The Coronavirus at Work
I’m not a medical doctor. I know next to nothing about virology or immunology. I cannot give any useful advice on how an individual person can beat the coronavirus, but I am well qualified to provide some informed analysis on how our labor markets can beat COVID-19.
I am a Professor of Human Resource Management with expertise in recruitment and selection and economic sociology. In this blog post, I hope to leverage that expertise to offer up an analysis on how this outbreak might affect labor markets and what you might do to best position yourself.
Let’s start with the bad news. A recession is all but inevitable in most countries of the world, including mine (Australia, a traditionally resilient economy). The big question is: will it be “V” shaped (a sharp downturn with a very quick recovery) or “U” shaped (a slow, steady downturn followed by a long, drawn out recovery)? Unfortunately, to answer this question with any certainty requires extensive knowledge about the virus itself, which I don’t have. What I can say definitively is that growth will slow or reverse in most countries of the world and unemployment will likely sky-rocket to levels not seen since the Great Depression of 1929.
My guess is that China will see a significant contraction of their bubble-driven economy, which will obviously have negative spillover effects on the rest of the world. In the West, the usual tools that are typically used to stimulate growth, like interest rate cuts, are pretty dull at the moment. Interest rates are already at near record lows. Unless we move into negative interest rates (a real possibility), it will be difficult for Central Banks to jumpstart the economy. Corporate earnings will plummet as folks like me stay home and save for the pending apocalypse. Wall Street will take a (much deserved?) beating, which many salivating and opportunistic traders are secretly hoping for. House prices will also decline in most areas, but the effect on us (real people) will be felt most in the rising unemployment rate. When folks can’t leave the house, (i) they can’t work as freely and (ii) they can’t consume as freely. It’s like a “double whammy” for production and consumption. Ouch!
Another real threat lurking in the background is deflation (when prices for goods and services go down steadily). You might think it’s a good thing if prices fall, and in some ways, it is. But most economists (especially those who’ve studied Japan’s recent history) will tell you that a long, drawn out, steady decline in prices will shrink the economy (and therefore the labor market) even further as people delay purchases in anticipation of further falls (creating a dangerous downward spiral, like the one Trent Reznor sang about).
That’s enough doom and gloom. Now let’s look at the good news. Even if you’ve lost your job recently, there are now, or will be in the not-too-distant-future, countless opportunities, if you just look for them. Labor markets are stealthy, kind of like a virus. They are always looking for ways to develop, spread into new areas, and grow. When one door closes, another opens up (goodbye manufacturing sector, hello service sector, etc.). As consumers’ priorities and tastes change, the market adapts. If you’ve been made unemployed recently, you could just sit around and wait for the labor market to rebound so you can go back to your old job. If it’s a V-shaped recession, great, you won’t be waiting long. But if it’s a U-shaped recession, you could be jobless for a long, long time. The alternative to waiting for for your old job is to take some pro-active steps that directly respond to the current situation. You could become an entrepreneur. With interest rates this low, it’s a great time to start a business. You could rent out a factory and make hand-sanitizer or masks. You could develop an innovative teleworking solution or a marketable psychological intervention for coping with anxiety. Just look at what people need right now and what they don’t have, and then try to fill that gap.
Another thing you can and should be doing right now is up-skilling. My guess (hope!) is that governments are going to pump tons of money into further and higher education. Take a few courses, especially if the state will pay for them. Get an MBA or a micro-credential. Pick a letter from STEM and learn as much as you can about it. Heck, you don’t even need to study these topics formally. Teach yourself how to code! Think like a scientist. Look for the opportunities, because they are waiting to be found.
I don’t want you to worry too much about this crisis. The human race has defeated foes much deadlier than this. We will pull through, and when we come out the other side, there will be so much space for growth and development that we’ll forget all about this damn virus. In the event of a U-shaped curve, my guess is that governments will begin to implement universal basic income (UBI), which means that most benefit programs will be consolidated and every citizen (regardless of income or employment status) will receive a monthly check that will be just enough to survive. This is a welcome initiative that has widespread support on the left and the right (even that old curmudgeon Milton Friedman supported UBI). The silver lining of this crisis is that it may speed up the implementation of UBI programs worldwide.
To sum up, yes, we have some difficult days ahead of us, but, lucky for us, labor markets are incredibly resilient. They want to succeed and, mark my word, they will find a way to overcome this coronavirus.
Andrew R. Timming
P.S. Obviously, the information contained above is general in nature and not to be considered professional advice under any circumstances.