The Future of Growth Series is a supplement to the white paper “The Future of Growth” released in August of 2020 by the Center for Urban Theory & Analytics at Cleveland State University.



COVID-19 and the Future of the Consumer City


By Richey Piiparinen, Joshua Valdez, and Jim Russell

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In his 1941 classic Escape from Freedom, the social psychological theorist Eric Fromm elaborated on the Freudian concept of “Eros”, or life force, described simply as the will to live. The primary drive in Eros, according to Fromm, is that of self-preservation. This is tied to our productive capabilities, or the work we do and the pay we get so as to attain life’s necessities: food, shelter, clothing, etc. Secondary to our need for self-preservation is our drive to avoid isolation. Simply, humans long for belonging and significance, i.e., meaning.

These individual needs, then, or more specifically: the cooperation required to achieve them, evolve into the reality that becomes our collective. It’s a collective made explicit in our cities, with economies long having been segmented into “producer city” components, or the production of goods and delivery of knowledge-based services; as well as “consumer city” components, or lifestyle amenities derived from the arts, entertainment, and urban design. If the former allows self-preservation, the latter allows for meaning-making.

Unlike the old industrial city in which life was segmented (i.e., one works here, lives there), the modern city is threaded with both consumer and producer functions. The urbanist “live, work, play” mantra, for instance, is not only designed to facilitate the means to make a living (i.e., “work”), but it also prioritizes meaningful human interaction (i.e., “play”). The economic sector responsible for providing these “play” amenities is leisure and hospitality which, in turn, is comprised of two subsectors: arts, entertainment, and recreation (the performing arts) and food and accommodations (the culinary arts).

No doubt, both the culinary and performing arts have acted as engine in the revival of numerous Cleveland neighborhoods, with Downtown, Detroit-Shoreway, Ohio City, Tremont, and Shaker Square the exemplars. That resurgence is most commonly measured by the real estate appreciation that follows a “scene’s” development, driven in large part by the upper-income migration that activates the “live” factor in the “live, work, play” triumvirate. Yet culinary and performing arts investors and workers often get overlooked when examining the etiology of a neighborhood’s rebirth, if only because the windfall they usher gets overshadowed by the developers’ brick and mortar investment. This overlooking, though, is being tested by COVID-19, if only because it’s impossible to overlook something that’s increasingly not there.

No sector has been impacted by the pandemic like the culinary and performing arts. That’s because physical proximity is part and parcel with its raison d'être. The crux of the issue is that closeness is still a no-go, hence the social distancing that has become the norm. Yet it’s a scenario few saw coming. Worse, the endgame—how to do we work together without being together? —isn’t foreseeable. There’s no playbook for this. “Everyone wants to know when this will end,” explained Devi Sridhar, a public health expert at the University of Edinburgh. “That’s not the right question. The right question is: How do we continue?”

Figure 1 shows that the answer for Cleveland’s leisure and hospitality scene remains out of sight. Year-over-year job losses for the sector have ranged from -55,700 jobs in April to -28,300 in September. By contrast, the largest contraction prior to pandemic was -4,300 jobs in August of 2009 during the Great Recession. Today’s devastation is unmatched.

And while the hurt has been felt across the whole of Cleveland’s economy, the proportion of total job losses accounted for by leisure and hospitality has been disproportional, ranging from 30.2% in April (55,700 out of 184,700) to 28.6% in September (28,300 out of 98,900) (See Figure 2).

Figure 3 compares Cleveland’s year-over-year losses amongst all major sectors from January to September, with leisure and hospitality leading the way (-28,300). Professional and business services is second (-20,500) due to office closures. Regardless, the culinary and performing arts scene has consistently been the hardest hit.

These trends are not likely to change until a vaccine is widely available, if only because of the socially-distancing mandates that limit businesses from reaching capacity. “Keeping tables apart, socially distant service… that’s not a reality,” notes one Cleveland restaurateur, explaining his reason to close. “If you can’t make money turning every table twice and a half, how are you going to do it at half that.”

And then there is the hesitation of attending in-person events given COVID-19’s proclivity to circulate indoors. Winter is likely to make this hesitation worse. And that’s not to mention the precautionary measures needed pre-vaccine. All the decontamination and separation measures, well, they can spark feelings of alienation, in effect voiding that experience of meaning that makes the industry so integral. Does this sound fun? “Every spectator goes through a kind of disinfection shower at the entrance of the theater,” explains a German theater director based in South Korea. “You keep your clothes on, of course, but you don't really get wet either. It is a very thin spray. Every visitor has to have their temperature measured, everyone has to wear a protective mask over their mouth and nose for the entire stay in the theater.”

This hesitation can in fact be measured in near-real-time using consumer spending trends via Affinity Solutions: a company that aggregates consumer credit and debit card spending information. Clevelanders spending on entertainment and recreation declined by 59% from January 2020 to September 29th (See Figure 4). Spending in restaurants and hotels were equally discouraging, with a decline of 58% (See Figure 5).

What has the decline in consumer spending meant for the viability of local culinary and performing arts businesses? Using data from the small business software company Womply, it is estimated that the number of Cleveland small businesses in leisure and hospitality contracted by 39.1% since January 2020 (See Figure 6). Of note, the cities with the largest decreases in leisure and hospitality small businesses were New Orleans (-70.1%), Austin (-65.5%), and San Francisco (-63.4%).