Rick, this is a question from Twitter. What about private or parochial schools that want to stay open but they’re in districts or counties where they’re just doing distance learning? Will they be allowed to open their schools and have kids come in person?
Hess: It depends on the state. It’s going to be an executive power kind of, statutory kind of question. Because there are two dimensions. It’s what the school feels comfortable doing and what families want. And there are also the larger public health ramifications.
One of the policy pieces of all this is this: There are about 35,000 private schools in the US, and folks sometimes have this picture in their mind of the famous ones, the St. Albans or the Exeters, these places that have hundreds of millions of dollars in endowments and they charge a ton of money. These are a tiny fingernail fragment of the 35,000. The vast majority of private schools charge less per year than the local public schools spend. Public schools across the US spend about $14,000 per year. Most private schools generally charge tuition that’s less than half of that. So these are schools that don’t have endowments and are running pretty thin margins. If these schools don’t open this fall, there is a huge chance that hundreds or thousands of them won’t be around to reopen in fall 2021. And that would be a devastating blow to these communities and families.
So I think part of the conversation about federal education aid, as we think about the bill that Congress is debating, is it’s really gotten framed as privates vs. publics. The point is that a small fraction of the money that we are talking about putting into public education — maybe $5 billion a year, $8 billion a year — could be a life saver for hundreds or thousands of these incredibly valuable community institutions that don’t have the wherewithal to figure out how to use PPP, that won’t be sufficient to see them through. But we’ve really got to be thinking about what, are the long-term implications for education in these communities?
Scott, do face shields work? What do we know? Are they effective?
Gottlieb: I wouldn’t wear a face shield in place of a mask. The mask is definitely the most effective tool. Most of the transmission is through respiratory droplets, but you can get transmission by having respiratory droplets land on your conjunctiva. And that’s been demonstrated in other studies. And so wearing sunglasses and a mask is pretty good protection. Typically, when I was on a plane, that’s what I was doing: wearing a mask but also wearing sunglasses.
Mike, could you explain the economic logic of reducing jobless bonus benefits? The $600.
Strain: The increased generosity of unemployment insurance benefits has two main effects on the economy. One is to spur the economy by increasing consumer spending, by increasing the amount of income households have. And the other effect is weakening the economy by keeping people out of paid employment and on the unemployment insurance rolls. And so the question at any given time is, which of those two effects is stronger?
I think in the months of April, May, June, and July, the evidence strongly suggests that the former effect was stronger — that these unemployment benefits have really helped the economy by supporting consumer spending and have not slowed the economy down by increasing the unemployment rate. That’s because the reason the unemployment rate is elevated is because there just aren’t jobs right now to get. So if you reduced the generosity of the benefit, you wouldn’t see people flood back to work. There are no jobs for them to flood back into. You would see a drop in consumer spending.
Of course, the policy question facing Congress is not whether we should have had benefits over the last few months. It’s whether we should continue to have them through the end of the year. And I think that if we were to continue to have them through the end of the year, that second effect would end up dominating. We would end up seeing benefits that generous slow the pace of recovery because they would keep people out of paid employment, even as they still serve to support consumer spending.
And so the question is, is there a way to support consumer spending in a way that these benefits have been doing while also not having these incentives not to go to work? And the answer is yes. The debate around these benefits has kind of a false-choice character. We should be trying to figure out how we can reduce disincentives to employment while also supporting vulnerable households, strengthening the safety net, and making sure that consumer spending is supported. And it’s possible to do those things.
So I’m in favor of cutting the $600 pretty significantly and then putting it on a glide path to zero by the end of the year, provided that we can also find ways to help support households and workers in the economy that don’t have those troubling incentives.
All right. Thanks a lot, Mike. That’s our webinar. Thanks for watching.
This article by James Pethokoukis, Scott Gottlieb, Frederick Hess, and Michael Strain first appeared in AEIdeas on August 13, 2020.