Economic Systems after COVID-19: Towards a More Resilient, Sustainable and Inclusive Recovery

August 07, 2020

By Nika McKechnie, IEDC Intern

On August 6, IEDC hosted a webinar entitled “Economic Systems after COVID-19: Towards a More Resilient, Sustainable and Inclusive Recovery” where experts discussed the challenges communities are facing in economic recovery from COVID-19 and in ensuring that economic recovery is inclusive and equitable.

Jeff Finkle, CEcD, the president and CEO of the International Economic Development Council, hosted the session of four speakers: Ted Egan, PhD, Chief Economist of the City of San Francisco; Fred Olayele, PhD, Chief Economist of the New York City Economic Development Corporation; David Wilson, PhD, Managing Director of Cities and Regions Ltd. in Auckland, New Zealand; and Karen Bakker, PhD, Professor and Canada Research Chair, University of British Columbia.

Dr. Egan presented on the current state of San Francisco’s economy, and the inclusive recovery challenges that the city is facing. In April, San Francisco lost 175 thousand jobs, a loss of about ten years of job growth. By this month, fifty thousand of those jobs had been recovered, clearly indicating that the city was beginning to recover. However, Dr. Egan predicted that employment levels may not fully recover until 2024.

Dr. Egan highlighted the inclusive and sustainable recovery challenges that San Francisco is tackling:

Short term: The main short-term concern is managing a phased reopening and an ongoing public health response. The city is also trying to protect income maintenance programs and safety net services, especially for unhoused and other vulnerable populations.
Medium term: The severe contraction of the tourism, arts, and food services sectors poses a massive threat. These sectors are the largest providers of low-income employment and have lost the most jobs, intensifying the already-present income inequality in San Francisco.
Long term: Persistent changes to working patterns raises concerns about San Francisco’s transit system and downtown. Though offices have reopened, public transit ridership has not recovered after its 90 percent drop at the beginning of the shelter-in-place order, creating severe congestion and parking issues. Additionally, 60 percent of the city’s GDP is in their downtown office space, so it is critically important to ensure those buildings are occupied.

Dr. Olayele discussed how COVID-19 is compounding upon an ongoing trend of increasing inequality in New York City, noting the decline in real wages for low-wage occupations and the housing cost increases in low-income neighborhoods. Now, the economic impacts of COVID-19 have been disproportionate on marginalized populations. 42 percent of people of color previously earning between $45,000 and $75,000 have suffered income losses due to the pandemic, compared to only 26% of white Americans. Dr. Olayele stressed that economic growth alone will not help those in most dire need, and there need to be specific policy interventions to promote equitable and inclusive growth.

Dr. Olayele laid out a plan for recovery:

Policy sequencing to prioritize hard hit sectors: NYC can learn from past crises like 9/11 and the 2008 global financial crisis to identify the industries that may take the longest to recover. However, previously safe sectors might be on a different trajectory because this is a pandemic-induced recession.
New small business financing and ownership models: Small businesses account for 95 percent of all businesses in NYC, but economic activity has moved towards large businesses. Women and minority business owners tend to have smaller businesses and lower revenues, so they may require more support in recovery.
Strategic investments in education and training pathways: Low-income workers have experienced the most job loss, and jobs paying living wages are more likely to require skills associated with higher education. Investing in educational access will increase access to high-income employment.
Private sector participation and investment: The private sector has the potential to contribute a great deal to recovery. For example, Facebook signed a new lease this week to occupy 730k square feet of office space in NYC, despite widespread theorizing about the end of the commercial leasing industry.

Dr. Wilson provided an international perspective by sharing New Zealand’s response to COVID-19 and the challenges they face in recovery. New Zealand moved quickly to shut down their borders to international travel in the early days of the pandemic, and this combined with a robust “test, trace, treat” system and daily nationwide communications from leaders has allowed them to contain the virus. Their response to the resulting financial hardships has been equally comprehensive, including delivering around $13 billion in wage subsidies and imposing a mortgage holiday to allow for a delay in payments.

Dr. Wilson outlined New Zealand’s challenges in economic recovery:

Regionalism: So far, New Zealand’s approach to economic recovery has been very centralized. However, the country’s regions are highly varied in their level of need, resources, and infrastructure.
Reliance on global economy and tourism sectors: The country’s economy is dependent on trade and international tourism. They took a significant hit upon closing their borders, and they now face changes to supply chains and travel patterns that may persist beyond the crisis period.
Debt and the end of subsidy programs: The extensive financial relief programs are expensive and not sustainable. Many of their subsidies will soon come to an end, and New Zealand predicts that this increase in spending will result in a debt that is 40 or 50 percent of their GDP.
Nascent inclusiveness movement: The push for greater inclusivity in New Zealand is in its infancy, and so without proper leadership or energy, may not be adequately centered in recovery efforts. The country has already seen rising inequality, and direct-action organizations are highly impacted by the recession.

Dr. Bakker discussed the need for new strategic workforce development for youth. Youth have been disproportionately affected by unemployment in the pandemic, and are also facing reduced future employability resulting from interruptions to post-secondary studies, cancelled internships and co-ops, and the potential that jobs they have been trained for will no longer exist upon graduation. Dr. Bakker predicted that the future of work was fully remote, with asynchronous communication between teams and human-machine collaboration on highly automated tasks. She also noted that the post-pandemic economic recovery is likely to accelerate these trends.

Dr. Bakker shared the main priorities for workforce development:

Investing in digital literacy and “human/soft” skills like professionalism, leadership, and communication

Funding accessible, agile upskilling and reskilling programs

Creating opportunities for authentic engagement in the recruitment process

Developing flexible, inclusive work spaces and places

All experts agreed that the COVID-19 pandemic has worsened inequalities, and that full recovery will require working intentionally towards inclusivity to ensure that all members of our communities receive the support that they require.