COVID-19 has plagued America and sparked record unemployment levels – but people have different theories on whether it’s the virus or the restrictions that cause the problems.
It turns out, COVID-19 deaths have a greater impact on long-term job loss than state restrictions or total COVID-19 case counts have, per a study from the Kalamazoo-based W.E. Upjohn Institute for Employment Research.
The study started in summer 2020, considering nationwide data through December, said Brad Hershbein, a senior economist with the Upjohn Institute. The 48-page study was released this week.
“People who complain about the restrictions and say they reduce employment – they’re right,” Hershbein said. “But the effects don’t seem to last very long. Once you relax them, we seem to recover.”
Restrictions, cases and deaths all have ties to job loss in the short term. But once restrictions are lifted, the data shows most of those jobs come back quickly.
“But if there are a lot of people dying – perhaps because there aren’t enough restrictions – that effect can linger for several months more and slow the recovery,” Hershbein said.
When people see the high death numbers, they’re more inclined to be cautious, stay in and not be out spending money.
“People cut back their activity – at least some of them do – and so they’re not buying as much or they’re not going out as much,” Hershbein said. “And that’s reducing demand for a lot of businesses and they don’t need as many employees, as a result.”
Michigan has relaxed restrictions in recent weeks – including reopening restaurant dining rooms Feb. 1 at 25% capacity. But because of the high death rate this winter, Hershbein said Michigan shouldn’t expect a speedy recovery.
The top four deadliest months in Michigan this century were April 2020, December 2020, November 2020 and January 2021 – with COVID-19 largely to blame.
April alone had more than 13,000 deaths. Before the pandemic hit, Michigan hadn’t had a month with more than 9,500 deaths.
COVID-19 deaths have a statistically significant tie to long-term job losses, the Upjohn study found. States with 100 additional deaths per 100,000 people saw reduced employment by 3 percentage points. In Michigan, that would total 150,000 fewer jobs, Hershbein said.
The study created a “restriction index” to rank different states on how strict their shutdowns were. Michigan was near the top for being most strict, Hershbein said, and kept restrictions in place longer than most states, he said.
While that prolongs the short-term hit, it’s worth the economic pain in the short term if it curbs deaths – since that’s the key to long-term recovery. One study found Michigan’s holiday restrictions saved an estimated 2,800 lives.
Despite Michigan having 3,000 restaurants permanently close during the pandemic, it will be difficult to find workers once the industry is back up and running, said Michigan Restaurant and Lodging President and CEO Justin Winslow, in a statement.
“There will be significant pent-up demand for restaurant and hotel experiences, and sourcing the workforce to meet that demand will be a challenge for operators across the state,” Winslow said. “Some displaced workers have found other work in other fields, such as online retail.”
How should states use this study to increase jobs? The top priority should be reducing COVID-19 deaths, Hershbein said, if they want to support jobs.
“Economic restrictions can be damaging, so other alternatives should be pursued,” he said. “But also, they don’t seem to be damaging over the long period of time.”
If vaccinations, mask-wearing and socially distancing can curb COVID-19 deaths – without doing shutdowns – that’s the best route, Hershbein said.
The study also found that economic recovery has lagged for Black and Hispanic workers and that the pandemic has hurt lower-wage workers much harder than people in high-paying jobs.
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