The Link Between Schools and Economic Recovery

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If you’ve got kids, “disruptive” is a polite way to describe how at-home schooling has changed things since US schools started shutting down in March.

Some changes have been relatively minor, like turning kitchens or bathrooms into study areas. Others have been more life-altering, affecting some parents’ ability to work. 

This report released by the Becker Friedman Institute in Chicago this past spring shows how big this issue is – their research says 50 million Americans need to iron out child care so they’re free to work. These adjustments are a lot for families to handle, but it’s not just families with kids who are affected.

School closures are connected to our current economic well-being. By their calculations, Goldman Sachs researchers found that shutdowns in the education sector sheared 2.2 percentage points off annualized US real GDP growth in the second quarter. 

The switch to online classes helped teaching jobs rebound, but left out support staff like cafeteria workers and custodians, who the researchers noted are less likely to be reemployed if schools stay closed.

Organizations and businesses that work closely with schools can also feel the effects. The report notes that when schools are closed, “other parts of the economy closely tied to the education sector, such as food providers for meal programs and businesses in college towns,” can also suffer.

Our future financial well-being is being affected too. Goldman Sachs researchers also looked at what these closures mean over the long term.

On their shortlist of impacts: negative effects from lower quality education, worsening educational inequality if poorer households have less access to remote learning, lack of social and emotional skill development, food insecurity and worsening income inequality if lower income households are less able to work from home.

So what’s the problem, why not just go online? Online-only education may sound like a logical Covid-19 workaround, but there are … hurdles. These include, as The Washington Post points out, things as basic as computers. Not all students have them. 

School systems are exploring ways to hold in-school classes, but the continued spread of Covid-19 is an issue. The latest surges have been among young adults and children, and they tend to be either asymptomatic or have mild cases. 

The added risk is in their potential interactions with older people who tend to be more severely affected by Covid-19. In this way, young folks are essentially walking around as potential infection vectors. 

This mix of young and old is part of what makes reopening schools so complex. Recent efforts to reopen schools, only to close them or impose quarantines soon afterwards, underscore the challenge.

This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.