I think everyone’s attention is on the fire, not what it’s doing to the house. By that I mean that the pandemic, riots, and government shenanigans are front-and-center problems that have a secondary effect on the economy.
Just the pandemic alone will cause decades-long ripples in our economy and a fundamental shift in our culture. I do believe that there is a strong potential for positive fundamental change, but man is it going to hurt getting there.
I live and work in one of America’s largest urban environments. My company has no plans to even consider reopening our office until 2021. Beyond that, the CFO is waging a completely rational campaign to permanently eliminate the significant costs of maintaining a luxurious multi-floor suite in one of downtown’s most historic buildings. We’ve already rebalanced our budget to not factor in cleaning staff, snacks, office personnel, new desks and chairs for 2021 … the list goes on.
On top of that, we’re making “Plan B” moves to sublet the office space with NINE other companies. These are all national or global companies with luxurious marble-floored headquarters in my city. If you are familiar with WeWork office spaces … that’s what corporate America is going to move towards. Or something like it. Smaller floorplans that you can use to keep a presence in a city for when you have important in-person meetings.
Even further, among my peers also in leadership, the opinion is almost completely unanimous: nobody wants to commute ever again, we’ve proven beyond a shadow of a doubt that productivity goes UP working remotely, it fits our lifestyle much better, and so forth. My company took a poll of the workforce and 97% said they don’t wish to return to the office under any circumstance … even if the pandemic and the riots were suddenly gone.
Going further stilllllllll … many of the leadership team have already flatly stated that they have no intention to ever work from the office again, and that of course this mentality extends to their teams. This has been echoed by my peers in over a dozen local companies.
Downtown areas are really organized around crystal towers that host a few big tuna anchor companies, with a smattering of others filling the in-between space, and lower levels of food and service to cater to those tenants. Obviously, if nobody is going to the office anymore all those services downtown that depend on throngs of business dorks won’t be making any money.
Let’s think about who that is. Restaurant owners, all their employees who cook and serve the food. Taxi, uber, bus, and shuttle drives who hustle people between transit points. Dry cleaners and launderers who have pickup or bag contracts with those companies (I pressed, bagged, and hung all my suits six months ago. Posting from my boxers here). Catering companies who depend on lunch traffic and expensive corporate lunches. Even your commuter trains, maybe subsidized by the government, depend on ticket fares to stay in the black. Every single person at my company canceled their transit passes on the very first day of WFH. Nobody wants to take the train, partly because of the pandemic, and partly because of the riots. Even the security guards in all the lobbies are gone … everything is locked up tight and boarded up.
Going further yet still. Because we’ve really only dipped a toe so far, my company has adopted a “work from anywhere” policy and as of right now, about 35% of our workforce is somewhere “up north” or in the rockies, or just renting an AirBnB to stay away from the city.
Another step towards real instability is the housing market. Silicon Valley is already seeing residential rent prices plummet as broke millennials realize they don’t have to pay $4000 per month to stay in a broom closet near their startup. Residential and commercial vacancy rates are already skyrocketing. We’re beginning to see this creep into other Metro areas like Chicago and NY, too. There is a small ray of hope here, though, as it seems that people are simply moving a few zip codes over instead of literally fleeing to the four winds.
And just to throw one more log on the fire, think about anything related to automobiles. While it’s true that some people are doing some road tripping, overall drivership is down. Way, way down. People are buying less gas, they’re using up fewer tires, their cars are incurring less damage and having higher lifespans. Fewer oil changes, fewer body panel repairs, fewer replaced windshields, fewer wiper blade replacements bought. More money that’s not changing hands in the new reality. The auto industry was already experiencing some serious angst … now that car sales are plummeting they’ll have to also reduce manufacturing capacity. Then all the 3rd party cottage industries will have to follow suit.
Millions of dollars used to change hands each and every day. POOF. Gone overnight. Many of those people will not be getting jobs back as the waves of restaurant closures hit us. We’ve already seen the ones with shaky business models close, and the second wave of closures is rippling through now. The third wave will hit the hardest, though. That’ll be the people who had some stability and savings and threw it all into the business trying to outlast this nonsense. Those people will be well and truly fucked, because when their business fails, they will have nothing.
I’m just gonna stop writing now, because anxiety is spiking. I hope you are all doing what you can to clear debt, reduce expenses, and find sustainable ways to house and feed yourselves for the next few decades. Best of luck.
Disclaimer: This is a guest post.