(CN) – The raging coronavirus pandemic is first and foremost a global public health crisis. But as countries shut down their entire economic systems in response, business owners, workers and economists are all beginning to fret that the world is poised on the brink of a financial crisis.
“If we can get the public health strategies in order, it will be a blip,” said Aaron Sojourner, an economist and scholar from the University of Minnesota. “It will be a quick up and down. But the slower the public health recovery, the more destruction to jobs, families and small businesses.”
Sojourner wrote an article for the Economic Policy Institute published Tuesday that predicted a record-breaking spike in unemployment claims across the United States, reaching as much as 3.4 million for the week ending March 21.
Those numbers are not officially available, but Sojourner and his partner Paul Goldsmith-Pinkham took published reports in 35 states and Washington, D.C. and extrapolated the data to arrive at the record-breaking increase.
“It could be as little as 3 million, but it could be a lot more,” Sojourner said. “I have seen estimates that only about 30% of Americans can work from home.”
Restaurant workers and blue-collar factory workers have been hit the hardest as the American economy grinds to a halt. But there are also glimmers of silver linings as the coronavirus has created a huge spike in demand for medical supplies like testing kits, ventilators and protective equipment like gloves and masks.
“There will be a reallocation to some extent,” Sojourner said.
General Motors recently announced it was exploring a partnership with Ventec Life Systems to reconfigure a plant in Indiana for the mass production of ventilators. The novel coronavirus Covid-19 attacks people’s respiratory systems and can lead to a potent form of pneumonia, which can be fatal.
Many patients both young and old require assistance to breathe at the critical stage of the disease, meaning ventilators are in demand.
Elon Musk, CEO of Tesla and SpaceX, shut down his factory in Fremont, California, last week but has turned the attention of his engineers toward the mass production of ventilators. He announced on Sunday that he was going to deliver 1,200 to the state of California in the coming days.
In another example of worker reallocation, distilleries have begun to produce alcohol-based hand sanitizer, which has proven effective at killing the virus when applied to people’s hands.
For instance, Falcon Spirits Distillery based in Richmond, California, is primarily known for its boutique gin. But in recent days it’s ramped up production to accommodate a spike in demand.
Instacart said Monday that it plans to hire 300,000 new workers to help shop for and deliver groceries. The move will more than double its current workforce.
Hilton and Marriott, two of the biggest hotel chains in the world, announced new programs to shift their furloughed workers to jobs in the food, health care or grocery store industry.
Speaking of groceries, the grocery store industry is taking off in these days of lockdowns and forced restaurant closures.
Krogers, Albertsons and other large-scale grocers have announced hiring blitzes. Walmart said it plans to hire an additional 150,000 workers for its stores and warehouses. Likewise, Amazon announced plans to hire 100,000 new people.
Restaurants have been particularly hard-hit as many states have made it illegal to congregate in dining establishments. But eateries are attempting to reconfigure their business models to provide more delivery and take-out options, particularly as many Americans are unable to cook for themselves.
“The need for at-home meals is greater than ever as parents provide more daily meals to children home from school,” said Jot Condie, president of the California Restaurant Association.
Meanwhile, many traditional delivery restaurants like pizza places have announced they too are in the market for additional workers.
The above anecdotes taken in aggregate seem to suggest that the American economy may not be closing so much as reorienting itself around a new reality.
For instance, Santa Clara County Public Health Officer Dr. Sara Cody recently said that her ability to do contact tracing early on during the outbreak was hindered by a lack of manpower.
Contact tracing is when you interview a person sick with the coronavirus and attempt to identify all the things that person has done in the recent past and who the person has had contact with.
If and when the United States and the rest of the world begin to emerge from lockdown, vigilance will be necessary for a period of time while public health professionals keep a wary eye out for further infection clusters.
“There is going to be a rise in demand in sectors like public health,” Sojourner said. “But relative to the size of the entire economy, it is still small.”
And that is the underlying truth for Sojourner.
“The reallocation will not be anywhere close to the scale of the dislocation,” he said.
The only real hope for the American economy, workers and small business owners is that the lockdown is short enough to facilitate a swift and full recovery.
“The coming stimulus will be absolutely critical to plug the huge hole in family income, in their budgets and small business balance sheets,” Sojourner said.
While temporary hiring might provide a veneer of good news and provide much-needed materials and services in the near-term, the virus must be contained if Americans are to get back to work soon enough to stave off another financial crisis.
“There is going to be some short-term pain, but we have to meet the public health crisis squarely,” Sojourner said.