People still afraid of catching COVID-19 are costing the U.S. economy billions of dollars

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More than two years after the coronavirus pandemic began, social distancing is keeping some workers from going back to work.

That’s according to this working paper distributed by the National Bureau of Economic Research. Some people are not prepared to let their guard down — in the knowledge that COVID-19 has not gone away. Some 13% of American workers say they will continue social distancing as the economy opens up and cases fall, and another 45% said they will do so in limited ways. Meanwhile, only 42% of those workers said they plan a “complete return”.

The study, entitled “Long Social Distancing,” estimated that people’s unwillingness to be in close proximity to each other has reduced labor participation by 2.5 percentage points in the first half of 2022 compared to what economists would normally expect to see — translating to $250 billion in potential annual output, representing nearly a 1 percentage-point drop. 

The share of working-age people in the labor force dropped for the third month in a row. Some 186,000 people left the labor force in November, the latest government figures show. The labor force participation rate ticked down to 62.1% in November from 62.2% in the previous month, the Bureau of Labor Statistics said Friday. The number has yet to recover to the pre-pandemic level of 63.4% in February 2020. 

The authors in the latest NBER report analyzed the results of the monthly “Survey of Working Arrangements and Attitudes,” which was founded by a group of economists in 2020 in response to the dramatic impact of COVID-19 on working life. The survey polls nearly 27,500 U.S. residents between the ages of 20 to 64 who have recent experience working. The authors looked at results from February 2022 to July 2022, and focused on people who had at least earned $10,000 in 2021. 

About one-fifth of the respondents who were not participating in the labor force during the week the survey was conducted said concerns about catching COVID-19 or other infectious diseases was the primary or secondary reason they were not currently working or seeking work. The three authors of the paper came from the business and economic departments of Instituto Tecnologico Autonomo de Mexico, the University of Chicago and Stanford University. 

“It is more common among older persons, women, the less educated, those who earn less, and in occupations and industries that require many face-to-face encounters,” the researchers wrote. “People who intend to continue social distancing have lower labor force participation – unconditionally, and conditional on demographics and other controls.”

Some 17.6% of respondents who held a high-school education or less showed a tendency for strong “long social distancing,” compared to 12.8% for those who had completed some college education, 8.9% for college graduates, and 7.6% for those holding a graduate degree. Similarly, those workers earning the least amount of money were more likely to miss work due to their desire to social distance.

Those reporting a strong desire to continue social distancing are more likely to work in jobs that require face-to-face encounters, the study found. In the early days of the pandemic — and before vaccines were available — millions of office-sitting workers were able to work from home, while many lower-wage workers faced the highest risk of contracting COVID-19.

Long social distancing is about 3 percentage points higher for Democrats than for Republicans and even higher for those who identify as Independents or with smaller political parties, the researchers found. “Along several dimensions – education, earnings, industry, and occupation – strong-form long social distancing is more common when remote work opportunities are fewer,” they added.

Businesses have struggled to find workers to fill jobs over the last 12 months, especially for service and labor-heavy positions. Labor shortages led to an increase in wages, and contributed to 40-year high inflation. Two groups of workers are yet to come back in earnest, those aged 20-24 and those over 65 years, the NBER study concluded. Experts say unless such workers return to the workforce, hiring will continue to be tough and labor shortages will persist. 


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