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The true cost of COVID-19

By J. Simpson

Editor’s note: The opinions expressed here are those of the authors. View more opinion on ScoonTV.

In October 2020, towards the beginning of the pandemic, researchers David Cutler and Lawrence H. Summers published an article in the Journal of the American Medical Association predicting that the COVID-19 virus could end up costing somewhere in the vicinity of $16 trillion after combining economic damages, health expenses, and loss of life. 


Now that we’re just a few months shy of the end of the COVID-19 public health emergency, how have those projections held up?


In many regards, the projections proved surprisingly accurate as noted by John Hopkins’ University Center for Health Security reported in April 2022. According to Hopkins’ researchers, the economic impact was less severe than had been originally feared but the toll on mental health has been greater than anticipated.


We are still feeling the economic effects of the COVID-19 pandemic in some subtle and surprising ways. The prevalence of remote work, for instance, is hollowing out city centers, causing massive depreciation in the value of commercial real estate. In New York City, the market value of office buildings fell $28.6 billion in 2022, for example.


Remote work also encourages companies to outsource their labor to countries with less expensive workforces. Deloitte reports that 70% of companies increased their outsourcing budget in 2020. This likely will have major ramifications on the American white-collar labor market and is another way that GDP will be diminished in the wake of the pandemic.


Calculating the economic impact of the pandemic will likely take decades. As we near the end of the pandemic, however, let’s dig a little deeper into the true cost of the COVID-19 pandemic. 

Cost Of the COVID-19 Learning Gap

Credit: Youth Truth Survey


Children, teenagers, and young adults have been hit especially hard by the COVID-19 pandemic. The challenges of remote learning worsened existing inequities in American classrooms in some pivotal ways that will influence the current generation for years to come.


Some education experts are calling this gap the “COVID slide.” and it’s already costing some governments up to $250 per child for private tutoring to help students get back up to speed. Researchers fear this still won’t be enough due to a lack of a cohesive recovery strategy.


To make matters worse, children from lower economic brackets suffered from greater learning loss in every country, threatening to further widen the income gap between the wealthy and poor. Studies show that students from lower income brackets don’t have as much access to digital tools, nor are they as familiar with how to use them. Lower-income parents aren’t as available to support students during remote work, as well, further widening the learning gap.


credit: Nature.com


It’s difficult to calculate what economic impact this might have in years to come. Researchers estimate that the learning gap could yield up to 1.5% lower annual GDP for the remainder of the century, however.

The Mental Health Costs Of COVID-19 

Credit: McKinsey & Company


The COVID-19 pandemic has taken a massive toll on mental health over the last three years. Again, many of our most vulnerable communities are especially susceptible to negative effects on mental health due to the pandemic. Adolescents reported higher levels of depression and severe social anxiety during lockdowns. Women have shown an increased risk of social anxiety due to the pandemic, as well, despite men suffering the greatest number of casualties.


Social anxiety disorder was already more prevalent in women and is even more pronounced in adolescents, as reported by the DSM-V. To make matters worse, women suffering from social anxiety disorder are often more severely impacted, particularly in regard to work and social life. Fewer women suffering from social anxiety disorder are employed, compared to their male counterparts.


Women make up a great majority of healthcare workers, for one thing. 70% of the world’s health workforce is made up of women, who were often frontline workers dealing directly with the pandemic. In the United States, women hold 78% of hospital jobs as well as 70% of pharmacy jobs. They’re also more likely to work in the service industry, which also deals directly with the public, and are also less likely to be able to be done remotely. 51% of grocery store employees are women, for example.


This is to say nothing about the home. Domestic violence surged at the beginning of the pandemic. It also cut them off from their existing support systems, resulting in an increased risk of anxiety, depression, and post-traumatic stress disorder (PTSD).


More than a third of adolescents reported experiencing poor mental health during the pandemic. 44% reported feeling persistently sad or hopeless during the last year. 55% reported experiencing some form of emotional abuse from a parent or other adult in the home. 11% experienced some form of physical abuse. 


 Some experts fear some of these changes may be here to stay. These mental health struggles will have an economic impact on workers and employers alike.


Mental health experts found employees suffering from severe mental health issues can earn up to an alarming 33% less than those who don’t. Likewise, it is estimated that depression-related issues cost employers nearly $2 billion each month. 

Lost Wages

Credit: Brookings


Calculating the amount of diminished productivity due to COVID-19 involves the most complicated calculus if it’s even possible with the data we currently have. Researchers Gopi Shah Goda, senior fellow and deputy director of the Stanford Institute for Economic Policy Research (SIEPR), along with co-author Evan Soltas, a Ph.D. student from MIT, attempted to address this in a recent study.


Goda and Solfas determine that there are around 500,000 American adults out of the workforce due to COVID-19. They also found that workers who have contracted COVID-19 make around 18% less than those who haven’t. Altogether, these factors combine to equal around $62 billion in lost wages each year.


These losses aren’t necessarily distributed evenly, either. Goda and Soltas report that older and disabled employees were disproportionately impacted by the pandemic. Considering that workers who have contracted COVID-19 are 7% more likely to not have a job a year later – another statistic unveiled in their report – vulnerable communities are going to be even more disadvantaged than they already are. 

Rent & Housing

Credit: California Housing Partnership 


COVID-19 disrupted virtually every industry on Earth, due to lockdowns, supply chain complications, infected employees, and government regulations. The real estate and housing market was hit particularly hard, as several of these issues collided to create a housing shortage and a spike in demand, simultaneously. New remote work policies caused a massive population shift, as workers relocated due to changing circumstances and a desire for more space.


Increased demand, along with shifting market pressures and demographic needs, resulted in a staggering $9 trillion in owner-occupied housing wealth between Q1 of 2020 and Q1 of 2022. 


This surge in housing wealth, along with inflation in house price growth, is partially responsible for the exploding interest rates in the last year. Research shows that a 1% increase in house price growth results in a .15% increase in inflation. The end result is that highly competitive real estate markets have been especially susceptible to skyrocketing inflation over the course of the pandemic.


source: Board of Governors of the Federal Reserve System


An unstable and competitive housing market had downstream effects on rent throughout the United States, as well. Research from the U.S. Census Bureau found that average rent prices increased from $1,163 in 2019 to $1,191 in 2021 after adjusting for inflation, an increase of 2.4%. The most recent fair market rent data reports that the average cost of a one-bedroom apartment increased in 58% of counties in the United States after taking inflation into account.


credit: HUD Fair Market Rent Data


Only time will tell what impact rising rents and the resulting loss of talent, opportunities, and local culture will have. 


Finally, renters and homeowners weren’t the only ones impacted by the COVID-19 pandemic. Landlords were impacted by tenants being unable to make rent for the duration of the pandemic. By December 2020, it was reported that one in five renters was behind on monthly payments. Again, vulnerable communities were disproportionately affected as landlords divested themselves of their rental properties, further widening the homeownership gap between white and non-white populations


The Cost of Food Shortages and Malnutrition

Credit: Hospital de la Familia Foundation


The COVID-19 pandemic caused millions of Americans to struggle to afford adequate food while simultaneously driving up the cost of food due to food shortages and inflation. Families and single parents with children were hit especially hard, particularly before the government rolled out relief programs.


At its peak, 30 million Americans reported not getting enough to eat in the last 7 days in December 2020. That’s roughly 14 percent of the entire population. This eventually fell to 9%, or 20 million, in March 2020 after the Rescue Plan was implemented. 


Even though the pandemic is winding down, we’ll be feeling its aftereffects for a long time to come. COVID-19 contributed to some of the worst inflation in history. In spite of this fact, additional benefits to the Food Assistance Program (FAP) ended at the end of February 2023. FAP recipients will have to contend with these higher prices without additional benefits, which will also have a downstream effect on the economy.


Source: Center on Budget and Policy Priorities


These food shortages and resulting malnutrition could have both short-term and long-term economic impacts. It is estimated that malnutrition is already costing around $6.1 trillion each year between the costs of healthcare, lost wages, lost productivity, and lost revenue. Children are affected adversely by food shortages and malnutrition, as improper nutrition can lead to a lack of neural development, resulting in mental and behavioral delays later in life.


source: American Action Forum


Considering that nearly 12% of those with children – roughly 1 in 8 of those surveyed – reported having food shortages at the height of the pandemic, we could be seeing the economic impact of food shortages and malnutrition during COVID-19 for a long time.

Final Thoughts On The True Cost of COVID-19

As we have seen, it’s nearly impossible to calculate the true economic impact of the COVID-19 pandemic. Only time will tell what effect the loss of life, talent, and opportunities has in the long run. Deficiencies in education, nutrition, and an unknown toll on the mental health of our population will be seen for years, even decades to come. Putting a final price tag on the losses we as a nation have incurred will take time. The final total will be a staggering, generation-defining number.  


One thing is for certain, vulnerable and marginalized communities have disproportionately felt the impact of the pandemic, further widening the inequality that was already threatening to rip society apart. Serious action needs to be taken, and the sooner the better, to help repair the damage that’s already been done and give poor and marginalized communities a fair shot at a happy life. 


Great lengths will have to be taken to repair trust in the institutions that are supposed to serve us. A lack of trust in government and society is part of what caused COVID-19 to be so devastating in the first place. This lack of trust isn’t entirely unwarranted, either. Areas with lower levels of government corruption were found to have higher vaccination levels, resulting in lower numbers of infections and death. We clearly need to address the roots of these issues as well as the fruits they bear.

J. Simpson

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