Do public health and protecting small business have to conflict?

We might need to close the bars, says economist — but then we should give them strong financial support

Beer in Bar
Photo by Martin Vorel

Among public officials and the business trade groups, the quarrel over trying to contain the spread of the coronavirus has frequently put public health and the economy at odds.

The tools that public health officials have used include orders aimed at keeping people home and out of crowded places of commerce — bars and restaurants especially. In response, business lobbyists and their allies in the Legislature have fought back.

After the state’s newest health order took effect Oct. 8, restricting indoor public gatherings, including occupancy at bars and restaurants, to 25% of capacity, the Tavern League of Wisconsin sued to block the restriction.

“We do not have the financial wherewithal to survive the blunt force of another business shutdown,” the Tavern League stated. It claimed that business restrictions “have not proven effective and will result in catastrophic losses in the hospitality industry in Wisconsin.”

The lobby won a brief, temporary restraining order suspending the measure. But on Monday, Barron County Circuit Judge James Babler reinstated the health order. The judge denied the Tavern League a temporary injunction that would have continued to put the health order on hold; he also lifted the restraining order. The capacity restriction is back on again, due to expire Nov. 6.

For economist Chad Cotti, pitting the economy against public health creates an unnecessary conflict.

“We’ve thought about our choices being public health choices or economic choices — what’s best of the economy, or what’s best for businesses,” Cotti tells the Wisconsin Examiner. “In reality, they’re the same thing.”

Public health, economic necessity

Cotti chairs the economics department at the University of Wisconsin-Oshkosh and also is a research affiliate at the University of Wisconsin-Madison’s Center for Demography of Health and Aging. His work focuses on health economics and public policy.

He’s also descended from three generations of bar owners — father, grandfather, great-grandfather. “I’m a disappointment,” he jokes. “I grew up with a lot of family conversations about this business.”

Chad Cotti, UW-Oshkosh (Photo courtesy of Chad Cotti)

Cotti points to two conflicting realities of the COVID-19 pandemic and the bar industry especially as well as the hospitality industry in general: Bars and restaurants have been shown to be a significant source of community spread for the virus. Closing them or severely restricting occupancy will help public health — and will hurt their business.

Yet even without those measures, “The reality is that people aren’t going to support those businesses enough to make all of them viable,” Cotti says. “If the virus is spreading the way it is, too many people will not go out to bars and restaurants to support those businesses sufficiently to keep them all at a pre-virus level of economic activity — it’s just not going to be the case.”

Getting the virus firmly under control, even if that means sharply restricting business, will be best not only for the country as a whole, but for those very businesses — yet “it puts the bar owners in a place where they can’t survive,” Cotti says. “We’ve left the bars and restaurants all alone on and island and said, ‘We’re not going to give you any economic support.’”

One answer, he says, would be to provide that economic support in return for stricter controls that would tamp down the spread of the virus.

“If we took the short-term steps of financially supporting that industry to be closed, it would have a huge long-term gain for the state economically,” Cotti says, “and it would be good for those businesses if we could get them on their feet more fully.”

There have been some efforts in that direction. While it’s a small measure, the Wisconsin Economic Development Corp. is offering $5,000 grants to as many as 10,000 small businesses that have been hurt by the pandemic. The agency began taking applications on Monday.

At the federal level, the most recent version of the HEROES Act — the latest round of proposed COVID-19 relief legislation passed by the House of Representatives — includes a provision for $120 billion in grants for restaurants, bars and food trucks. That bill is currently stalled in the Senate.

Susan Quam, vice president of the Wisconsin Restaurant Association, says the trade group hasn’t taken a formal stance on the concept of providing more financial aid for the industry in return for stricter limits on operation in order to avoid spreading the virus.

“We would have to look at what would be the return for the operations for doing that,” says Quam. “The devil would be in the details.”

The restaurant association has focused on “strongly educating” restaurants on safety mitigation — providing masks for employees, strictly observing social distancing and regularly sanitizing facilities — so they can “remain open and do what we do best: serving food safely,” she says.  

Survival struggle

As a graduate student, Cotti studied how the wave of smoking bans, local and later statewide, affected the bar and restaurant industry. Bar owners would “look around their bars and they could see the people that were smokers that might not come back, but they couldn’t see the potential nonsmokers that would come,” he observes.

Given the unknown risk to their business before bans took effect, Cotti understands the opposition of many bar owners to smoking bans. In the end, he found the effects were mixed, with some bars benefiting and others struggling through the change.

“It’s a business that, especially for small families, can be pretty tough — especially in the beginning of the business when you owe money on the mortgage for the building,” Cotti says.

That makes the pandemic’s impact — whether from the virus or public health measures to block its spread — especially sharp.

Bars “can’t survive for months and months and months with no customers,” he adds. “Public Health is telling us, we have to keep these places closed.”

Political leaders “have to come to a solution that makes an understanding that these particular industries would be bearing the brunt of helping us from a public health perspective,” Cotti says. “And economically, it’s a better choice to pay them. It would be better for the economy as a whole, especially in the long run, we would save a ton of money as a state, if we paid them to be closed.”

Erik Gunn
Senior Reporter Erik Gunn reports and writes on work and the economy, along with related subjects, for the Wisconsin Examiner. He spent 24 years as a freelance writer for Milwaukee Magazine, Isthmus, The Progressive, BNA Inc., and other publications, winning awards for investigative reporting, feature writing, beat coverage, business writing, and commentary. An East Coast native, he previously covered labor for The Milwaukee Journal after reporting for newspapers in upstate New York and northern Illinois. He's a graduate of Beloit College (English Comp.) and the Columbia School of Journalism. Off hours he is the Examiner's resident Springsteen and Jackson Browne fanboy and model railroad nerd.