To see the version published in the Lincoln Journal Star, click here.
The pandemic that is affecting every state in our nation did not discriminate and has hit us here at home in Nebraska. From March 14th to March 21st, initial unemployment claims rose 1,871% from the previous week. However, there are policy steps that can be taken to help the economic restoration of our great state not only during this emergency, but afterwards as well.
It is a fact we are in a recession, both nationally and in Nebraska. The economic definition of a recession is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters”. Because Q1 ended March 31, and the quarantines have not been lifted, it is safe to say that GDP will drop for both Q1 and Q2 indicating a recession.
Many have been making comparisons of this recession to the financial crisis in 2008/09. These are two very different events and cannot be resolved the same way.
The Great Recession, like most others, showed signs of a contracting business cycle well before a formal recession was recognized. However, this recession happened almost overnight. In the span of one month the nation’s economy went from an all time high to a screeching halt.
During most economic downturns the focus is solely on fiscal solutions like taxes and spending. We saw large amounts of spending by both federal and state governments in 2008/09 to prop up the economy, however, in this situation no amount of spending will put people back to work. Our economy cannot go back to normal until quarantine and shut-in orders are lifted and businesses can operate under normal conditions again.
While Nebraska will see a jump in unemployment, Medicaid and SNAP as a result, there are flexible and creative ways to keep Nebraska’s economy from collapsing to help mitigate the impact. While some lawmakers and advocacy organizations have already requested more spending or an increase in taxes, these will not help during this time of emergency or afterwards when sanctions are lifted.
One solution is for Nebraska to lift or suspend regulations to encourage new business and creativity in the private sector. This will help to counteract some of the lost economic activity and unemployment due to the COVID-19 crisis and hopefully pave the way for a less burdensome regulatory climate after the pandemic.
An obvious example are health care regulations. In fact, over half of the states have suspended or waived some sort of health care regulation to help combat the effects of COVID-19. In Nebraska, Governor Ricketts signed an emergency executive order relaxing the state’s licensing restrictions for health care workers. This allows licensed professionals from other states to practice in Nebraska if the need arises.
Not only is this good at time of crisis, this is also a step the Legislature should make permanent through universal licensing. People don’t lose their skills just because they are from another state, and we shouldn’t have to wait for a crisis to welcome skilled workers to our state.
And while lifting regulations is beneficial for those in the medical field, there are numerous other regulations that can help other sectors of our economy.
Nebraska has already waived certain hauling requirements for truckers delivering food and supplies to ensure stores can get the supplies they need. This has allowed grocery stores and other essential retail outlets to hire more employees to meet the growing demand.
And as a result of restaurant closures, many are adding delivery services for the first time. This is allowing servers and bartenders that would otherwise be unemployed a job by delivering meals. After this crisis is over, there will be an expectation that many of these restaurants will continue to deliver food which will ultimately add jobs to our workforce.
Another example of creativity is Omaha’s Brickway Brewery and Distillery. Once their taproom closed, business was cut by more than 75 percent. However, thanks to a regulation ease and the federal government suspending the excise tax on distilled spirits used to make hand sanitizer, Brickway is now making and distributing hand sanitizer to help curb the national shortage. While Brickway isn’t charging for the hand sanitizer right now, maybe a new product will emerge after this crisis is behind us – instead of craft beer it will be craft hand sanitizer.
And this is just the tip of the iceberg. There are many more regulations in Nebraska that can be relaxed as a response to COVID-19 to remove barriers for entrepreneurs.
So as we work through the current crisis, and our Governor works with the federal government to attempt to mitigate the threat of COVID-19 to our health, as well as trying to provide temporary relief to those most affected financially, let’s look ahead to ways that we might emerge from this time with an even stronger and more robust economy in our great state.