How COVID-19 is Reshaping the Future of Business and Work Recap

by Lauren Duke, IEDC Intern

After the 17th consecutive week of unemployment claims reaching over 1 million, economic developers are forced to face the long-term realities of business and work after COVID-19. While reopening led to a return of some service jobs in June, Americans face permanent job loss and small businesses are forced to close their doors as the economy continues to weaken. 

In a webinar hosted by Brookings and The Hamilton Project on Thursday, July 16, panelists discussed the impact of COVID-19 on business and work throughout the country. The aforementioned realities, paired with the end of increased unemployment benefits in two weeks, have signalled to researchers that the country could be facing a wave of financial suffering, decreased competitiveness, and decreased labor force participation.

Economic Consequences of Coronavirus on Minorities, Small Business, and Women

Economic growth over the past decade is the result of a boom in low-wage, low-mobility service jobs, according to David Autor of the Massachusetts Institute of Technology (MIT). Many of these jobs, which include food service, transportation, retail sales, and personal services, are no longer needed as people telecommute and leave their homes less. As a result, it is likely that those that hold these jobs, particularly minorities, will face economic consequences such as eviction and bankruptcy. 

Dependency on large, online retailers has an adverse impact on smaller firms, as they have less of the market share to sustain their traditional brick and mortar business model. MIT’s Nancy Rose asserts that as more people depend on large corporations, their increase in capital allows them to eliminate competitiveness, acquiring companies that may have previously posed a threat to their business. Greater allocation of capital to larger firms and their shareholders leads to greater disparities in income and financial equity, as small businesses and their employees cannot withstand economic difficulties. 

Moreover, COVID-19 and economic shutdowns have highlighted gender disparities in the workforce, according to Betsy Stevenson of the University of Michigan. The worsening of the virus due to premature reopening is threatening the female workforce, as 76 percent of public school teachers are female. With no national guidance or funding for childcare and education, these workers are among the most vulnerable in the national labor force. Stevenson asserted that a continued drop in women’s labor force participation is expected in August as the childcare crisis continues.

Possible Solutions 

Economic developers can combat these projected problems by advocating for policy action at the national level. Extending unemployment benefits past the July 30 deadline will prevent needless suffering among marginalized communities such as evictions, foreclosures, and bankruptcies. At the local level, community leaders should provide support to small businesses, connecting them with small business relief programs and keeping them updated on relief opportunities. 

This recession has and will continue to further deepen income inequality within the United States. Many of those adversely affected are in vulnerable positions due to systemic issues. Economic developers must work to recognize these inequities within their communities and uplift those that are marginalized ever further in times of crisis, particularly as we battle the economic downturn caused by COVID-19.