{"id":434532,"date":"2020-05-14T16:01:42","date_gmt":"2020-05-14T20:01:42","guid":{"rendered":"http:\/\/www.rochester.edu\/newscenter\/?p=434532"},"modified":"2020-05-14T16:01:42","modified_gmt":"2020-05-14T20:01:42","slug":"stay-at-home-labor-markets-us-economy-434532","status":"publish","type":"post","link":"https:\/\/www.rochester.edu\/newscenter\/stay-at-home-labor-markets-us-economy-434532\/","title":{"rendered":"Reopening the country will do little to restore the US economy"},"content":{"rendered":"
A Rochester economist says multiple factors\u2014not just stay-at-home orders\u2014combined to generate the recent economic collapse.<\/div>\n
\"Lisa
Economics professor Lisa Kahn. (Ä¢¹½´«Ã½ photo \/ J. Adam Fenster)<\/figcaption><\/figure>\n

In mid-March, California issued the country\u2019s first shelter-in-place directive, with other states following suit over the next month. During that period, a record 22 million Americans filed for initial unemployment insurance benefits, as the country\u2019s labor market went into a freefall. So it\u2019s reasonable for people to link the nationwide shutdown to the downturn in the economy.<\/p>\n

But Ä¢¹½´«Ã½<\/a> economics<\/a> professor Lisa Kahn<\/a> says there is much more to it.<\/p>\n

\u201cWhile the early stay-at-home states have slightly bigger spikes in unemployment claims and job vacancies, the dramatic spikes are everywhere, regardless of a state\u2019s individual policies,\u201d says Kahn, coauthor of the National Bureau of Economic Research working paper<\/a> \u201cLabor demand in the time of COVID-19: Evidence from vacancy postings and UI claims.\u201d<\/p>\n

And if a state\u2019s lockdown policies were not the sole driver of the labor market collapse, people would be wrong to expect an easing of those policies would restore the economy to what it was at the beginning of the year.<\/p>\n

Says Kahn, who specializes in labor economics, \u201cThat will take people being less worried about the virus and more willing to spend money.\u201d<\/p>\n

Kahn\u2014along with fellow economists Fabian Lange of McGill University and David Wiczer of Stony Brook University\u2014considered two factors: initial unemployment insurance claims and job vacancies. While the unemployment insurance claims indicate the number of people who have lost jobs, the job vacancy data reflect the outlook of employers\u2014and that outlook has been dismal. At the same time that insurance claims shot up, postings for job vacancies declined by 30 percent of the level that existed at the beginning of the year.<\/p>\n

At first, Kahn was surprised to see those numbers, whether or not a state was under stay-at-home restrictions. \u201cBut once we thought about it, we realized what was happening,\u201d says Kahn. \u201cEven before we had these stay-at-home policies, people were being urged to avoid restaurants and large-group gatherings in order to avoid getting or spreading the disease. On top of that, people were nervous about whether they would be able to keep their jobs in the impending crisis. All those factors\u2014not solely the orders keeping people at home\u2014combined to generate the collapse in economic activity.\u201d<\/p>\n

Moreover, the collapse occurred in all industries, though it was less pronounced in sectors considered essential, which includes health care, grocery, and protective services such as police and firefighting.<\/p>\n

The downturn also took place regardless of work conditions. While it\u2019s true that people who can work from home are somewhat less likely to lose their jobs, employers are scaling back on those job vacancies, as well. As Kahn explains, there\u2019s a reduced demand for goods and services, no matter how they\u2019re provided.<\/p>\n

\u201cThink about people doing business online,\u201d says Kahn. \u201cConsumers are worried about the economy and being laid off themselves, so they\u2019re going to be less likely to purchase those products and services.\u201d<\/p>\n

Kahn explains that consumer confidence will be a major factor in restoring the economy. Even if the number of COVID-19 cases drops significantly throughout the country, people may be worried about what will happen in the fall when flu season ramps up. Those worries can affect an employer\u2019s willingness to bring back workers, as well as the willingness of consumers to spend money.<\/p>\n

Given that \u201cemployers are contracting across almost all sectors and occupations,\u201d says Kahn, \u201clifting state orders will not be a magic fix.\u201d<\/p>\n

Read more<\/strong><\/h3>\n
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\"FinancialRochester economist: Without stronger leadership, \u2018disaster\u2019 lies ahead<\/strong><\/a>
\nIn the absence of mass testing, tracing, and quarantining for COVID-19, \u201cWe are going to have an extraordinary economic downturn,\u201d says economist Narayana Kocherlakota.<\/span><\/div>\n
\"DoctorCOVID-19 demands a reckoning with hospitals\u2019 fee-for-service business model<\/strong><\/a>
\nA health care system that prioritizes volume over routine care is \u201cstructurally incapable\u201d of responding to the challenges presented by COVID-19, writes Mical Raz in a Washington Post<\/em> op-ed.<\/span><\/div>\n
\"SignSocial distancing has stabilized, but failed to reverse, the spread of COVID-19<\/strong><\/a>
\nAccording to a study by data scientists, social distancing measures like closing schools and restaurants sharply decreased the doubling rate of confirmed cases, but COVID-19 is still spreading.<\/span><\/div>\n<\/div>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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