Which jobs are vulnerable in the six-foot economy?

26 May 2020 16:04 RaboResearch

The United States might be stuck with a so-called ‘six-foot economy’ for a considerable period of time in order to prevent a re-emergence of the COVID-19 virus. Our main finding is that 23% of all US jobs might face problems to adapt to such an economy. Occupations in healthcare (60% vulnerable jobs), air transport (59%) and the hospitality sector (49%) are especially vulnerable.

Microscopic view of influenza virus cells

The risk of reopening the economy

There are conflicting opinions about the reopening of the US economy. At the national level, there have been promising developments in the number of daily cases since the beginning of May. The number of daily deaths by the COVID-19 virus has even dropped below 1,000 people, which was the lowest number since the start of the epidemic in the US (Figure 1).

Figure 1: Downward trend in daily COVID-19 cases and deaths…

Source: Macrobond, European Centre for Disease Prevention & Control

Figure 2: …but the flattening of the curve remains unimpressive

Source: Macrobond, European Centre for Disease Prevention & Control

However, there are considerable differences in the spread of the coronavirus by state. This is also true for the policy response. Many American states have begun to ease the lockdown restrictions or plan to do so within a short period of time. People are again allowed to visit the gym in Alabama, get a haircut in Alaska, take a dip in the ocean in California and go to the movies in Texas. In fact, some states have been reopened despite an upward trend in corona cases. In a hearing with the Senate in May, Dr. Fauci, the nation's leading virus expert, warned that states would face serious consequences in case of a premature reopening. This statement is in line with a recent study in Science arguing that social distancing and COVID-19 surveillance measures are necessary in the years to come, since a resurgence in contagion could be possible as late as 2024.

Against this backdrop, it becomes ever more likely that the US will also have to implement a six-foot economy for a considerable period of time. In this report, we assess which US jobs are able to adapt to a six-foot economy and which ones might face difficulties.

The US six-foot economy

Reopening is proving cumbersome

Many industries are operating well below their pre-corona capacity. Real-time data measuring the hours worked by employees at small businesses in the US indicate that activity is still 39% below pre-corona levels on average, with personal care activity even at -64% (Figure 3).

In states that have reopened their hospitality sector, restaurants are only operating at 60% to 80% of their full booking capacity (Figure 4). These figures all illustrate that many segments of the economy are not able to fire on all cylinders again, despite easing of the lockdown measures.

Figure 3: Impact of COVID-19 on hours worked for a selection of occupations

Note: The rates compare the median hours worked on a certain day to the median of that day at pre-corona levels (4 Jan 2020 – 31 Jan 2020). Source: Macrobond, Homebase

Figure 4: Restaurant capacity in the six-foot economy

Source: OpenTable

Organizers of activities involving large masses of people, such as concerts, festivals, sports, will have to think about adopting completely different business models. In manufacturing, supply-chain disruptions might prevent firms from scaling-up to pre-crisis levels any time soon. And, of course, the transportation industry will be heavily affected. Air travel will be prone to a long and intensive process of biometric check-ins, sanitation of luggage and passengers, touchless boarding, etc. The CEO of Boeing said that by the end of the year air traffic levels may be up to 50% of the levels that they used to be.

What does the US six-foot economy look like?

Our next step is to map what the US six-foot economy might look like (see Figure 5 and the breakout box for more information on the applied methodology). We use data on more than 900 occupations in 34 industries and assess whether these jobs can be performed at home (dark blue bars in Figure 3). If working at home is not an option for a specific occupation, we assess whether the job can be performed at arm’s length or roughly six-foot from others (see orange bars in Figure 5). The vulnerable jobs within the six-foot economy are the ones that cannot be performed at home and at the same require proximity to other people, which hampers compliance to social distance rules (light blue bars in Figure 5).

Figure 5: 23% of the US economy might face problems in the six-foot economy

Source: RaboResearch calculations based on BLS, Leibovici et al. (2020), and Dingel and Neiman (2020)

Our main conclusion is that 23% of all jobs in the US might experience adaptation problems in the six-foot economy. The largest problems are expected in healthcare (60% vulnerable jobs), air transport (59%) and the hospitality sector (49%). Most of the vulnerable industries are also relatively big. The public sector (15%), healthcare (12%), hospitality (7%), retail (9.5%) and construction (6%) are responsible for almost half of total employment in the US. Specifically, we are talking about jobs in nursing residential care facilities, pilots, transportation security screeners, flight attendants, and bartenders and cooks.

Box 1: Methodology to gauge the US six-foot economy

In order to map the US six-foot economy, we use the occupational employment statistics (OES) from the Bureau of Labor Statistics (BLS), which contains information for more than 900 occupations in the US. We combine those statistics with information from two studies. First, we use a study by Dingel and Neiman (2020), who assess whether jobs can be performed at home. They conclude that 37% of all jobs in the US can be done at home. For jobs that cannot be performed at home, the impediment is usually inaccessibility of specific equipment and machines. Important to keep in mind that the classification by Dingel and Neiman (2020) only examines whether jobs can be done at home hypothetically. This does not mean that adaptations to the workspace are not required, for example in telework server capacity.

For jobs that cannot be performed at home, we use the approach developed by Leibovici et al. (2020), who classify occupations as being low, medium or high contact-intensive, based on data from the Occupational Information Network (O*NET) database. Occupations that cannot be done at home, but are at the same time low- to medium-contact-intensive can be conducted at least at an arm’s length and are thus able to comply to social distance rules within a six-foot economy. Again, this does not imply that no adaptations are necessary, for instance adapting offices. Occupations that cannot be performed at home and require proximity are the ones that might face difficulties in the six-foot economy.

To recapitulate, we distinguish three categories:

  1. Occupations that can be performed at home
  2. Occupations that cannot be performed at home, but can be executed with low or medium proximity
  3. Jobs that cannot be performed at home and require high proximity.

As a final remark, we only assess the technical possibility to adapt to a six-foot economy and do not examine economic viability of jobs. For instance, we do not assess whether restaurants are able to run a profitable business when forced to operate at only a fraction of their pre-corona capacity.

Of course, jobs related to the entertainment industry (festivals, concerts, amusement parks etc.) might be at risk as well. Not necessarily because these jobs cannot be performed at a distance from others, but because it is hard for their customers to remain at a distance from one another. Finally, large parts of the public sector, such as healthcare and police, are prone to adaptation problems. While some of these problems could be solved by personal protective equipment, some jobs may disappear altogether in a prolonged episode of social distancing.

How long will the six-foot economy last?

It is difficult to assess for what period of time countries will have to implement a six-foot economy. This depends of course on if and when a vaccine will become available. Large pharmaceutical companies have teamed up to start clinical testing in September 2020. If a vaccine is found, a mass vaccination program could take up another six months. So even in the most optimistic scenario, we expect a six-foot economy to be in place for at least another year. However, there are scientists who have doubts whether a successful and safe vaccine will ever be developed. This would seriously complicate a normalization of economic activity to pre-corona levels.