As the spread of COVID-19 closes businesses and sends workers home without pay, city officials are grappling with the economic threats the virus is making to not just city revenue, but household incomes.

Up to 66,000 workers in Jefferson County could suffer layoffs of other loss of income due to business closures intended to slow the spread of COVID-19, said Josh Carpenter, director of Birmingham’s Office of Innovation and Economic Development. With a little more than 500,000 people employed across the county, this means 13 percent of the city’s workforce is at risk.

About 71 percent of the jobs in seven county Birmingham metro area are consumption-based jobs—those that rely on people leaving their homes and spending money. If people don’t spend money, these workers don’t get paid.

“Birmingham is vulnerable because we have a higher concentration of those jobs than in other economies. That's what’s concerning me,” Carpenter said.

There are also 5,997 small businesses in Birmingham. These are businesses of 50 or fewer employees. These nearly 6,000 businesses employ around 47,000 people.

To support businesses and employees impacted by coronavirus, the city, the Community Foundation of Greater Birmingham and the Birmingham Business Resource Center have created the Birmingham Strong Fund. On Tuesday, the council approved $1 million for the fund. The council is expected to approve an additional $200,000 for the fund next week.

The funds were established to help stabilize employment, stimulate economic vitality and offset losses related to the coronavirus. The Community Foundation of Greater Birmingham will operate the fund.

Within this fund will be two smaller funds. One will be a fund to provide zero-interest, 180-day loans to small businesses. The other fund, a resiliency fund, will pay workers who were laid off due to coronavirus to do essential jobs like setting up testing sites, meal prep and delivery and other labor needs that could arise as the economy and workforce changes during the coronavirus pandemic, Carpenter said.

He said the fund will coordinate with both public and private sector to find jobs and fill them.

“This will be to pay wages for people performing essential tasks to help us get through COVID-19,” he said.

Workers can expect to be paid $12 an hour.

Carpenter is encouraging small businesses hoping to take advantage of the short-term emergency loans and laid-off workers needing employment can find information at bhamstrong.com.

He hopes to raise an additional $1.2 million for the fund from the private and philanthropic sector. Those interested in donating to the fund can do so at bhamstrong.com.

Impact on Birmingham’s pockets

If residents are feeling the economic squeeze, the city of Birmingham will feel it too.

City officials expect to lose $9.2 million in revenue over the next 60 days due to these closures. More than 80 percent of the city’s revenue comes from sales and business taxes, making city revenue especially vulnerable of a recession or other economic downturn. If people aren’t spending and making money, the city’s wallet will feel it.

The expected loss of revenue over the next 60 days also puts a strain on the city budget, which led the city council to pass a $4 million funding package Tuesday night to meet immediate needs of certain city departments during the coronavirus pandemic.

This funding package includes:

$50,000 for supplies for first responders

$47,000 for supplies for police

$450,000 for supplies for public works

$2.6M in overtime for police and fire

$880,000 for additional technology for city employees to work from home

$1 million for the Birmingham Strong Fund to support small businesses

The city council also plans to approve an additional $200,000 from the Office of Innovation and Economic Opportunity to be given to the Birmingham Strong Fund.

“I want to thank the council for working with me to secure the funds for the city’s COVID-19 response. This is an important message to the people of Birmingham. Through this funding, we are committed to providing a full response to COVID-19 with our police, fire and public works. Also, we have taken the first important step to launch an economic stimulus plan for our small businesses struggling during this pandemic,” Woodfin said Tuesday night.

The city will use the general cash fund and investment—a fund where surplus revenue is held—to cover the cost of the $4 million funding package and the expected $9.2 million revenue loss.

During Tuesday’s city council meeting, Finance Director Lester Smith stressed that the $9.2 million figure is an estimate based on the percentage of revenue lost during the 2008 recession. During that time, the city suffered a loss of about 20 percent of city revenue from sales and business taxes.

Just last week, the city council approved spending $7.9 million of the additional revenue collected during the 2019 fiscal year. Those funds include: