Business disruptions from social distancing

Abstract

Social distancing interventions can be effective against epidemics but are potentially detrimental for the economy. Businesses that rely heavily on face-to-face communication or close physical proximity when producing a product or providing a service are particularly vulnerable. There is, however, no systematic evidence about the role of human interactions across different lines of business and about which will be the most limited by social distancing. Here we provide theory-based measures of the reliance of U.S. businesses on human interaction, detailed by industry and geographic location. We find that, before the pandemic hit, 43 million workers worked in occupations that rely heavily on face-to-face communication or require close physical proximity to other workers. Many of these workers lost their jobs since. Consistently with our model, employment losses have been largest in sectors that rely heavily on customer contact and where these contacts dropped the most: retail, hotels and restaurants, arts and entertainment and schools. Our results can help quantify the economic costs of social distancing.

Fig 1. Patterns of interaction in the workplace.

Horizontal movement represents production, vertical movement represents interaction. (A) Each worker W works on a range 1/n of tasks, passing work n − 1 times. (B) Worker W and customer C engage in frequent interactions. (C) Each worker W needs physical access to a key resource R.

Fig 2. Teamwork and customer contact are highly correlated.

Each circle represents an occupation. Teamwork and customer contact indexes are constructed as explained in main text.

Fig 3. Workers in customer-facing occupations with face-to-face interaction can rarely work from home.

Filled circles represent the occupations where face-to-face contacts are more important than emails and memos. Hollow circles represent the occupations where emails and memos are more important than face-to-face contacts. The indexes are constructed as explained in main text.

Fig 4. Workers in teamwork-intensive occupations with face-to-face interaction can rarely work from home.

Filled circles represent the occupations where face-to-face contacts are more important than emails and memos. Hollow circles represent the occupations where emails and memos are more important than face-to-face contacts. The indexes are constructed as explained in main text.