The Corner

Regulatory Policy

New York’s Restaurant Disaster

Diners eat lunch in outdoor seating in New York, June 22, 2020. (Mike Segar/Reuters)

With New York City sinking ever deeper into financial difficulty, it’s worth paying attention to this report over on the home page by Brittany Bernstein.

Here’s an extract:

Half of New York City’s bars and restaurants are in danger of permanently closing in the next six months as a result of financial fallout from the coronavirus, according to an audit released Thursday by state comptroller Thomas DiNapoli.

The comptroller found that in the next six months, between a third and a half of all city bars and restaurants could close their doors for good, eliminating over 150,000 jobs.

“The industry is challenging under the best of circumstances, and many eateries operate on tight margins,” DiNapoli said. “Now they face an unprecedented upheaval that may cause many establishments to close forever.”

As the coronavirus tore through the city this spring, restaurants were forced to close their doors to indoor dining, allowing only takeout, and later outdoor dining, for months. Restaurants were allowed to host indoor diners for the first time in six months on Wednesday, though only at 25 percent capacity.

The financial impact of the reduced service left nearly three-quarters of employees in the city’s restaurant industry jobless at the pandemic’s peak, the report said. The industry’s employment fell to just 91,000 jobs at that time, down from 317,800 jobs in 2019 when the industry paid out $10.7 billion in wages and amassed more than $27 billion in taxable sales.

The financial ruin has had the greatest impact on the city’s minority communities, the report found; in 2018 some 60 percent of restaurant workers living in the city were immigrants — 44 percent of whom were Hispanic and 20 percent were Asian….

The disaster reflected in this report is not, of course, confined to the numbers, horrific though they are, but also to what those numbers represent in ruined livelihoods, lost futures, and despair. And that is before starting to think about the knock-on effect of those lost businesses, lost revenues, and lost incomes on other businesses and thus their employees. Then (as alluded to in the article) there are the consequences for the city’s battered budget. And, of course, the woes don’t stop there.

DiNapoli’s reference to “an unprecedented upheaval” is artfully worded. Pinning the blame on a virus would not be enough. The reality is that all this was all set in motion first by the arrival of COVID-19 in this country, then by the initial botched response to this threat (at many levels of government), and then by the way that these errors were compounded first by ill-judged underreaction and then by ill-judged overreaction.

To repeat something I wrote the other day:

[Lockdowns] were easy enough to defend — for a short time. We knew a lot less about COVID-19  then. And there was also an understandable fear that health-care systems would be overrun. The idea was to buy time to flatten the curve, not to eradicate the virus. In the absence of a vaccine, there was no chance that COVID-19 would simply go away. A lockdown could postpone the spread of the disease, but it could never have been sustained for long enough to have any chance of reducing it to, at most, a nuisance, without destroying the economy. Rather, prolonging lockdowns kept the virus at bay for long enough to ensure that its recurrence would coincide with the onset of flu season and trashed the economy while it was at it.

And as I noted in the same article, the lockdowns have had adverse health consequences too.

Dealing with COVID-19, a highly infectious, and dangerous disease (particularly to certain categories of patient) — and certainly no “flu” — was never going to be straightforward. But that was no excuse for failing to find a way to live alongside the virus in a fashion that avoided shutting down so much of the economy for so long a time, even in a hotspot such as New York City.

Intelligent management of the pandemic was always going to involve restrictions, but the resort to the heavy-handed command-and-control of Cuomo and de Blasio showed few signs of intelligence and revealed a management style notable mainly for its crudity. What we saw was a reflex fueled by panic and ideological habit, made even more damaging by a seeming inability to realize that risk and reward shift over time: What might have been sensible in March was close to madness in May.

And the bill for that failure is rising by the day.

Meanwhile, if anyone can explain the risk-reward calculation that went into capping indoor dining at 25 percent of capacity rather than, say, fifty percent, I’d be interested to hear it. Restaurants run on very thin margins. Finding the right balance between necessary health precautions and giving large numbers of restaurants at least a chance of survival was never going to be easy. But opting for 25 percent was a sign of political leaders who were not even pretending to try.

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