The pandemic has led to unemployment of workers in the service sector, retail and other fields at a scale and with a swiftness unprecedented in the historical record. They are cashiers and janitors, construction laborers and secretaries. For many, their prospects were already diminished by decades of technological progress. They are, disproportionately, women and minorities, precisely the groups that were already saddled with a spectrum of pay and wealth gaps even before Covid-19 hit.
What’s making things worse for these workers and their families is that the pandemic is also accelerating the arrival of remote work and automation. It is a turbo boost for adoption of technologies that, according to some economists, could further displace lower-wage workers. It could also help explain the “K” shaped recovery many pundits have observed, in which there are now two Americas: professionals who are largely back to work, with stock portfolios approaching new highs, and everyone else.
As the pandemic laid bare, the service sector employs an ever-growing number of Americans in the business of feeding, pampering and caring for other Americans, especially wealthier ones. From cleaning staff to security guards to restaurant cooks, entire categories of workers saw their ranks decimated as people ceased to travel, eat out, go to offices and more.
By forcing so many professionals to work remotely, all at once, the pandemic may have permanently reduced how often people work from an office. Compounding this is the departure of high-wage earners from America’s crowded, expensive cities. Many are already heading for suburbs, towns and even rural areas, where they can have houses big enough to accommodate home offices while also slashing their cost of living and improving their quality of life. These trends could have a significant impact on spending in urban cores, says Dr. Autor. This could also permanently dent business travel, a huge source of revenue for hotels, restaurants and other businesses that accommodate the travelers most likely to pay full freight, he adds.
Another factor that could increase economic inequality is that, as in all recessions, many small businesses will be wiped out. According to Yelp, 73,000 businesses in the U.S. listed on its website have already closed permanently since March, including bars, restaurants, gyms, salons and shops.
A fundamental tenet of most economists’ thinking is that in the long run, innovation is a tremendous net benefit to human civilization. As long as we can thread the eye of the needle of environmental catastrophe, increased productivity has the potential to continue to reduce global poverty, quash childhood disease, better the lot of the world’s most vulnerable and expand the global middle class. The challenge, argue Drs. Autor and Acemoglu and many others, including world leaders like Emmanuel Macron, is reducing the short and medium-term harms meted out to those whose lives and livelihoods are being disrupted right now.
But one thing is clear: The pandemic has moved up the adoption of certain technologies by years, especially those supporting automation and remote work. In the short term, this means profound disruption—job loss and the need to move to new roles—for many Americans who have the least wherewithal to cope. In the long term, experts say it may exacerbate trends that U.S. policy makers of every political persuasion have failed to fix for decades.
https://www.wsj.com/articles/covid-19-i ... 1598068859 (subscription)