As of June 8, 2020, the United States is officially in a recession, but this recession started rather abruptly in February when businesses began being shuttered to prevent the spread of COVID-19. Businesses like bars and restaurants have been hit hard, as they have had to rely on limited service to remain open at all where possible and many have gone out of business for good as a result. Businesses where employees could work remotely made the shift rapidly, staving off an even worse economic disaster. This recession was different from previous ones because the cause was a global pandemic and businesses had to adapt quickly to a rapidly changing economic and legal environment. The global economy has been hit hard, but what will an economic recovery look like?
How This Economic Downturn Compares To Others
In previous recessions the changes have been gradual so that by the time a recession is confirmed it has already been going on for quite some time. This recession was sudden, clear, and obvious, and in fact legislative bodies at both the state and federal levels acted quickly to lessen the economic blow. This economic downturn is different in that it has affected different sectors very differently - big box stores are doing extremely well as are online stores with delivery options, while bars, restaurants, and small businesses are having a difficult time. This is in part because people are opting for fewer trips and instead getting what they can get at a big box store or by ordering it online to minimize exposure.
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A typical economic recovery is also gradual, with consumers and investors alike being wary and proceeding cautiously. But this one is unlikely to follow that pattern.
How Bad Is Unemployment Right Now?
In April of 2020, the unemployment rate hit the highest level it has been since The Great Depression at 14.7%. Though the rate has fallen steadily, it remains at historically high levels. In some states the unemployment rate is much higher than the national average - 43 states have had record-high unemployment and in some states as many as one out of every four people are out of work.
By May of 2020, some 21 million Americans were out of work, and 2.3 million of those lost their job without any possibility of being recalled back to work. Nearly 19 million people could feasibly return to work if their employers survive the shutdowns, but it seems that on a daily basis major companies like JC Penney, Stein Mart, J Crew, Gold’s Gym, Neiman Marcus, Pier One, Hertz, and more are announcing bankruptcy, restructuring, store closures, or worse.
How Has The Workforce Adapted?
The workforce has adapted to the new normal in a lot of different ways. Teachers have begun teaching students remotely, and places like community centers, museums, zoos, and church-based daycares and schools have stepped in to provide a safe place for kids to do remote learning while parents are working.
Grocery stores and big box stores have adapted hours so that seniors and those with medical conditions can shop in the early morning hours, and they have begun closing overnight instead of remaining open to both preserve manpower and to deep clean and restock the stores without needing to worry about customers.
Restaurants and bars have adapted with takeout service, food trucks, and even by selling merchandise to keep at least some level of cash flow going. Bars have sold to-go cocktails and cocktail kits.
For companies that operate offices, remote work has become the new normal. Anyone who had the ability to work from home has been asked to do so, which has prevented the economy from completely collapsing in on itself. The technology available today has made this economic recession and this pandemic different from the past.
The Past, Present, And Future Of Tech Innovations During Downturns
In previous economic downturns, necessity has become the mother of invention. The Great Depression brought us electric razors, car radios, chocolate chip cookies, and even the popular board game Monopoly.
The Great Recession of a decade ago brought us Warby Parker, Groupon, Venmo, Instagram, Uber, Slack, and more.
This recession is different, but it is being mitigated by technology more than anything else.
People have been buying up new technology, from laptops to webcams to headsets, and in fact the sale of Chromebooks has skyrocketed 400%, which has also bolstered economic stability.
Technology is allowing many people to continue to go to work and school, which has prevented a total meltdown. Technology is also allowing people to order groceries and food for pickup and delivery, it’s delivering telemedicine visits to people, and it’s keeping people connected through social media and teleconferencing. Much of the technology being used now has been around for a while but was underutilized and underappreciated until now.
What Changes Will Likely Be Around For Good?
The telecommuting revolution will forever be credited to the COVID-19 pandemic recession. Before the recession around 10% of American workers and 29% of college graduates were working from home at least some of the time. During the pandemic two in three Americans were working from home at any given time. What’s more, three in five want to keep working remotely after the pandemic is over.
Remote work has the ability to reshape the American workplace to make it better suited to work/life balance. Remote workers save money and time on commutes, work attire, lunches out, and more. It’s also a great way for working parents to balance work life with parenting responsibilities. Additionally, remote work offers people with disabilities accommodations that could be life and career-changing.
Remote work will also give struggling companies a chance to broaden their search radius for employees to help rebuild their companies after the recession ends. Companies will also get the chance to reevaluate the need for large offices and all the maintenance and expenses that come with them.
The Changing Landscape Of Cities
One of the major changes that could take place because of these technological employment changes is that people could decide to leave cities and work remotely from anywhere they can find a stable internet connection.
The Rural Electrification Act was passed shortly after the end of The Great Depression, and it created jobs and brought services to people in the most remote areas of the country. A universal broadband act could also bring reliable internet access to every American, increasing opportunities for those who don’t live in large cities and allowing those who do to choose to live in places with a lower cost of living.
This will solve the problem of higher housing costs in major cities as space runs out for people to be there in person as well as traffic and other issues that come with overpopulation.
What Will Recovery Look Like?
To lead an economic recovery, businesses need to:
- Prioritize remote work and flexible scheduling as people work to get their family lives back on track at the same time
- Invest in technology that helps give workers flexibility - this will help companies prepare for future pandemics/epidemics and other potential issues
- Push for universal broadband access
Once a vaccine or a cure is announced it is likely that an economic boom will occur. As businesses slowly resume normal service and begin to think about creating the future of work instead of getting back to business as usual, technology will lead the way to the economic recovery. Learn more about how tech will spur the economic recovery below.