The Indoor Impact of Extreme Heat

Asked about the economic impact of extreme heat, we could think of crop pickers, dog walkers, and delivery people. Instead though, let’s move indoors.

Extreme Heat

Through its impact on equipment and people, heat affects us indoors. Hit by fires and power outages, during July oil refinery output fell short of the 84 million barrel daily average they expected. At the same time, lacking air conditioning, manufacturing employees were hit hard. Working when temperatures exceeded 90 degrees, people got so dizzy and nauseous that they went home temporarily or permanently. Those that remained needed more breaks and made the mistakes that mental fuzziness can create. At a Kansas meatpacking plant, workers reported foggy goggles that blurred their vision.

It all adds up to the amount and quality of work.

Translated into lost time, we are looking at an estimated 2.5 billion hours a year. As dollars, it is $100 billion. As productivity, the decrease is 25 percent at 90 degrees and 70 percent with a whopping 100 degrees.

Our Bottom Line: Total Factor Productivity (TFP)

We care about extreme heat because it reduces the productivity that produces our paychecks and fuels economic growth. Actually, extreme heat is all about the basics. We are just talking about the three factors of production from which we make all goods and services.

We call it total factor productivity (TFP). Do take a look:

But let’s not stop here.

Taking another step into economic territory, we can follow a path that takes us to the negative externalities created by extreme heat. Defined as the harmful impact of a phenomenon that ripples far beyond its source, the negative externalities of extreme heat move far beyond the workplace.

My sources and more: Thanks to the NY Times Daily podcast for inspiring today’s post. From there Bloomberg had the details on oil refineries and the NY Times reported the overall cost. And finally, we downloaded from Pixabay the ventilator image that we featured.