We are pleased that Gov. Gretchen Whitmer is not choosing to close down the state in response to the latest wave of the coronavirus—a response she’s opted for during past surges. Shuttering large swaths of the economy is costly on many fronts, and has long-lasting impacts.
A new report released by the Mackinac Center for Public Policy, authored by University of Michigan-Flint economist Chris Douglas, estimates that Michigan lost more than 64,000 jobs during the state’s second lockdown, starting last November. During the so-called “pause to save lives,” indoor dining was banned through Feb. 1. Other businesses, such as theaters and bowling alleys, as well as high schools and colleges were also closed for weeks.
Since this lockdown hit the hospitality industry especially hard, Douglas focused on the effects on restaurants and bars. In Michigan, an estimated 3,000 restaurants have closed since the beginning of the pandemic, taking with them thousands of jobs. Women and minorities are disproportionately impacted.
The study found Michigan’s job losses were much steeper than neighboring states, thanks in large part to its tight restrictions. Jobs at eateries and bars fell 23% from October 2020 to January 2021, according to the report—a direct result of the shutdown order.
These findings mirror an earlier report from the Anderson Economic Group, which examined the economic hit following the second lockdown. That report found the leisure and hospitality industries lost nearly 60,000 jobs between November and December, yet the retail industry, which was allowed to remain open, saw an increase of jobs during that time frame.
Other Midwest states, including Ohio, Wisconsin and Indiana, that avoided bans on indoor dining experienced much smaller industry employment losses of 5% or less.
“We can clearly see that the costs of the shutdowns have been devastating,” said Douglas in a statement. “Unfortunately, the shutdown did not appear to provide any noticeable benefits that could justify the massive costs to the jobs and livelihoods of Michigan’s citizens.”
Douglas also took a look at the data surrounding the effectiveness of the lockdowns on preventing deaths from the virus. He found “little statistical relationship between lockdown severity and declining COVID-19 deaths.” Other neighboring states fared about the same as Michigan in terms of virus cases, even though they had much looser mandates in place.
This meshes with a recent Associated Press report that found similar COVID outcomes in Florida and California, despite disparate strategies for responding to the virus.
Yet Douglas identified a strong statistical link between shutdowns and unemployment.
In his conclusion, Douglas writes: “Economic shutdowns provide massive, concentrated costs on those businesses and individuals impacted by these restrictions. Many businesses who were mandated to close will never reopen. Many individuals who worked in the affected industries consequently will have a difficult time finding a new job.”
Governors like Whitmer want to appear they are being proactive in fighting COVID, but they must take the evidence into account to ensure they aren’t doing more harm than good.