Although there is a great deal of speculation surrounding the social and economic outcomes of the novel coronavirus (Covid-19) pandemic, examining prior public health emergencies can provide some insight into these questions. A recent NBER analysis reminds us that when the Spanish Flu wreaked worldwide havoc just over 100 years ago, a third of the global population was assumed to be infected. Although the global mortality rate was 2%, the mortality rate in the US was only 0.5%—possibly due to its favorable GDP prior to the outbreak.
However, within the US, that 0.5% death toll from 1918-1920 led to a 1.5% decrease in Gross Domestic Product (GDP) and 2.1% decrease in consumption. Along with increased inflation (5%), drops were found in returns of stock (-7%) and government bond (-3.5%). Global GDP and consumption decreases were even higher, resulting in even larger drops in stock and bond returns.
While advances in public health over the last century will likely prevent the rate of deaths seen with the Spanish Flu, the economy today is seeing large resource scarcities and GDP decreases as less travel and trade occur. The International Monetary Fund currently predicts an overall GDP loss of 5.9% in the US for 2020. If history is to be repeated, however, these consequences hopefully will be be short-lived.
An implication for businesses is that without measures taken by governments and central banks, capital to restart operations may be in short supply when the pandemic subsides. This underscores the importance of ensuring employees— the main drivers of business growth and success—receive the support they need during the crisis. Businesses that provide ongoing care to employees can mitigate the impact of chronic health issues and mental health challenges during these unprecedented times and safeguard the valuable skillsets and productivity of current employees.
Developing a health benefits strategy that emphasizes care management and mental wellbeing can help ensure that employees are ready to meet day-to-day operational demands and are resilient and ready to respond in the wake of emergencies. Consider the following:
Ensure Access and Availability of Mental Health Resources
Prioritizing resources for mental health support (e.g. telehealth) can both help mitigate the severity of mental health distress for those who already suffer from conditions such as depression and anxiety. These resources can also benefit those without a prior history to help them combat the additional stress of uncertainty and challenging circumstances related to new work arrangements. In addition, mental health services may help protect against illness.
Create a Smooth Transition to New Work Arrangements
Planning for and communicating alternative work arrangements for employees will help allow business to function during emergency situations and can alleviate stress for concerned employees. Working from home may present challenges, but guidance exists to help.
Plan Ahead for When the Crisis Subsides
Formulating a return to work strategy will help businesses prepare for operations when emergency mandates are lifted.
If you are looking for insights and ideas, employers are currently connecting virtually on IBIBridge to exchange information about their companies’ COVID-19 experiences, strategies and questions. Join in on the conversation today.