Lockdowns Intended To Preserve Our Health Are Making Us Poorer and Angrier

The U.S. economy may be slowly pulling itself out of the doldrums inflicted by social distancing and government lockdown orders promoted as efforts to stem the spread of COVID-19, but many Americans continue to suffer.

Half of Americans who lost their job because of the pandemic are still out of work, and the resulting damage to finances falls hardest—as you might expect—on lower-income people who have little cushion against hard times. That’s something to keep in mind as politicians contemplate renewed restrictions, especially given the potential for economic pain to worsen already-simmering social tensions.

“Overall, 25 percent of U.S. adults say they or someone in their household was laid off or lost their job because of the coronavirus outbreak, with 15 percent saying this happened to them personally,” Pew Research reported last week. “Of those who say they personally lost a job, half say they are still unemployed, a third have returned to their old job and 15 percent are in a different job than before.”

What makes the situation even worse is that the burden falls hardest on those who can least afford it. “Lower-income adults who were laid off due to the coronavirus are less likely to be working now than middle- and upper-income adults who lost their jobs (43 percent vs. 58 percent),” Pew adds.

Among those who have continued working or are back to work, many are making do with reduced hours and pay cuts. About a third of adults report they or their households have suffered such trimmed income opportunities. That means less money in-hand and greater difficulty in making ends meet.

“A quarter of U.S. adults say they have had trouble paying their bills since the coronavirus outbreak began,” the Pew report notes. “Among adults with lower incomes, 46 percent say they have had trouble paying their bills, and about a third (32 percent) have had problems paying their rent or mortgage since February—significantly higher than the share of middle- and upper-income adults who have faced these struggles.”

Fortunately, the economy shows signs of recovery, though not full health by any means. An economic index created by Moody’s Analytics and CNN shows unemployment declining from its pandemic peak and both hiring and hours worked at small business on the rise. But overall economic activity is only at 81 percent of where it was when lockdowns began back in early March. While not everybody is affected to the same extent, we’re living in a poorer country than we did just months ago.

And the effects are expected to linger.

“The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Federal Reserve cautioned on September 16.

Likewise, the Congressional Budget Office expects the vast sums of money spent by the federal government in an attempt to keep people fed and housed while the economy was in a holding pattern “to raise borrowing costs, lower economic output, and reduce national income in the longer term.”

Obviously, this is a big deal in terms of people’s ability to pay for necessities, save for the future, and create prosperity for themselves and their children. But continuing joblessness and economic distress also have important implications for the stability of the society in which we live.

Recent months have been marked by protests, riots, and political violence in cities across the country. Yes, we were in for a rough ride, anyway. We entered this contentious election year with Congress and the president locked in an impeachment struggle, amidst high social tensions and a polarized population divided into mutually loathing political and cultural factions.

But, as I warned in March, drawing on historical examples and research by social scientists, unemployment and economic distress have proven time and again to fuel social unrest.

“Results from the empirical analysis indicate that economic growth and the unemployment rate are the two most important determinants of social unrest,” noted a 2013 report (PDF) from the International Labour Organisation (ILO), a United Nations agency that maintains a Social Unrest Index in an attempt to predict civil disorder based, in part, on economic trends. “For example, a one standard deviation increase in unemployment raises social unrest by 0.39 standard deviations, while a one standard deviation increase in GDP growth reduces social unrest by 0.19 standard deviations.”

As the pandemic lockdowns started to affect people’s lives in March, David L. Katz, former director of Yale University’s Yale-Griffin Prevention Research Center, wrote in The New York Times that he was “deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life—schools and businesses closed, gatherings banned—will be long lasting and calamitous, possibly graver than the direct toll of the virus itself.”

Six months later it appears that Katz’s fears have been fulfilled. We’ve had months of social unrest with no end in sight. Millions of Americans remain un- or underemployed and, as Pew points out, “many Americans continue to face deep financial hardship” and are struggling to pay their bills. The economic damage inflicted by the lockdowns looks destined to extend into the foreseeable future.

And now politicians are contemplating or already imposing new restrictions as the pandemic continues and the numbers of cases rise in some places. Israel is under a renewed lockdown. Spain and the U.K. are sliding in the same direction piecemeal. Some U.S. jurisdictions are tightening the screws as public health professionals call for putting the whole country back in suspended animation.

Given what we know now after months of unpleasant experience, it should be obvious that restrictions intended to preserve our health are making us poorer and angrier. Further disrupting people’s social connections and economic activity would be worse than pouring salt on open wounds. It would amount to throwing a lit match on a pile of oil-soaked rags.

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