The economy cools when the mercury rises
As the heat increases, our narrow comfort zones are exposed. Workers are most productive at “room temperature.” In fact, studies have shown that at temperatures above 77°F, workers experience a 2% loss of productivity for each additional 1.8°F increase.2 This likely explains why your office now feels like the Arctic Circle. Meanwhile, analysis of the American Time Use Survey found that on days with a maximum temperature above 85°F, workers with higher climate exposure cut their working day by as much as an hour.3
Heat has also been linked to a significant reduction in income per capita in the US, with average daily income declining 1.5% for each 1.8°F that daily average temperatures exceed 59°F.4 As Geoffrey Heal and Jisung Park point out in their review of research on climate and human health, this means that an 84°F day reduces the country’s annual income by 0.065%, and 20 such days a year would reduce income by 1.2%, equivalent to a minor recession.5
A sizeable portion of the US labor force is exposed to extreme weather—with 5 million people working in the transport sector, 7 million in construction and 1.3 million on farms. Overall, 58% of US workers are hourly employees,6 and many of the new jobs that have been added to the economy post-recession are part-time positions or in industries like construction that are impacted by extreme weather. Therefore, the sky bears watching this summer, especially with the hottest months of the year ahead of us. From record-setting heat to flooding in the Midwest, the weather could play an outsized, unnoticed role in the upcoming economic releases.
Want to read more? You can find previous publications of The Big What If on SPDR Blog.