COVID-19 devastated Myrtle Beach tourism-based economy. How quick will jobs recover?
When coronavirus first hit the Grand Strand area in March, Donna Brin wasn’t sure how she’d keep her Little River business afloat.
The owner of bFIVE40, a large format print solutions manufacturer specializing in custom apparel, had to put everything on hold as the large corporate events that served as the base of her customers stopped.
“I was worried about how I’d keep paying the few employees I had,” Brin said.
But a pivot toward custom fabric, reusable face coverings quickly quelled those fears, and allowed her business to thrive, tripling its staff — from five to 15 — while building a larger client base that Brin is sure will help them continue their success even when masks are no longer needed.
“It’s been a whirlwind,” she said. “We’re kind of like that glimmer of hope (amid these difficult times).”
The COVID-19 pandemic and mandatory shutdowns it caused nearly devastated Myrtle Beach’s tourism-based economy, but most job losses are quickly returning and economists believe the area is poised to capitalize long term on the resulting nationwide work-from-home trend.
The Sun News commissioned a study by University of South Carolina research economists examining the virus’ impact on Horry County’s economy.
The study, funded by a Facebook grant, showed the county suffered more than any other area in the state and the road to a full recovery during the coming months remains murky, but the factors that have led to steady growth during the past decade should allow residents to be “optimistic about the future.”
“We’re very bullish on Myrtle Beach when looking at the long run,” said Joey Von Nessen, USC professor and lead researcher on the study. “After we see a vaccine developed and the pandemic is largely behind us, South Carolina and Myrtle Beach in particular offer enormous competitive advantages, ... namely beach access and low cost of living.
No short-term fix
Horry County’s unemployment rate peaked just over 22% in April during the height of government-imposed business restrictions. No other county in South Carolina exceeded 20%, the study showed, and the statewide rate peaked at nearly 13%.
“Even tourism-heavy Charleston County saw an unemployment rate that peaked at just 13.1 percent,” the study states. “This is a reflection of the more diverse industry composition of the Charleston region, much of which was not affected to the degree that leisure & hospitality has been.”
While the leisure and hospitality and retail industry sectors combine to represent 29% of South Carolina’s jobs, they comprise nearly half of the tourism-driven Myrtle Beach economy. Multiple restaurants, hotels and entertainment venues have reported mass layoffs or furloughs to the state since March, and nearly 22,000 jobs were lost in April locally within the leisure and hospitality sector.
“The study is an important reminder of the need to further diversify our local economy to allow our workforce to better weather large-scale economic challenges such as pandemics and hurricanes,” Karen Riordan, president and CEO of the Myrtle Beach Area Chamber of Commerce, said in a statement after reviewing a report of the study’s findings.
Stephen Greene, president and CEO of Myrtle Beach Area Hospitality Association, noted that the timing of the restrictions were particularly tough because so much of the industry’s money is made during the summer months.
While he touted a more positive fall season and said Myrtle Beach compares favorably to bigger cities in its ability to recover tourists, Greene acknowledged many unknowns remain and negative impacts could continue into next year.
“This is not going to be a short-term fix in our industry,” he said.
One specific unknown that Greene said has been a major discussion within industry leaders is whether international students will be allowed into the country next summer to serve as temporary workers.
The Grand Strand typically welcomes more than 3,000 of those students, working under the U.S. Department of State’s J-1 visa program, but strict travel restrictions severely diminished this year’s program.
Those workers are needed to fill employment gaps and would’ve been happily welcomed even this summer, Greene said, as numerous would-be employees preferred to collect increased unemployment payments rather than return to work.
“It’s hard to discuss with so many Americans losing jobs, but these are minimum wage jobs that (our residents) aren’t necessarily looking for right now,” he said. “We’ve struggled for years getting people to want to work in our industry.”
By June, Horry County’s unemployment rate had rebounded to 11%, still among the highest in the state, as most industries outside of leisure and hospitality approached pre-pandemic job totals.
Construction leading the rebuild
Among the study’s most notable findings, it identified the construction industry as the primary driver of the Myrtle Beach area’s employment growth during recent years and noted that sector’s resilience to coronavirus-related consequences.
Statewide, the construction industry only declined to about 94% of its pre-recession employment levels in April and had already almost completely recovered by August.
“This is an important consideration given that construction had been the industry leader in Myrtle Beach’s employment growth in the years leading up to the COVID-19 pandemic,” the study notes.
Myrtle Beach-area construction jobs increased to just under 6% from 2010-2019 compared to nearly 3% across all sectors in the region, and the study pointed to an increasing population and needed rebuilding efforts in the aftermath of Hurricane Matthew in 2016 as major factors.
During the past decade, the Myrtle Beach-Conway-North Myrtle Beach metropolitan area population has increased 3% annually, second most in the nation behind The Villages, Florida.
Jason Repak, vice president of the Horry Georgetown Homebuilders Association, said demand for housing in the area, once thought primarily to be a hub for retirees, has increased across the spectrum, and that demand has remained steady throughout the pandemic.
The study explains that COVID-19 restrictions have primarily disrupted lower-paying blue-collar jobs that require in-person interaction, but those workers are more likely to be renters, while workers in white-collar office jobs that are likelier homeowners have been able to transition to working from home.
Von Nessen, the USC economist, predicted the work-from-home trend could end up benefiting Myrtle Beach in the long run as people look to move away from dense, city environments and seek a lower cost of living and natural amenities.
“When you combine a highly desirable location and remove the limitation of having to live near where you work, Myrtle Beach becomes an attractive alternative for even more people,” he said.
Repak said he’s been hearing from other homebuilders that a lot more people have been seeking homes with office space, which is leading to larger houses and moving away from the purely open floor plan that had otherwise been attractive to new buyers.
While the pandemic hasn’t diminished many local construction jobs, Repak said it has severely impacted the availability and price of needed materials, in particular lumber, which has nearly quadrupled in price since April.
Locally, the industry has also recently faced issues finding qualified employees and residents often oppose new development due to concerns about flooding and traffic.
Repak said he’s sympathetic to concerns about flooding as it has affected several of his relatives, but it’s a complex problem and demand isn’t slowing down, so a reduction in new construction will only drive up home prices.
Pace of recovery
The rapid recovery of jobs in the region pointed to the potential for what economist refer to as a V-shaped recovery — a steep decline followed by a steep rise. But that growth began slowing in July and August, the study showed, which could lead to more of a U-shaped recovery, a slower pace similar to the Great Recession of 2008, which took South Carolina about five years to recover all jobs lost.
In the short term, Von Nessen pointed to successful school reopenings and the need for additional federal stimulus as keys to a speedy recovery and the ability of businesses, particularly small businesses, to survive.
Horry County Schools have been operating on a hybrid schedule, with students allowed to attend in-person classes two days per week, since opening in early September, and the district recently approved changes to its operating plan to continue on that path until its safe for students to return full-time.
Meanwhile, congressional discussions about a new stimulus package stalled prior to the election, though federal legislators have continued to describe it as a priority.
“The initial round of (Paycheck Protection Program loans) really helped many small businesses make it through,” said Greene, of the Myrtle Beach Area Hospitality Association. “Some are really banking on another round, ... and additional stimulus for people to travel and spend at their businesses.”
Before bFIVE40 transitioned to its mask-making venture, Brin said the PPP loan helped bridge the gap for about six weeks, which they needed to fully shift gears.
That ability for businesses to adapt and regain consumer confidence will also play large roles in Myrtle Beach’s economic recovery, Von Nessen said.
Greene pointed to industry-wide adaptations including the use of QR codes instead of menus and contactless delivery as moves that many will keep in place moving forward.
The Myrtle Beach Area Chamber of Commerce lost 11 of about 2,800 members specifically due to COVID-19, according to Riordan, but less than 1% of their remaining investors have expressed concerns about having to close within the next year without additional stimulus. Some have adjusted operating hours to keep costs down.
Ultimately, the study predicts that “in the absence of any widespread treatment or vaccine, even a strong economic recovery is not likely to reduce unemployment to pre-pandemic levels before 2021.”
This story was originally published November 11, 2020 at 2:28 PM.
