All Pain, No Gain: Risking The Public’s Health Does Not Lead To Faster Economic Recovery
The responsibility for balancing public health and an economic recovery has fallen on state governments. Some states, such as Massachusetts, New York and Washington, chose to go slow with lengthy stay-at-home orders and a gradual reopening. Others, such as Florida, Georgia and Texas, imposed only short stay-at-home orders and aggressively reopened. The aggressive reopening has led to massive spikes in new infections and record numbers of daily deaths from the novel coronavirus in short order. It did not lead to a promised economic boom, though.
In fact, states that aggressively reopened did not gain any economic advantage in exchange for the tragic health toll. A few weeks ago, my colleague Ryan Zamarripa and I summarized weekly data from the U.S. Census’ Household Pulse Survey, which captures Americans’ economic situation in the pandemic. We looked at four contemporaneous measures – renters either not paying or deferring their rent, homeowners either not paying or deferring their mortgage, families often or sometimes being unable to afford food, and people losing earnings amid the pandemic. We also considered three forward-looking indicators – renters’ confidence in paying their rent, homeowners’ confidence in paying their mortgage, and people’s expectation about possible earnings losses in the future. Specifically, we looked at how these indicators changed after stay-at-home orders ended, relative to the period during stay-at-home orders. We then compared these differences between two groups of states: those with short and those with long stay-at-home orders, based on data from Opportunity Insights’ tracktherecovery.org. At a minimum, the economies of states with risky public health approaches clearly did not improve more than those that proceeded more cautiously. It actually may be the opposite. In all cases, states with long stay-at-home orders showed greater improvements than states with short stay-at-home orders.
Adding new weekly data further underscores this point. The figure below uses the same seven measures that my colleague and I recently used, but adds one more: whether or not people have a job. It also adds two more weeks of data. Including this new data provides more evidence that re-opening quickly and risking public health does not come with economic benefits. For example, in states that took the risky public health approach and often saw cases surge, a growing share of people struggled to pay their rent. The share of renters either not paying or deferring their rent was 1.6 percentage points higher after reopening than before, while there was no change in states that proceeded more cautiously (see figure below). And, the more cautious re-opening approach was associated with greater jobs gains. The share of people with a job was two percentage points higher after reopening than before in states with long stay-at-home orders, while it was only 0.5 percentage points greater in states with short stay-at-home orders (see figure below). As virtually all states have left their stay-at-home orders in the rear-view mirror, it becomes increasingly clear that putting people’s health at risk did not accelerate the economic recovery in states that re-opened faster.
The additional weeks of data also allow for a somewhat different analysis that illustrates these two different paths after reopening on a week-by-week basis. All states that had a stay-at-home orders have been open for at least five weeks. The progress for states with cautious health measures versus risky ones looks remarkably different over those five weeks. For example, the average employed share of the population in states that proceeded cautiously with public health measures was 3.1 percentage points greater five weeks after reopening than at the end of the stay-at-home orders (see figure below). In contrast, the employed share in states with risky public health approaches was only 0.4 percentage points higher five weeks out from the stay-at-home order (see figure below). The same pattern emerges for other indicators, not shown here. A little over month after opening up, states that aggressively forged ahead and put their people’s lives at risk got an economic whimper rather than a bang.
There is no way around it: getting the economy back on track means controlling the pandemic. There are no short cuts. Putting people’s lives at risk and wishing the virus away are not going to produce a magic economic recovery.
The second lesson from the data is that no state is an island. All state economies are connected with each other. No single state can forge its own path out of the pandemic. Because controlling the pandemic first is essential, it is then also clear that the federal government needs to develop, implement and sustain a national strategy to fight the pandemic. It also needs to lead on combating the economic fallout from the pandemic.
Protecting the public’s health and aggressively suppressing the virus’ spread will inevitably hurt people’s and businesses’ finances. Policymakers can and need to address that pain with targeted, large and sustained fiscal interventions. These policy measures will require added and extended unemployment insurance benefits, paid medical and family leave, added stimulus payments, as well as financial assistance – grants and loans – to businesses that struggle due to no fault of their own. At the same time, state and local governments will need more help to protect the public’s health, while also maintaining their services in education, transportation, social safety nets and other areas. Families and businesses will struggle because of the global pandemic. Congress and the White House can ease those inevitable struggles, but will need to act soon and stop treating protecting the public’s health and seeding an economic recovery as conflicting goals.