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Illustration: Sarah Grillo/Axios

The pandemic is striking directly at the heart of what has historically made America stronger than almost any other global economy — our awesome productivity.

Why it matters: Modern recessions, even the Great Recession of 2008-9, have tended to have little to no effect on how efficiently America produces goods and services. This recession is different. COVID-19 has hammered the potency of our companies and workers.

How it works: COVID-19 has deeply changed the way the country works.

  • Working from home has damaged companies that invested in sparking creativity and innovation by bringing employees together in thoughtfully-designed offices.
  • Teachers worry more about distancing and ventilation than they do about education.
  • In nursing homes, aides now have one job — preventing the spread of the virus — that has a higher priority than everything else.
  • In travel, the basic economics of whole industries have been upended. It takes just as many pilots to fly a socially-distanced plane, for instance, as it does to fly a full one.

Show me a business that involves individuals entering a building, and I'll show you a business where leaders are being urged to put significant new resources towards social distancing, ventilation, temperature checks, health attestations, contact-tracing databases, ubiquitous hand sanitizer stations, and myriad other COVID-related expenses.

  • While employers are forced to spend time and money on such projects, employees are also being hit hard. Many are struggling with suicidal thoughts, while Wall Street executives talk about having to deal with "rolling nervous breakdowns.”
  • "People are living at work," says Abby Levine, a principal in Deloitte's real estate group. "That has a physical, emotional, and mental impact."

By the numbers: The recession is bad enough — deeper and faster than anything we've experienced in living memory. The hit to productivity comes on top of that.

  • Stanford economist Nicholas Bloom sees productivity declines within firms of between 5% and 10%. "These falls are not surprising," he says, "but are absolutely massive."
  • For some service-industry sectors, the decline in productivity means thousands of businesses have to shut down entirely, since they can no longer make a profit. Restaurants are a prime example.

The bottom line: So long as COVID-19 continues to spread at a rate of more than 50,000 new cases per day, the virus will continue to act as a deadweight on the economy, depressing productivity — and total economic output — to well below pre-crisis levels.

Go deeper

Nov 10, 2020 - Economy & Business

The business case for child care

Illustration: Eniola Odetunde/Axios

The coronavirus pandemic has exposed the inextricable link between child care and the economy — and it's pushing businesses to confront the cost of working parents' unpaid side gig.

The big picture: Child care is denting the workforce, preventing a huge swath of Americans from contributing to their firms and to the economy at large. To chip away at the problem, and protect their bottom lines, employers are bulking up child care benefits for workers.

Updated 3 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Pfizer and Moderna boosters overwhelmingly prevent Omicron hospitalizations, CDC finds — Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: The case for Operation Warp Speed 2.0 — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies — Federal judge blocks Biden's vaccine mandate for federal workers.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

Arizona governor sues Biden administration over COVID funds tied to mandates

A teacher prepares a hallway barrier to help students maintain social distancing at John B. Wright Elementary School in Tucson, Arizona, on Aug. 14, 2020. Photo: Cheney Orr/Bloomberg via Getty Images

Arizona Gov. Doug Ducey (R) filed a lawsuit Friday against the Biden administration for ordering the state to stop allocating federal COVID relief funds to schools that don't comply with public health recommendations such as masking, the Arizona Republic reports.

Why it matters: The Treasury Department said last week that the state would have to pay back the money if Ducey does not redesignate the $173 million programs to ensure they don't "undermine efforts to stop the spread of COVID-19."