Normal 2.0
By: Tj Magno
Tags: Technology, Economics, Business, Politics, Psychology

The world will look different after the COVID-19 pandemic passes, as methods of human interaction may be fundamentally and permanently altered. Decentralized workforces and an increasing reliance on the internet for facilitating exchanges will fan the flames of the developing digital world. Economic reconstruction will only accelerate this transition online, and those who cannot adapt to the economy of tomorrow will form an increasingly isolated social class that struggles to get by.

The COVID-19 pandemic has fundamentally altered the nature of human interaction. Those who are still employed are working from home now more than ever before. Children are attending school virtually through Zoom and Google Classroom from the comfort of their own bedrooms.

As we continue adapting to life during stay-at-home orders, the economy continues to struggle.

At least 36 million people have filed for unemployment since the COVID-19 pandemic began in March. A Washington Post/Ipsos poll conducted between April 27 — May 4 suggests, however, that unemployment is even worse than the headline 14.7% U-3 unemployment as of April 2020. According to the Post/Ipsos poll, 40% of laid off workers have not filed for unemployment, and 84% of respondents in this group stated that they do not plan on filing for unemployment within the next two weeks.

Chart taken from unemploymentdata.com

Perhaps 40% of laid off workers believe the economy and country will return to normal shortly. Why bother applying for unemployment if you will soon be back at your job, assuming you have enough in savings as a buffer?

A “return to normal” will not bring the United States back to life as it was before the pandemic. Businesses have been forced to scrutinize their capital expenditures and cut costs wherever possible in order to stay ahead or simply stay afloat. Macy’s furloughed most of its 130,000 employees, and J.C. Penny, an employer of roughly 90,000 people, filed for bankruptcy.

According to economists at the University of Chicago, an estimated 42% of job loss due to the COVID-19 pandemic will be permanent. Companies like Macy’s and J.C. Penny will be forced to adapt in order to compete with online retailers like Amazon; the e-commerce industry is booming, and human labor is becoming obsolete with the rapid progression of automation.

Americans should prepare for life after quarantine: Normal 2.0

New United States — The Employed

Remote working is decentralizing the workforce. Many people will not return to physical offices if given the choice. According to a recent Gallup poll, 59% of workers who have been working from home due to COVID-19 stated that, moving forward, they want to work remotely as much as possible.

Twitter CEO, Jack Dorsey, announced that all Twitter employees can work from home permanently if they so choose.

Remote working can increase worker productivity, but it can also lead to break downs in collaboration. According to Kevin W. Rockmann of George Mason University and Michael G. Pratt of Boston College, working from home is contagious. Employees will elect to work from home if their colleagues have already begun doing so. As a result, people will increasingly communicate through video conferences, email, and office workspaces like Slack rather than in conference rooms and by the water cooler.

60% of people working from home say that they now enjoy a better work-life balance because they are not wasting time commuting to their offices. For New Yorkers averaging a 33 minute commute to work, working from home would save over 10 full days of lost time over the course of a year. Saving so much time will further incentivize more employees to work remotely.

Chart taken from Robert Half

The COVID-19 pandemic is also testing how workers’ at-home performance affects company-wide productivity levels. The traditional five-day workweek may soon give way to the four-day workweek. As long as employees can complete their deliverables and do all that is asked of them from home, there may be no need to keep them “on the clock.”

Microsoft Japan trialed a four-day workweek in August 2019, and productivity increased 40%. Unsurprisingly, 92% of employees said they liked the four-day workweek.

Businesses can achieve and even exceed productivity goals by reducing office rent expenses and improving employee satisfaction rates. A post-pandemic economy for the employed may disrupt the natural flow of in-person communication (i.e., nonverbal cues and eye contact) but may also provide unprecedented improvements for employee work-life balance and even increase corporate savings.

New United States — The Unemployed

We are experiencing an acceleration in the transition to a more automated workforce. Why would a company traditionally relying on human labor continue to rely on it when automated alternatives could do the same job while commanding no salary, not threaten to join a union, and not get sick?

The previous examples of Macy’s and J.C. Penny laying off employees or filing for bankruptcy does not necessarily mean these companies will cease to exist. Rather, they will likely try to adapt to the new economy; cutting down on physical retail locations and emphasizing e-commerce will be a high priority.

This forced adaptation will streamline corporate operations, and many employees will become unemployed and under-skilled for the new economy. As the nation’s poor economic situation hampers individuals’ abilities to pursue higher education, and as companies are simply not looking to hire, under-skilled workers may feel that there is no clear path forward to success.

A 2017 National Bureau of Economic Research (NBER) study showed that for every 1% increase in unemployment, there was a 3.6% rise in the opioid death rate. The economic fallout from the COVID-19 pandemic will leave many out of work with no set plan for re-entering the job market, and many will suffer financially, physically, and mentally as a result.

Millions of people will be left on the sidelines with little to no income. As hopelessness and despair set in, people will search for ways to cope with and escape from their new realities.

The internet offers such an escape. Easily accessed from the comfort of one’s own bedroom or basement, the internet provides a seemingly endless list of opportunities, including limitless options for entertainment. However, what is currently the foundation for remote workers and virtual schooling may also be a harbinger of prolonged alienation and social isolation.

In 2018, according to the Bureau of Labor Statistics, unemployed men and women cumulatively spent roughly 75% more time on leisure and sports per day than their employed counterparts.

Chart taken from Bureau of Labor Statistics (annotations added)

A 2017 NBER study highlighted how unemployed people, young men specifically, are turning to recreational computer use and video games. According to this study, from 2012–2015, “younger men increased their recreational computer use and video gaming by nearly 50 percent… Non-employed young men now average 520 hours a year in recreational computer time, sixty percent of that spent playing video games.” That is 21 full days of recreational computer time and 13 full days of video gaming.

Sales for video game hardware, software, accessories and game cards for March 2020 grew at least 35% compared to sales in March 2019. According to The NPD Group, March 2020’s $1.6 billion in video game spending was the highest reported total for a March month since 2008 when monthly spending hit $1.8 billion.

In March 2008, reported unemployment sat at 5.1% as the United States entered into the Great Recession.

Chart taken from Bureau of Labor Statistics (annotation added)

Consumer spending in the U.S. video game industry hit a record $10.86 billion for the first quarter of 2020. According to Mat Piscatella, games industry analyst at The NPD Group, “‘as people have stayed at home more, they’ve utilized gaming not only as a diversion and an escape, but also as a means of staying connected with family and friends.’”

A Whole New World

People have been and still are sitting at home with nothing to do — assuming they are abiding by social distancing measures — and a lack of human interaction is causing people to look for ways to escape. Regardless of their employment status, people are seeking out ways to fill in the hours of their now seemingly wide-open days.

As video game capabilities continue to progress, the online world offers an increasingly enticing option to simply spend your newly found free time. Take a look at the next-generation graphics of the PlayStation 5; virtual worlds are becoming more realistic, and the progression of virtual reality development will further push the boundaries of the gaming experience. Moving forward, video games will become truly immersive and increasingly escape-worthy.

Connectivity without physical human interaction could negatively influence how people communicate with one another not only throughout the COVID-19 pandemic, but afterward as well. Strong relationships can and certainly are built through online communities and multiplayer video games, but the increasing reliance on technology as a replacement for human touch will create a subset of the population that would rather stay in the virtual world instead of the physical one.

For those left behind in tomorrow’s economy, this virtual landscape may be the only source of relief. If reality is disappointing and your list of opportunities to succeed is dwindling, plugging in might be viewed as the only way out.