Fears for US recovery grow as virtual schooling continues

Fears about the prospects for US economic recovery have grown in recent weeks as school districts across the country have decided to begin the academic year with remote learning in response to the coronavirus crisis.

Large public school districts including Miami, Los Angeles and Washington DC have opted for online instruction amid concerns that reopening could trigger a new surge in infection among students and teachers.

Economists say the decisions could cause hits to employment, productivity and consumption that would stunt the US recovery — and could lead to more lasting damage in the form of curtailed educational achievement and greater inequality.

“The fact that schools are not reopening as normal is a negative for the economy, but in some cases it’s a needed negative — in the sense that the health situation hasn’t improved enough to guarantee a safe return,” said Gregory Daco, chief US economist at Oxford Economics.

The difficulty in reopening primary and secondary schools has also become a flashpoint in the race for the White House between President Donald Trump and Joe Biden, his Democratic challenger.

“If President Trump and his administration had done their jobs, America’s schools would be open,” Mr Biden said at an event in his hometown of Wilmington, Delaware, on Wednesday. “Instead, America’s families are paying the price for his failures.”

Mr Trump has sought to shift the political narrative away from Covid-19 by doubling down on a “law and order” message in recent days. But his administration has repeatedly pressed schools to reopen, making the case that children are at “an extremely low risk for a serious illness or death” from coronavirus.

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What worries economists is that the US experience stands in contrast to the widespread return of in-person education in many other advanced economies hit hard by Covid-19. This is causing a loss of opportunity and productivity for parents, which is disproportionately affecting women.

Alicia Modestino of Northeastern University wrote in an article published on the EconoFact website last month that on average parents are losing a full day of work each week to address their children’s educational needs during the pandemic. About a third of the US workforce, or about 50m people, has a child under 14 at home, according to University of Chicago and Northwestern University economists.

“If it goes on long enough, then some people will end up exiting the workforce entirely or their jobs will go away,” said Ross Hammond, a senior fellow at the Brookings Institution.

In the Federal Reserve’s “Beige Book” — which summarises reports to the US central bank from business contacts across the country — some companies are blaming closed schools for labour shortages at a time of exceptionally high unemployment.

“Firms continued to experience difficulty finding necessary labour, a matter compounded by day care availability, as well as uncertainty over the coming school year and jobless benefits,” the Fed reported on Wednesday.

Mr Daco said: “It’s not just about the kids learning in the best possible environment, it’s also about the ramifications of families not being able to return to work because they have to tend to their children . . . or are facing a less productive environment because they are stuck at home with the kids.”

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US economists are also weighing other direct negative effects of protracted school closures on the labour market. Even if many teachers and staff who continue to work remotely are not losing their jobs and remain protected by union contracts, other workers — including contractors and suppliers — have been furloughed or dismissed.

This adverse dynamic has also affected tertiary education, since several large universities are starting the year virtually, including the University of North Carolina at Chapel Hill, which initially reopened in person only to rapidly shift back to remote learning after a Covid-19 spike.

According to US labour department data, employment in state and local education and education services declined by 1.47m in the early months of the pandemic. Only about a third of those jobs had come back by July.

Meanwhile, stores that depend on traditional back-to-school shopping have been hit, as have businesses that rely on foot traffic from elementary and secondary schools and universities to sell everything from food and drink to clothing and toys to students, parents and staff.

Many experts also worry that the long-term damage from the protracted school closures could be significant. A particular concern is that children from lower-income families will have trouble managing remote learning, worsening economic inequality over time.

“We’re starting to wonder what sort of level of drag there will be on future economy from the fact that the schools are closed — and how long that will last,” said Marguerite Roza, director of the Edunomics lab at Georgetown University.

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Caroline Hoxby, an economics professor at Stanford University, has suggested that households struggling with remote learning should be allowed to send children back to school, while those that are coping better should keep children at home to limit capacity. She said teachers also need to be comfortable returning, so they do not quit because of health or other reasons, depleting the vital educational workforce.

“A really big decrease in productivity from a macro point of view is a very serious thing,” Ms Hoxby said. “But on the other hand, we also are going to get big reductions in productivity if everybody’s sick from Covid and it might not be a 20 per cent reduction in productivity, it might be a 50 per cent reduction in productivity.”

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