How Coronavirus Is Impacting the Labor Market

published on July 20, 2020

Ambika Wozniak as an extraordinary CV out of Chicago and Harvard her tour of duty and Notre Dame and here she is now at Minneapolis what you need to know is Minneapolis owns a high ground on children education in America professor wonderful to have you with us you have

Written on the inequalities of this virus we are living it now in July August and into September with public school kids crushed by budgets fiscal the rest and fancy private school kids actually maybe will be able to go back

To school that's just one inequality that we have how do we solve this right so I think that one of the things that we really want to highlight coming out of the latest research is something that I think is going to help us think about

The trade-offs of some of the policies governor's are considering reimposing and of course any progress that we make in containing the virus is going to have serious ramifications for our children what we want to highlight is the fact

That after a few months and weekend weeks with this virus we've been able to understand what's happening to labor markets in places where different policies have been adopted and a really striking finding coming out of many

Pieces of research I've seen this repeatedly in very timely research seminars this early summer is that states that have had strict and early lock downs are seeing labor market changes that are really just as

Significant as states that did not lock down so what that's telling us is that the economic impacts of the virus are happening regardless of the state what we've witnessed here in John Farrow is the foreigner from England has really

Noticed this it's without question the gains of the stimulus has gone to Wall Street we saw this with Morgan Stanley's our earnings and you know the rest of them goldman sachs and all what is the policies prescription you would advocate

So that we get a bit of equality across society right now in the crisis yeah so I think with this new information that we have that the virus contraction is hitting all states regardless of their shutdown

Practices we really see that it's imperative that support continued for workers and small and medium-sized businesses and I think some of the evidence that we're seeing on consumer finances so from researchers who have

Access to for example bank account and credit card spending data even for very low income households we can sometimes see them in such data it really does look like some of these fiscal policies have they have definitely made it to

Those households now that doesn't mean that that's erased the financial hardship of the pandemic for many households they're treading water for many households they're still facing significant financial uncertainty we see

That in the data that I study that looks at food insecurity and ability ignorance on time but we definitely it would be an overstatement to say that those stimulus and extended benefits packages that were in place under the cares Act would be an

Overstatement to say that they haven't made it to Main Street or to many American households what we need is to have those policies likely continue because we're right back where we started

In fact or even we're even worse off right now in terms of the virus and so engaging in a second round of such packages I think could help prevent an economic disaster that will follow as the virus continues to spread in the

Next couple of weeks abigai what you're saying is so so powerful let me repeat it there is no connection between labor markets and virus protection policy what does that mean for reopening there are some people

That think we could see some divergence across states a New York across some of the states across the Sunbelt for instance so you saying that we won't see that divergence we will not see nearly as much divergence as I think people

Expect I think people have current have come to view containment policy as a where if we engage in containment policy we are going to lose out economically and they're seeing them as kind of a lunch one trade-off and what we've come

To learn is that this is much more of an investment if you invest in containment policy now it pays benefits in that your economy can open sooner and faster and the reason we're not seeing as much of a connection that one-to-one trade-off is

That people are making behavior changes on their own that's a first reason and so folks are just not going to go out and they're not going to spend at the same levels if they feel insecure about their family's safety in their own

Health the other reason we're not seeing that divergence that we might expect is that state economies are connected to one another so if one of them is very slowed down it's going to affect other state economies throughout the US so

We're seeing is that the labor market is not the same as the virus market abigail is such an important point and you say shut down orders work they work not only to control the virus but for the economy that said if there is not some sort of

Lockdown if there isn't a stricter enforcement of some of these policies to constrain the virus is any extra stimulus throwing money good money after bad this idea that the bridge to the other side is becoming a bridge to

Nowhere the friends that I share some of those concerns I see concerns that folks have about these packages what we also see in the data is that significant numbers of folks are very concerned about their ability to continue to stay

In their housing we know that housing disruption is significant for families that experience it and it would be significant for our cities and communities I think in my view presents preventing large-scale housing

Displacement when the next round of mortgage payments and rent payments come due is really critical so some of this policy I definitely agree is it's a challenge to think of exactly the right level but we need to prevent that

Next we both collapse professor one final question unfair but it is the heritage of the Minneapolis Fed folks they own a pre-school education nursery school education and all the benefits of that abaca Wozniak really simply does

Distance learning work for kids I haven't observed it tell me it works please I'm sad to say that it does not work well particularly for disadvantaged students really striking data from Brown University looking at they actually had

A study in progress as my understanding when the pandemic hit tracking students performance using one of these online math modules that I think a lot of us have probably encountered now even though we didn't go to school with them

When we were growing up they kind of were collecting this data in the background pandemic it you can see how much learning loss has happened we're all across the board but most significantly for students from lower

Income household so it's certainly helpful to have in place but it's not a good substitute it's not making up the ground and I think we need to think really seriously about how we're gonna put that back these are again

Investments that we've were gone in the last couple of months how are we going to make this up to our children in the coming months and years when the pandemic has passed

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