California’s tougher COVID rules haven’t hurt economy: report
Regulations to prevent the spread of COVID-19 have not come at the expense of California’s economy, according to a new report that found states taking a more passive approach to the pandemic have seen no blow economic boost thanks to their limited regulation.
The results of the UCLA Anderson forecast are “diametrically opposed” to the common narrative among some opponents of COVID-19 regulations that public health orders have undermined the economic recovery, Director Jerry Nickelsburg said.
Among the larger states, those with strict pandemic rules have performed just as well and, in some cases, better than their laissez-faire counterparts. California’s GDP declined less than that of Texas and Florida in 2020, all of which surpassed the United States as a whole. Washington, which had some of the tightest pandemic restrictions in the country, had the smallest GDP loss among large states.
“In this group, you just can’t find any evidence that the economy – as measured by the contraction in GDP – has been affected by the intervention,” Nickelsburg said.
This finding was reinforced by similar data from Scandinavia, where Sweden has been touted as an international model for a weakly regulated response to the pandemic. Instead, the country had up to four times as many COVID-19 cases as Finland, Norway and Denmark, all of which have performed at least as well economically.
The regulation may have helped offset some of the negative impacts of business closures by helping customers manage the relative risks of going out to eat or shop, Nickelsburg said.
“In states with restrictions, the state sends a signal about what is safe to do and what is not,” he said. “In unrestricted states, individuals make that decision and some voluntarily withhold their request. “
California’s economy was also helped by the fact that job losses were concentrated in industries that require a lot of human contact – recreation and hospitality, education, retail and health care and social services accounted for 75% of job cuts, according to the report.
At the same time, industries like tech where employees can work from home have seen far fewer job or wage cuts, which has helped isolate the state’s economy and, more recently, accelerate. its recovery. The report found that San Francisco, Silicon Valley and the East Bay all experienced faster job growth between December and March than the United States as a whole.
Having so many workers who weren’t laid off also helped keep one of California’s biggest industries afloat – housing.
“Low interest rates and the fact that high-income people generally haven’t lost their jobs have resulted in a high demand for housing,” Nickelsburg said. “So the construction industry has done well. “