COVID-19 will disrupt many established workplace trends
By Justin Fox
Over the past few months, the coronavirus pandemic has altered almost every aspect of how people around the world live their lives and do their jobs. In the months to come, it will continue to disrupt and transform routines. Sooner or later, though, the emergency will end. Lots of things will go back to the way they were before January 2020. Some won’t.
So much has already been written and said about the latter group of possibilities that I hesitate to add to the cacophony. But it may lend some structure to the discussion to sort the changes to come into three broad categories.
The first involves pre-existing trends that are being accelerated by the pandemic. The second involves trends that have been reversed by the pandemic. Then there’s … everything else.
Perhaps the most obvious case of a trend being accelerated by the pandemic is working from home. Doing so was actually more common back when tens of millions of Americans still lived on farms, shopkeepers lived above their stores and women sewed garments at home for piecework rates. But since 2000, which is around when broadband internet access began to become widely available, white-collar workers have driven a rise in the percentage of American workers who say they usually do their jobs from home, from 3.3% to 5.3%.
The percentage is a lot higher than that right now! Only 29% of employed Americans said they could work from home in a 2017-2018 Bureau of Labor Statistics survey. But given that those who can’t work remotely have been laid off or furloughed in huge numbers since March, nearly half of those who now have jobs in the U.S. have likely been doing them from home, estimates Adam Ozimek of the online labor marketplace Upwork.
My guess is that many of these people will be eager to return to the office when the pandemic is over. But large office buildings may not go back to full-scale operation for quite a while, and by the time they do many employers will have rethought their office-space needs, many workers will have rethought their commutes and many organizations small and large will have discovered new ways to collaborate from afar, with all sorts of consequences for office dynamics, business travel, commercial real estate and maybe even the shape of urban growth.
This growing freedom to work from somewhere other than the office will be empowering and liberating for some. But working remotely is for the most part a privilege of the affluent and educated, and some of the other trends getting a boost from COVID-19 don’t seem all that favorable for workers. For example, industry after industry in the U.S. has been growing more concentrated since 2000, and new-business formation has been on the decline a lot longer than that.
Yes, young companies gained a little ground in 2015 and 2016. But a new data series from the Census Bureau indicates that the formation of new businesses with hiring plans is down 32% since mid-March versus the same period last year, so that resurgence is over for now. Any economic downturn is going to favor strong companies over weak ones, but the particulars of this one seem to favor the giants even more than usual. Big tech companies are strengthening their grip as the pandemic progresses, and the fact that the five biggest such companies in the U.S. — Microsoft, Apple, Amazon.com, Alphabet and Facebook — account for more than 20% of the value of the Standard & Poor’s 500 Index and nearly 50% of the Nasdaq Composite Index explains a lot about the resilience of the stock market amid economic calamity. Buyout firms that target troubled companies have also been seeing big stock-market gains. Consolidation is accelerating, and while conditions for those employed by giant, profitable companies in technology and some other sectors can be pretty great, the overall bargaining power of workers suffers.
Another workplace trend of long standing is increased automation. Fears of a rapid, massive displacement of humans by robots haven’t yet been realized, but machines have been taking over human tasks for centuries, and the pandemic seems likely to accelerate this process, especially for jobs that involve people performing physical labor in close proximity to one another — from meatpacking plants to Amazon warehouses to, perhaps, commercial kitchens. The need for distancing will eventually abate, but once companies invest in machines that do some or all of the work, those machines are unlikely to go away. There’s also been a rush to enlist 3-D printers to solve temporary supply-chain problems that will likely lead to their permanent, often-labor-replacing use. Such innovations can drive the productivity growth that improves living standards, not to mention displace jobs that are objectively awful, so this isn’t all bad news. But short-term it again reduces workers’ bargaining power.
So much for trends that are being accelerated. The most dramatic reversal so far has been the end to the long rise of employment in leisure and hospitality. The sector, which includes restaurants, hotels, casinos, museums, gyms, sports teams and, of course, bowling alleys, accounted for almost a quarter of U.S. payroll job growth over the course of the just-ended expansion — and lost almost half of its jobs between March and April.
The damage to the industry is severe and will persist for quite a while. If government efforts to keep these businesses on life support falter, it could take many years to repair. But once the threat of the coronavirus has passed, or receded into the background of seasonal respiratory ailments, almost everyone is going to want to hang out with friends, go to restaurants, sports events and shows, and travel again. The upward trend will surely resume; the big question is just where the starting point will be.
A lot of the biggest questions about the post-coronavirus work environment will be answered by political action or the lack thereof. Will the failures of the mostly job-based U.S. health-insurance system in a job-destroying pandemic lead to major reforms? Will the greater toll the pandemic has exacted on the disadvantaged encourage efforts to reduce economic inequality? Will the safety net be reformed to address the effects of automation? Will renewed antitrust enforcement counter the trend toward consolidation? Or do I have the direction of change all wrong here, and what we should really expect is more government dysfunction and maybe some tax cuts? I DON’T KNOW! And nobody else does, either. Predicting what might happen seems far less useful than working to bring about the change you want to see.