State report says pandemic caused fewer business closures than expected


Foxtail Bakery. Baltazar’s. Vine-N-Tap…just three local business casualties to the COVID-19 pandemic.

Hundreds more have closed across the state, while others struggle to rebound and survive as indoor dining restrictions slowly loosen.

But a new state report indicates the situation never got as bad as initially expected.

“It is encouraging from a big picture perspective that there have been relatively few closures compared with the initial level of fear at the start of the pandemic,” according to the report from the Oregon Office of Economic Analysis. “The fact that entrepreneurship has remained so strong means the total number of businesses in the economy will continue to increase.”

▶️ Local restaurants continue to struggle amid COVID; popular spots closing

The report set to get real-world data to either debunk or confirm some third-party sources that showed 30% of Oregon businesses have closed and 50% of leisure and hospitality firms closed over the last year.

It laid out four points:

  • Active business licenses actually increased nearly 2% from January 2020 to January 2021 and “private sector business units” jumped by nearly 3%.
  • Businesses close every year, even in good economic times. While sizable increases in the number of firms shutting their doors, this is nowhere near some of the estimates cited in the past year. Either the pandemic generated three times the number of closures as past severe cycles or these third-party data estimates are not truly representative of the overall economy.
  • Small business income is largely flat over the past year thanks to the Paycheck Protection Program.
  • Timely data for bars and restaurants – the most impacted sector in terms of the pandemic – show that firm closures are up in the past year, but not nearly as much as the conventional wisdom or miscellaneous third party data indicates.

Specifically, OLCC data shows the number of active liquor licenses for on-premise sales over the past year is down around 5% while renewals hover around 92%.

“Overall there is a clear increase in closures among bars and restaurants in Oregon, however, that increase thankfully appears to be around 5% not 50%,” according to the report.

The report’s most encouraging data points show start-up activity has surged since the shelter in place phase of the pandemic ended based on business application data from the Census Bureau and the Oregon Secretary of State.

“The best-case scenario here is that the rising number of start-ups means innovation and productivity will increase in the years ahead, boosting long-term economic growth prospects,” the report said. “At a minimum, the higher number of start-ups means the economy will not suffer the double blow of more closures and fewer start-ups as has been the case in past severe recessions and which would slow the overall recovery.”

Damon Runberg, a regional economist with the Oregon Employment Department said his own analysis of Central Oregon data backs up the state report.

Runberg looked at the number of businesses that had reported payroll employment in Q3 2019 but no longer in Q3 2020 and compared that to previous years.

“That VERY early results reveal that the ‘closure’ rate in 2020 wasn’t much worse than the years leading up to 2020,” he said in an email to Central Oregon Daily News. “In fact, the closure rate was lower in some industry sectors, such as professional ad business services.”

He said the CARES Act and other federal programs probably saved many businesses during the pandemic.

“We shall see if that support carries us through the recovery,” he said. “The good news is that we expect to see a figurative shot in the arm this summer as the economy opens back up.”


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