Your Economy (No Politics)

[al44]

Forget about returning to jobs as usual after coronavirus

By John Steele Gordon April 2, 2020 | 8:16pm | Updated


With the pandemic raging through the country, forcing the shutdown of much of the American economy, the unemployment rate — a measly 3.5 percent in February — has gone through the roof.

Just in the last two weeks, new applications for unemployment benefits have reached an incredible 9.9 million. That’s 6 percent of the entire workforce. That’s about as many job losses as there were in the entire 2008-2009 ­recession.

Undoubtedly there are more layoffs to come as companies still operating find they must reduce labor costs during the deep recession the pandemic is creating.

But more than the immediate pain, this crisis is likely to reshape the economy permanently.

In good times, when business is profitable and getting more so, many bosses avoid making hard choices. Inefficiencies are ignored, new labor-saving technology is not installed, under-performing employees are tolerated.

But when the bad times inevitably come, suddenly executives have no choice but to run the tightest ships possible and labor costs are usually one of the easiest variables to control. And those lost jobs don’t come right back after the economy once again turns up.

Sharp recessions, often caused by a single event such as today’s pandemic, are usually followed by equally sharp recoveries. The curve, in other words, is shaped like a V. Let us hope that is what happens here, but it’s by no means guaranteed. After having been forced to cut back, many companies are likely to decide to try to move forward with less — at least at first.

Some jobs are just not going to come back. Most restaurants in the country are closed right now, at least for in-house dining. A fair number in all likelihood will never reopen. Restaurants are a labor-intensive, low-margin business in the best of times and many close every year anyway. The pandemic will undoubtedly push many over the edge.

And it’s likely that some of the customers who are, for the first time, taking advantage of the takeout service now being offered by many restaurants will find they like being able to eat restaurant food at home. So they will continue to do so after the pandemic is over with. That will mean fewer jobs for waiters, busboys and dishwashers.

We live in economically revolutionary times with the ongoing digitalization of the world. Some of the expediencies that have been resorted to in the pandemic, such as increased working from home and teleconferencing, may well turn out to be simply a better way to do things. That will have consequences.

If, for instance, a significant portion of the working population — and their bosses, of course — find they can work just as well from home, they are likely to increase doing so. That, in the long run, will mean fewer jobs for transportation workers as the volume of commuters declines.

The explosion of teleconferencing that is taking place among families and friends (the stock price of Zoom has shot up in the last few weeks, despite the stock market debacle) will undoubtedly subside. But it won’t return to pre-pandemic levels. That, too, will affect the travel sector of the economy.

On the plus side, however, Americans today are far richer than they were, say, in the 1930s, and a far higher percentage of families have substantial financial assets and credit lines to see them through the crisis. Once it is over with, they will be in a much better position to resume normal life than were the millions destituted by the Great Depression.

John Steele Gordon writes for Commentary.

https://nypost.com/2020/04/02/forget-about-returning-to-jobs-as-usual-after-coronavirus/