Social Distancing Desires Keep Some Out of the Labor Force
Many Americans plan to continue social distancing even after the COVID pandemic ends, according to data from the , and people with such plans are less likely to participate in the labor force. The effect is to reduce the size of the national workforce and potential GDP, , , and find in (NBER Working Paper 30568).
To reach their conclusions, the researchers tap survey data from the first half of 2022 for nearly 27,500 persons, 20–64 years of age, who earned at least $10,000 in 2021. In one analysis, the researchers focus on persons who are outside the labor force in the survey week. When asked why they are neither working nor seeking work, about one-fifth of the respondents point to “worries about catching COVID or other infectious disease” as a primary or secondary reason. The researchers use these self-assessed reasons for not working to estimate the impact of infection worries on labor force participation.
About one in eight survey respondents say they will continue social distancing that began as a response to the COVID pandemic, reducing their willingness to work.
In a second analysis, they fit statistical models that relate current labor force status to social distancing intentions. They use the models to infer the effects of social distancing intentions on labor force participation. Forty-six percent of respondents intend to make a “substantial” or “partial” return to pre-pandemic work activities and another 42 percent anticipate a complete return, but about 12 percent plan “no return to pre-COVID activities, as I will continue to social distance.” This latter group embraces what the researchers call the strong form of long social distancing. Persons who plan stronger forms of social distancing are, other things equal, less likely to participate in the labor force.
The propensity for strong-form social distancing rises with age and falls with educational attainment and earnings. It is higher for women than men at all ages, perhaps because women take on greater caregiving roles for children who are too young for vaccination, and others who are more vulnerable to COVID and other infectious diseases. Strong-form social distancing is also more common in industries and occupations that require a high volume of face-to-face encounters. For example, 17 percent of persons with current or most-recent work experience in transportation activities intend to continue strong-form social distancing, compared to less than 10 percent of those in manufacturing, construction, information and finance, insurance, and real estate. Strong-form social distancing intentions are 3.5 times more common, relative to a plan to return to all pre-COVID activities, among those who cite infection worries as the primary reason for not working or seeking work.
The researchers estimate that long social distancing reduced the US labor force participation rate by 2 percentage points in the period February–July 2022, and by 1.4 percentage points on an earnings-weighted basis. They calculate that this labor supply reduction lowered potential output by 0.94 percentage point, which translates to a flow output drop of about $250 billion a year.