Who has been hurt by the shutdown the most?

Let us take two individuals — a middle-aged restaurant business owner and a middle-aged worker in the technology industry. If none of these individuals has an underlying condition, they should, on average, face the same risk of COVID-19 driven mortality and sickness. However, the restaurant owner faces a higher risk of economic ruin if the government mandates a shutdown, while the technology worker does not.

So, if given the option to decide whether the government should shut down or not, these two people may likely support different decisions. The technology worker would likely support or be indifferent to a shutdown of the economy. The business owner, on average, would likely not support a shutdown. And given a choice, he could try investing in resources that mitigate COVID-19 spread without necessarily closing his business.

Shutdown policies, however, have offered no such opportunities. Instead, lawmakers have mandated a one-size-fits-all approach not rooted in evidence, taking no consideration of differences in health and economic risk, leaving no option for individuals to figure out the least costly way of dealing with the pandemic.

Unfortunately, those who have been forced to bear the brunt of this one-size-fits-all type of policy-making were already very vulnerable. These include working mothers, low-income workers, small business owners, minority business owners, and school children.

Working mothers

Women, compared to working men, have suffered the most job losses. This is due to several reasons.  The service sector, for one, disproportionately employs more women than men. This industry, however, has been hard hit by the COVID-19 shutdowns, leading to a disproportionate share of job losses among women.

Secondly, working women have also been plagued with childcare issues. Health mandates, as well as executive orders, have forced childcare centers to reduce capacity, causing some centers to shut down. This has reduced childcare availability,  forcing some working parents, mostly women, to leave the labor force. School closings have also been a big contributing factor to this phenomenon.

According to the Chicago Tribune,

Early in the pandemic, moms of school-age children from early closure states were about 68% more likely to voluntarily leave their jobs than moms in states that had not yet closed, according to a study by the Minneapolis Federal Reserve. Compared with dads, moms were about 50% more likely to take leave.

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A September survey of more than 40,000 North American workers by consulting firmMcKinsey found 1 in 3 mothers has considered leaving the workforce or scaling back her career because of the pandemic. Among those considering a change, the majority cite child care as the primary reason.

This will likely have a significant impact on women’s long-term career prospects. People who reduce work hours or leave the workforce often lose advancement opportunities and skills, which often translates to lower lifetime wages.

Low-income workers

Low-income and low-skilled workers are generally concentrated in the service sector. On the other hand, middle-income, as well as high-income workers, are concentrated in sectors that allow remote working. Low-income workers, therefore, have suffered the majority of pandemic-related job losses.

At the height of the state-mandated shutdowns, for instance, Minnesota saw a 50 percent decline in leisure and hospitality jobs between May 2019 and May 2020. That is, thousands of workers were displaced because the government arbitrarily decided that their workplace was not essential or more risky. While the hospitality industry has recovered some of its jobs in Minnesota, it is still facing hurdles and possibly a slower recovery.

Small businesses

Small businesses are the backbone of our economy. They are essential for job creation and economic growth. But, small businesses are more vulnerable to economic downturns. Yet rules made in response to the coronavirus did not take this fact into account.

Executive orders arbitrarily designated a lot of small businesses as non-essential, forcing them to shut down. Additionally, social distancing rules sanitizing mandates created an unfriendly environment for small businesses. Research has already estimated that as of May, about 100,000 small businesses had closed nationwide.

Minority business owners

According to research that came out in June, minorities experienced the most decline in business ownership. This could be potentially because minority businesses are heavily represented in sectors that were deemed non-essential.  Similarly, when it comes to employment, minorities were also hit the hardest when it came to job losses.

Young workers

Generally, young workers face high unemployment rates. Those higher-than-average rates jumped even higher during the coronavirus recession, which could stall human capital accumulation, which is useful in the workforce. High unemployment rates deny a lot of teens the chance to partake in the labor force and develop their skill set.

For young workers already in the labor force, economic downturns negatively impact career prospects and, subsequently, economic well-being. For college graduates, entering the workforce during recessions not only decreases their chances of employment but also their chances of getting a high-paying job. Low entry-level earnings often set young people up for overall lower lifetime earnings.

Source: Bureau of Labor Statistics

Students

Generally, kids learn better in classroom settings. Not only that, but being around fellow kids is good for their overall well-being and social development. School closures have denied children both their optimal learning environment and opportunities for social interaction. This could have consequences for years to come.

Research suggests that kids who have fallen behind during the COVID-19 pandemic could have lower future earnings,  a risk that is much greater for low-income students who are at a disadvantage when it comes to remote learning.