The COVID-19 Pandemic in Austin: Impact, Reaction & Survival
At the request of the City of Austin and the Austin Chamber of Commerce, the University of Houston Hobby School of Public Affairs conducted a study of the impact of COVID-19 on economic activity in the Austin area. The study sought to better understand the impact of the COVID-19 Pandemic and associated business shutdowns with the goal of informing the decision making process to determine how the limited federal funds provided to the City of Austin and Travis County can be most efficiently and equitably distributed.
The study includes three components: an analysis of the economic conditions in the region prior to and during the COVID-19 Pandemic; an on-line survey of businesses; and a survey of childcare centers.
- During the second week of April, overall revenue for small businesses in the Austin area fell to 50% of the pre-COVID level. Revenue bottomed out in April while remaining 26.5% lower in the second week of June.
- Consumer spending declined in all sectors to about 30% below January 2020 levels. As of June 18, overall spending bounced back close to the pre-COVID level. However, spending remained low in the sectors most impacted by COVID-19 and the stay-home and social distancing policies.
- Weekly unemployment insurance claims in Travis County spiked to 14,585 during the third week of March and slowly declined to 2,583 in the second week of June. The unemployment rate in the Austin area was over 12% in April.
- Forty-seven percent of survey respondents estimate that their businesses can survive 10 months or less in the current environment; 39% report that they can scale their activity; and 14% cannot estimate how long they can endure.
- From March through June, businesses implemented different strategies in response to COVID-19: 48% of the businesses temporarily closed; 42% enacted a hiring freeze; 39% reduced employee hours; and 37% laid off full time employees. Ten percent of respondents reduced benefits while 2% of businesses permanently closed.
- The three Austin industries in the most dire straits today as a consequence of the COVID-19 Pandemic include Live Music, Restaurant/Bar, and Hospitality Services industries.
- Sixty-four percent of survey respondents have applied or intend to apply for loans from the SBA Paycheck Protection Program (PPP).
- More than half of Austin’s Live Music businesses and Restaurants and Bars will be forced to close permanently in six months or less under current conditions without financial assistance from the government.
- Childcare programs will be instrumental in allowing families with children to return to work. The biggest concern of child care providers is the expectation that parents will be reluctant to send their children back to childcare centers, fearing the possibility of transmission and infection.
Background Conditions in the Austin Area
This report describes the economic and business conditions in Austin at the time of the survey, using the most recent data from the U.S. Census Bureau and other sources. The report items include the following:
- Sectoral distribution of employment in the Austin metropolitan area
- Impact of COVID-19 on small business revenue, costs, financial constraints, and expected recovery
- Evolution of labor market conditions
Survey of Austin Area Businesses
The survey of Austin area businesses was conducted between June 11-25, 2020. In all, 1,050 business owners completed the survey. The survey contains the following components:
- An analysis of how businesses in general have been affected by and responded to the COVID-19 Pandemic over the past four months
- An exploration of how different industries have been impacted by and reacted to the pandemic
- An understanding of the differential impact of the pandemic on minority-owned and woman-owned businesses, and on businesses of different size and age
- An in depth examination of the six sectors that have been more heavily impacted by the COVID-19 Pandemic: Live Music; Restaurants and Bars; Hospitality Services; Retail Trade; Arts, Entertainment and Recreation; and Healthcare
Survey of Austin Area Childcare Centers
The survey of 94 childcare centers was fielded between June 25 and July 9, 2020. The centers surveyed ranged from family homes to school-based programs with enrollments between three and 800 children. The survey examines the following aspects:
- The impact of the outbreak of COVID-19 and the Stay Home-Work Safe orders by local governments on childcare providers
- The expectations about reopening and expected changes in enrollment and revenue
- The concerns for sustainability of the childcare centers and programs
Kirk Watson, Dean, Hobby School of Public Affairs
John Antel, Professor, Department of Economics, University of Houston
Mark P. Jones, Senior Research Fellow, Hobby School of Public Affairs; James A. Baker III Institute for Public Policy's Fellow in Political Science, Rice University
Pablo Pinto, Director, Director, Center for Public Policy; Associate Professor, Hobby School of Public Affairs
Sunny Wong, Professor, Hobby School of Public Affairs
Gail Buttorff, Co-Director, Survey Research Institute; Assistant Instructional Professor, Hobby School of Public Affairs
Francisco Cantu, Co-Director, Survey Research Institute; Associate Professor, Department of Political Science, University of Houston
Renée Cross, Senior Director & Researcher, Hobby School of Public Affairs
Jim Granato, Associate Dean & Professor, Hobby School of Public Affairs
Richard Murray, Lanier Chair in Urban Public Policy & Professor, Department of Political Science, University of Houston
Yewande Olapade, Post-Doctoral Fellow, Hobby School of Public Affairs
Savannah Sipole, Research Associate, Hobby School of Public AffairsAgustín Vallejo, Post-Doctoral Fellow, Hobby School of Public Affairs