This past week has been a dramatic change in the pace of life as we know it, to say the least. Living in New York City, working for a global organization, I am connected to both Corporate America and small to mid-size businesses. I have been able to crowd-source some interesting insights on COVID-19’s impact on both business and society at large.
The Markets seemed to have priced in a “V” shaped recovery, however experts I engage with are now expecting more of an “L” shaped recovery. Meaning the effects of this crisis will be prolonged, preventing a quick and active recovery even after the pandemic is over. Estimates point to a significant rise in unemployment in the U.S., to as much as 20% by the summer.
I have found it particularly difficult to develop a comprehensive understanding of this fast-moving landscape; thus, I am sharing my personal insights, crowd-sourced solutions and opportunities below:
- The travel, tourism and hospitality industries represent about 1 in 10 jobs on our planet. These represent approximately 320 million jobs globally, of which 50 Million are now at risk. Even after things return to “normal,” we are unsure how many of these jobs will be reinstated. Those workers who are displaced over the next 6 months, how will they survive? The industry is effectively in survival mode and will need financial support to protect the income of workers and zero interest loans to help rebuild.
- As a solution, let’s think about re-purposing spaces in this time of need. Can cruise ships be turned into floating hospitals and convention centers into medical care facilities? How can we re-purpose labor to fill the surge in demand from the healthcare industry? There is a massive need at call centers that are offering information to the public regarding the pandemic. Drivers are needed to deliver medicine and groceries to those that are quarantined or taking shelter within their own home.
- Gone are the days of soft money from venture capital funding companies with no profits (Uber, WeWork). With the dramatic shift in consumer sentiment, there will be a return to “value-based” business models. The Instagram-fueled, direct-to- consumer models creating businesses overnight are a thing of the past.
- There was a false sense of security that had developed among consumers, strengthened by year upon year of economic expansion. It became a dogma in our way of life, where we believed things will always be this affordable. It’s important to note that most Americans do not have a 6-month safety net; when combined with joblessness and disrupted global supply chains, I predict consumer demand will shift away from goods that are considered a “nice to have.”
- Small Businesses are simply shutting down; high rents (especially in big cities) are too prohibitive to run on diminished business models. Social distancing constraints are forcing restaurants to switch to delivery only, which are not sustainable for many. SME employers are forced to lay off employees and find solace in the fact that the new stimulus package will pick up their slack through unemployment benefits. My friends that run small businesses in New York City are being advised by their accountants to cut all expenses and preserve cash as much as possible to better position themselves to enter back into the market, once things subside.
- In this period of severe economic disruption, one question rises to the top: “How do we avoid the depreciation of assets, our employees and their skills”? We must set up training in a massive way, to prepare employees to return to the same jobs or secure different jobs with new skills in the upturn. Re-skilling has become a shared responsibility of both the employer and the government, and is ripe for private-public partnerships.
- There is a natural tend toward “nationalization” or in-sourcing the production of everything, at the cost of ignoring fundamentals of global supply chains. Closing borders has created a sentiment of backlash towards the global economy. The sentiment ignores all the benefits of price and expertise afforded at a country level specialization. There is a reason why American consumers can easily afford to buy goods at Walmart, Target & Amazon. We outsource to cheaper labor markets and take advantage of mass production. In-sourcing will lead to the erosion of consumer choice and the ramification will be a significant increase in price.
IMPACT ON OUR DAILY LIFE
- Information and our source of information is being constantly questioned. According to the Edelman Trust Barometer, employees are more likely to believe corporate communications over other media and government outlets. The proximity of their employer in their daily lives and a high level of politicization of our news cycle leads employees to trust information from their employer more than any other source. This provides an added layer of responsibility on corporations, and leaves open an opportunity for corporate leadership.
- Activist companies are being rewarded in this climate of public policy failures. Companies are being asked to step up and offer community-based solutions, such as providing school lunches to children in cities where schools have been closed. CEOs must be visible in setting new norms for everything from working from home to small yet critical good habits, such as washing hands.
- We have moved from the co-working spaces to working 100% out of our homes. For those who are not used to this environment shift, managing distractions has become the most critical barrier to productivity. Losing our office space and interaction with co-workers will also take a toll on innovation and creativity in the long run.
- In New York City we have switched to remote learning in schools. Parents are suddenly finding themselves with many more jobs as the primary teacher, guidance counselor, physical Ed. instructor and Principal. As parents try to balance their jobs, new opportunities in distance learning programs abound. Many parents would pay a premium to incorporate innovative education tools that lessen this newfound burden.
- Finally, I personally find a disparity in how seriously young adults are reacting to this epidemic. There is a big gap in perceived consequences of COVID-19’s effect on younger populations, partly due to the media focus on the elderly. Many of us live in mixed households comprised of several generations, or in large apartment buildings sharing elevators, exposing each other to significant risk. We need to remember that we are indeed all in this together. It’s almost certain that the devastation of this epidemic are a burden we’ll have to bear together, so let’s all try to do our part.