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Posted: 2020-08-04 9:47:58

MIT Economists on the Impact of COVID-19 on Labor Markets

"these four shifts will reduce the demand for low wage work, which will increase income inequality and long-term unemployment"

From Steve at Small Business Labs
Originally published 2020 08 04
1.  Telepresence: The essay points out that the shift to remote and telepresence is " is so self-evident that it might escape notice." But if there is a substantial reduction in the number of people working in offices and/or traveling to meet in offices, there will be much less need for the workers who feed, transport, clothe, entertain, and shelter people when they are not in their homes. 2.  Urban De-Densification: While stressing that "the death of cities have been greatly exaggerated over many decades," changes caused by COVID-19 will likely lead to a reversal in the growth of large urban centers due to people moving to the suburbs as well as smaller towns.  This, too, will result in less need for many workers who support those living in urban areas. 3.  Employment Concentration in Large Firms: Because of their stronger balance sheets and ability to raise capital, large firms tend to do better in economic downturns than smaller firms.  As we've pointed out, this recession is hitting small firms hard and many will likely permanently close this year.   4.  Automation Forcing: Due to social distancing requirements and labor lock-outs, firms are quickly adopting automation technology (such as delivery drones) to keep their businesses running. This will likely result in leaner staffing in retail stores, restaurants, factories, and other places where companies have invested in labor-saving automation systems.
1.  Telepresence: The essay points out that the shift to remote and telepresence is " is so self-evident that it might escape notice." But if there is a substantial reduction in the number of people working in offices and/or traveling to meet in offices, there will be much less need for the workers who feed, transport, clothe, entertain, and shelter people when they are not in their homes. 2.  Urban De-Densification: While stressing that "the death of cities have been greatly exaggerated over many decades," changes caused by COVID-19 will likely lead to a reversal in the growth of large urban centers due to people moving to the suburbs as well as smaller towns.  This, too, will result in less need for many workers who support those living in urban areas. 3.  Employment Concentration in Large Firms: Because of their stronger balance sheets and ability to raise capital, large firms tend to do better in economic downturns than smaller firms.  As we've pointed out, this recession is hitting small firms hard and many will likely permanently close this year.   4.  Automation Forcing: Due to social distancing requirements and labor lock-outs, firms are quickly adopting automation technology (such as delivery drones) to keep their businesses running. This will likely result in leaner staffing in retail stores, restaurants, factories, and other places where companies have invested in labor-saving automation systems.
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Tags:essays,large firm,less need,economist david autor,low wage workers,nature of work,stronger balance sheet,social distancing requirements,large urban center,mit economist david,Government Policy,industry structure,Small Business Economy,Web/Tech