Will the workplace be the same?
After a year of shutdowns followed by phased re-openings and businesses that could not sustain that economic rollercoaster, the country faces a staggering loss of life, an unemployment rate of over 6 percent and the loss of about 100,000 businesses that have closed, possibly never to return.
What can businesses do to move forward and how will they look? Will anything ever go back to the way it was pre-pandemic or is this a time to embrace a new model for doing business?
According to Dr. Mark Zajack, professor of business and finance at Lycoming College, the pandemic accelerated change in certain industries.
“For a lot of jobs that could easily go remote, it has really accelerated the pace of change,” Zajack said.
“Technology is one big area where companies have increased the pace at which they sought to automate things. They sought to give employees the ability to work remotely and employ as many technological solutions as they could to keep employees productive even then they’re out of the office,” he added.
Illustrative of how technology has crept into the everyday business model is the use of ZOOM for business meetings, which before the pandemic was practically unheard of. Now, Zajack feels, that is not likely to totally change back to what was considered the norm.
“I don’t think it will return to our previous model, entirely,” he stated.
“I think a lot of companies hesitated to have remote workers because they weren’t sure that they could ‘manage’ the workers as well as is they weren’t in the office. I think that perspective has changed for the better where companies now understand that people can be productive even when they don’t see them in the office. So maybe the increase level of trust by managers will help the employee experience,” he explained.
In addition to increased productivity, another benefit which may be realized from being able to work from home remotely or to use flexible hours is increased employee well-being.
“By giving employees more power to control their work, to control their work schedule, you’re really empowering the employees to make those decisions that managers used to make for them. Research indicates that when people want to work remotely and they get that opportunity, they can be more productive than they were when required to come to the office,” he added.
Although Zajack believes there are benefits in working in a remote model, he feels that some people do long for the social aspects of interacting with co-workers. That some employees miss the “hallway conversations.”
Ideally the new business model would incorporate both remote and in-person worktime–basically a hybrid.
“I think when we do go back to normal, not everyone will go back to the office five days a week as they used to, but I think there will still be a place in most companies and most industries for getting together in an office and seeing people in person,” he predicted.
Pre-pandemic, the idea of working remotely was not even on the radar, with the pushback being that business had always been conducted a certain way, so why change it.
“I think the pandemic, having been forced to change things so much, that may have pulled people out of that default mode and there may be a little bit more flexibility,” Zajack said.
The loss of half a million people from the economy, although the numbers significantly skew to older members of the population, may still have some affect going forward.
“The sheer number of people we lost during the pandemic, on its own would not have a huge impact on the job market. But certainly, with all of the job loss that happened simultaneously and multiplying the number of people affected by the deaths of loved ones, we will see kind of that lasting effect of saying this is the way things were before. Now, we have this post-pandemic new normal whatever that turns out to be,” he said.
Looking at history, a comparable event to the pandemic, in terms of the number of lives lost, would be World War II where around 420,000 Americans died. Following the war, both the United States and Japan experienced one of the most robust economic growth and reset in economic history, according to Dr. Elizabeth Moorhouse, associate professor of economics at Lycoming College.
Moorhouse detailed the reasons for this. She said that first of all, most of the fighting was done in Europe. This meant that in the United States, infrastructure was intact. Cities weren’t destroyed and factories were still up and running.
“So, that was good. And, any lessons learned through the war effort in more efficient ways to produce goods and services, after the war those lessons could be shifted to the production of consumer goods,” she said.
“I thing there’s parallels to this, so this pandemic has forced firms to adopt new ways of doing things. People have lost jobs in the process, but I do thing there are some efficiency gains that we’re learning through this episode that will carry over to the post-pandemic world,” Moorhouse added.
During World War II, people were also asked to make sacrifices for the war effort, such as not eating as much meat, don’t consume as much now or loan your money to the government, in order to free up resources to produce more military goods.
“There was a lot of pent-up demand in kind of econ lingo. So, American consumers were really eager after the war to start spending again. The economy was growing, incomes were rising so, there was that kind of the surge in consumer spending,” she said.
Moorhouse compared that time in history to what could possibly happen after the current health crisis ends.
“I do think we’ll see that to a certain extent after this pandemic is over. I know so many people are eager to travel. Eager to eat at restaurants. Eager to get together with friends and family to celebrate all the things that we can’t really celebrate in the same way,” she stated.
Moorhouse also believes that along with the surge in consumer spending will come strong economic growth.
“Now, will we actually get to where the economy was before the pandemic started, that’s more unclear. I think we’ll see growth, but how long it takes us to do a full recover, it could be years, especially with labor markets,” she cautioned.
Moorhouse, like Zajack referenced the increase in the number of workers who have switched to a remote model during the pandemic, She cited statistics that showed that pre-pandemic only between 5 and 10 percent of workers in this country were working remotely. The estimate today is that figure is about 40 percent. Some may not be working entirely at home, but are at least attending meetings remotely.
Although she predicted a decline in that number after the pandemic, Moorhouse stated that she doesn’t believe it will ever return to pre-pandemic rates.
One positive aspect of this acceptance of this trend is that workers can seek out employers who offer that option.
“Economists talk about job match. So that is that is the quality of the match between employer and employee. So, if more employers are willing to offer remote work to their employees, then employees who really value that can seek out employment opportunities that offer remote work,” she explained.
Working remotely also offers a disconnect between where you live and who you work for.
“Those two decisions are no longer tied together,” Moorhouse pointed out.
She noted that there has been a trend of people living in densely populated urban areas choosing to move out of the city, because during the pandemic, they were “sick of doing stay at home orders in 800 square feet small apartments.”
“If they can remote in, that’s going to be a growing trend,” she said.
Although there are advantages to working remotely, there are also disadvantages. Obviously not all jobs can facilitate it and those jobs are the ones that will be affected if a large number of workers are removed from an area where they work, shop and frequent local restaurants.
“If remote work displaces a meaningful fraction of professional office time and business travel, like daily commutes and also business trips, conferences and such, it’s going to mean a steep and permanent decline in demand for workers to clean office buildings…for security, hotel workers, restaurant staff, taxi drivers, Uber drivers. All those services that really catered to people who were doing lots of things outside of their home. Those industries are going to probably be permanently reduced as a result of this,” she stated.
She added that although she does not like making bold predictions about the future, she feels that this is a relatively safe conclusion.
Another downside of this is the fact that many of the workers in these service jobs do not have post-secondary education. Before the pandemic there was a decline in manufacturing jobs that didn’t require a college education or higher, Moorhouse said.
“They were shifting toward these more service jobs, so, I’m a little worried where these workers are going to find themselves, if after the pandemic this shift to remote work is a permanent and lasting one. It definitely has a domino effect,” she added.
A growing trend by warehouse and factories, like meatpacking plants, to replace workers with technology and automated machines was prompted, in part, by the pandemic’s mitigation requirements, but is it here to stay?
“That trend has always been part of the U.S. labor market, but man, did this really pick that up,” she said.
“In meatpacking plants in the Midwest there were a couple of really bad cases of COVID…they hastened up their pace of trying to automate some of those tasks that workers used to do, in the name of safety for their workers. If they adopt this new technology they’re probably going to stick with it post-pandemic,” she added.
Being an optimist, Moorhouse said that she doesn’t feel that human workers will be totally replaced by machines.
“I think that if we can adjust these productive, efficient ways of doing work, then the talent of workers can be redirected to other places where machines are not so good,” she said.
“I am the optimist that in the long run if we can harness new technology to help us produce goods and services more cheaply, using fewer labor resources, then we can just direct that labor right into the types of things that machines are not very good at and it’s the face to face, personal interaction sorts of jobs that hopefully we will be able to return to,” she added.