What is the Pandemic Changing in the World?
The COVID-19 pandemic is changing just about everything. It is getting us to re-evaluate our lives, businesses, relationships, how we spend our money and time, and what is important in life. To me, that feels like just about everything.
This post was largely inspired by Josh Bersin’s post The Pandemic Is Changing Society and Business In Amazing Ways. Josh refers to this as Big Reset.
I want to give you my view as an expatriate living in Mexico and experiencing the pandemic in a foreign country. As I get to read American news sources, I would just like to reassure you that my wife and I are actually safer in the state of Jalisco in Mexico than we would be back in Texas.
What is the Pandemic Changing? The Economy and How We Measure It.
This pandemic is changing the structure of our economy in multiple ways. The United States economy is driven by consumer spending. As long as we keep buying “stuff”, the economy grows and prospers. We are coming out of lockdown of many months where, except for food and toilet paper, we largely stopped buying “stuff”.
Retail Sales Have Dropped
Retail sales dropped by almost 20% in April and recovered some of that in May. However, the spending drop is not evenly divided across societal groups. According to the NPR article The Rich Have Stopped Spending And That Has Tanked The Economy, where author Scott Horsley interviewed researchers based at Harvard, the rich have largely stopped any discretionary spending. Scott writes:
“When the stimulus checks went out, you see that spending by lower-income households went up a lot,” said Nathan Hendren, a Harvard economist and co-founder of the Opportunity Insights research team.
However, the wealthy are not matching them. “For higher-income individuals, that spending is still way far off from where it was prior to COVID and it has not recovered as much,” Hendren said.
That’s potentially crippling because consumer spending is a huge driver of economic activity. In fact, so much of the country’s economy depends on shopping by the top income bracket that the wealthiest 25% of Americans account for fully two-thirds of the total decline in spending since January.
The drop in spending of the wealthiest 25% of Americans will have long-lasting effects.
How has your spending changed?
What is Being Disrupted?
The largest drops in spending have occurred in restaurants, travel, and hospitality. These are industries that are not quickly coming back. I wrote about how the aviation industry is being gutted in a previous post. This will cause many downstream disruptions in industries you would not have associated with aviation, like the automotive industry (read below).
Listen to the Wall Street Journal podcast episode, How Hertz Went Bankrupt, and you will start to understand the pandemic was just a trigger for many systemic problems in our economy. Hertz held more than $19B in debt and is now dumping cars on the used car market. 20% of all car purchases are made by fleet customers, think about what this will do to the auto industry.
Now is a great time to buy a used car!
How We Measure Economy is Broken
The May US unemployment report showed the economy was rebounding much faster than expected, but well… it had a glaring error.
This pandemic has brought in a whole new employment classification – furloughed. It is assumed that all of those furloughed employees will return to their employers and therefore, are not really unemployed. Well, that might be true but with the Payroll Protection Program that might not be true. The problem is this program and others that are part of the CARES act expire this year.
Any career professional who was around during the great recession will tell you that U3, the official unemployment, is a lousy measure of real unemployment. This is only further being exposed by this pandemic. We have so many in our population whose employment status does not fall neatly in the employed versus the unemployed buckets.
Then there is the whole concept of Gross Domestic Product. GDP has been described as a terrible metric for success and wealth for many years. This pandemic only further exposes its weaknesses.
What is the Pandemic Changing? Our Health, Healthcare, and Healthcare Workers!
Our own personal health has been exposed as the major factor in whether we survive a COVID-19 infection. The oldest of us have died in the greatest numbers only to be followed by those with pre-existing conditions like diabetes and high blood pressure. We are responsible for our own health which includes eating healthy and exercising.
There has been a massive shift to cooking and eating at home which will actually make us healthier. Check out the NY Times article How Covid-19 Is Making Millions of Americans Healthier.
We have seen a rapid shift to telehealth that is unprecedented. My wife recently was scheduling a doctor’s appointment back in Austin and was told that she would not be allowed in the office. Instead, they scheduled an appointment over Google Meet.
Due to a recent shift in HIPAA standards, which could be temporary, telehealth has become a standard way to see medical professionals. This shift is so rapid that it is hard to believe we will ever go back.
Never has there been a greater appreciation for the healthcare workers in the world. In cities around the world, there is a daily celebration for our healthcare workers. Check out these videos in the article from Business Insider Watch people in cities around the world cheer from their windows and rooftops at the same time to thank healthcare workers and first responders.
At the same time, there is a real concern for the physical and mental health of our healthcare workers. Many of our healthcare workers and first responders are suffering (or will suffer) from PTSD and burnout which will have long-lasting effects on our healthcare systems for years to come.
Has your opinion of healthcare workers changed this year?
What is the Pandemic Changing? The Workplace!
Remote work is here to stay. There are so many companies that did not believe that letting employees work remotely could work. They have been proved wrong by this pandemic.
Prior to the pandemic, only about 7% of workers worked remotely. It has been estimated that up to 50% of workers are working remotely today. Some of these workers will return to the office but most companies will not be returning their employees to the workplace this year. I have had long discussions with several HR consultants and they said that companies have spent years cramming more and more employees into open offices. The open office is the polar opposite of what is needed in the post-COVID-19 world.
The office of the future will look different.
Not everyone can or even wants to work remotely. We have seen massive COVID-19 outbreaks in places like meat and poultry processing facilities. Those workplaces will change.
You have probably walked into a Costco store and found a plastic barrier to protect cashiers. I doubt those plastic barriers will go away in the post-COVID-19 world.
Whether you will end up working remotely or working in the workplace, it will look different in the post-COVID-19 world.
What is the Pandemic Changing? Transportation!
With many more people working remotely, the concept of the commute to work will change. We will be getting into our cars less and less. Mass transit ridership has plummeted during the pandemic. It will also be interesting to see the effect of mass transit.
Many of us are walking and cycling more because of the pandemic. There are discussions among urban planners again on whether dense urban communities make sense in the post-COVID-19 world.
Business travel has plummeted during the pandemic. A lot of business travel is oriented around meeting people face to face. Some of this travel will not return because we have figured out we can do this over video. There will also fear of getting back onto an airplane.
Are you driving less? Will you be getting on an airplane anytime soon?
What is the Pandemic Changing? How We Interact!
A couple of months ago I was on a Zoom call and I asked what people wanted to do when the pandemic was over. One woman said she wanted to start a business giving hugs. We all chuckled and then multiple people chimed up and said they wanted to be her first customer.
Are the days where we shake hands over? What about hugs?
Will we just have to be satisfied to bump elbows or fists?
Will social distancing become the norm? I live in Mexico where giving a hug or kiss on the cheek is socially acceptable and at times expected.
One surprising fact is the pandemic is causing a decrease in the birth rate. According to the Washington Post article ‘Covid baby bust’ could lead to half a million fewer births next year. I will let you read the article to figure out why.
How has it changed how you interact with people?
What is Not Changing?
We will still breath air and…I am not sure what will not change.
I have not discussed the environment, mental health, and many other aspects of life.
My goal is to get you to think about how things might change – and prepare yourself.
What have I missed? Comment below.Marc Miller