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The Jobs Imperative

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The Jobs Imperative

While managing the virus, America must open its economy and get people back to work. July 6, 2020
Economy, finance, and budgets

The coronavirus shutdown was one of the biggest economic experiments in American history. Economists and public-health scholars will study it for generations. History is still unfolding, but it is certain that the importance of having a job has been affirmed. It is not enough to pay people a government benefit and tell them to watch Netflix. People need somewhere to go; they need a sense of purpose and accountability. These are necessary not only for a functioning economy but also for a healthy society.

The latest job numbers show improvement: the unemployment rate has tightened to 11.1 percent, from a high of more than 14 percent in April, when 20 million people were unemployed. But these figures do not capture the extent of American underemployment. Students aren’t taking classes or working summer jobs; many people are working fewer hours than they were before the crisis. In May, the workforce-participation ratio—the share of Americans with a job—was about 50 percent. In February, it was over 60 percent. Infection spikes in Sunbelt states are forcing more closures and prompting concerns that things could get worse. American cities have been wracked by rioting, looting, and violence.

Numerous studies have shown that having a job is essential, beyond the obvious need to earn money to sustain life. Unemployment harms mental health. The lack of social contact and status, of a sense of control and routine, lead to anxiety and depression. The damage can be long-lasting if unemployment goes on for many months. In 2015, the Centers for Disease Control warned that high unemployment was a public-health problem, though the CDC has been silent on the health impact of mass unemployment in recent months. A study of teenagers estimated that summer jobs lead to lower rates of crime, violent crime, incarceration, and even premature death. Historically, prolonged large-scale unemployment has led to political crisis, and even revolution.

Getting people back to work must become a more urgent priority, even as some regions show an increase in Covid-19 infection rates. Arguing that there is no economy without public health, some economists maintain that stopping the virus must be the top priority. Indeed, in March, when we knew less about Covid-19, it was necessary to shut down as much of the economy as possible and replace lost income with unemployment benefits. But this policy is not optimal for more than a month or so. If lockdowns go on too long, they backfire. People seek meaning in community, and that’s one reason why people have gathered at massive protest rallies or flocked to crowded bars. So far, no state is going back to full lockdowns, though some are forcing some businesses to close indefinitely. These moves will add to uncertainty and will worsen unemployment.

Living with Covid-19 for the long term requires a targeted strategy that prioritizes keeping as many people working as possible while balancing the need to protect the most vulnerable. Economists teach that every choice involves costs and tradeoffs: there are no perfect solutions, but people respond to incentives. Economic ideas that look great on paper but are unsustainable in the real world don’t make good policy. The same principles apply for public health. Instead of promising perfect safety, politicians should be honest and change the way they talk about the disease. Some people will get sick, and this is the price we pay for a functioning economy and society. A low-risk person (who doesn’t live with a high-risk person) has a responsibility not only to avoid crowds and wear a mask but also to return to work, if possible. The extra unemployment benefits should end as planned because evidence suggests that they undermine the incentive to return to work.

Managing the risk of opening the economy against the danger of more infection requires reliable data. Months into the pandemic, the public still has no clarity on the trade-offs. Rather than platitudes about following the science, denial, and alarmism, we need our leaders and public-health officials to be clear about which activities are the riskiest, who faces the most risk, and what behavior can reduce that risk. Reopening policies can then be reshaped accordingly.

Finally, our national experiment with mass-subsidized nonemployment should end the conversation about the Universal Basic Income, which proponents argue would free people from grueling jobs so that they can unlock their creativity. The last few months have shown that this is not true; most people are most productive when they have a job. Policies that discourage work have imposed huge costs, budgetary and societal. And yet, somehow, we still hear about UBI as a serious proposal. Americans don’t need more government handouts; they need to get back to work. No economy without public health? True enough—but there is no public health without a functioning economy.

Photo: Petko-Ninov/iStock

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