Evidence Grows of Lockdowns’ Toll on Employment

Social distancing has contributed to job losses, new research suggests, pointing to the case for targeted curbs instead of sweeping orders

By Greg Ip of The WSJ. Excerpts:

"A team of researchers led by Ms. Simon and Ohio State University economist Bruce Weinberg tackled this by studying mobility data of people at work and Google searches related to unemployment, and compared them to when states imposed stay-at-home orders and closed nonessential businesses. They then examined hard data on weekly claims for unemployment insurance and the Bureau of Labor Statistics’ monthly employment surveys.

Their study, released last month, found that work-related mobility dropped notably after the imposition of a stay-at-home order, and unemployment related searches rose sharply after the closure of nonessential businesses. Initial claims for unemployment insurance rose sharply immediately after stay-at-home mandates. Weaker employment is correlated with stay-at-home mandates and business closures.

The authors conclude the share of people 21 and over with a job fell 1.7 percentage points for every extra 10 days a state was under a stay-at-home order between March 12 and April 12. They estimate 60% of the job losses between January and April were driven by states’ social-distancing policies and the remainder by factors common to the whole country, such as fear of infection or the slumping global economy.

In previous research, Ms. Simon had found that mobility fell sharply in mid-March before stay-at-home orders. In an interview, she said it appears that employers didn’t respond to slowing activity with job cuts until states ordered people to stay home and nonessential businesses to close.

While Denmark locked down its economy, Sweden didn’t, which appears to have helped its economy. Between March 11 and the end of May, newly registered unemployed rose by a cumulative 4.2% of the labor force in Denmark compared with 2.9% in Sweden. Between February and April, retail sales fell 4.4% in Denmark compared to 1.3% in Sweden."

South Koreans still socially distanced voluntarily, and that cost jobs. A study by Sangmin Aum of Myongji University and two co-authors found employment nationwide fell 0.9% during February at the start of the pandemic, and by 1.9% in the region where a large religious gathering was the source of most of the country’s infections.

But based on per capita infections, South Korea’s job losses were about half those suffered in the U.S. and U.K., which did have widespread lockdowns.

That social-distancing orders cost jobs isn’t an argument against them, but against using them indiscriminately.

Ms. Simon asked: “What if we go through a second wave and we have policies that are just very blunt, that shut down everything” despite mounting evidence that the risks of various activities differ widely? “Every activity has some transmission risks associated with it, but some are so much lower.”

Lockdowns might be better than no lockdowns, but lockdowns targeted at riskier activity might be better than both, she said."