As we struggle to re-open the country, many are steadfast on getting things “back to the way they were.” It’s an ideal goal, but in many ways, Covid-19 may have already changed us, forever.
Some economists say the pandemic accelerated us five years into the future from a technology perspective. Companies that were once reluctant to adopt technology now find themselves devoting capital into IT with no disparity. In-person meetings with doctors, CPAs and financial advisors are now being done online; sometimes more efficiently, as we eliminate commuting, parking, and other related frustrations. Corporations are also finding meetings that required flights and hoteling can be hosted online instead, for a fraction of the prior costs. That can have ripple effects, boosting the future revenues of online meeting platform providers, IT support services and rapidly developing the telemedicine space. It may also mean long-term decreased revenue for airlines, the auto industry, oil and gas, and hotels, as business travel is reduced to an as-needed basis.
Many continue to work through Covid-19, but in new ways. Businesses who were reluctant to change the traditional model of working from an office daily are now finding that employees can be trusted to work from home. I call it the first win-win-win for society in a long time. Employers are able to “reduce their footprint” which is a public relations, green-sounding way of saying, cut their over-head costs. By having more employees work from home, employers can immediately reduce their office lease expenses, land lines, utilities, and so-on. Employees who need to come into work occasionally can “hotel” or check-in to a day-use desk, allowing companies to rent smaller office space for their rotating work force. The second win is for the employee who gets to work from home occasionally or permanently. In busy metropolitan cities, the avoided commute time can be invaluable, adding tremendously to quality of life. For your wallet, working from home can also equate to reduced auto, insurance, maintenance and gas costs. Given these benefits, a recent study noted currently unemployed people might be willing to reduce their target starting salary for new jobs where they are allowed to work from home; an indirect but definite win for employers. The third win is for our environment. Los Angeles has notoriously polluted air, but a recent study by IQAir, a global air quality company based in Switzerland, reported LA saw some of the cleanest air of any major city in the world during April.[i]
The loser in this win-win-win scenario is the commercial real-estate industry. It is predicted the landscape for commercial real-estate may be permanently changed. In past market downturns, real-estate was an inversely correlated asset that provided protection when the stock market was down. However, in our post Covid-19 era, commercial real estate may not prove to be a safe haven. Many corporations plan to “reduce their footprint” by 30% in the coming years, providing instability in the commercial real estate space. We already saw the collapse of the once highly anticipated WeWork shared office space provider. Large retailers in shopping malls and the food service industry may also begin to reduce consumer facing locations as people acclimate to shopping online and prefer to use outdoor space for socialization and networking when social distancing restrictions are lifted. In essence, we as a society are changing, and business is rapidly evolving to survive in the “new world.”
Our education system is rapidly changing also. Many local schools and universities originally viewed school closures as temporary until the Covid-19 risk had passed. However, institutions realize that Covid-19 may reemerge during the flu-season and so it would be prudent to plan how to educate remotely again in the near future, should the need arise. However, this is also eye-opening to the philosophy of education. Ivy-league university lectures are no longer constrained to the size of the lecture hall. Rather, these highly regarded professor’s lectures can be recorded and live-streamed around the world for many students to participate in. This could be the beginning of a globalized education platform, and dare I say it, lower future education costs?
A larger and murkier Covid-19 issue is the increase in government indebtedness related to sustaining the economy. The US government was already running a disturbing National Debt of $23.3 trillion prior to the pandemic. That figure has increased to $25.1 trillion and counting due to back-stops put in place to keep the economy afloat.[i] Prior to Covid-19, it was predicted under the existing planning provisions, social security and Medicare would be unfunded by 2035.[ii] The path ahead is complicated and political, but it is hard to imagine there will not be some consequences to the US citizens and corporations in the form of higher future taxation to solve this daunting problem. Therefore, many financial planners and estate planners are determining ways to mitigate future taxation or pay taxes at current rates in preparation for the fearful road ahead.
Finally, in our battle to fight Covid-19, many have lost loved ones to this deadly disease. In that loss, we may find a new normal, different strength, and eventually new joys, but we will never go back to the way we were. In mourning, perhaps we can remember to be grateful for the things we almost took for granted; our health, our loved ones, our amazing medical providers, grocery store workers, package delivery drivers and garbage truck drivers whose daily tasks keep the world going. Instead of focusing on differences of opinion, we may choose to come together in community and support one another through adversity. Covid-19 is not yet behind us, but it is already making a permanent impression on us and our future.
Wishing you all continued health and safety.