Economic Decline: Result of the Pandemic or Public Policy?

Syndicated Columnist John Hood wrote an opinion piece in the Carolina Journal this week about Coronavirus response and business. In his piece, Hood parses out how much of the decrease in local economies is the result of public policy, rather than the Coronavirus. Hood writes:

Over the first two months of the coronavirus crisis, our state’s labor-market cratered. The number of employed North Carolinians dropped by 820,000, or 17%. Only 56.3% of working-aged residents were either employed or actively looking for jobs. That’s the lowest rate of labor force participation in modern times.

But have North Carolina’s economic woes been caused more by COVID-19 itself, or by government’s regulatory response to the pandemic? This is not a simple question to answer.

However, in comparing North Carolina to its neighbors, it starts to become more clear. Hood explains:

Deaths per million in South Carolina (85), North Carolina (75), and Tennessee (49) are relatively low. But their regulatory approaches have been rather different. Goy. Roy Cooper’s lockdown orders were more sweeping and are being lifted at a much slower pace…

Foot traffic at dine-in restaurants has returned to 87% of pre-COVID levels in South Carolina and 76% in Tennessee. In North Carolina, the level is only 59%…

It would be hard not to conclude that the major difference here is public policy, not disease severity. South Carolina and Tennessee have lifted their restrictions earlier and more broadly. People have responded by getting out more, and companies have likely been rehiring to handle the increased business.

It’s likely that, if North Carolina reopened more businesses, employment numbers and foot traffic would increase. Of course, that does come with certain risks. Hood addresses those risks by stating:

Perhaps, as Cooper’s defenders will warn, our southern and western neighbors will come to regret their decisions in two-to-four weeks if their COVID hospitalizations and deaths spike. But if North Carolina has a particularly bad jobs reports next month, the governor’s go-slow approach to reopening will likely be responsible for a significant share of the negative economic consequences.

Read the full piece here. Read the John Locke Foundation’s policy guide for moving forward after Coronavirus here.