Heat waves are a drain on the economy. And they’re getting worse.
Heat waves are a drain on the economy. And they’re getting worse.
It’s only mid-June, and huge swaths of the country are already experiencing — or bracing for — major heat waves. More than 70 million Americans are under extreme heat alerts, and temperatures in parts of the West have been above 100 degrees.
The Midwest and Northeast are the next regions headed into the oven.
During the winter months, we often hear about cold weather and snowstorms playing havoc with retail sales or other economic activity, but there’s growing evidence that summer heat waves take a big economic toll too — and that their impact is growing as the climate warms.
On a recent really hot day, workers were fixing masonry on the roof of Amir Jina’s building.
“And the head contractor said, ‘During the hotter parts of the day, I’m just not going to send out people to work,'” he said.
Jina, who’s an assistant professor of public policy at the University of Chicago, said the contractor was worried about the health effects on the workers — and the potential for costly errors amid the heat. So the crew took more time to finish the job.
“Probably would have taken two days, ended up taking three or four days just because they needed to stop,” he said.
This happens in a lot of industries when temperatures become unbearable and it’s unsafe to work outdoors.
“All aspects of the economy slow down,” said Solomon Hsiang, a public policy professor at the University of California, Berkeley.
He said heat can lead to more accidents on the job. It can also increase health care costs, strain the electricity grid, reduce crop yields and depress overall economic output.
“The real challenge with this kind of slowdown is that we don’t usually see that we ever catch up again,” he said.
Hsiang said that after a heat wave, the economy can get back to its normal baseline of productivity, but we often don’t make up for what we lost while it was hot.
And with more intense and frequent heat waves as the climate warms, that could have a lasting impact on the economy.
“A lot of little heat waves can add up to having this very large effect on overall economic performance in the long run,” he said.
We’re already seeing that. According to research out of Dartmouth College, increased heat waves due to climate change erased at least $16 trillion from global gross domestic product between 1992 and 2013.
Justin Mankin, a Dartmouth professor who co-authored that paper, said governments and businesses are adapting by installing air conditioning in more warehouses and schools, putting out warnings ahead of heat waves and reducing work hours when needed.
“And so, you need to weigh that cost of lost economic productivity against the costs of adaptation investments,” he said.
In general, he said, those investments are usually cheaper than the economic losses caused by heat.
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