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COVID-19

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Opinion >  Guest Opinion

Economy will not survive long shutdown

jill j. mccluskey

The effects of the COVID-19 virus in the Inland Northwest will be enormous on many dimensions. While policies certainly should focus on public health, economic impacts and societal effects cannot be ignored in the process. Given the variation of industries and population densities in Washington and Idaho, serious thought must be given to the type and length of the shutdown.

The benefits of “social distancing” by “flattening the curve” have been explained, but the exit strategy is unclear. An infectious-disease expert argued that extreme social distancing will be needed for at least five months. Dissipating the impacts of the virus over time reduces the probability that our health system will be stretched beyond its capacity, but this also increases the life of the virus in society because herd immunity, which is essential for overcoming the epidemic if no vaccination exists, will not be established. If social distancing works and slows infection rates, the need for distancing will endure and the economic pain will be more severe with the passage of time.

Washington Gov. Jay Inslee and Idaho Gov. Brad Little both recently issued stay-home orders. These policies do not consider that industries, areas and people have heterogeneous responses to the virus. Inslee stated, “ I make this difficult choice knowing it will add to the economic and family hardship. … We want to get back to normal as soon as possible. … And the fastest way to get back to normal is to hit this hard, and that’s what we’re doing.” But this has exactly the opposite effect; while it may reduce the number of COVID-19 deaths in the short run, it will increase and lengthen the economic hardships. In fact, Inslee has already suggested extending the order since his original statement. If continued for too long, the universal stay-at-home policy will result in a new “normal” with high unemployment and a smaller economy.

The economic impacts of the shutdown in our region will be far from trivial. Our economy includes many small businesses that consumers and employees rely on for their livelihood. Some entrepreneurs have invested their lives into their businesses, only to see them shut down, possibly permanently. A healthy economy creates reductions in poverty and improvements in education, and provides resources to combat viruses and other illnesses. A weak economy causes the destruction of many aspects of the quality of life, including some lives themselves, especially for people without job security or large financial reserves.

Massive economic disruptions have already happened. The shift to eating at home has caused many layoffs in the restaurant industry. Travel, entertainment and other industries are also facing catastrophic situations. Washington and Idaho have seen new unemployment claims skyrocket. Economists have predicted a national unemployment rate of 30%, which is higher than the Great Depression’s peak of 25%. This will create hardship for many families for years to come that will spawn additional psychological, biological and physiological maladies. While we can try to minimize the impact of unemployment with government programs, any aid will become progressively more unsustainable as the economy tumbles. While the economy will eventually recover, “recovery” means that the economy will start growing again from a substantially reduced starting point, meaning there will be negative consequences in perpetuity. To put it succinctly, this shutdown cannot be kept in place for months.

While Seattle was an early hotspot of COVID-19, over half of the counties in Idaho and five in Washington have yet to report a case of COVID-19. Within both states are massive differences in population densities and industries. Yet our policies seem to be a sledgehammer instead of a scalpel that don’t distinguish between different regions. Given the costs of the shutdown, policies are needed that consider local conditions, populations, caseloads and health care resources. Increased testing and safety procedures are needed.

Rather than an all-or-nothing policy, we can reduce some aspects of the economy while opening others subject to regulations that mitigate the spread of the virus. People will be eager to become part of a solution. It is important to listen to epidemiologists in times like these, but we must also consider the direct economic costs, mental health costs and other physical health costs that come with shutting down the economy.

Jason Winfree and Jill J. McCluskey are economics professors at University of Idaho and Washington State University, respectively. These are their personal views and do not reflect the views of their employers.

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