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The Economy, the Election, and Hopes for a Post-Coronavirus Future: Interview with Assistant Professor of Economics Nicholas Kacher

COVID-19 is here to stay for the foreseeable future. How will this impact employment, migration, and how voters cast their ballots this November?

 

Nicholas Kacher is an assistant professor of economics at Scripps College whose research and teaching focus on urban and regional economics, environmental and natural resource economics, labor economics, the gig economy, economic recovery, and migration and housing. He has worked for nonprofit economic development organizations in Tanzania and in Massachusetts, where he supported a range of programs designed to boost local economic resilience. Scripps College’s Office of Marketing and Communications interviewed Professor Kacher to find out about his work on post-recession economic recoveries, his thoughts on labor and economics in post-COVID-19 America, and how the turmoil of the pandemic could affect how people vote in the 2020 election.

 

Marketing and Communications: Let’s start with the money. A lot of your academic work examines factors that led to economic recovery after recent recessions. What have you found to be the best indicators of economic recovery?

 

Nicholas Kacher: Counties that had higher rates of entrepreneurship—openings and closures of businesses—had faster economic recoveries from the 2008 recession. Though those counties suffered greater initial economic downturns, they bounced back more quickly and robustly.

 

Between 2001 and 2008, business establishments in the US were opening at a historically rapid pace. The 2008 recession marked a substantial and sustained decrease in establishment openings. But some of that entrepreneurial slack has been taken up by self-employed business ventures—the basis of what’s sometimes called the “gig economy.”

 

MC: Do you foresee these same factors playing a role in post-COVID-19 economic recovery?

 

NK: I expect to see some different types of entrepreneurship, including continued growth in self-employment. This rise has been and will continue to be driven by two factors: opportunity and necessity. With an increase in available technologies, specifically mobile technology, and an increased acceptance of remote work, there are greater opportunities to, say, sell a product through an intermediary like Etsy or direct to consumers using social media. On the other hand, people may turn to self-employment out of necessity because of job loss or lack of job options. Twenty million workers in the US were furloughed or laid off in the first months of the pandemic, largely in the hospitality sector. Many—maybe even most—of these jobs may return when health risks decrease, but some companies might look toward automated or artificial-intelligence alternatives to rehiring workers.

 

Additional forms of entrepreneurship may also play a large role in our economic recovery. While we usually associate entrepreneurship with the formation of new business, it can also include existing businesses practicing new methods. We are already starting to see businesses finding new ways to offer goods and services—just look at how quickly restaurants pivoted to delivery and pickup. Services like fitness classes that have started livestreaming might continue those practices to reach larger audiences even after resuming in-person business. A silver lining to crises is that they tend to catalyze creativity, and I expect that to be true in this case.

 

MC: This type of self-employment seems likely to have major effects on US internal migration if people are less bound to an office than previously. Is everyone going to move to Boulder, Austin, or any of those other highly desirable, mid-sized cities that have been booming in the past 10 years or so?

 

NK: In The Rise of the Creative Class, which we read and discussed in my Core II class, author Richard Florida contends that educated people from STEM, knowledge-based, media, and artistic fields are attracted to areas with a diverse urban population, cultural opportunities, and access to natural amenities.

 

Even before COVID-19, there was a large divergence in population growth among American cities. Places like Seattle, Denver, and Austin all grew by more than 20 percent over the last decade, while Detroit, Baltimore, and Cleveland lost population. New York City only grew by two percent over that time, all from international migration. But as you mentioned, some of the fastest-growing areas are smaller cities like Irvine, Bend, Raleigh-Durham, and Boulder and Fort Collins in Colorado—places with cultural amenities and robust job markets, but with lower density, slightly more affordable housing (although often still steep), and, in many cases, better weather than the older industrial powerhouses.

 

Migration out of the Rust Belt and rural areas could accelerate the closures of hospitals, schools, and other essential services in depopulating places.

 

I do expect that those whose work and family situations allow them to pick their locations will continue to favor these types of places. This trend—especially in the face of a pandemic likely to have lingering health effects—does pose challenges. Population growth can drive gentrification in attractive areas, and, conversely, migration out of the Rust Belt and rural areas could accelerate the closures of hospitals, schools, and other essential services in depopulating places.

 

MC: How do you see the 2020 election playing out as people reassess where they live, their relationships to work, the availability of healthcare, and so many other factors brought to the fore by COVID-19?

 

NK: Healthcare is already a top priority for voters, and I can only imagine that support for policies that translate into more affordable and accessible healthcare will become a higher priority. I also think current unemployment rates are startling enough that we are seeing potential for some substantial changes to the way people think about labor market policy: for example, universal basic income seemed pretty unfeasible during the Democratic primaries, and yet, a few months ago, nearly every household received a check for up to $1,200, akin to a basic income. Ultimately, voters in November are going to have healthcare and the labor side of the economy very much on their minds, and I would expect the party that does a better job selling their vision for those two things to be the successful party. In light of how unprecedented these events are, I do expect that people will be receptive to policies that would previously have been considered pretty unorthodox, but major economic events tend to shift the window in terms of what types of policies people are interested in.

 

MC: That certainly seemed to be the case during the 2008 election, when voters seemed to experience an ideological shift that enabled the passing of progressive policies and measures that had previously seemed radical.

 

NK: In the aftermath of the Great Recession, there was an awakening to the extent of inequality in the country—just think of the Occupy Wall Street movement, the real shift in economic discussions to focus on wealth and income shares, not just as it related to the “upper class,” but increasingly focused on the very wealthiest, the very biggest corporations. These themes remain prevalent, like an increasing awareness of the need for regulation in financial sectors. So, I think that the 2008 recession brought some things to the forefront.

 

As far as the 2020 election goes, my sense is that the pandemic and the economic consequences associated with it have brought a lot of divides that already existed into starker focus. For example, the extent to which access to quality healthcare varies by region and race has become increasingly hard to ignore, the divergence in worker flexibility has become increasingly stark—who can work remotely and who cannot? There’s an increasing recognition that many jobs deemed “essential” aren’t really compensated well, even in the best of times. All of these issues existed before the pandemic, but the circumstances of these past few months have really highlighted them. Voters are less and less able to ignore a lot of those dividing lines.

 

MC: What are your students saying about these topics?

 

NK: My recent Core II course Where We Live and What We Live For focused on interdisciplinary social science approaches to regional studies. My students really dug into asking why certain places experience such different outcomes from each other. We examined the history of racial segregation in housing in this country and saw how historical discrimination feeds into residential patterns today. My students also used a new data tool called the Opportunity Atlas to examine how a person’s place of birth impacts their lifelong economic and sociological outcomes. We found that California offers better-than-average social mobility—the chance that someone born into a low-income family will achieve relatively high income as an adult—but that throughout the country, everything from income to educational attainment to probability of being incarcerated depends heavily on a person’s place of birth, race, and family socioeconomic status.

 

We found that California offers better-than-average social mobility—the chance that someone born into a low-income family will achieve relatively high income as an adult.

 

MC: Are you ultimately hopeful about post-COVID-19 America and the 2020 election?

 

NK: I’m hopeful that the circumstances will wake us up to some unfortunate truths that we seem better able to ignore when this amorphous thing we call “the economy” is growing. Median incomes in the US have grown slowly compared to the economy as a whole since the 1970s, and the percentage of people living in poverty hasn’t decreased during this period, either. This really shows the extent to which national economic growth doesn’t automatically correlate with quality of life for people at the lower end of our economic distribution, in struggling regions, or even for middle-class members of society, in terms of earnings, life expectancy, access to healthcare, and environmental health. Economic crises aren’t good for any of those things, but economic growth is not guaranteed to fix things, either—policy changes are needed to remedy those issues. So, my hope is that this will be a call to action to address those underlying divisions rather than deepening them.