Labor Day 2050: How Unchecked Global Warming Threatens Labor Productivity

First published on ClimateProgress.org, a project of the Center for American Progress Action Fund, which was recently named one of Time magazine’s Top 25 blogs of 2010.

Unchecked global warming will have a serious negative impact on labor productivity this century. Ironically, strong climate action would be a huge boost to productivity.

Here’s what we know: A 2013 NOAA study concluded that “heat-stress related labor capacity losses will double globally by 2050 with a warming climate.” If we don’t get off our current path of carbon pollution emissions, we face as much as a 50 percent drop in labor capacity in peak months by century’s end.

A number of recent studies have projected a collapse in labor productivity from business-as-usual carbon emissions and warming, with an economic cost that could exceed all other costs of climate change combined. Further, one expert reviewing recent studies warned that “national output in several [non-agricultural] industries seemed to decline with temperature in a nonlinear way, declining more rapidly at very high daily temperatures.”

Here is an important chart from a 2010 Ziven-Neidell paper for the National Bureau of Economic Research, “Temperature and the Allocation of Time: Implications for Climate Change.” It plots “the number of minutes in a day that individuals (who work in outdoor or temperature-exposed sectors in the USA) spent working as a function of maximum temperature (in Fahrenheit) that day.”

Productivity starts to nose-dive at 90°F and falls off the cliff at 100°F.

As for the cumulative impact, here’s a key figure from the 2013 NOAA study, “Reductions in labour capacity from heat stress under climate warming.”

If carbon pollution remains unrestricted, we are risking catastrophic drops in labor productivity.

Andrew Gelman, director of the Applied Statistics Center at Columbia University, summed up the research this way in a 2012 post: “2% per degree Celsius … the magic number for how worker productivity responds to warm/hot temperatures.” The negative impact appears to start at about 26°C (79°F).

This loss of productivity is by no means the most life-threatening of climate impacts when compared to, say, Dust-Bowlification and its impact on food security. But it is one of the most important unmodeled climate impacts that makes the likely cost of climate change far higher than standard economic models suggest.

If we stay anywhere near our current path of carbon pollution emissions, then as we move towards the middle of the century, a larger and larger fraction of our summertimes will be intolerable.

In a 2011 post, “Mother Nature is Just Getting Warmed Up,” I discussed this trend and newly-released research forecasting permanently hotter summers:

The tropics and much of the Northern Hemisphere are likely to experience an irreversible rise in summer temperatures within the next 20 to 60 years if atmospheric greenhouse gas concentrations continue to increase, according to a new climate study by Stanford University scientists…

“According to our projections, large areas of the globe are likely to warm up so quickly that, by the middle of this century, even the coolest summers will be hotter than the hottest summers of the past 50 years,” said the study’s lead author, Noah Diffenbaugh.

It’s worth another look at projected days above 100°F on our current emissions path, via the National Climate Assessment (NCA):

Yes, absent a sharp and deep reduction in national and global emissions, much of Kansas (!) by century’s end could well be above 100°F for nearly the whole summer. Labor Day will mean a return to those pleasant mid-to-upper 90s.

By century’s end, much of the Southern U.S. will see temperatures above 90°F for five months of the year or more, which is a stunning change from just the recent past (again via NCA):

It truly will be an endless summer over much of the South (see also NASA’s Hansen: “If We Stay on With Business as Usual, the Southern U.S. Will Become Almost Uninhabitable”).

So what does this mean for productivity? Prof. Solomon M. Hsiang wrote last year:

In my 2010 PNAS paper, I found that labor-intensive sectors of national economies decreased output by roughly 2.4% per degree C and argued that this looked suspiously like it came from reductions in worker output. Using a totally different method and dataset, Matt Neidell and Josh Graff Zivin found that labor supply in micro data fell by 1.8% per degree C. Both responses kicked in at around 26C.

Here is the key chart from Hsiang’s own work, which shows “national output in several [non-agricultural] industries … declining more rapidly at very high daily temperatures.”

This is essentially adaptation: One common way that healthy people respond to high temperatures is just to work less. NOAA notes an important caveat that may mean reality will be even worse: “In focusing on the capacity of healthy, acclimated individuals, this study also severely underestimates heat stress implications for less-optimally acclimated individuals such as the young, old, and sick.”

Hsiang states the central point:

It’s worth noting that reductions in worker output have never been included in economic models of future warming (see here and here) despite the fact that experiments fifty years ago showed that temperature has a strong impact on worker output (see here and here). In my dissertation I did some back-of-the-envelope estimates using the above numbers and found that productivity impacts alone might reduce per capita output by ~9% in 2080-2099 (in the absence of strong adaptation). This cost exceeds the combined cost of all other projected economic losses combined.

So the next time you see a projection of the economic cost from climate change — and a resulting social cost of carbon — you might want to double the numbers to get a more accurate picture of what we are risking by our callous inaction.

What makes inaction doubly tragic is that a rapid transition to a clean energy economy would be a tremendous boost to worker productivity. A 232-page International Energy Agency report from 2014, “Capturing the Multiple Benefits of Energy Efficiency” found that “the uptake of economically viable energy efficiency investments has the potential to boost cumulative economic output through 2035 by USD 18 trillion,” which is larger than the current size of the U.S. economy!

In particular, the report found that green building design can achieve health benefits — including reduced medical costs and higher worker productivity — “representing up to 75% of overall benefits.” That is, the non-energy benefits of energy efficiency upgrades can be three times the size of the energy savings.

This study also found that when the value of productivity and other benefits of industrial efficiency measures were factored into “traditional internal rate of return calculations, the payback period for energy efficiency measures dropped from 4.2 to 1.9 years.” In other words, payback time was cut in half.

So, climate inaction would severely harm labor labor productivity while strong climate action would strongly increase it. Not exactly a tough choice for policymakers to make.

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