In the short term, likely not. But long-term U.S. productivity is at serious risk—unless policymakers, companies and individuals act today to fix structural inequalities.
As long as children stay healthy, parents across the United States want schools to open and remain open. But the reality of the U.S. coronavirus infection rate these days is that not all K–12 education will be conducted on-site this fall.
That begs the question: What is the potential economic fallout of remote learning?
The most comprehensive research suggests that the near-term impact of keeping America’s schools closed would likely be minimal. That’s right: Remote primary and secondary schooling would dent, not significantly damage, the U.S. economy. At least for a while.
Unfortunately, over the long term, it could significantly hurt the productivity of the U.S. economy and exacerbate income and educational inequalities.
Still, there is reason to hope. If U.S. schools are forced into prolonged remote or socially distanced learning, the pandemic could provide an opportunity for governments, corporations and citizens to strengthen the economy of tomorrow by supporting students today.
Deliberate action is necessary, and many are already stepping up to this challenge.
Here is what we know now—and what might be done.
Good news: Closing schools isn’t likely to significantly hurt near-term GDP
It seems logical to assume closing schools to prevent the spread of COVID-19 would produce a material, short-term drag on the U.S. economy. According to the Census Bureau’s “2019 Current Population Survey,” roughly 64 million U.S. parents live at home with at least one child under the age of 18. That’s about 20% of the American population.
To quantify the potential near-term impact of closed schools on GDP, we need to answer such questions as: What jobs will be eliminated if there is no in-person schooling? How many parents are currently working and unable afford childcare in the absence of school? How many parents have a relative or friend who can help with childcare?
The conclusion from comprehensive research is counterintuitive in some ways: It finds that closing schools actually has a relatively benign near-term impact on GDP. For every month schools are closed, about $50 billion of GDP is lost. While this amount may seem substantial, it is miniscule in a $20 trillion–plus economy.1
What’s more: Even this GDP estimate may be too high, as the analysis assumes:
- Uniform closure—With all U.S. schools closed for one month. Given how unequally COVID-19 cases are distributed around the United States today, it’s likely that at least some schools will be open.2
- A largely on-site workforce—While the study uses 2006 data that has only 25% of U.S. workers able to work from home, a more recent study (June 2020) from the U.S. Bureau of Labor Statistics finds that roughly 45% of U.S. employees are in occupations in which working from home is feasible.3 While many occupations have had the ability to work from home for some time, employees generally worked onsite; COVID-19 changed that quickly.4
Share of U.S. employment where working from home is feasible
The bar chart compares the percentage of U.S. workers that were able to work from home in 2006 and are able to in 2020. It indicates that in 2006 around 25% of U.S. workers were able to work remotely and in 2020 that has increased to about 45% of U.S. workers.
Bad news: Long-term productivity is at risk
The problem is that closing schools is likely to drag down productivity growth over the long run.
Changes in productivity—how well workers, consumers, entrepreneurs, business leaders and policymakers function—typically take years to see their full effect. Education plays a pivotal role in developing the labor force. And here’s the kicker: The Bureau of Labor Statistics finds the “quality of labor force” is the largest contributor (30%) to economy-wide productivity.
Sources of U.S. productivity growth
The bar chart displays the sources of U.S. productivity growth in 2018, indicating that 30% of the total contribution stems from the Quality of Labor Force.
The pandemic could supersize the “summer slide”
Now consider that education gaps typically cause children to fall behind. It’s well documented that student achievement scores decline over summer vacation—the so-called “summer slide.”5 Evidence also makes clear that the slide disproportionately afflicts lower-income households, whose children tend to fall three extra months behind their peers from middle-income families.6
It’s troubling to contemplate the potential damage should children’s educations be put on hold or hampered for longer. And it’s natural to ask: How might we prevent that?
The best answer today is: Access to computers and the internet are lifelines to a good education.
But here again there are serious divides. Fourteen percent of U.S. children ages 3–18 don’t have any access to the internet at home. That means more than nine million children would have difficulty completing assignments online.7 Further, the dispersion is wide across income cohorts, and the COVID-19 crisis is exacerbating this gap. Leveraging Google search data, the nonprofit research organization NBER shows that while the demand for online educational resources increased dramatically in March and April (after schools closed in the United States), the increase was substantially larger in areas with higher income and greater internet access.8, 9
Percent of children ages 3-18 living in households without internet access (2018)
The bar chart displays the percent of children ages 3-18 living in households without internet access in 2018 across income cohorts. It shows that the lowest quarter of income has the highest percentage of children ages 3-18 without internet access at 12.8%.
Reason to hope and ways to help
So what exactly can U.S. policymakers, corporate leaders and citizens do?
- Provide resources to lower-income households and those that lack technological resources. Students need this technology to succeed in a socially distancing world. But they’ll also need it tomorrow when they graduate into a digital economy. Companies and individuals are providing more flexibility with their charitable dollars—allowing school districts to repurpose funds for purchasing laptops and improving internet access for underserved students.
- Support housing and food supply to children and their families. Closed school lunch programs for children and parents’ loss of jobs threaten the basics for children, which obviously are prerequisites for any learning. Yet more than half of school-age children in the United States today are eligible for school lunch programs. If there’s no school, how will they receive enough nutrition? Many private foundations and philanthropists are supporting local community funds that help families facing financial hardship because of the COVID-19 pandemic.
- Embrace working from home wherever possible. Before the crisis, U.S. mobility was declining. Rapid growth in the digital economy on the coasts led individuals to put down roots there; then they stopped moving. Result—a widening regional wealth gap.
Then came the lockdown, widespread work from home and more technology to do so. Post-pandemic, companies that saw little to no impact on productivity might allow more employees to work from home, fully or predominantly.
Such “virtuality” might let highly skilled workers in densely populated areas move to lower-cost rural areas, reducing commutes and boosting productive hours. Meanwhile, companies might both expand their potential labor pools and reduce infrastructure costs. This movement also could serve to revitalize lower-cost communities across the United States, and help close income and educational inequality gaps.
If you’re interested in connecting with other philanthropists and nonprofits working to help students across America, speak with your J.P. Morgan team. Also be sure to see our article: Giving during a crisis: How to make a difference.
1 Joshua Epstein, Ross Hammond and Howard Lempel, “Cost and Healthcare Impacts of U.S. School Closures: An Update,” NYU School of Global Public Health, March 11, 2020.
2 Indeed, based on data collection from Education Week, only about 65% of students were being required to pursue remote-only learning in the fall. That includes 382 school districts across the country. https://www.edweek.org/ew/section/multimedia/school-districts-reopening-plans-a-snapshot.html
4 Benjamin Mandel, Malika Saran and Patrick Lenihan, The global ‘work from home’ labor force: Market implications of skill-based tech adoption and lower urban density, J.P. Morgan Asset Management, June 2020.
5 A. Atteberry and A. McEachin, “School’s out: Summer learning loss across grade levels and school contexts in the United States today,” pp35–54, in K. Alexander, S. Pitcock and M. Boulay (Eds), Summer learning and summer learning loss, New York: Teachers College Press, 2016.
6 Middle-income students saw gains in proficiency versus losses for low-income students. Cooper, H., Nye, B., Charlton, K., Lindsay, J. & Greathouse, S. (1996). The effects of summer vacation on achievement test scores: A narrative and meta-analytic review. Most assume that differences in access to (as well as encouragement to use) learning resources over the summer explain the socioeconomic divide.
7 National Center for Education Statistics, USA Facts April 2020. According to Census data, there is a sizeable 12% gap in internet access for children between households in the top versus bottom quartiles of the income distribution.
8 The NBER is a private, nonprofit, nonpartisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policymakers and business professionals.
9 Researchers found that search intensity for school-centered resources increased linearly by 15% for each additional $10,000 in mean household income. They concluded that in socioeconomically advantaged areas, schools are better prepared for virtual learning, parents are more prepared/engaged in virtual learning, or both.