Costs from labor losses due to extreme heat in the USA attributable to climate change

Extreme heat is already occurring more frequently and with greater intensity, with this trend predicted to continue. Exposure to extreme heat causes labor supply declines, but studies to quantify the economic effects from future climate changes are limited. In this study, we adopt two different exposure-response functions relating extreme heat to the loss of labor working minutes or labor productivity. We estimate that temperature differences between 2006 and 2016 relative to 1980–1990 led to labor losses of ~$1.7 billion annually in the USA. Under the high emissions RCP8.5 scenario, approximately 1–1.8 billion workforce hours will be lost annually in the 2050s, and 1.5–4.4 billion hours will be lost by the 2100s, depending on the exposure-response function used. The lost hours lead to an estimated $51–119 billion in losses by the 2100s, without considering future climate adaptation, demographic, employment, wage structure, or economic changes. Whereas 2006–2016 losses correspond to 0.07% of the 2016 GDP, the 2100s losses rise roughly fourfold to 0.3%, which are mainly caused by the increases of extreme heat conditions with population growth a secondary factor. With the climate change mitigation strategies of the RCP4.5 scenario, 600–2600 million hours of lost labor per year could be avoided in the 2100s, saving $20–78 billion depending on the chosen exposure-response function. We also evaluated the effect of decarbonizing the energy sector in a manner consistent with the 1.5 °C target of the Paris Agreement, finding that these lead to ~77 million avoided lost work hours worth ~$2.5 billion annually by the 2050s with global collaboration but insignificant impacts with US action alone. Though uncertainties and limitations exist in the study, we find that extreme heat will cause large economic losses to US businesses, especially in southern states (from California to Florida), though widespread climate change mitigation has the potential to substantially reduce these losses. We find that uncertainties among the exposure-response functions used to derive the economic effects of extreme heat on labor are much larger than those from the climate models. Previous studies using only one exposure-response function may exhibit substantial biases and likely underestimate uncertainties associated with the effect of climate changes on labor.