While the Covid 19 pandemic is still very real, many feel that it is beginning to wind down although rational people do fear a resurgence at some point. Many of us plan to get booster shots later this year and perhaps annually for many years to come.
I receive a great deal of e-mails from readers commenting on how things have changed for them over the last 30 months. Some actually see it as a surprise positive. A few ad agency principals have written that they have negotiated lower rental costs for their shops and others have saved by moving to smaller digs. With fewer staffers appearing in the office five days per week, some companies of all stripes have given each staffer a locker to store necessary items. They have conference rooms and a few traditional offices for very senior team members. Everyone else comes in several days per month.
It sounds great at first blush. Yet, what is it doing to some cities? Yes, you save money on rent. Most of us would not shed many tears for landlords but commercial real estate is getting hit hard in many localities. Members of cleaning crews have been laid off as you do not need a big staff when you are nowhere near full occupancy. Some say office space can be converted to residential apartments. Yes, but that will cost millions and may take years to transition.
Many humble services have disappeared and not just in top 10 cities. Food trucks are fewer and scrappy street vendors have moved on as well. Delicatessens often cannot survive with fewer people in nearby offices daily and mid-priced restaurants are struggling more than ever. Retail has been savaged by Amazon but noon time shopping in major metropolitan areas is but a memory in most instances. Mass transit has to be losing more money than ever these days although accurate data has been hard for me to find. Uber drivers? A mixed bag market to market.
The financial media provides detailed coverage of Apple, Amazon, Microsoft, Alphabet (Google) Tesla, Meta (Facebook), Disney, Netflix, and Berkshire Hathaway. I devour it daily. Yet about 50% of all jobs come from small businesses and they account for 42% of Gross Domestic Product. What happens when these smaller businesses get hit hard and then find that the seismic change since the Covid outbreak is likely not to be temporary?
The new reality is about to arrive. And, there is a body block that is likely to add to the discomfort. Federal Reserve Chair Jay Powell came on strong during a brief but tough speech at the recent Jackson Hole wing-ding for billionaires. He sounded as if he were Paul Volker 2.0 (Volker was Fed chair in the late '70's up to the mid-1980’s who burst the inflation bubble with record high interest rates that triggered a deep recession. I admire his courage tremendously). Powell pledged to keep raising rates and admitted that the Fed’s stance would cause some pain in employment markets. Whether the Fed will stay the course or blink is above my pay grade and perhaps yours as well. Yet, a possible/likely recession on top of this shift in commuting and work practices could really hurt. My guess is that such a recession would be shallow but might linger for a long time as the economy would need extra time to adjust to this new reality.
Surprisingly, some ad agencies and other types of service and tech firms tried giving staffers a locker but no formal office 20+ years ago. Results were mixed but top management often felt that they could not monitor staff effectiveness well. Now, in a digital age it works well in many situations with the big bitch being that newcomers want to work remotely from the get-go without learning corporate culture or basics. Also, they do not know the personalities or real role of key players in leadership.
All of us know that the only constant is change. My opinion is that Covid 19 sped up the rate of change in many areas significantly.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.
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