The jobs picture, coronavirus response protocols and mental health

I am waiting for the jobs numbers out of the US as I begin this post. On Wednesday, we got a preview via the private sector unemployment numbers released by ADP. They showed a loss of more than 20 million jobs, which was pretty much in line with estimates. Consensus estimates for the official numbers in a few minutes are for a loss of 22 million jobs and an unemployment rate of 16%. Both of these numbers would be the worst since this kind of record keeping began in the US in 1939.

These job losses are a human tragedy on a tremendous scale, with unknowable long-term personal, economic and mental health consequences. So today, I want to write about this pandemic in those terms because I don’t think enough attention is being paid to it.

Mental health

I am going to start with the psychological impacts of the pandemic because it is something that is important to me.

Just before we went into lockdown in the United States, a college friend of mine took his own life. I was at home when I found out. Another college friend who lives in the area called and I started chatting with him, excited to hear from him after a few weeks because I was planning to meet up with him and a few others for sushi and a night out. But his tone was decidedly sombre. And when he broke the news from that morning of my friend’s death, I understood why.

The next day, I went to New York for the week, mostly in a fog. I shut down except to work (and drink, unfortunately). But I did my utmost to be a resource to my friend’s family in contacting people about services. Then the shutdown hit and services had to be private. Our college reunion, set for June, was cancelled. And so, we have had no closure. My friend’s family hasn’t had a full sense of closure too. This is a human tragedy for so many of us connected to my friend, who was the life of the party for those of us who knew him.

For me, then, the psychological impact of shutdown isolation and unemployment is very real, even though I am with my family every day and am not unemployed. This morning I tweeted about this, referring to a Bloomberg article on the coronavirus and mental health. Please read that article.

Sorry to post such horrible news but I think it’s an important consideration. Look after your family and friends and be well. https://t.co/2PQuLVgg2H

— Edward Harrison (@edwardnh) May 8, 2020

This is why I believe a well-considered response to the pandemic is so important. It’s not just about jobs but personal well-being.

Jobs and mental health

My wife is a pre-school teacher and administrator. And she’s always telling me how important structure is for children. She says it keeps them grounded and provides them with the security they need to take well-measured risks, to have the intellectual curiosity, and to have the mental predisposition to receive new information. That’s critical because early childhood learning has a greater impact on human development than perhaps any other stage of life.

But, the structure she speaks to is important for us adults as well. Without it, the same insecurity, lack of focus, and mental rigidity develop. That goes directly to job loss. A recent study at the US National Institutes of Health showed people saw:

work as the basis for belonging, and loss of work affected their social life and consumption patterns due to changes in their financial situation. They also expressed feelings of isolation, loss of self-esteem, and feelings of hopelessness, which affected their physical well-being. Longer duration of unemployment increased the respondents’ negative emotions. The respondents reported activities, structure, and affiliation in other contexts as part of their coping strategy against poor mental health.

So, if you connect this study to the research done by the Well Being Trust and researchers affiliated with the American Academy of Family Physicians that I quoted above, you have to be worried about the longer-term impact on mental well-being from this coronavirus pandemic. It’s not just the isolation from lockdowns though. It is the isolation and loss of self-esteem and belonging that goes with unemployment as well.

Covid-19 policy responses

What do we do about this from a policy perspective then?

I think the logic from my post in mid-April on lockdowns bears repeating:

testing is job #1. Test as many people as possible as often as possible, including random testing to get a sense of asymptomatic infection. That’s the only way people will feel safe returning to work after a lockdown. And it’s the only way you can find infection clusters and isolate them while getting on with life in as normal a way as possible.

As I pointed out then, Iceland, while a small country naturally protected from disease elsewhere by an ocean, is still an example. They have not had a strict lockdown, just as Sweden has not. But they have tested like crazy. And that approach has allowed the Icelanders to isolate clusters of infection and mitigate the impact elsewhere.

Are the Icelanders and Swedes making the right choices? We won’t know until after the fact. But, Iceland hasn’t done a strict lockdown and they have had very positive outcomes so far because of their testing regime. Sweden, on the other hand, certainly has a higher death count by an order of magnitude than it’s comparable Scandinavian peers, Denmark and Norway, who chose a more draconian lockdown as their initial response. So, on it’s face, right now the Danish and Norwegian approaches seem the more well-considered ones.

But, my Wednesday post was mostly a defense of the Swedes. My understanding is that the Swedish approach is designed to prevent the healthcare system from becoming overwhelmed while avoiding drastic lifestyle changes. Striking the right balance is going to be difficult. And it will vary from country to country.

The important hypothesis here comes from Wednesday’s post:

measures to flatten the curve will meaningfully slow transmission, but a shutdown only pushes serious cases into the future. It does not cure them or make them go away. Only infection or a vaccine can do that.

The point of a lockdown is to get your house in order. That’s not just about the healthcare system either. You’re also buying time to develop the right protocols necessary to help people lead as minimally restrictive a life as possible, not just to help the economy, but to bring people back together and create an environment that sustains mental health and physical well-being.

The US isn’t doing that, of course. The Trump White House won’t issue detailed CDC guidelines for states, businesses on reopening. I have no idea why and neither do you. We can only speculate. Let’s not, because regardless of the motivation, the outcome is clear; it opens the US up to a risk of a large second wave, the attendant fear, behavioral change, economic uncertainty, isolation and mental health challenges. This is not what we want.

My take

The jobs number has now come in. The number was 20.5 million with an unemployment rate of 14.7%. That’s better than expectations on both counts. Index futures rose and bond prices fell on the news, which is a bit perverse given the number was the worst in history by an order of magnitude. It’s just that it beat expectations.

The reality behind the headlines is worse though. As I pointed out on April 24 on Twitter, “to be counted as unemployed in the… April 2020 US survey, you have to not only be without work but also actively looking for employment. The unemployment number may not be as high as expected.”

The reason the headline numbers are not as bad is that  employment to population ratio has dropped, reflective of people who are really unemployed but not captured in the headline number. Another factor is that the household survey response rate was 13% percentage points lower than normal.

Here’s what the numbers look like with that 13% drop in response rate in the household survey. Note the row highlighted in yellow showing the massive departure from the labor force. Those are really people who are unemployed.

The U-6 number, just under 23%, is more reflective of the reality. That’s a Great Depression-like statistic. 

One other thing to notice is the duration of unemployment. There’s a massive increase in newly unemployed from March to April.

As time goes on, we need to watch these numbers to see if they move to the longer-term rows in future reports. Earlier today, Politico was saying it could take a decade to dig out of the unemployment hole left by the coronavirus pandemic.

The bottom line here is that a V-shaped recovery is pure fantasyland stuff. It won’t happen. For the US, my fear is that the policy response of opening up like the Europeans, but with less pandemic preparedness than the Europeans and while infection counts are still rising, the US is going to set itself back economically. And the human toll would be immense.

So right now, I am left hoping that the hot summer weather to come makes the outcomes better than expected. And then, by winter we’re better prepared with testing and everything else.

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Have a restful and safe weekend.