By Emma Rose Bienvenu
The coronavirus pandemic will be remembered as a world-reordering event. Like the Great Depression, the fall of the Berlin Wall, and the 2008 global financial crisis, it will accelerate social and economic changes that would otherwise have taken years to materialize.
However long it will take, we will eventually beat back this virus, and our economies will eventually recover from the punishing recession it will have brought about. But when the dust settles and the masks come off, the pandemic will have permanently reshaped our social and economic behavior. Here are a few outcomes that seem increasingly likely.
1. Companies that traffic in digital services and e-commerce will make immediate and lasting gains
With people isolated indoors and away from other people, short-term winners will be those who provide goods and services without needing to come into physical contact with their customers.
Winners in this category will be cloud computing providers (for example, Amazon Web Services), remote work services like Zoom, Slack, Microsoft Teams, virtual reality companies like Oculus, streaming services like Netflix, and esports organizations like Cloud9.
Social media traffic will soar, but advertiser revenue will suffer from weak demand in a crippled economy. Coca-Cola has already pulled all social media ads; as its peers follow suit, the sharp overall decrease in ad spend will reverberate down to production companies, advertising agencies, and TV and radio stations.
In the short term, e-commerce platforms, food delivery services, and logistics companies will also be winners. When the economy does eventually improve, these gains will mostly endure thanks to entrenched shifts in consumers’ buying habits.
2. Remote work will become the default
Employees who are suddenly working from home by necessity are experiencing a change in their work style that spares them the suit and commute and gives many of them greater flexibility with their schedules and demands outside of work. Many will find they prefer working remotely and, when the crisis recedes, it will become hard and expensive for some companies to deny them that option, while others will want to take advantage of this new preference. Remote work technology will improve, enabling the sort of mingling previously thought to require in-person meetings. This will cause a severe downturn for commercial real estate as companies drastically cut the size of their workspaces.
Coupled with stricter travel restrictions and mandatory quarantines for foreigners entering certain countries, this will also put severe strain on industries reliant on business travel. It will also lead to an exodus of white-collar workers from big cities — once companies’ remote work routines have been smoothed out, their newly remote-capable employees will have the flexibility to move out of dense cities and into lower-cost areas.
3. Many jobs will be automated, and the rest will be made remote-capable
To survive the crisis, firms will need to lay off their least-productive workers, automate what can be automated, and make the rest remote-capable. Those who do this effectively will emerge leaner and more efficient. They will also have no incentive to return to their pre-crisis head count — and many of those whose functions have been automated will lack the skills to compete in the new, post-crisis economy. Labor force participation will suffer. In the medium and longer term, these companies will also realize that the functions they have made remote-capable can also be performed by highly skilled workers in lower-cost countries. In short, jobs will first move from in-person to remote-domestic, and in time they will go from remote-domestic to remote-overseas.
4. Telemedicine will become the new normal, signaling an explosion in med-tech innovation
In a matter of weeks, regulatory barriers to telemedicine in the U.S. have largely fallen. Doctors in the U.S. now perform remote visits across state lines, can email and video-chat patients in compliance with HIPAA, and Medicare and health insurance providers have to now reimburse telemedicine services. Though these measures were announced as temporary, those who have now had firsthand experience with the convenience and cost-effectiveness of telemedicine will not want to forgo it. Once the crisis recedes, health care will begin to be provided remotely by default, not necessity, allowing the best doctors to scale their services to far more patients. Already, shares in Teladoc and similar companies have surged on the expectation that the pandemic will provide long-lasting tail winds for the telemedicine industry.
The human and economic cost of the pandemic will inject Department of Defense-level spending into telemedicine, medical imaging companies, diagnostics companies, and virology research. Telehealth offerings will improve and proliferate, with better at-home testing and diagnostics products and the ubiquitous adoption of wearables that continuously monitor for symptoms. Major cities will put in place permanent pandemic surveillance systems, and many businesses and sports stadiums will perform real-time threat monitoring by screening for symptoms and temperature-checking attendees.
5. The nationwide student debt crisis will finally abate as higher education begins to move online
The pandemic has forced numerous universities to move classes online, prompting calls from students for reimbursements of tuition and expenses. If, come fall semester, universities are still teaching online, what percentage of those students will re-enroll at pre-crisis tuition levels? The worldwide remote learning experiment that is currently underway may demonstrate that higher learning can function effectively at a fraction of in-person costs. If it does, it may lead to a reckoning that transforms the delivery of higher education, particularly for less-selective universities, as students re-weigh the costs and benefits of a four-year residential experience.
Universities will also face pressure to cut costs from the severely cash-strapped state governments that fund them. Many will eventually adopt hybrid models that limit face-to-face learning to project-based assignments and student working groups. These will dramatically cut costs, while allowing the best instructors to scale their insights to more students. They might also make a compelling case for broadening access to elite universities, whose small cohorts have historically been justified on the basis of physical constraints inherent to classrooms and campuses.
6. Goods and people will move less often and less freely across national and regional borders
Countries will retreat into themselves, borders will become less porous, and international trade will slump. To bolster their ability to survive extended periods of economic self-isolation, governments will push to strengthen domestic manufacturing capacity and step in to inject adequate redundancy in critical supply chains. Even before the pandemic struck, higher wages in China, international trade wars, and the rise of semi-autonomous factories had already prompted firms to reshore manufacturing, bringing it closer to domestic research and development centers. The coronavirus crisis will accelerate this trend: Increasingly, corporations will favor the resiliency of centralized domestic supply chains over the efficiency of globalized ones. Lacking support to protect the shared gains of worldwide economic integration and globalized supply chains, the multilateral institutions of global governance established in the 20th century will, if temporarily, begin to fray.
Governments that adopted emergency powers to manage the crisis and police their borders will be loath to relinquish them when it recedes. Governments will conduct more widespread and more intrusive surveillance and claim broader authority to monitor and respond to viral threats. Checkpoints at national and regional borders will use biometric screening to detect deadly viruses in real time and impose mandatory quarantines on travelers entering from certain countries. This will create significant friction for all kinds of travel. Airlines, hospitality, and tourism will experience a severe slump in demand in and beyond the immediate aftermath of the crisis.
7. After an initial wave of isolationism, multilateral cooperation may flourish
After an initial retreat from globalization, countries might come to recognize that technological and viral threats are existential, and therefore require international cooperation. Adopting a sense of pragmatic internationalism, countries would develop international norms, monitoring and reporting systems, and coordinated response and contingency plans. When the next pandemic strikes, global monitoring and reporting systems would detect it earlier. A coordinated global response would make self-isolation orders effective, shortening the economic shutdown and hopefully sparing lives.