The world after COVID-19 will look different. Those unable to adapt to the “economy of tomorrow” will constitute an increasingly isolated social class that struggles to get by.

The COVID-19 pandemic has fundamentally altered the nature of human interaction. Those who are still employed are working from home now more than ever before. Children are attending school virtually through Zoom and Google Classroom.

As we continue adapting to life during stay-at-home orders, the economy continues to struggle.

At least 36 million people have filed for unemployment since the COVID-19 pandemic began in March. A Washington Post/Ipsos poll conducted between April 27 — May 4 suggests, however, that unemployment is even worse than the headline 14.7% U-3 unemployment as of April 2020. According to the Post/Ipsos poll, 40% of laid-off workers have not filed for unemployment. 84% of people in this group stated that they don’t plan on filing for unemployment within the next two weeks.

Chart taken from unemploymentdata.com

Perhaps 40% of laid-off workers believe the economy and country will return to normal shortly. Why bother applying for unemployment if you’ll soon be back at your job? That is, assuming you have enough in savings as a buffer. A “return to normal” will not bring the United States back to life as it was before the pandemic. Businesses must now scrutinize their capital expenditures and cut costs wherever possible to stay ahead or stay afloat. Macy’s furloughed most of its 130,000 employees, and J.C. Penny, an employer of roughly 90,000 people, filed for bankruptcy.

According to economists at the University of Chicago, an estimated 42% of job loss due to the COVID-19 pandemic will be permanent. Companies like Macy’s and J.C. Penny have to adapt to compete with online retailers like Amazon; the e-commerce industry is booming, and human labor is becoming obsolete with the rise of automation.

Americans should prepare for life after quarantine: Normal 2.0

New United States — The Employed

Remote work is decentralizing the workforce. Given the option, many people will not return to offices. According to a recent Gallup poll, 59% of COVID-19 induced remote workers stated that moving forward, they want to work remotely as much as possible.

Twitter CEO, Jack Dorsey, announced that all Twitter employees can choose to work from home permanently.

Remote working can increase employee productivity, but it can also lead to breakdowns in collaboration. According to Kevin W. Rockmann of George Mason University and Michael G. Pratt of Boston College, working from home is contagious. Employees will elect to work from home if their colleagues have already begun doing so. As a result, people will increasingly communicate through video conferences, email, and office workspaces like Slack and Basecamp rather than in conference rooms and by the water cooler.

60% of people working from home say they now enjoy a better work-life balance because they’re not wasting time commuting to their offices. For New Yorkers averaging a 33-minute commute to work, working from home would save over 10 full days of lost time over a year. Saving so much time will further incentivize more employees to work remotely.

Chart taken from Robert Half

The COVID-19 pandemic is also testing how workers’ at-home performance affects company-wide productivity levels. The traditional five-day workweek may soon give way to a four-day workweek. As long as employees can complete their deliverables and do all that’s asked of them from home, there may be no need to keep them “on the clock.”

Microsoft Japan trialed a four-day workweek in August 2019, and productivity increased 40%. Unsurprisingly, 92% of employees said they liked the four-day workweek.

Businesses can achieve and even exceed productivity goals by reducing office rent expenses and improving employee satisfaction rates. A post-pandemic economy for the employed may disrupt the natural flow of in-person communication (i.e., nonverbal cues and eye contact) but may also provide unprecedented improvements for employee work-life balance and even increase corporate savings.

New United States — The Unemployed

We’re experiencing an acceleration in the transition to a more automated workforce. Why would a company that traditionally relied on human labor continue to do so when automation could do the same job while commanding no salary, not threaten to join a union, and not get sick?

The previous examples of Macy’s and J.C. Penny laying off employees or filing for bankruptcy do not necessarily mean these companies will cease to exist. Rather, they will likely try to adapt to the new economy; cutting down on physical retail locations and emphasizing e-commerce will be a high priority.

This forced adaptation will streamline corporate operations, and many employees will become unemployed and under-skilled in the new economy. As the nation’s poor economic situation hampers individuals’ abilities to pursue higher education, and as companies are simply not looking to hire, under-skilled workers may feel that there is no clear path forward to success.

A 2017 National Bureau of Economic Research (NBER) study showed that for every 1% increase in unemployment, there was a 3.6% rise in the opioid death rate. The economic fallout from the COVID-19 pandemic will leave many out of work with no set plan for re-entering the job market. Many will suffer financially, physically, and mentally.

Millions of people will be sidelined with little to no income. As hopelessness and despair set in, people will search for ways to cope with and escape from their new realities.

The internet can offer such an escape. Easily accessed from the comfort of one’s own bedroom or basement, the internet provides a seemingly endless list of opportunities, including limitless options for entertainment. However, what is currently the foundation for remote workers and virtual schooling may also be a harbinger of prolonged alienation and social isolation.

In 2018, according to the Bureau of Labor Statistics, unemployed men and women cumulatively spent roughly 75% more time on leisure and sports per day than their employed counterparts.

Chart taken from Bureau of Labor Statistics (annotations added)

A 2017 NBER study highlighted how unemployed people, young men specifically, are turning to recreational computer use and video games. According to this study, from 2012–2015, “younger men increased their recreational computer use and video gaming by nearly 50 percent… Non-employed young men now average 520 hours a year in recreational computer time, sixty percent of that spent playing video games.” That’s 21 full days of recreational computer time.

Sales for video game hardware, software, accessories, and game cards for March 2020 grew at least 35% compared to sales in March 2019. According to The NPD Group, March 2020’s $1.6 billion in video game spending was the highest reported total for a March month since 2008 when monthly spending hit $1.8 billion.

In March 2008, reported unemployment sat at 5.1% as the United States entered into the Great Recession.

Chart taken from Bureau of Labor Statistics (annotation added)

Consumer spending in the U.S. video game industry hit a record $10.86 billion for the first quarter of 2020. According to Mat Piscatella, games industry analyst at The NPD Group, “‘as people have stayed at home more, they’ve utilized gaming not only as a diversion and an escape, but also as a means of staying connected with family and friends.’”

A Whole New World

People have been and still are sitting at home with nothing to do, and a lack of human interaction is causing people to look for ways to escape. Regardless of their employment status, people are seeking out ways to fill in the hours of their now seemingly wide-open days.

As video game capabilities continue to progress, the online world offers an increasingly enticing option to simply spend your newly found free time. Take a look at the next-generation graphics of the PlayStation 5; virtual worlds are becoming more realistic, and the progression of virtual reality technology will further push the boundaries of the gaming experience. Moving forward, video games will become truly immersive and increasingly escape-worthy.

Connectivity without physical human interaction could negatively influence how people communicate with one another even after the pandemic. Strong relationships can be and certainly are built through online communities and multiplayer video games, but the increasing reliance on technology as a replacement for human touch will create a subset of the population that would rather stay in the virtual world instead of the physical one.

For those left behind in tomorrow’s economy, this virtual landscape may seem like the only source of relief. If reality is disappointing and your list of opportunities to succeed is dwindling, plugging in might be viewed as the only way out.

In the real world, people need to meet basic needs like groceries, rent, and paying their bills. The U.S. government’s $1,200 stimulus check to millions of Americans, along with other stimulus measures, represents a step toward addressing the dire economic situation many now find themselves in. The House of Representatives is set to vote on Friday, May 22 in favor of the HEROES Act, a $3 trillion stimulus package that would provide another round of $1,200 checks — among other measures — to adults, this time including up to three adult dependents per family.

According to Netspend, a global payments company that has handled around $1 billion in federal stimulus checks for its customers, people are spending the money on “groceries, fast food, pharmacies and gas, as well as withdrawing cash from ATMs.” Current, a personal banking company, supports this by reporting that many of its customers are spending their stimulus money on similar purchases.

Chart taken from cnbc.com

That 5% of stimulus check money being spent on video games, at least by Current clients, further demonstrates people’s desire to either escape their hardships or enjoy their influx of newfound disposable time.

What Next?

People now have unprecedented levels of free time, and this will persist after the pandemic. People will be employed and enjoy an improved work-life balance, or they’ll be unemployed and struggling to adapt to the economy of the Digital Age.

Regardless of one’s work status, everyone needs to be able to feed and shelter themselves. Without meeting these basic needs, it’s essentially impossible to achieve a lifestyle of dignity and self-fulfillment. Maslow’s Hierarchy, a foundational principle of psychology, illustrates how people can realize self-actualization. Basic needs are a prerequisite.

Image taken from simplepsychology.org

Normal 2.0 will consist of companies that cumulatively employ hundreds of thousands to millions of Americans — companies like Macy’s, J.C. Penny, Walmart, and McDonald’s — deciding to either transition their businesses online or replace humans with autonomous labor. This will leave a massive portion of the population either unemployed or lacking the skills necessary to effectively adapt to a workforce that’s increasingly reliant on software engineers and artificial intelligence.

How can we ensure that those struggling to catch up to the demands of the new economy are not simply left behind, disregarded, and forgotten?

Finland recently released the results of its government-backed basic income experiment. From 2017–2018, “2,000 randomly selected unemployed people across the country [received] a regular monthly income of €560 (~$600), with no obligation to seek a job and no reduction in their payment if they accepted one.” Recipients of the basic income enjoyed “improve[d]… mental well-being, confidence and life satisfaction.”

Now, Spain, Scotland, and other major countries are either planning on or seriously considering adopting similar policies to resuscitate their flailing economies. If people are unable to work or simply struggling to find work, governments would be well off to prioritize the happiness, mental health, and general well-being of their citizens by providing foundational resources in the form of direct cash payments. These payments can be used for the bottom-rung necessities on Maslow’s Hierarchy, and case studies show that they are.

Stockton, California has been conducting a basic income test, and results show that, of the tracked money, 40% went toward food and 12% went toward utilities; people in need of money spend it on necessities. The breakdown of how bank customers have been spending their $1,200 stimulus checks corroborates this notion.

Working remotely and for fewer hours per week — thanks to a decrease in commuting time and potentially a four-day workweek — will grant people something more elusive than a large paycheck: time.

A restructured business landscape that improves work-life balance for the employed will prioritize highly skilled job applicants. Many people will not “make the cut.” These people will also have more free time, albeit while not receiving a paycheck.
What will society look like when everyone has newfound time on their hands?

Humans are moving online sooner rather than later. The internet is fulfilling our innate need for community during the pandemic, but it may persist even more pervasively than before after the economy reopens. Our current lack of in-person social interaction has forced us to rapidly evolve, and communication methods — social media, video conferences, and online video games — may soon constitute America’s new “normal.”

We are social creatures. Our definition of what is “social” may simply need to evolve alongside us.

Exploring how technology affects people, business, and politics. Runner | Guitar Player | Fan of the Yankees, Giants, & the Knicks

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