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The Hope in Our Economy

The Hope in Our Economy

More than a thousand of us in northeast Nebraska have lost our jobs. Many of us have had to decrease how much we work. Some of us are sick, however, most of us will recover. Our economy will also recover. But how quickly we can get back to a steady paycheck depends on how good we are at waiting.

If you pay attention to the news, you know that now, more than ever, it is focused on the negative and the daunting. It focuses on the increasing infections around the country and the world, the climbing number of deaths, and the frustration of people losing their jobs.

Lighter moments are found when there is singing or dancing in the streets and concerts online. There is an abundance of appreciation for those who work in grocery stores and for truck drivers and delivery personnel who are helping to keep the stores stocked. They are all admittedly putting their health at risk for our survival. Teachers are working hard to provide material for their students. Parents, more than ever before, have come to appreciate how difficult it is to teach – never mind having 30 kids at once (and not getting paid enough for it). The community applause for our hardworking healthcare workers is endearing and provides hope in humanity.

Nevertheless, we can’t help but feel troubled as bills become due and local jobs become less tenable. A clear indicator of this is the mounting number of unemployment insurance claims submitted over the last couple of weeks.

The national news tells us that nearly 10 million claims have been submitted across the country. In Nebraska, the Nebraska Department of Labor1 received an average of 770 claims per week between January 1 and March 14. As a state, there have been 20,000 claims over the past two weeks. In northeast Nebraska2, there was 17 claims submitted between March 9th and the 14th. The following week there were 367. The week after that, last week, there were 1,003 claims submitted. That equates to a 5,800% increase in two weeks. In other words, 1,370 people in our communities who had jobs 3 weeks ago have been laid off. That’s 1,370 people who will find it difficult to pay their rent or mortgages.

In the past two weeks, the majority of those laid off in Nebraska worked in the accommodation and food service industry (11,200 people state-wide), followed by healthcare and social assistance (5,300 people), retail trade (3,500), services such as repair and maintenance personnel, personal care and laundry services, religious and civic organizations (3,500 people), and manufacturing (2,000 people). Note that three of these categories are our top industries in northeast Nebraska: government (including education), manufacturing, healthcare and social assistance, followed by retail trade.

So far this year, 39 businesses in northeast Nebraska have closed affecting at least 490 employees, according to the Nebraska Department of Labor3. This is not much higher than the first three months of 2019 with 29 closures and at least 687 employees laid off (several Shopko locations closed during this time period).

According to a Pew Research Center publication on March 264, “33% say they, or someone in their household, have lost a job or taken a pay cut (or both) because of the coronavirus outbreak.” The Bureau of Labor Statistics states that Americans have started to work fewer hours5. Nationally, the number of part-time workers increased from 4.3 million in February to 5.8 million in March. Within that group of part-time employees, 4 million people indicated that they were working part-time because of unfavorable business conditions or slack work. State data related to this topic is not yet available.

There are two main drivers in this pandemic that will have large effects on the depth of our economic contraction and how long it will last. The first concern is related to the number of fatalities. Economists recently published a research paper looking at pandemic economics and how public health interventions affected the economy during and after the 1918 flu pandemic6. They found that when cities intervened early and more aggressively, they were more likely to mitigate the loss of life and have a less debilitating loss in the economy and faster economic growth after the pandemic.

Time is the second driver that will affect our economy during the Covid-19 pandemic. Dr. David Ho, a Professor of Medicine at Columbia University and a pioneer scientist during the HIV/AIDS crisis, characterizes the difference between a simultaneous effort addressing directive health measures versus implementing them in a sequence. In the illustrations designed by Dr. Ho, notice that the outbreak can be controlled much sooner when policies are put in place simultaneously, regardless of the local caseload. Waiting until a specific location meets a threshold results in additional cases and a longer period of time until the threat is mitigated. Gaining time will not only allow for fewer cases, and therefore fewer deaths, but it will also allow time for therapeutics to be tested.

Simulation Chart
Sequential Chart

No one wants to be in the predicament in which we find ourselves. We are trapped in our homes and are told not to go out unless it is absolutely necessary. By doing this we will save our healthcare system and we will save lives. But the consequence of this is that we aren’t spending money. And so, those who need that money to run their business, can no longer do so. This, in turn, means that many of us work less or lose our jobs and are left with less money than what is necessary. But there is hope. There is hope that the government can mobilize the $2 trillion stimulus bill soon. There is hope that unemployment insurance claims can be filed quickly. There is hope that the Covid-19 cases will start to decrease. So, as a society, alone together, we wait, and we hope.