Valley small business owners feel some local leaders are painting an unrealistic picture of economy

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Posted at 2:20 PM, Jan 15, 2021
and last updated 2021-01-15 20:42:33-05

There is a phrase that states rising tides lift all boats.

But, some Valley restaurant owners and people in the service industry feel as if they are sinking and no one is hearing their cries for help, while other industries rise above the water amid this pandemic.

After hearing from Governor Doug Ducey following his State of the State address on Monday, there is a concern that an unrealistic picture is being painted of what is going on in Arizona's economy.

"I've been throwing food festivals in town for about 10 years," said David Tyda. "I was the co-creator of the Arizona Taco Festival."

Right now, Tyda should be preparing for the 3rd Annual French Fry and Music Festival.

"It's pretty bizarre," said Tyda. "There's no doubt about it."

The winter and spring seasons usually bring out a sea of people to spots, like Margaret T. Hance Park in Phoenix. That is where crowds of people are known to come for festivals this time of year. But now, it is nearly empty most days.

That is why Tyda said he was frustrated to hear Governor Ducey's speech.

"As bad as things got, we're recovering fast," Governor Ducey said on Monday.

To him, it is frustrating.

"You see the facts, you see the numbers, but then to hear the people in charge say, 'We're resilient. We're doing great. Arizona's open...' It doesn't look open to me. Look at this field," Tyda exclaimed. "This field is empty right now!"

Here are the numbers from the Bureau of Labor Statistics for Arizona.

At this point, the figures only go through November of 2020 and those are still considered to be preliminary.

The number of people working in leisure and hospitality dropped to levels lower than the Great Recession after losing more than 135,000 people in the industry by April of 2020.

Jobs have come back since then.

In November of 2020, those preliminary numbers show just over 290,000 people back to work in the industry. However, that still means close to 47,000 are no longer working there.

"Thinking about it in retrospect, what we're experiencing today starting in March 2020, is much worse than the economic situation of 2008," explained Phoenix restaurant co-owner, Danielle Leoni.

Leoni opened The Breadfruit and Rum Bar in 2008, so she has been through two economic downturns.

Now, they have been closed since March and she is concerned if she will ever be able to open again without some financial relief coming.

"Independent restaurants, in particular, are having a hard time because our government did give us another round of PPP... but, that's the problem is... we don't need PPP," Leoni said.

Leoni said the Paycheck Protection Program helps pay employees. But many restaurants do not have many employees to pay. They must find ways to pay rent, pay utilities, and more with little or no revenue coming in.

"The K-shaped recovery is very, very clear," explained ASU Professor of Supply Chain Management at Arizona State University's W.P. Carey School of Business, Hitendra Chaturvedi said.

He explained to the Rebound Arizona that the state is in a holding pattern when it comes to the economy until the vaccine is more widespread.

The K-recovery shows what Governor Ducey is so positive about with specific industries seeing growth in the pandemic. This includes technology companies and transportation with all the goods Arizonans are buying online.

However, the bottom half of the K-curve shows the industries that are still not seeing good movement. This includes the service industry. Chaturvedi believes it is only a matter of time before the lack of growth on the bottom half will hit those at the top.

"People who don't have money to spend, they are not going to buy stuff from Amazon and they will reduce their spending there, also," Chaturvedi said. "So, this lower end of the K is going to put a hook onto the upper end of the K and start to pull it down."

His concern is that if the state is painting a perfect picture, the people who need help may not be able to get it.

"We also run the risk of people who are willing to give money to us at the federal government level... they will say, 'Yeah, but you guys are doing great! You don't need any help from us. Let's give it some other state who's crying a lot and is more in pain.' And by doing this, what you just did is you shot yourself in the foot," Chaturvedi said.

ABC15 Arizona did request an interview from the governor through his communications team on Thursday around 2:00 p.m.

We did receive a phone call from a member of Governor Doug Ducey's staff after our story originally aired on ABC15 Arizona. They pointed the Rebound Arizona to an executive order Governor Ducey signed last month to extend patios to give restaurant owners a safer option to stay open. They also stated that many restaurant owners have spoken with support of the Governor's decision to limit lockdowns and continue with mitigation efforts, like smaller capacity. This allows them to still operate.

For these small business owners in the service industry, they know there are still choppy waters ahead and they need to be thrown a lifeline.

"I would really appreciate that as we're moving forward with plans for economic relief that we're not just painting a rosy picture, but a realistic picture so we can have an economy that fully rebounds," said Leoni.

With that support, they hope they can weather any economic storm together.

"This part is doing good. This part not so good, so we've got to work on it," Tyda said. "We have to help these particular people."