Apr 28 2009
How Would A Pandemic Affect Unemployment?
As of yesterday, thousands cases of the swine flu had been reported worldwide, according to all of reports on CNN. 150 died in Mexico, some people are infected in the United States, some in Canada, then Spain and Australia. No doubt about it, pandemics, if this is one, can go worldwide at warp speed now that global travel is the norm.
The question then bodes, how would a worldwide pandemic affect the monetary situation? Here are a few thoughts on the situation.
1. Expect gold to rise in value. Peoplle always buy gold when they are nervous. Could the leadership at the national level somehow be affected before enough inoculations are made? Certainly the President, his cabinet and other critical people will be inoculated first. But what about administrators that simply won’t fall into the level of “Must be Inoculated?” If the government worker bees are dying, who will be able to get all of the work done? These are the kinds of things that make people flock to gold.
2. Expect a period of economic crisis: Imagine the country shut totally for ten days. People who are already struggling to make ends meet will truly suffer if they are not allowed to work at home or show up at the work place. Take that kind of money out of the system and it will be financial catastrophe to an already weakened economy.
3. Death Knoll for Small Businesses: The small businesses that are already struggling simply would not make it. Even Walmart would have a difficult time if it suddenly had to close all stores for ten days. Suppliers that are already not getting paid from small businesses would find it impossible to stay afloat. Massive numbers of distributors, trucking firms, and other middle men could simply be wiped out overnight, first by lack of workers that become ill and secondly because firms aren’t paying them.
4. Burdened hospitals would screaming for help. Imagine the state budget cuts which have already relegated poor people to use the emergency room more. Now put people in there that can’t pay the bill and that’s a recipe for fiscal disaster for the hospital. Most hospitals are required to treat the ill, but expect more to leave people dying in the halls. (This has been known to happen.) Priority will go to people who can pay. And hospital administrators would be calling upon the states, who are already hurting fiscally, to help keep them open.
But then there would be a turn around. If people simply don’t get inoculated, if they don’t have access to medical care in time, if they don’t get Tamiflu to help them beat it, they can either get well or die. If the virus mutates into the deadly type of 1918 where it killed some people quite quickly, businesses could reopen to find over half of their workforce simply gone.
The unemployment picture would immediately change. Professionals who have been looking for work may suddenly find themselves in demand. Men and women who have been walking the unemployment line might find employers offering better wages to lure people to work for them.
There is historical precedence for this. The last plague that swept Europe completely changed the feudal system because the peasants that worked the fields simply left for the cities to find work. These were jobs that had previously been available to city dwellers. But when millions died throughout Europe, the remaining workers found themselves in demand for better paying jobs. The result: feudal lords had no one to work their lands and ended up out in the fields themselves. It was quite the shift in employment.
For now, there is no reason to be too terribly concerned. Tamiflu seems to help it, and no one in the United States has died from it. Mexico, the hardest hit nation, has responded appropriately. Consequently this illness could be beaten before it even gets too far into the general population.
