With infections rising in the U.S., the Coronavirus will have a large negative effect on the economy. However, it won’t be the death toll, but the impact that the Coronavirus will have on the American workforce.
According to the Bureau of Labor Statistics, on average, workers in the private industry received 7 days of sick leave per year at 1 year of service, 7 days of sick leave per year at 5 and 10 years of service, and 8 sick days per year at 20 years of service according to a 2018 study. Furthermore, only 71% of workers in the private industry had paid sick leave benefits. This, coupled with the fact that that 78% of US workers are living paycheck to paycheck according to a CareerBuilder survey in 2017, begins to show the cracks in the American workforce. The Coronavirus will cause these cracks to grow in several different ways.
Firstly, over 800 U.S. citizens have already been placed under a mandatory 14-day federal quarantine at U.S. military bases. The number of quarantined will continue to rise, and the US may look to enacting even larger scale quarantines after a WHO team found that the practice, among others, was effective in China.
Secondly, as more people are infected, schools will begin to close. A school in Dublin has already been closed for 14 days. Japan looks to close all their schools for 1 month. Two schools in the U.S., one in Oregon and another in Washington state, have also been closed due to the Coronavirus. With school closures, parents will be forced to either take time off work to watch their children or spend extra money on childcare.
Finally, workplace closures are also more likely to occur. China’s PMI for February is looking to be the lowest it has been since 2009 due to workplace closures. On March 1st, the staff at the Louvre museum in Paris closed its doors. With more workers getting sick, or the potential of the Coronavirus spreading, we are likely to see workplaces in the U.S. close as well.
Between the fragility of the American workforce, the rising rates of Coronavirus infections, and the measures taken to prevent large outbreaks of the disease, the U.S. economy may be in for an even larger downturn than what has occurred already in the stock market.