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Lockdowns Cause Unemployment and Are Ineffective in Containing the Coronavirus

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By the end of 2019 and early 2020, the United States’ unemployment rate was the lowest recorded since 1969, around 3.5%. Technically, this level is considered full employment, as people who are unemployed are transitioning from one job to another, which is always the case in dynamic economies in which some businesses and activities are declining while others are expanding. But then lockdowns happened.

As a result of the pandemic and the restrictions imposed on people’s mobility – lockdowns and isolation – unemployment began to rise in March and reached its highest level in April, when it was almost 15%. It then fell throughout the following months to 6.7%, the figure at the end of 2020. This indicates a remarkable recovery in economic activity.

Unemployment - lockdowns - El American
Unemployment rates in the U.S. December 2019 – December 2020. (U.S. Bureau of Labor Statistics)

The reduction in economic activity and the consequent increase in unemployment affected the various states of the Union differently, depending – in each case – on the intensity of the restrictions imposed on the mobility of individuals.

The restrictions on activity during the pandemic depended on each state and not on the federal government. As of mid-2020, twelve states and the District of Columbia had Statewide Restrictions (SWR). Five others imposed city-level restrictions (City Level Restrictions – CLR), while 10 of them issued guidelines and recommendations (R). In 23 states, no statewide restrictions were imposed (No Statewide Restrictions – NSWR).

Among the states that enacted greater restrictions was New York, whose unemployment rate reached its highest level, 15.9%, in July 2020. In December it was at 8.2%, above the national average. Pennsylvania, which also implemented mobility restrictions throughout its territory, had a peak unemployment level of 16.1% in April and in December it was at 6.7%.

El American - Covid-19
Despite the unemployment caused by the restrictions, the lockdowns appear to have only slowed the spread of the virus.(EFE)

It is interesting to note that in those states that imposed limitations on mobility in the cities experienced lesser loss of employment in April, when the greatest level of unemployment at the national level took place.

The following graph show the arithmetic mean for the unemployment rate in April, when it reached its peak, and in December, and in the states depending on the type of restriction. The states were grouped according to the nature of the restrictions they imposed on mobility. It can be seen that at its highest point, such as in December, the average unemployment rate in SWR states is greater than the national mean, and slightly higher than the other three groupings.

Unemployment rate by state mobility restrictions. (U.S. Bureau of Labor Statistics)

In summary, the pandemic and the restrictions imposed on the mobility of individuals nearly tripled the unemployment rate between March and April. The effect appears to have been greatest in those states where the restrictions were most severe. In these states, too, the reduction in unemployment has been slower.

Despite the unemployment caused, the lockdowns did not make much of a difference

Democratic states were more likely to impose mobility restrictions than Republican states. While the percentage of infections is indeed lower in Democratic states, the difference may be explained by the fact that the rate of expansion slowed in those states as lockdowns were imposed.

Percentage of the total population infectionMortality rate
Republican states8.60%1.5%
Democrat states7.23%1.8%
Percentage of infected population and mortality in Democratic and Republican states. (Calculations by Juan F. Velez with CDC data).

However, once the lockdowns were lifted, all states have again experienced an increase in the number of infections. The problem with lockdowns is that they are not a pandemic prevention measure, but a delaying measure intended to give the health care system time to prepare for the pandemic. Although the Democratic states perform marginally better in the percentage of infections, they do not perform marginally better in the mortality rate, where they lead by a marginal 0.3%.

The efficacy of mobility restrictions is debatable, and their effects in containing the spread of the coronavirus appear to be merely dilatory rather than preventive. The cost of the lockdown has been more than 22 million jobs, which will take some time to recover.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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