Dr. Greg Wright, an assistant professor in UC Merced’s Economics program, who earned both a Master’s degree and a Ph.D in Economics from UC Davis, shared with the Times his perspective on the coronavirus’ impact on the economy, based on the national unemployment rate.
Dr. Wright told the Times, “Since March 2020, the effects of COVID-19 on the local and national economy have clearly been devastating.”
Describing the effects on the economy from the ongoing surges in virus cases since about the first week of June, he explained, “Actually, there have been positive signs, as the May unemployment numbers were not as bad as in April. Unemployment fell from 18.7 percent in April to 16.5 percent in May [and to 11.1 percent in June] (for context, a year ago the unemployment rate was 7.2 percent).
“Interestingly, the largest gains were in Leisure and Hospitality, which suggests that the reopening of the economy was good for employment, as expected.
“Less positive news came from the government sector, as local government continued to lay off workers. Without federal support for state and local governments, this will continue.
“Some or all of these gains in employment numbers may be reversed as social distancing is re-enforced, or new restrictions on businesses are issued (or re-issued).
“But there is a simple way to keep these employment numbers rising: Wear a mask.”
When asked if he believes the reopening of businesses has had an effect on the uptick in virus cases, Dr. Wright said, “It seems that the uptick in cases is primarily due to people being less conscientious about social distancing with family and friends. Being indoors without masks for extended periods of time — that is the dangerous behavior we need to avoid.
“So the re-opening of business may have played a small direct role, but the data seems to indicate that the indirect effect of the re-opening of businesses was probably more important, in that it contributed to complacency about the continuing seriousness of the virus. If people are told it is okay to go shopping and eat in restaurants, then they are also likely to feel that giving up on social distancing measures is okay too.”
Commenting on the impact of the pandemic in general, as well as on various categories of workers, Dr. Wright told the Times, “The hope was that many of the unemployed workers would be only temporarily out of work, but the continuation of the COVID-19 crisis through the Summer may worsen the long-run consequences.
“For one thing, the longer a person is unemployed the less likely they are to re-enter the workforce. So the failure to contain this virus will deepen the economic pain not just now but in the future.
“This may be disproportionately true for women, who are typically the first in the family to reduce working hours or stop working and are less likely to re-enter the workforce following unemployment. So we may see a significant and persistent decline in women’s labor force participation in the future.
“It is also exacerbating inequality. Many white-collar workers such as myself are reasonably protected from the threat of unemployment, can work at home, and have some savings. We all know that this is far from true for the majority of workers, and the already large gap between the haves and have-nots is only going to grow as the result of this crisis.
“The best remedy for this is continued direct government assistance for the unemployed until the economy recovers and significant support for state and local governments, who are under immense financial strains.”