Good News in the Post-Coronavirus World

March 12, 2020

When the present looks bleak, it’s a good time to think about the future, which we can hope will be brighter. It is hard to see a story where the coronavirus won’t spread widely in the U.S. and elsewhere, leading to tens of millions contracting the disease and hundreds of thousands or even millions of deaths that could have been prevented. But we, or least most of us, will likely make it through to a post-Coronavirus world. And, that world may be better in important ways because of the pandemic.

At the most immediate level, we may see the rules likely to be put in place now, mandating paid sick days, become a permanent part of the social safety net. The coronavirus has driven home a simple point. Not only do we want workers to be able to take off sick days for their own good and the good of their families, we don’t want sick people going to work and spreading disease. This is especially true for many low paid workers, currently lacking paid sick days, in the restaurant and retail sectors.

There are also efforts to apply these rules to people who are currently treated as independent contractors, like Uber and Lyft drivers. This is a great precedent and may help build momentum for treating these people as employees with the rights guaranteed to employees under the law. California has already gone this route, other states and the country as a whole need to follow.  

Securing universal paid sick leave and reducing the miss-classification of workers as independent contractors would both be really big deals, but the potential gains go much further. Contrary to what Andrew Yang and many pundits frequently assert, the robots are not taking all the jobs. In fact, job loss due to productivity growth has been extraordinarily low in the last 14 years. Productivity growth has averaged less than 1.4 percent annually over this period. This compares to 3.0 percent annual rates in the long Golden Age from 1947 to 1973 and again in the decade from 1995 to 2005.

The changes in the workplace required to adjust to the spread of the coronavirus, and most importantly adjusting to increased telecommuting, is likely to lead to large increases in productivity as workplaces figure out how to maintain operations with fewer worker hours. After the worst of the pandemic has passed, workers will again be working at factories, stores, and offices, but some of the restructuring that occurred during the crisis is likely to remain in place.

Most importantly, there are likely to be increased opportunities for telecommuting. This would be great news for several reasons. First, it will allow many workers more time with their families or to do other things, since they won’t have to waste time commuting. It is also a good thing from the standpoint of reducing greenhouse gas emissions, not only by reducing trips, but also by reducing the fuel wasted in traffic congestion. And, increased telecommuting could mean that more people have the opportunity to live far away from metro areas with high priced housing, like San Francisco and New York. That not only will save these people money on housing, but reduced demand pressure can help to bring down prices for the people who stay in the area.

While it will generally be more educated workers who have the opportunity to telecommute, there will be office workers in lower paying positions who are also likely to have this option. In any case, reducing congestion and lower housing prices will be benefits that are widely shared. In addition, more rapid productivity growth will provide room for larger wage gains.

There are other changes, the effects of which are likely to be less clear. For example, the cruise ship industry may never recover from the stories of mass infections and involuntary cruise ship detentions. The rest of the travel industry may also see enduring changes. Donald Trump’s arbitrary decision to bar Europeans from coming to the United States is likely to have a lasting effect on tourism here. Many Europeans are likely to decide that it is not worth a gamble in making big plans for a trip here, which can be blocked on a whim. They will also go to alternative destinations, which they may like, and return to in future years. In this respect, it is worth noting that the United States has enjoyed large trade surpluses in travel until this year.   

The universal support for free coronavirus testing, and some support for free treatment (if people without insurance or with bad insurance can’t get free treatment, they won’t get tested) may be a foot in the door for extending universal health care more broadly. The opposition is not about to disappear, but if we can have free care in a pandemic, is there a reason we can’t have free care more generally?

Also, if we can get some clear thinking, we will have any vaccine produced with public funding in the public domain from Day 1. If the taxpayers paid for the research, there is no reason that a private company should have a patent monopoly on the vaccine. This is not a question of begging drug companies to make it affordable, if the vaccine is in the public domain it will be a cheap generic. This should be the case with a coronavirus vaccine and it should be the case with all future drugs.

And, just to remind people, there is an enormous amount of money at stake. If all drugs were sold as generics in a free market, we would likely save $400 billion a year. This is about 1.8 percent of GDP, $3,000 per year per family, or more than five times the entire budget for food stamps. In other words, it is huge money. People should be paying attention.

Anyhow, we don’t know all the ways the world will be different in a post-coronavirus world, but there is good reason to believe that things will change. We have to try to make sure the changes are for the better.


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