Did Stay-At-Home Orders Tank The Economy? Ohio State Researchers Don't Think So

May 11, 2020

Two studies released Monday by The Ohio State University researchers are helping federal officials understand the emerging unemployment crisis caused by the coronavirus pandemic.

The working papers for the National Bureau of Economic Research examine who was hit the hardest by coronavirus-related shutdowns, and how state's varying actions affected unemployment.

The first found young people, those with large families, those with less education and Hispanic populations were disproportionately affected by pandemic-caused unemployment.

“Both educated workers and non-Hispanics happen to be in the types of jobs that can be done more effectively remotely and are less likely to be in things like retail, trade, and construction that pretty much have to happen face-to-face,” says Bruce Weinberg, an Ohio State professor of economics who worked on both papers.

Weinberg notes that the pandemic has been indiscriminate in its effect on job loss. High infection rates had little relationship to increased unemployment claims. And states with minimal social distancing early on still had “tremendous unprecedented increases” in claims.

“So, it looks like the slowdown was an across-the-board phenomenon due to the slowdown nationally and internationally, not specifically to what individual states were doing,” Weinberg says.

Over the last seven weeks, since Ohio's shutdown orders went into effect, the Department of Jobs and Family services received a total of 1,118,569 unemployment claims.  That's more than the number who applied the previous three years combined, and does not include self-employed workers or independent contractors who haven't been able to file for benefits yet.

Nationwide, 20.5 million jobs were lost in the month of April, bringing the country's official unemployment rate to 14.7%, the highest level since the Great Depression.

However, the researcher's findings could also mean that rescinding stay-at-home orders won't necessarily provide the immediate economic relief some are hoping for.

“It seems very easy to say, ‘Oh, if we allow people to go out, then all of a sudden, people will go out and do stuff, and the economy will return closer to normal,’” Weinberg says. “Our results suggest that might not work as well as people think, just because people don’t have the money in their pocket that they might have, and people are nervous about what’s going to happen.”

Next, Weinberg's team plans to study just how effective the state's moves to re-open the economy are.

"Our goal, now that the states, including Ohio, are starting to roll back social distancing, is to conduct a new study where we can go out and say, 'OK, how much did rolling those policies back actually improve the economy?'" he says.

Do you have questions about Ohio's coronavirus response? Ask below as part of our Curious Cbus series.

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