Millions of Americans are being kept out of the workforce due to the lingering effects of Covid, resulting in billions of dollars in lost wages and productivity. How is this affecting our economy? Returning guest Katie Bach shares the findings from her new report which outlines just how severe the labor market effects of long Covid have become.
Kathryn Bach is a Nonresident Senior Fellow at the Brookings Institute and the CBO of &pizza.
Twitter: @kathrynsbach
New data shows long Covid is keeping as many as 4 million people out of work https://www.brookings.edu/research/new-data-shows-long-covid-is-keeping-as-many-as-4-million-people-out-of-work
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David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures. If you are a regular listener of Pitchfork Economics you know that we’ve talked a bit about how weird this economy is right now, how different our inflation is from past inflations, how bizarre it is to have people talking about recession in the midst of record low unemployment and record high job reports. And there’s a lot of reasons why this might be happening. One of them that we feel hasn’t gotten enough attention, at least from the economic perspective, is the impact of long COVID, perhaps tens of millions of Americans have in the past or are now suffering from long COVID symptoms. And it’s surely had an impact on the labor shortage we’ve been experiencing and the economy as a whole. How much an impact has not been clear, but there’s actually some new numbers out and a new report by a previous Pitchfork Economics guest, Katie Bach at the Brookings Institute. And we’re really fortunate to talk with Katie today about long COVID, its economic impact and its very real impact on quality of life.
Katie Bach:
My name is Katie Bach, I am a non-resident senior fellow at the Brookings Institution where I research topics related to job quality, low wage work and increasingly long COVID.
David Goldstein:
Well, thank you for coming back. We talked to you, I believe it was January, I lose track of time. There’s no time in the era of COVID anymore. It all runs together. And at the time we were talking about why companies can’t self regulate their way to inclusive capitalism and in our conversation the issue of long COVID came up and there was the question of whether it was worsening the labor shortage and nobody really knew at the time, but there is new data. Could you tell us a bit about what we’ve learned?
Katie Bach:
Absolutely. At the end of 2021, someone asked me what I thought the impact of long COVID on the labor market was. And I was like, honestly, probably nothing. I mean, I just can’t imagine it’s big enough to even be a blip. But the question got stuck in my head. I used best available data, back in 2021, to make an estimate and I estimated that somewhere around 1.5 million full-time equivalent workers were not working due to long COVID. And the whole point of the piece was to call on data collection agencies like the Census Bureau to start collecting data on this.
Fast forward to June, the Census Bureau and the CDC put long COVID questions onto this survey called the Household Pulse survey. And it’s a survey that was launched at the beginning of the pandemic to understand the pandemic’s impact on Americans. And they asked questions specifically about long COVID prevalence, so essentially who has had COVID symptoms, long COVID symptoms, for three months or more that are new since they were infected with COVID today. And what we learned from this survey is about 8% of working age Americans fall into this long COVID category, so that’s about 16.3 million.
David Goldstein:
That’s big.
Katie Bach:
Extraordinarily big. I mean, this is significantly higher than what I estimated back at the end of 2021. But then of course the question is, okay, but how many of them can’t work? Because technically you could answer yes to that Household Pulse question because you haven’t regained a sense of smell. And while that’s incredibly frustrating and difficult to deal with, it’s not going to stop you from working unless you’re a food taster. And this is where we run into a data challenge. Again, nobody’s really asking that question on any of the big surveys. The question of is long COVID interfering with your day to day life? I used the best estimates that I could find on the percentage of people with long COVID who are out of work. And my estimate is that we’ve got somewhere between two to four million full-time equivalent workers out of the labor force right now due to long COVID.
David Goldstein:
So when we say full-time equivalent workers, we mean that’s the equivalent of two to four million full-time equivalent positions. It’s likely a larger number of people and some of them are part-time or missing-
Katie Bach:
Exactly. Exactly.
David Goldstein:
So it’s millions of people it’s affecting. Okay, so 2.4 million, let’s talk about as a percentage of the economy, the percentage of workers, how much that’s potentially costing us each year.
Katie Bach:
Yeah. And again, these are fairly startling numbers. So let’s just take the midpoint of the range, three million, and let’s say we’ve got about three million full-time equivalent workers fully out of work due to long COVID. That would be about 1.8% of the entire civilian labor force. The annual cost of just lost wages, so not lower productivity, not healthcare costs, not the costs of caregivers who’ve had to give up some of their work, just the lost wages from these people would be about $170 billion a year.
David Goldstein:
And on the high end, it’s-
Katie Bach:
It’s about 230.
David Goldstein:
230. And that is about 1% of GDP just in lost wages.
Katie Bach:
Exactly. And so I think looking at that number… First of all, I think I had two takeaways from this. Number one is we really, really need better data collection still. I mean, this is better than I was able to do before, but we really need questions about long COVID’S impact on work on the current population survey, which is the big survey that gives us all of our unemployment, employment, labor force statistics, and it’s a really robust longitudinal survey. That’s point one. This is a big enough problem, we’ve got to be collecting better data. But point two for me is let’s say that the lower end of my range is a 100% overestimate, let’s say I am really far off, we would still be talking about $50 billion a year in lost wages. So to me the takeaway is look, we need better data, but by any reasonable estimate, this is a major societal problem, which means we’ve got to start taking mitigation measures.
David Goldstein:
Are other countries doing a better job collecting data and are their findings comparable with your estimates?
Katie Bach:
The UK is the other country I spent a little bit of time looking at. And the UK is doing a much better job than we are. Their Office of National Statistics is tracking long COVID prevalence, and by long COVID I believe they’re using the three month definition as well, lingering symptoms, but what they’re doing that we’re not is they’re asking is this interfering with your life? Is it interfering with your life at all with your daily activities? And then they ask the question, is it interfering or limiting your daily activities a lot? And so we actually know that about 0.6% of the British population says that long COVID is interfering with their daily activities a lot. And comparable number in the US would be about two million people.
David Goldstein:
Right. So it’s a right in your range there, so there’s no reason to expect that your two to four million range is out of whack.
Katie Bach:
No, not when looking at other countries. Where it gets a little tricky is when you look at US labor data and if we were really at four million people, I would expect a bit of a stronger signal in the labor data. There is some, we’re about a percentage point of labor force participation below where we should be. And there’s a lot going on right now in the labor force. So for example, the participation rate of disabled Americans has actually gone up, probably because of remote work. And so you’ve got these weird net effects where yeah, you have people dropping out because of long COVID, you potentially have about half a million people going in because suddenly work is accessible to them.
David Goldstein:
I want to bookmark that and get back to that point in a moment. I just want to finish up the conversation about the economic cost first because of course lost wages aren’t the only costs of long COVID. There’s been some other estimates that show a much higher cost in terms of treating, the medical costs.
Katie Bach:
I am trying to stay in what is mostly my lane, which is just talking about the wage numbers. There is a really well known and well respected health economist at Harvard, Professor David Cutler, who recently put out a more comprehensive estimate. And so he looks at a five year cost compared to the annual cost I’m looking at. And he finds the reduced earnings, which is my lost wages over five years, he finds is about a trillion dollars. In other words, 200 billion a year. So completely right in line with my estimate. But actually the bigger costs are one, reduced quality of life and it’s not a cash cost for the US economy, but it is something that health economists do tend to consider.
David Goldstein:
And let’s be clear, we’ll pause here and make this comment that we make a lot on this podcast, that actually quality of life is the whole purpose of economics. So if we’re having an economic conversation, even if you can’t put a dollar value on it, it’s still what really matters.
Katie Bach:
And taking a quick moment on that, I will tell you since I published this, a lot of long COVID patients have reached out with their stories and it is devastating. These are people who, some of them are in the early stages of their career who now can’t go to graduate school. Some of them are young parents who now can’t look after their children. You have 50 year olds who were at the prime of their career and looking forward to retirement who are now stuck in bed. I mean, the human cost is devastating.
And so where Professor Cutler ends up is over five years, you’re at about $2.2 trillion. And then finally he looks at medical spending and he comes up with a little over $100 billion a year. And what he doesn’t have in here is the lost productivity of caregivers. And I will tell you, a lot of the people who’ve reached out are telling me not just what the impact is on them, but on their partners, on their parents, on their children who now have to look after them. So by any measure, I mean, we are talking about a number that you can express as a percentage of GDP, which is kind of insane.
David Goldstein:
This is big in terms of the number, the millions of Americans it impacts, the hundreds of billions of dollars a year in cost, the quality of life, the reduction in quality of life, not just for people suffering from long COVID, but from their caregivers, they’re family members. So you’d think it’d be a bigger issue than just people talking about, “Oh, I haven’t regained my sense of smell yet,” but go back to this comment you made about how people with disabilities have seen their workforce participation increase. This suggests that there are things we can do to better reintegrate people with long COVID back into the workforce. That there are policies that we can do to mitigate this, not just prevention, but actually addressing the people with long COVID. What are we looking at? What are the most promising policy initiatives out there?
Katie Bach:
First and foremost, we have to get these people access to good treatment. There is so much we don’t know about this disease, but we do know that there are people who, with the right medical treatment, are able to regain some percentage of their function, sometimes even a large percentage. To get people the right treatment, we really need two things. One, we need more research, more clinical trials. The US government dedicated about a billion dollars through the NIH to long COVID research, which sounds really great, but then you consider even the bottom end of my range and we’re talking about $100 billion in just lost wages. And at that point, one billion starts to sound like really not enough.
Research to speed up clinical trials and to figure out what kind of treatments actually work. Two, I mean, right now there are a handful of physicians who treat this. A lot of them don’t take insurance because insurance is really not designed for you to spend an hour with every patient like you need to with a chronic complex condition like this. And so we need to somehow get thousands of physicians trained to actually treat these people so that they can access insurance covered healthcare and hopefully improve enough to get back to work.
David Goldstein:
Is the healthcare industry, and by that I’m including the insurance industry, are they taking this seriously because the whole conversation over long COVID reminds me of the early stages of the public conversation over things like Lyme disease and Chronic Fatigue Syndrome where there wasn’t a consensus that it was a real thing.
Katie Bach:
I have talked to a lot of patients who were diagnosed with post-viral conditions pre COVID, or I should say post-infectious because that includes chronic Lyme, but people who have this label of ME/CFS or Chronic Fatigue Syndrome. And I think there is absolutely no doubt that society writ large, including healthcare providers, are taking this a lot more seriously than they ever took any of those conditions. I mean, frankly, those conditions were mocked. People called it the yuppy flu. People rolled their eyes at the hysteria of these women who dared to have inexplicable symptoms.
And at least anecdotally, you absolutely get long COVID patients saying, “My doctor doesn’t believe me,” or, “My doctor says I’m fine.” And this is my perspective. And this is anecdotally. It doesn’t seem to be at the same scale that it was before. And I think that is probably the silver lining if there is one, is hopefully this will get the medical community, including drug companies, to start paying more attention to these conditions.
I also know, anecdotally, I talk to scientists who are researching these conditions and they say that they’re having much easier time accessing funds from drug companies than they are from the NIH. So it seems that at least some of the pharmaceutical companies are paying attention. And when it comes to insurance, I have no idea, but I can’t imagine that it’s going to be good.
David Goldstein:
Right. Because when you have a bunch of symptoms but there’s no identifiable cause because you have no viral load anymore, that’s not the type of thing insurance companies want to pay for.
Katie Bach:
No, they do not. That’s the medical side, and I mean, that just has to be a priority. Going back to the point about human cost, I mean, that is how you alleviate the human cost. The second piece though, and this kind of dovetails a little bit more with everything I was talking about the last time I was on the show, 30 million Americans have no access to any form of paid sick leave. And what that means is when they are sick, they go to work and that means that whatever they have, they spread. And so it seems like a really obvious time to either mandate, I mean, mandate or mandate and subsidize, paid sick leave. Especially in industries where workers have to be in person, which are often these low age service sector jobs.
David Goldstein:
The essential workers.
Katie Bach:
The essential workers, exactly, right.
David Goldstein:
They’re essential enough that they have to work, but not so essential that they get paid sick leave.
Katie Bach:
Or a living wage.
David Goldstein:
Or a living… Right.
Katie Bach:
So then the third piece is, from my perspective, employer accommodation. Long COVID, and the government’s been very good at saying this clearly, long COVID is protected under the Americans with Disabilities Act. I mean, obviously not every case, but it is a disabling condition if it interferes enough with your daily life. The government’s been very clear on that. I think a lot of patients don’t realize they can ask for accommodation. I mean, this is again, an anecdote, but I actually have someone on one of my teams who has long COVID and it never occurred to her to ask me for any accommodation. She didn’t know she could. And so we need better education for patients.
We also need better education for employers. A, they need to understand that they don’t have a choice. If they can accommodate someone without undue burden, they have to. But I think it would be also helpful to tell them what other employers are doing, to give them ideas on how to accommodate people because it’s a tricky thing to accommodate. And this is actually what I want my next piece of research to be on is what are the accommodation strategies that work that enable people to keep working?
But then finally, of course there is a group of people who you just won’t be able to accommodate with any kind of employer measures. And so this is either people who are so sick, they just can’t work at all, or not to harp on this, but low wage service workers. It’s a great example of, take a restaurant worker or retail clerk or a nursing aid at a nursing home, that is an in person physically demanding job that is shift work. And if you have an illness with extreme fatigue, physical limitations, unpredictable symptoms, it is really hard to keep doing that job. And so for those people, we really need a safety net, which means they need to be able to access social security disability insurance.
David Goldstein:
And that’s a challenge because as we talked about earlier with insurance companies, it’s hard to prove that you have long COVID.
Katie Bach:
Exactly.
David Goldstein:
It’s just your word that you’re suffering from symptoms like fatigue or brain fog, et cetera.
Katie Bach:
Yup. And going back to the point about medical care, to the extent that you don’t have physicians who specialize, or I mean, who have experience in this, it’s also really hard to get a doctor to say, unequivocally, “Yes, this person has long COVID.” And so anecdotally, a lot of people, a lot of the patients I spoke to in putting together this work, have told me that either they haven’t applied because it’s a complicated application process. And as you mentioned, a lot of them do have brain fog. Or they did apply, but they didn’t list long COVID. They tried to get in under a different diagnosis because they just assumed they would be rejected. Or they applied and they were rejected.
David Goldstein:
Okay. To sum up the conversation, it’s a lot of people, millions, it’s a lot of money in lost wages. It’s a lot of money in terms of healthcare costs. It is definitely, I mean, well, we started with is it worsening the labor shortage? I assume the answer is yes from this.
Katie Bach:
Yes.
David Goldstein:
It must be. It’s a huge impact in terms of quality of life. And it is exposing several big flaws in our safety net, including access to disability, access to healthcare, access to paid sick leave, particularly for low wage service employees, et cetera. I’m going to ask you just hot take, we see the economic, we’re having, well, allegedly, this has got to be the most confusing recession ever, if we’re in a recession.
Katie Bach:
Indeed.
David Goldstein:
I keep hearing that term and I can sometimes tweet out worst recession ever sarcastically when I look at the job numbers. Really tight labor market, high inflation, well, high inflation compared to what we’ve been used to the past 25 years, 30 years. Wouldn’t have looked that outrageous in the 1970s, high, but they saw worse. We know that COVID is certainly responsible for triggering these economic disruptions. How much of a role do you think long COVID is playing in creating this really weird economy?
Katie Bach:
My belief is that we will figure out over the next year that long COVID is having a measurable impact on what looks to be the scarcity of labor in certain industries. And I think especially when you think about the low age service sector where, as I said, these are really hard jobs to do if you’re sick, I do believe that some percentage of the labor tightness is coming from people dropping out of the workforce.
David Goldstein:
And so obviously the solution to that is for the Fed to raise interest rates.
Katie Bach:
I mean, it’s almost certainly going to get people back to work.
David Goldstein:
Oh God, it’s so crazy. I mean, this is a weird economy. I am quickly falling into the nobody knows nothing about nothing school of economics.
Katie Bach:
I have been there since I first took an economics course [inaudible 00:24:40].
David Goldstein:
Yeah, it’s just that it is unlike anything we’ve been in. And there’s all these things happening at once and it’s hard to sort it all out. But clearly reading, and for folks we’ll put a link in the show notes to Katie’s report at Brookings, it clearly is a real thing. Is there any chance of collecting even better data? Is the Census Bureau or others trying to wrap their minds around this?
Katie Bach:
My deep hope is that the Census Bureau starts putting questions about long COVID on the current population survey. And my hope is that a report like mine that puts a stake in the ground and says, “This is probably about the magnitude we are looking at,” can help accelerate that move. Because again, it’s just so big. Unless we want to say, “You know what, we know enough, this is huge. Let’s just throw everything we have at it.” We live in a world of finite resources. We need to know exactly how big and exactly what the impact is. And so my very deep hope is that we see these questions on the current population survey in the next year.
David Goldstein:
I’ll tell you one thing I’ve learned, Katie, is I’m not taking my mask off.
Katie Bach:
Well, me either.
David Goldstein:
Yeah. I do not want, I mean, I have a very accommodating employer and I’ve mostly been home for the past couple of years and that’s great. But I think our conversation would’ve been a little different were we both suffering from brain fog.
Katie Bach:
That is absolutely true.
David Goldstein:
Have we missed anything else we need to discuss here?
Katie Bach:
One last point, it kind of follows up on what you said, recently the CDC, as you guys probably know, changed its guidance on COVID precautions. And it basically switched from a, we will provide guidance that protects population health, to you are individually responsible for looking after your own health and making your own risk assessment. And I understand why they would make that switch at this point. But if people are individually responsible for making their own risk assessment, they have to actually understand the risks. And the media and frankly, public health focus on severe disease and death, while again, understandable is only part of the story. And I think it is very hard for people to actually assess the risks they’re taking if they don’t understand what the incidence of long COVID looks like after a COVID infection.
David Goldstein:
Right. A lot of people are like, “Oh, it’s not killing…” Well, it is killing people.
Katie Bach:
It is still killing people.
David Goldstein:
It is still killing people at a higher rate than the flu does. So this idea that, ah, it’s not killing people anymore. It is. But that’s not what most of us are afraid of. If you’re healthy, chances are you’re not going to die from it. But your risk of long COVID is actually pretty significant, and from everything we know, increases with every reinfection.
Katie Bach:
That’s right.
David Goldstein:
Yeah. It’s disheartening because I wear the mask and I see people looking at me disapprovingly, rolling their eyes, and I feel like I’m protecting them and they’re not protecting me, it’s one way.
Katie Bach:
It’s incredibly discouraging and frustrating. And again, the long COVID patients I’ve talked to, I mean, it’s just devastating for them to see this because they know what can happen. And many of them were perfectly healthy, active people. And I think this is, for them, it’s like watching a car crash.
David Goldstein:
Right. It’s a shame. Well, thank you for doing that work and thank you for coming back on the podcast. We really appreciate it.
Katie Bach:
Absolutely. Thanks so much.
David Goldstein:
On the next episode of Pitchfork Economics, we’ll be talking with Marshall Steinbomb about student loan forgiveness and the unforgiving attitude towards it by some orthodox economists.
Speaker 1:
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