As business tanks because of coronavirus, unemployment claims soar across Maryland

As business tanks because of coronavirus, unemployment claims soar across Maryland

Small operations furlough employees, face uncertainty

| Published:
Denizens Brewing Co.

Denizens Brewing Co, which has locations in Silver Spring and Riverdale Park, is one of the many businesses in Montgomery County that have been affected by the coronavirus.

File photo

Examples of why unemployment claims in Maryland are surging are all over Montgomery County, where businesses are getting clobbered by the ravages of coronavirus fallout.

Last week, fewer people were walking through the doors of the Denizens Brewing Co. taprooms in Silver Spring and Riverdale Park. Starting Monday, the owners had to furlough 30 employees — the majority of the brewery’s workforce. Now, it’s operating with only 12 employees.

“It’s absolutely horrible, but it’s the only thing we could do,” said Julie Verratti, co-owner of Denizens. “It’s horrible to have to furlough people. They didn’t do anything wrong.”

Verratti, who owns the brewery with her wife and her brother-in-law, said sales were down 50% or more on Saturday. The next day, they dropped 80%.

“We had to change our entire business model in less than 24 hours,” she said. “I’m scared out of my mind. I feel completely left out in the cold by the [federal] government.”

Last week, more than 3,700 people filed unemployment claims in Maryland — a jump of more than 1,000 from the first week of March, according to a report from the U.S. Department of Labor on Thursday.

On Monday, around 5,400 claims were filed with the Maryland Department of Labor. On a “normal” Monday, the division receives about 1,100 claims, said Fallon Pearre, a department spokeswoman.

As coronavirus’ grip on the economy causes businesses to furlough and lay off employees, the state department’s website and call centers are experiencing a substantial surge of people calling and logging on to learn if they’re eligible for unemployment benefits.

“Our Division of Unemployment Insurance is fully staffed, but the website and call centers are currently experiencing an unprecedented volume of users due to COVID-19,” Pearre wrote in an email. “This is resulting in longer processing speeds online and longer holding periods on the phone.”

The call centers extended operation hours by two hours starting Thursday. The state Department of Information Technology is working to increase the state Department of Labor’s network bandwidth to increase processing speeds on the website.

When asked for data specific to Montgomery County, Pearre wrote that the U.S. Department of Labor “issued strict guidance to states regarding the release of confidential and embargoed unemployment insurance claim data” during the national and state health emergency.

The weekly claims for each state will be updated on the U.S. Department of Labor website every Thursday morning.

Small businesses are particularly being hit hard, as Gov. Larry Hogan has ordered restaurants, bars, gyms, spas, movie theaters, shopping malls and entertainment venues to shut down.

Food delivery and pickup, as well as bottled alcohol sales, are allowed as businesses try to stay afloat.

It’s becoming a more familiar circumstance for small businesses across the county as revenue goes down and employers can’t pay all of their staff.

The taprooms at Denizens were closed on Monday before Hogan’s order for bars and restaurants to shut down by 5 p.m. that day. The brewery, which opened in 2014, is now fulfilling take-out orders from its restaurant. The staff is making home deliveries for beer.

Because of the staff cuts, Verratti said, employees are working as early as 6 a.m. and as late as 11 p.m.

“It’s really hard to plan and sort of stabilize when literally, at any hour, something could change,” she said. “Everyone has pivoted. It literally feels like we’re in the trenches right now.”

The home deliveries have brought in some revenue, but nowhere close to what the brewery’s taproom sales were. More than half of the wholesale business was stopped because bars and restaurants were closing.

Verratti said the business lost “tens of thousands of dollars” in revenue, and the owners haven’t paid themselves for the entire year.

Tricia Swanson, vice president of government relations for the Montgomery County Chamber of Commerce, said some businesses in the county began laying off employees last week.

“A lot of small businesses — their business is like a family and these are layoffs that are extremely difficult,” she said. “It’s an unprecedented time.”

A range of industries has experienced financial pain over the last week. More types of businesses are expected to be affected if the downturn continues.

During the federal government shutdown last year, there was a known solution and known outcome, Swanson said.

“Are we just at the beginning of this?” she said. “The big question here is the unknown.”

Mike Kurman, vice president of event production at Precon Events in Rockville, said the company had to furlough six of its 18 employees after 24 to 36 events were cancelled or postponed until the end of May.

The company designs, manages and produces events for trade shows, conferences, galas, corporate events, and other large-scale events.

“Obviously, it’s hurt us in some pretty big ways. This is typically our second busiest season,” Kurman said. “It’s pretty much brought us back to zero. … We probably make 50% of our revenue in the spring — maybe even more.”

Precon, which has been operating for about 12 years, usually handles up to 150 events each year. Two weeks ago, one of its large corporate clients canceled six months’ worth of events.

“This is a company that we travel around the country with doing trade show booths,” he said. “That was the first domino to fall.”

To keep revenue from dropping, Precon is contacting companies that might use marketing services during this period, such as hand sanitizer manufacturers, or proposing turning corporate events into virtual webstreams.

“Every day is just so different that it’s hard to market yourself when no one really knows to what extent that this is going to play out,” Kurman said. “Events inherently are really based around gatherings of people.”

A few million dollars’ worth of business was lost because of the event cancellations, he said.

“There’s no silver lining in it,” he said.

Erin Allen, owner of temporary employment agency Contemporaries in Silver Spring, said the agency employs about 110 people — six of which are furloughed because of lost business.

The company’s biggest contract is with the National Institutes of Health, where about 80 Contemporaries employees work. The contract accounts for 80% of the revenue for the business.

The NIH processes invoices on paper. After it directed its staff that handles those invoices to work from home, Allen doesn’t know when she will be paid.

“I’m having to talk to my banker and see if we can get an extension on our line of credit,” she said about being able to pay her employees who are still working for NIH. “We shouldn’t have to be in that situation.”

To help small businesses, the federal government needs to order an immediate moratorium on all commercial debt, payments and rent, Verratti said, and Montgomery County should delay the business personal property taxes.

Without the money on hand to pay employees, businesses will close, more people will be out of work and the commercial tax base will significantly decrease, she said. Around 85% of the businesses in the county are small businesses.

“People are trying to survive right now,” Verratti said. “They’re scared out of their mind and there’s no end in sight.”

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com

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