Economy Truth

Studies: The Shutdown Is NOT Lives Vs. Dollars, It’s Lives Vs. Lives

Rod Thomson

“If you’d like to die for the sake of the economy you go right ahead and do that. I, on the other hand, have no intention of sacrificing myself or any of my family or friends for the economy.”

This common sentiment, expressed on Facebook, is the wrong formulation. It is the false equation of money or lives. It’s not only wrong, it’s deadly.

Here’s how: Unemployment increases the death rate. This is a known truism among economists — who are not much en vogue right now but economics really needs to be. It turns out, this correlation has been studied extensively since at least the 1970s. Maybe earlier. That it is true is not in doubt. The only question is how much does it increase deaths. What’s the ratio?

According to one meta-analysis of 42 studies involving 20 million people — I told you there are a lot — the risk of death increases 63 percent when you lose your job. Please note, not 63 percentage points, but 63 percent from a fairly small percentage. However, when applied to raw numbers the totals become surprising, as we will get to shortly.

From the meta-analysis from National Center for Biotechnology Information abstract: “We extracted 235 mortality risk estimates from 42 studies, providing data on more than 20 million persons. The mean hazard ratio (HR) for mortality was 1.63 among HRs adjusted for age and additional covariates. The mean effect was higher for men than for women. Unemployment was associated with an increased mortality risk for those in their early and middle careers, but less for those in their late-career.” 

A controlled study at the University of Helsinki concluded: “In a recent study, an excess mortality of 47 percent was observed among men unemployed or working part-time for reasons other than illness after adjustment for age, geographic region, social class, cigarette smoking, alcohol consumption, weight and known pre-existing disease.” So this study backed out as many factors as possible to isolate the impact of just being unemployed.

There are mountains of these studies. It’s astounding that apparently none of our intrepid media members have ventured to search this out and report on it.

So what are the actual numbers? Well that’s a lot trickier. The range I’ve found in this research goes from a few thousand up to 37,000 deaths for every one percent increase in the unemployment rate. 

And it’s dicey because even the unemployment rate is iffy being dependent on the labor participation rate — the total number of people employed divided by the total size of the labor force. When people get discouraged and stop looking for work, they are no longer counted as unemployed because they are no longer in the labor force. Those non-workers who are not labeled unemployed anymore would probably also have some increase in the death rate, but I can find no studies of that segment, perhaps because it is so malleable.

The high end number of estimated deaths comes from a 2011 textbook called “The American Economy: How It Works And How It Doesn’t,” by Wade L. Thomas and Robert B. Carson. Citing Bluestone, Harrison and Baker’s book, “The Causes and Consequences of Economic Dislocation,” they conclude that for every one percentage point increase in the unemployment rate, there are 37,000 deaths — the largest single source coming from heart attacks, presumably from stress, but another 1,000 from suicides and another 650 from homicides. The rest are not categorized, likely due to a lack of underlying data.

On the lower end, if you take data from the Great Recession, you find that the unemployment rate in 2015 had returned to its level before the financial crisis and downturn in 2009. (Remember, this lowered unemployment rate was with a greatly diminished labor participation rate, which is why it did not “feel” like a strong economy.) In those seven years, inclusive, there was an increase of 195,000 deaths in total, which means an average of 27,900 deaths per year. The unemployment was different each year, so we cannot say how much correlates to a percentage point, but clearly much less than 37,000. But this is back-of-the-napkin figuring and the actual studies are more reliable.

What all these studies conclude, to varying degrees, is that this economic shutdown will, absolutely, kill Americans just as COVID-19 is killing Americans. The rate of death due to forced unemployment is unknown, and maybe cannot be known, although I hope it will be researched a lot more after this unique event so we can understand the trade-offs next time.

Economists such as Larry Kudlow use a rule of thumb of 10,000 deaths for every one percentage point increase in the unemployment rate. That doesn’t seem unreasonable given the study ranges. The U.S. unemployment rate may surpass 30% in the second quarter of 2020 due to the broad shutdown. That’s higher than the Great Depression.

So if we apply the 10,000 rule just for ease of estimating, and start with a 3 percent unemployment rate, we can estimate that the 27 percentage point increase in unemployment could cost 270,000 lives over the course of a year. That is now much higher than the estimates of COVID-19’s death toll.

Few people think we will be shut down at this level for a year, but what will be the rate of increase once we re-start? That will not be overnight. We can see how, right now, almost assuredly the shutdown itself is taking American lives and will take thousands more.

Unfortunately Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said that we cannot start to “relax” social distancing until there are “no new cases, no deaths.” This is a horrific formulation — the syndrome that arises from someone who is only looking at one side of an equation and who’s held the same job since 1984.

Fauci’s formulation would keep us either in a lockdown or social distancing that includes closed restaurants and public areas, for many months or even years, which would undoubtedly mean multiple times more deaths from the cure than from the disease. 

So the proper formulation is not to suggest we are trading money for lives. Everyone can feel quite righteous about that — particularly if they are not living paycheck to paycheck. But clearly the idea that we would be “dying for the economy” is just ignorant.

The proper formulation is that we are trading lives for lives. We are trying to save lives from COVID-19, but we are costing lives from unemployment. How many is unknown, but as death estimates from the coronavirus in the U.S. continue to fall, it makes the correct formulation, with perhaps better numbers than I have gleaned, all the more critical. 

The question our leaders need to ask and get an answer for is: What do the death toll estimates and unemployment numbers look like if we transition to practicing social distancing, no handshaking, no major events, but otherwise everyone younger than, say, 65 returns to work — including restaurants and retail — while those over 65 or with preexisting conditions remain self-quarantined until we have very effect treatments or a vaccine?

At some point, we will be killing more people by closing the economy than we are saving by closing the economy — if we are not already there.

Rod Thomson is an author, past Salem radio host, ABC TV commentator, former journalist and is Founder of The Revolutionary Act. 

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