Snow Storm Hit Businesses, Governments Hard
People may have dug out their cars from this month's historic East Coast snowstorms, but businesses and governments will be digging out for a long time from the lost revenue and extra costs they incurred.
Back-to-back snowstorms that pounded the East from Washington to New York City with up to 4 feet of snow in five days cost the nation about $15 billion, says Diane Swonk, chief economist at Mesirow Financial.
"If this was a regular economy, this would be a blip on the radar screen, but it's not a regular economy. It's a very fragile and nascent recovery," Swonk says. Retail and air-travel disruptions that would have been recouped in a healthy economy are "just lost," she says.
Hit hardest were hourly workers such as restaurant servers and factory workers, Swonk says.
Paul Cohn, co-founder of Capitol Restaurants Concepts, says five of his seven restaurants in the Washington-Baltimore area closed for almost a week because employees couldn't get to work.
"If you want to buy a shirt or car, you can get it the next week. If you miss a meal, you're not going to go out and buy it later," Cohn says. "Our hourly employees are out of income."
He worries about a "ripple effect" hurting business at the end of the month, when some owners may lack cash to pay rent.
"I think this is going to be the nail in the coffin of a lot of restaurants," Cohn says.
Auto mechanics report losing gas sales and repair business, says Paul Fiore, director of government affairs for the Washington, Maryland, Delaware Service Station and Automotive Repair Association.
"And they'll never get it back," Fiore says.
Even businesses that continued to operate did not escape losses.
Chemical manufacturer W.R. Grace&Co. kept its Baltimore factory humming by keeping 400 workers on site, toiling in 12-hour shifts with six-hour breaks for four days.
The company fed and housed employees, and paid them lots of overtime, says Bill Corcoran, vice president for public and regulatory affairs.
State agencies charged with clearing roads are still tallying the costs.
Maryland had spent about $50 million of its $60 million highway snow-removal budget before this month's storms, says Shaun Adamec, a spokesman for Gov. Martin O'Malley.
"We expect this latest blast to well exceed $50 million, but we are still compiling those final figures," Adamec says.
The Virginia Department of Transportation estimates that it has spent $120 million on snow removal, eclipsing its $79 million snow-removal budget and its $25 million reserve.
"We continue snow-removal efforts with the same gusto as before," spokesman Jeff Caldwell says. "We're covering the cost of that out of our maintenance program."
Maintenance unrelated to safety, such as buying traffic cameras and mowing grass, are likely to be curtailed, he says.