The blog of the Urban Institute
March 9, 2020

The Coronavirus Outbreak Is Already Affecting Workers. Three Policies Can Help.

We don’t know yet how many people in the US will be affected by the coronavirus nor how long the health crisis will last. But we do know if the situation continues, it will affect workers. Public officials should proactively consider policies that could mitigate the outbreak’s effect on workers.

How could the outbreak affect businesses and workers?

Jobs and businesses with the highest risk for infection transmission at work and a high degree of contact with public, such as health care, food service, and transportation, are most at risk. Of course, workers and businesses in other sectors with direct contact with large numbers of people may also be affected.

Coronavirus’s economic effects go far beyond the risk of infection, especially if the outbreak is far reaching or long term. A large-scale economic effect on businesses could lead to high worker absenteeism rates and revenue losses. Some businesses may have to lay off workers, and they may face the risk of some workers going to work when they are ill.

Workers could also face indirect risks resulting from the global connectedness of business. Companies with a strong reliance on global supply chains in other hard-hit areas could be left economically vulnerable. Companies’ long-term responses aren’t yet clear. Some may diversify into other countries, and others may reduce operations. Preventative and response actions can affect the economy through consumer behavior. Cruises and airlines, for example, are already affected by the outbreak.

The effect on workers could be considerable, especially for low-wage workers and people in nonstandard employment. Workers may lose income if they become ill or must be quarantined or if their employer doesn’t provide paid sick leave. If workers are laid off, they may not qualify for unemployment insurance, depending on their employer, the state where workers live, and their length of employment. People who are self-employed or are working nonstandard, contract, or “gig” jobs—common in sectors with high transmission risk—may be at the highest economic risk.

What public policies could ease the outbreak’s effect on workers?

The unemployment rate does not yet reflect the outbreak’s effects, but if the situation continues, the US may see rising unemployment rates and continued volatility already evident in financial markets. At least three policies could mitigate potential effects of a sustained threat from the coronavirus on workers.

Cover or subsidize paid leave for people without employer-provided sick leave

Now is a good time to review federal and state leave laws and consider rapid modifications that might be needed for this and future crises. This outbreak highlights the risks and costs facing workers and their communities when workers don’t have access to sick leave. If emergency federal paid leave were authorized during this crisis, it could become a foundation for permanent paid leave policy nationally.

Activate emergency and special unemployment insurance quickly 

Special benefits may be needed for workers who aren’t eligible for regular unemployment insurance, such as people in nonstandard work and “gig” jobs and self-employed or contract workers.

The federal government is considering covering health services for uninsured people infected by the coronavirus. Federal officials could make similar arrangements for workers who are affected economically but who don’t qualify for unemployment insurance. The federal government could also extend unemployment insurance benefits, which it has done in previous emergencies, depending on the length of economic decline after the outbreak ends.

Prepare for when the coronavirus outbreak ends and economic risks subside

After the outbreak slows in the US, some workers could find themselves unemployed because they lacked adequate paid sick leave or because they were employed in an industry that suffered revenue losses and cut jobs. Federal funding might be needed to expand the availability of public reemployment services to help workers whose old job may not be available anymore. 

We don’t know yet how long or extensive the effects of the coronavirus will be, but thinking about the risks to workers now and the kinds of policies that might be needed could mitigate the immediate and long-term economic effects on workers.

A traveler wears a medical mask at Grand Central station on March 5, 2020 in New York City. Six people have been infected with the COVID-19 virus in New York state, all linked to a 50-year-old lawyer who lives in Westchester County and works in Manhattan. Photo by David Dee Delgado/Getty Images.

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