Thoughts on Snowmageddon's Impact on the Economy


On most days, my work goes like this: something happens, I read about it, and I blog it. Today, I'm desperate for things to write about because the snow storm has shut down New York City and Washington, D.C., the two cities that create most of the news that I blog. If nothing's happening, then I can't read about it, and I can't blog it, and my productivity suffers. And I'm one of the lucky ones, since I can work at home while most jobs require something more than an Internet connection.

Scanning Twitter and away messages on Gchat, most of the thinking about this snow storm's effect on the economy seems to focus on the idea that we can kiss goodbye the $100 million we spend daily to run the federal government. But as you might guess, the actual economic impact of snow storms is a lot more complicated than a minus sign.

Stephen Gandel from TIME magazine has some interesting thoughts on the topic. Most interestingly, he gets me thinking about the clean-up effort. To shovel away the snow, the local government usually taps less fortunate workers for temp jobs. These workers are more likely to spend their next marginal dollar, making them prime candidates for government spending with a high multplier. Gandel goes on:

NYC is paying $12 an hour to people hired for snow removal. So some of that money will come back to the local government in the form of taxes. Yes, most of these people probably fall in a very low income bracket, but chances are they will spend most of the money they make, generating sales tax, and more economic activity ... Call it the snow stimulus.

Some analysis assumes that each snow day's hypothetical production is simply lost, forever. That misses something important. Anybody who's called in a sick day knows that your work doesn't just disappear. You have to make it up somehow, and often before a deadline that pre-existed your day off. Some productivity will be lost, but it certainly isn't equal to an entire day's work.

Or consider planned purchases. I need a new shirt and was going to buy one this week, until the snowpocalypse shut down DC transportation. I'm still going to need the shirt next week, and I'll buy one if this God forsaken blizzard ever stops. So my purchased was delayed, not canceled. This obviously doesn't hold for time-sensitive transactions. Like food. I won't pay for two lunches each day next week just because I've stayed inside and eaten Special K for the last three days. Those transactions are, in fact, lost in the snowblivion.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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