The polar vortex – which has caused temperatures as low as negative 14 in the state of Michigan and claimed the lives of three Michiganders – is causing problems throughout the state regarding government and businesses.
State government – along with several local governments – have shut down due to the cold weather. Many school districts and even several colleges closed, as well. Essential services, such as police, fire departments and road clearing have remained in operation, but many other government services, including mail delivery, was suspended.
Apart from schools and governments, private businesses are feeling pain. While some, such as 11 General Motors plants in Michigan, have completely shut down for the time being, others are being affected in other ways. Ford announced that the cold weather was harming some of its production, and the closure of highways and freezing of pipes is causing trouble for several other occupations.
“There have been issues with extensive energy use; Consumers Energy has asked businesses to lower their thermostats to conserve,” Jeffrey Beck, an associate professor from Michigan State University, said in an email. “Hospitality businesses have issues because people are not traveling, dining out, or staying in lodging properties. On the flipside, lodging properties that are near interstates may have the opposite problem – travelers are stranded because highways are closed (obviously depends on location). Frozen pipes and water mains can affect all businesses, not just hospitality business.”
Delivery workers, he said, are being disproportionately harmed by the cold weather. Additionally, beverages, such as beer, cannot be delivered because they will freeze in this weather.
Economist Anthony Davies said in an email that hourly workers are likely the most harmed by the polar vortex.
“Hourly workers are clearly harmed, and the harm can be quite bad,” he said. “Businesses that need to play catch-up after the shut down may offer more hours, allowing hourly workers an opportunity to catch up on their lost wages. But, for those with little savings, that could mean they're having to borrow to meet basic living expenses during the shut down and then paying those loans back with interest over time.”
But even though the weather is causing certain problems, both economists said that most of the problems will be short term. Except for dealing with snow movement, Beck said there won’t really be long term problems. Weather in the state is expected to warm up extensively this weekend to temperatures that will allow people to resume work as usual.
Davies pointed out that even if a business stays shut down for the entirety of the week, that this would only be two percent of the work year, showing that there will not be many long term effects. Additionally, not all businesses shut down, and the ones that did will have plenty of time to make up for lost production, he said.
Alternatively, some businesses may benefit in the short term, because cold weather and the aftermath of cold weather can create work for plumbers, carpenters, insulation retailers and installers, as well as the electric company, Davies said.
Yet, despite some businesses actually benefiting from the weather, Davies said that the cold weather will certainly not be an overall good for the economy.
“Every dollar we have to spend on protecting ourselves from the freezing temperatures is a dollar we no longer have to spend on other things,” Davies concluded. “So, in total, economic activity doesn’t increase. It merely shifts from the some sectors of the economy to other sectors.”