Miami, New Beginnings with Covid-19
This past January, CNBC reported that financial advisor SmartAsset, using data from 2014 and 2018, ranked Miami fourth among 500 cities in the US for population growth (9.43%), housing units (10.11%), and household income (31%). Then, City of Miami Mayor Francis Suarez added “Miami continues to exhibit signs of tremendous growth. From our tax base growing by over 10% to new construction swelling by over $3 billion, this study validates our efforts to nurture our continued growth in ways that promote exciting long-term economic opportunities for our residents and elevate our status as a world class city”
Fast forward to today, Mayor Suarez can finally have dinner with his family after weeks in quarantine battling the coronavirus as thousands are applying for unemployment benefits in numerous drive-thru sites around the county. With the surge in unemployment, the Florida Department of Economic Opportunity website cannot handle the volume of calls and the online demand. As of May 1, the latest numbers from the DEO shows that they have over 1 million claims to process. With an economy that’s primarily driven by the construction and service sectors, unemployment in Miami-Dade County has more than doubled from 1.5% in February to 3.7% in March and the uptrend is estimated to continue in April.
Meanwhile, Miami-Dade County being a buzzing international hub became a hot-point with thousands of coronavirus cases as Miami-Dade County Mayor Carlos Giménez called on Governor Ron DeSantis to turn the fabled Miami Beach Convention Center into a 450-bed field hospital for the expected overflow from local hospitals. As of May 9, Miami-Dade County confirms over 14,000 cases with deaths approaching 500 which represents +30% of the state’s total. A caveat here is that there is a lot of concern from news organizations on how the DeSantis administration is handling the reporting of cases, there are differences between the numbers reported by the Department of Health and the state’s 21 medical examiners. The feeling from those that demand transparency is that DeSantis is downplaying the true health impact on the community and that while he must prioritize getting people back to work, he should do so only as soon as it’s safe to do so.
No, this is not a repeat of Rod Serling’s 1959 first Twilight Zone episode “Where is Everybody?” but it does feel like we are about to enter the fifth dimension. Nobody could have predicted this transformation on March 1 when the state announced its first two cases of the coronavirus. According to a Miami Herald analysis, state officials have documented cases of COVID-19 going back to December 31, which means that community spread of the virus was ongoing earlier than thought.
The solution will be painstaking in many ways as the relationship between President Trump and the states is testing our federal system of government on many levels. The so-called united front is more like a dysfunctional drill where what is acceptable in one county is not acceptable in others. The opening of beaches around the state has been a guessing game, with sun seekers driving hours to lay in the sand and unplug themselves from the daily stress. In an editorial that ran in both The Fort Lauderdale Sun Sentinel and The Miami Herald, Linda Quick, President and CEO of the Quick Bernstein Connections Group, a healthcare consulting firm and past president of the South Florida Hospital and Healthcare Association writes “It’s a confusing mix of restrictions, rules, and policies – something we just don’t need right now.”
This past April 20, which now feels like a decade ago, Governor Ron DeSantis created a task force of 22 executives from the government and private sectors to create short, medium and long term recommendations to open the state’s economy. For his part, Miami-Dade county Mayor Carlos Giménez held a virtual town hall meeting on the same day to get moving on an opening strategy. He was hoping to soon present a plan to Governor DeSantis to re-open the county but unfortunately DeSantis' phase one re-opening plan is taking place this week and does not include Miami-Dade due to new case numbers that remain high. This past Wednesday, during a press conference at the testing site at Hard Rock Stadium, DeSantis said “In order for our state to be successful, we need our South Florida communities to be successful,” adding “Miami’s an incredible engine for the state of Florida." On his quest to follow through this week, Giménez has agreed to open the parks, waterways and golf courses, but the beaches and nonessential businesses will remain closed. An early drawback was the closure of South Pointe Park after crowds consistently defied the face mask order. Gimenez no doubt has a tough task in managing the Miamian’s outgoing lifestyle to which David Schwartz President of Florida International Bankers Association adds “Unfortunately we are still seeing too many people not respecting the guidelines and the rules laid out by federal, state and local governments. It is essential if we are to protect the public health and return to some semblance of normalcy”
We asked our leadership group about the level of leadership confronting this issue and about how this crisis has impacted their businesses and operations. Clearly the local leadership skills of Gimenez and Suarez shined with 36% approval rating, while local business and religious leadership tied Ron DeSantis and the State for second with a 24% rating. Unfortunately the back and forth between the State and the White House (17%) led to lower ratings for both, which proves that clear and consistent messaging is important in all crisis management.
We then asked about how the Department of economic opportunity handled the surge in unemployment claims. Most felt that it was unacceptable incompetence (44%) or not ready for the demand (44%). Governor DeSantis promises to take a look at the system that as of May 1 had rejected 40% of applicants and is still struggling with over 200,000 unprocessed claims. He also promises to review the history of the $77.9 million contract that was awarded to CONNECT online unemployment system which was signed under former Governor Rick Scott. Now in a Facebook video Orlando-based power attorney John Morgan offers, at no charge, to recoup the $77.9 million that the state paid if governor DeSantis allows him to do so. This issue has raised some concerns and will clearly stay alive for quite a while.
On the business front, we asked how they see their revenue projections for 2020 versus 2019. Unfortunately only 4% expect any revenue growth, with 36% expecting to be at 80% versus 2019 and 20% expecting to be at 60% versus 2019, but the hard truth is that in Miami-Dade’s service economy 40% project 2020 revenue at 50% or below. These numbers do not bode well for the local economy and seems to confirm the Congressional Budget Office projection that second quarter national GDP could drop by 12% with unemployment at double digits for the remaining of 2020. Aventura City Commissioner Gladys Mezrahi confirms what many expect from the public sector, adding “I am holding on hiring any new employees except public safety and or on as needed basis. The real impact will be in next year’s budget and I will be making the same adjustments, limiting projects, reducing revenue projections, reducing all non-essential spending. We have not received our property values yet which will be the most important factor. That will be coming out soon. All our Directors are aware of the issues and are going to cut their submitted budgets by 5% and we will go from there. We will be submitting a balanced budget and maintaining all basic operations”
Even with such a dire year-end revenue outlook, their staffing expectations for 2021 are on the upside with over 75% seeing at least 80% of their staff back to work and only 25% expecting only those essential positions to be back. There is no doubt that this experiment will alter some business practices, like the open floor offices, and probably change the office sharing concept. Remote work will increase with a major push coming from the healthcare sector as more doctors adopt virtual practices, Teladoc’s CEO Jason Gorevic told The Wall Street Journal, “Virtual care has moved to center stage and I would say it’s taken an irreversible leap forward." Businesses and organizations will have to re-think their layers of management and company-client touch points in order to face the next unforeseen crisis.
So if the great experiment will change work spaces, how will they manage their business interactions? Has COVID-19 finally pushed us into the contact-free-economy? The majority (32%) see social distancing as their top practice, so the Miami kiss-on-the cheek greeting practice is now history, the second most popular practice with 27% is video teleconferencing, and wearing masks in meetings a close third with 26%. Surprisingly, regular staff testing was a distant fourth with only 14.7%. Which means less business travel, a lot more openness to remote work and less group meetings. But there is no doubt that this will bring greater focus to a lot of companies that were caught off guard without the proper technology and trained staff to go full remote.
Our initial Miami-Dade Power Poll is now in the history books ...the real history books. As a child, I watched those Rod Serling episodes in wonderment of what it would be like. Well it will be life changing, but I have no doubt that we’ll come out better on the other side.
Hope you’ll join us on the next Power Poll, I promise it will be another good conversation.
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Best & Be Safe,