As I type, no one really knows. However, if history serves as a guide, the most highly educated, the most productive, the most highly or uniquely skilled, and the most creative US workers will probably do just fine. They almost always do. The reason is simple: labor competes the same way businesses do, either on price or on product. Since governments at all levels set minimum wage requirements, it is almost impossible for labor to compete on price alone. As a result, US workers are increasingly in two camps: those that can compete for highly skilled and highly compensated jobs and those who can’t.
Therefore, as is the case with all recessions and other economic slowdowns, the less educated, the less skilled, and the less profitable participants in our workforce will be most impacted by the COVID19 pandemic.
If only a portion of the predictions we have made in this series comes to pass, workers around the world will have to adapt to the changes in the new normal or have the global economy leave them behind. Since the new normal we envision involves an increased use of technology in how we live our lives and conduct business, the average worker will have to become more proficient in their use of it. Even jobs which you wouldn’t imagine would use much advanced technology, like massage therapists, will have to make full use of it to better market themselves, book appointments, and even bill their clients.
To that end, I can’t count the number of times I have opted for the vendor at the farmers’ market or antique mall who uses a payment method like Square or Venmo over the ones who don’t. While this might seem like a relatively minor adaptation of technology, the ones who adopt it first will have an advantage over their competition. Trust me, the booths that take Square always close earlier than the ones that don’t.
Essentially, the workers who adapt the best will find they won’t be as constrained by corporate structure as they were previously. In this environment, the creative among us should thrive. They have always had the idea generation; however, their adaptability and increased use of technology will give them access to more efficient production and distribution channels. For example, it isn’t terribly difficult to envision an industrial designer manufacturing their ideas using a 3-D printer, and selling their products through a number of different outlets.
Prior to the COVID19 pandemic, the so-called ‘gig economy’ was becoming increasingly sophisticated. According to Investopedia.com, key takeaways of a gig economy are:
- The gig economy is based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform
- The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
- At the same time, the gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients.
If left undisturbed, the gig economy will flourish in the new normal which follows. Younger workers will make full use of existing technology to perform handyman jobs, babysit, run errands for clients (Shipt comes to mind), drive for ride-share companies like Uber or Lyft, make deliveries for companies like Amazon Flex, and even do creative and professional work on platforms like Fiverr and SpareHire. Companies will also get into the act and develop their own ‘gig economy’ applications. This will ultimately reduce the need for FTEs (full-time employees) moving forward. Again, this assumes the powers that be leave the gig economy undisturbed.
Unfortunately, politicians will probably put pressure on ‘gig employers’ to turn their 1099 contract workers into W-2 FTEs, with benefits, especially at the state and local levels. Obviously, this defeats the purpose and benefits of the gig economy, and will limit the opportunities for workers (especially younger ones) as the economy slowly adopts to the new normal. As is often the case, well-intentioned actions will have ironic consequences.
Further, the powers that be at all levels of domestic government will enact or otherwise pass a number of new rules/regulations in attempt to mitigate job and income losses during subsequent pandemics and/or economic downturns. Necessarily oblivious to the fact government mandated lock downs were the proximate cause of the economic downturn, politicians will concoct all sorts of restrictions and procedures which will inhibit companies from operating efficiently. Many of these will be innocuous sounding and supposedly in the public good, such as limiting the number of people in a store to a pre-determined level. However, the costs associated with these rules will be enough to be a burden on many small businesses or branch offices of larger employers.
Globally, emerging economies will likely struggle with the new normal. As the former 1st World struggles with its debt load and its own problems, former 3rd World countries will lack access to capital and markets for their limited goods and services. As we discussed in a previous segment, some countries will benefit from China’s Belt & Road Initiative, but China will be quick to jettison those which don’t fit into its longer-term plan. It was one thing to ‘throw money around’ to limit the Western world’s influence. However, as the latter retreats from low income countries, Beijing won’t feel as compelled to help those countries which don’t have any real value to the Middle Kingdom.
When you look at everything together, the new normal will benefit those:
- who have access to capital
- who are relatively well-educated, trained, and/or creative
- that are easily adaptable, especially when it comes to technology.
Those that don’t meet or have these characteristics will be detrimentally impacted, and fall even farther behind.