President-elect Joe Biden ran on a platform to address climate change, remedy inequality, resurrect the economy, and implement a more focused COVID-19 strategy but he faces some tough challenges delivering.
It appears that Pfizer
should be rolling out vaccines soon, but it will take months to inoculate most Americans. Deploying vaccines beyond high-income countries and China could take even greater effort.
Pfizer’s vaccine will likely come first but must be stored at minus 94 Fahrenheit, and many places lack adequate freezer capacity. About half of all Americans are reluctant to take a vaccine.
Biden needs to explain to the nation that Asian countries and Norway and Finland have enjoyed more success containing the virus by submitting to frequent tests, rigorous contact tracing, and strict quarantining for those testing positive or who have been exposed. And implement similar strategies with state governors.
Once we have vaccines, Biden, Kamala Harris and their cabinet should spread across the nation to take their shots in public view.
Biden is correct to warn this winter will be long and dark. Infection rates will come down only slowly, and restaurants and stores will continue at limited capacity. Many who have lost jobs will have few decent opportunities for re-employment at their former occupations.
Most moratoriums on mortgage and student loan payments and evictions will end Dec. 31, and many of the unemployed will have run through their state benefits.
State and local governments will lose $434 billion in revenue over two years and have shed well over a million employees.
Disruptive changes in economy
A stimulus bill to extend unemployment benefits and aid to the states is lacking thanks to gridlock. Even if Biden can broker a deal between Nancy Pelosi and Mitch McConnell, some 4 million to 5 million will be added to the rolls of permanently unemployed. Nearly 100,000 small businesses have closed permanently, and COVID-19 has accelerated disruptive changes in business practices, work locations and consumer habits—many of those will only partially reverse.
Abandoning bricks-and-mortar stores and large cities for work at home can create the illusion of growth. The boom in suburban housing, home improvements to create larger work and recreational spaces, and dispersed fulfillment centers for e-commerce may register as investment in the gross domestic product accounts but it renders obsolete downtown office space, gyms and storefronts long before their useful life is finished. That does not add to the nation’s productive potential, rather it merely moves it around.
For several years business travel may not recover to pre-COVID-19 levels. Business-district coffee shops, restaurants and retailers will have fewer customers stopping for morning brews, lunch and office attire, but the boom in home improvements, internet shopping and internet-based services ranging from cloud software to entertainment streaming services will continue.
Many workers displaced last spring and summer earned modest incomes in public-facing services and cannot be expected to take jobs in the construction trades, coding software or building websites without substantial retraining—especially of the sort that public adult education is ill equipped to provide.
This fall and winter the pink slips are more highly concentrated among professional workers—lawyers, bankers, engineers, technicians and managers—with job skills specialized to activities that are contracting. They are potentially more mobile than low-wage workers, but mortgages and student debt can make them reluctant to endure many months of retraining or to move families.
Without getting most of the structurally unemployed back to work, the economy won’t be able to reasonably pay for green technologies and climate-change abatement or create expanded opportunities for minorities and women without depriving opportunities to others—a zero-sum game that will inflame national divisions.
Expanding industries—web-based services, robotics, electric cars and the like—all need workers with skills that businesses can’t easily find. Alongside a COVID-19 strategy, Biden should craft a national re-employment strategy that subsidizes employers to hire and retrain workers, who were formerly employed in other industries, by offering payments equal to 25% of their former salaries for one to two years if employment subsequently continues for another one to two years.
Expanding the pool of skilled labor is the single most important thing Biden could do to rev up growth, create tax revenues to finance his climate-change program, and create more equally shared prosperity.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.