County Health Department, told the County Board of Health on Wednesday that Omaha-area hospitals are beginning to “feel the burden of the coronavirus,” with hospitalizations for COVID-19 almost doubling in the past two weeks, reaching their highest point since the pandemic began.

The Nebraska Medical Center recently opened a fourth floor for COVID-19 patients.

Pour also expressed concern about Memorial Day weekend, a time when people typically gather in large groups.

She said it’s almost “imminent” that the area would see a surge in cases or hospitalizations after the holiday weekend.

Among Pour’s biggest frustrations is seeing so many people not wearing masks.

“We cannot let our guard down,” she said. “I think a lot of people have.”

Ricketts noted that the statewide rule limiting gatherings to 10 people will remain in place for the Memorial Day weekend.

Dr. Angela Hewlett, medical director of the Nebraska Biocontainment Unit, said the upward trend in hospitalizations is worrisome.

“We just keep building,” she said Thursday during a town hall with Ricketts on NET. “That’s what I’m worried about. It’s not a big surge, but a gradual building up.”

The Nebraska Medical Center currently stands at about 80% capacity, she said. Some of those patients are people who put off treatment for heart conditions and other ailments. But the count includes about 50 people with COVID-19, who arrived very sick. About half are on ventilators, where they typically stay for three or four weeks.

It can take about a month after a person is infected to be hospitalized, a factor that has complicated plotting the virus’ trajectory. A new surge in rural areas would put pressure not only on rural hospitals, but also those in larger cities, Hewlett said.

“We need to be very careful about what we’re doing,” she said, “not only in our rural areas but our urban areas as well.”

Ricketts said that the 30% benchmark has always been subject to change and that most of the uptick in hospital use in the Omaha area is not related to the coronavirus but to postponed medical care.

Both he and Dr. Gary Anthone, the state’s chief medical officer, said they are carefully watching the Omaha area’s hospital capacity — in particular the ICU beds and ICU staffing.

Anthone said Friday that he speaks with hospitals’ chief medical officers daily. Not one, he said, is concerned that the situation is getting out of hand. Some hospitals have shifted staff to provide additional help to ICU nurses. All have plans to get more from staffing agencies if necessary.

And hospitals can transfer patients to other hospitals, as some did when outbreaks stressed hospitals in Hall and Dawson Counties.

Pour, like Ricketts, said she has not yet noted any blips in cases from the May 4 opening.

“Honestly,” she said, “I do not think we’ve seen any impact.”

And with June 1 still more than a week away, Khan, a pandemic expert, said the state is probably ready to take additional steps toward reopening — as long as cases are going down in its communities.

“We want to reopen, but we want to reopen safely,” he said. “We want people to go out in an environment where they’re not likely to get infected. And that means making sure we’ve eliminated as many cases as possible from our community.”

Dr. Bob Rauner, the Lincoln-based chief medical officer of a network of Nebraska clinics, said after Ricketts announced the May 4 openings that the state should see two weeks of declining cases before reopening.

Rauner said he’s more in the middle of the road when it comes to the new round of openings, particularly given that Nebraskans for the most part have continued to be cautious.

“I think we do need to start opening some things up,” he said. “But it needs to be well thought out.”

Opening barbershops and salons makes sense if both the stylist and the client wear masks, Rauner said. He said he will probably visit a Lincoln bistro that’s planning to reopen, but he will dine on the patio. He said he doesn’t see an economic case for going back into churches. His hasn’t opened, he said, and it’s doing well with remote attendance. Donations have not dropped off.

Dr. David Filipi, an Omaha physician for more than 40 years and medical director of a Midwestern doctors association, thinks that it’s reasonable to begin opening up given the hospital capacity in the Omaha area. Hospitals could quickly shut down elective procedures if coronavirus cases start rising faster than expected.

“This is the first time we’ve done this sort of thing,” said Filipi, a member of the County Board of Health. “We’ve been managing things pretty well so far. ... The governor has been very reasonable about his approach, using science to guide his thinking.”

But Khan said that while he’s encouraged by the decrease in cases, the state still needs to bring those numbers down to a handful.

PRAM, the Pandemic Recovery Acceleration Model developed by Khan and other pandemic and infectious disease experts at UNMC, sets benchmarks that signal when each of the state’s regional health care coalitions have reached low levels of transmission.

One of PRAM’s benchmarks calls for new cases in the state to number no more than 20 a day. For the Omaha-area coalition, Pour said, the benchmarks are about eight new cases a day, a positive test rate of 5% and one death a week. Douglas County’s positive test rate last week was about 11%.

Because the state hasn’t yet reached such levels, Khan said, Nebraskans will need to continue to wear masks, wash their hands and practice social distancing while out in public.

“We may be going back out again, but we haven’t canceled the pandemic,” he said. “Because the pandemic’s still there and 95% of Americans are still susceptible ... we still need to be cautious.”

World-Herald staff writer Paul Hammel contributed to this report, which includes material from the Washington Post.


Our best staff photos of May 2020

Photos: Our best staff photos of May 2020