The output is helping to protect U.S. government tax revenue from a total collapse, at a time when expenses are expanding; lawmakers in Washington just approved a $2 trillion plan to provide financial assistance to households and businesses.
As economists scramble to assess the devastating impact of the coronavirus, they’re homing in on an unexpected hero that’s mitigating the damage in the U.S.: remote working.
With offices across the country closed and people stuck in their homes, many professional workers have accomplished a not-seamless but ultimately successful transition to online workplaces – allowing those in crucial industry sectors including professional and business services to continue doing their jobs.
The rapid shift means a significant portion of the economy – roughly half, at least, based on a CoinDesk analysis – might be able to continue unabated even if many households remain under voluntary or mandatory lockdowns for at least six more weeks, as Microsoft-founder-turned-philanthropist Bill Gates has suggested might be needed.
Using these technologies is likely to get smoother with practice, of course. In the meantime, many office-workers-turned-home-workers will eventually gain confidence they’re still doing their jobs so they can continue to receive their paychecks.
“It is amazing how we, as a country, seem to have really stepped up and have been able to do our jobs, for the most part, under these extreme conditions,” said Beth Ann Bovino, chief U.S. economist at Standard & Poor’s. “There’s a pretty significant chunk of people who, before the coronavirus, worked at their desks in an office. Now it’s just transplanted to working at home.”
To those who believe in a digital future in which decentralization makes systems more resilient, the crisis has expedited the inevitable.
“People are talking about how this is going to be the fourth industrial revolution with different technologies changing fundamentally how we work,” said Jennifer Christie, the head of people at social media giant Twitter and maestro behind its near-overnight shift to a distributed workforce in early March.
Christie pointed to the pandemic’s global reach. “I can’t imagine it doesn’t have an impact on organizational structures and norms,” she said.
By the numbers
The U.S. economy is facing such hardships that weekly jobless claims shot up to a record 3.3 million last week and the Federal Reserve pledged to inject an estimated $4 trillion into the global financial system to keep markets from unraveling – roughly equivalent to the total amount of money created on the central bank’s balance sheet since its founding in 1913. Researchers at the Federal Reserve Bank of St. Louis estimated last week that layoffs in the second quarter of 2020 could reach 47 million.
The pain is expected to hit workers on the low end of the wage spectrum the hardest, from restaurant employees, taxi drivers and musicians to barbers, flight attendants and oilpatch roughnecks whose livelihoods have been upended by a sudden drop-off in demand. Macy’s, the largest U.S. department-store chain, said Monday it would furlough 125,000 employees after a plunge in sales.
But based on an analysis by CoinDesk, some 48 percent of the $17.8 trillion of U.S. national income in 2019 came from industries where many jobs could conceivably be done remotely. (National income, or the value of all goods and services produced by U.S. businesses and individuals, is similar to gross domestic product, or GDP.) Those include finance, insurance, real estate, rental, leasing, information and professional and business services, using the categories provided by the Commerce Department’s Bureau of Economic Analysis. They also include government services.
Not included are industries where a physical presence is typically required, such as agriculture, forestry, fishing, hunting, landscaping, mining, utilities, construction, manufacturing, wholesale trade, retail trade, transportation and warehousing. There’s also arts, entertainment, recreation, accommodation and food services. But even many functions within those industries, such as administrative support and online music production, could be done by employees working online.
Also not included are educational services, health care and social assistance, collectively representing some $1.84 trillion of economic output last year, or 10 percent of national income. Many of those essential workers are still doing their jobs.
University of Chicago economists wrote in a separate study published March 27 that some 34 percent of jobs, representing 44 percent of all wages, could plausibly be performed at home.
“The share of jobs that could be performed at home is an important input to predicting the economy’s performance during this or subsequent periods of social distancing,” the researchers wrote.
The new normal
News reports over the past week have been filled with the harrowing accounts of dedicated hospital workers in New York and elsewhere rushing to save lives despite a lack of ventilators, masks and other crucial gear.
Less salient are the heroic efforts of public and private school systems to establish online instruction with little more than two weeks’ notice – led by homebound teachers and administrators.
Initially set up as a temporary backstop to keep kids on task, remote learning could prove pivotal to finishing the academic year if homebound measures remain in place through late May or June. Teachers aren’t in their classrooms, but they’re still doing their jobs, collecting well-deserved paychecks.
Without remote working, “it could have been a lot worse,” says Steve Blitz, chief U.S. economist at the forecasting firm TS Lombard. The availability of the Internet, certainly not something that existed at the time of the 1918 Spanish flu outbreak, “does create the avenue more readily for people to work from home and engage with their coworkers.”
Crucial to this transition, of course, is that Internet networks are proving robust enough
to handle the shift in traffic from office buildings to home networks. And previously niche technological applications like Zoom scaled up in a matter of weeks into household words or even verbs, as: “Lemme Slack you that link.”
A boom for Zoom
The companies behind America’s remote-work explosion are seeing surges in the number of those using their products.
For Zoom, the videoconferencing software developer-turned touchstone of stay-at-home communications, it’s been more like a tsunami.
A spokesperson for San Jose-based Zoom said executives didn’t have time for an interview because they were so focused on technical-support issues. (The New York Times reported on Monday the New York Attorney General’s office wrote a letter to Zoom executives asking what security measures they have put in place to handle the sudden increase in traffic, and to detect hackers. According to the paper, the letter referred to Zoom as an “essential and valuable communications platform.”)
Slack, a group instant-messaging service that many companies use as a virtual office, notched a record 12.5 million simultaneously connected users on March 24, representing a 25 percent increase in just two weeks, CEO Stuart Butterfield wrote in a blog post.
We’re all ‘decentralized’ now
Twitter’s 4,900 employees comprise a tiny but telling sliver of Slack’s massive user jump.
They had already been using the platform before COVID-19 shut the office lights. But when CEO Jack Dorsey declared on March 2 the company would go remote, Slack became the primary workspace, a virtual office – even a creative outlet.
Christie, the HR chief, said it helped Twitter preserve the “water cooler” camaraderie found in offices of old.
Workplace decentralization isn’t new to the digital-asset industry, with its blockchain computer networks and interconnected, round-the-clock, private marketplaces for trading cryptocurrencies like bitcoin (BTC), in some cases powered by automated computer code. Many crypto-industry startups were already based out of coworking spaces like WeWork; those employees just brought their laptops home.
But even the startups might not have predicted everyone else could shift over so quickly.
“You’re seeing a lot of people discover a useful tooling that’s been around for a very long time,” said Corey Petty, senior security engineer for the decentralized messaging platform Status, whose 61 employees already worked remotely. “Those that aren’t willing to change drastically are going to fail.”
Jake Yocom-Piatt, project lead at Decred, a cryptocurrency project, says he’s been working remotely since 2013. He’s based in Chicago while the company’s 60 or so employees and contractors are spread out in far-flung locales from Michigan to Texas and Australia to Europe. There’s no home office.
Given that the internet evolved partly from the U.S. military’s drive for a communications network that could survive a nuclear war, it’s not surprising the Web is still standing, he said.
“But when you’re talking about the quality of software, it can vary massively,” Yocom-Piatt said. “It appears that Zoom and Slack and a handful of these other players are better-built projects than you might have otherwise expected. If you would have asked me beforehand, how would it do if it experienced a 10-fold increase, I would have answered that it would have had problems.”
At Status, the remote workers chat via Slack, Discord, Status, Zoom and Google Meet, working across time zones and borders with the same tools newly dispersed companies now depend on, Petty said.
Businesses that survive this crisis “will come out with a new fresh vision of what it means to have an organization and run it,” he predicted. Further innovations in remote-working tech will help people realize “that you do not have to operate traditionally to be successful in a business.
“I’m really looking forward to that because a part of our goal is to help people realize that you can have meaningful real relationships with people and communities in a distributed way,” Petty said. “People have just been opposed to getting over that barrier of initially trying and this is forcing everyone to do it.”
No going back
Old-line businesses like the New York Stock Exchange continue to open and close on time even after its historic trading floors closed last week. TV anchors and newspaper reporters and editors put out updates 24-7 – from their homes.
Remote working also might help to soften the blow on consumer confidence, a crucial psychological metric that economists survey regularly to gauge the climate for retail spending.
For workers, logging on from home every morning might provide the jolt of normality needed to keep them optimistic, said Bovino. She talked to CoinDesk by phone from her apartment in New York, where her husband is also working from home and her 4-year-old son is doing preschool online. That’s in between the tortured moments of anxiety and empathy when she peers out the window and sees ambulances plying the empty streets below, sometimes stopping at nearby buildings.
“There could be a change in sentiment, and a positive change in sentiment among these workers who are pioneers in this new digital work-from-home landscape,” Bovino said. “There’s going to be a feeling of pride that they were able to overcome these hurdles and were able to get that memo out to their internal team or publish that report on some sector, or something of interest for their firm.”
Blitz says he expects the coronavirus to accelerate major changes in the economy, and in the way people work. Once the virus’ peak passes, will people want to immediately go back to crowded office buildings and tedious, exhaust-choked commutes? Or spend so much money on gasoline or public transportation?
Now that more bosses have experienced online working, they might be more willing to entertain work-from-home arrangements for productive employees – or even push to eliminate the office as a way of cutting costs. Candidates for new roles might be eligible no matter where they live; some U.S. employers might hire more remote workers abroad.
Many people will eventually want to go back to offices, Blitz predicts, if only to avoid the myriad distractions of working at home including the noise from the neighbors’ lawnmowers and leaf blowers. But on a macro basis, society and the economy are likely to change drastically. The coronavirus could accelerate decades-in-the-making technological trends that were already in the works.
“So much of the economy is still done the old way,” Blitz said. “But the chances of us going back 100 percent to the way we were before is probably not likely.”