COVID’s big losers
With Omicron fading (fingers crossed!), we can start the process of looking at winners and losers as we emerge from the worst pandemic in 100 years.
By Jeffrey Cole
This time it feels real!
Last June, when most of us had been vaccinated and COVID was starting to recede, it felt like the crisis was waning and we could resume our old lives. We fled our homes onto airplanes, to restaurants and movie theaters, sporting events and concerts. Life was getting back to normal.
Like the groundhog on February 2, we didn’t see our shadow and believed Spring was on the way rather than facing another six weeks (in this case nine months) of pandemic Winter.
Despite our optimism, Delta and Omicron soon followed.
Today, we again see no shadow, and hope an endemic rather than pandemic, spring is ahead. We have decided that the pandemic is over… whether it really is or not. We need it to be over… whatever the science says.
After two years, the world has completely changed. At the Center, we have been tracking this change in our COVID Reset Project. Now we can see which industries and companies will emerge weaker and diminished coming out of the pandemic and which have gained strength and market share.
This column will look at COVID’s losers. My next column will examine the winners.
America never wanted to go cashless. Many threatened to protest if the government got rid of the penny (the world’s most worthless piece of metal). We even opposed tinkering with cash (like replacing the paper dollar with a coin) for sentimental reasons. Surveys showed enormous resistance to the idea of going cashless or any moves in that direction.
COVID has pushed us into a cashless world whether we wanted it or not. (We didn’t.) In March and April of 2020, many were afraid that cash (as well as mail and groceries) might contain the virus. (It didn’t.) Most merchants didn’t want to touch our cash or even be close to us when we made a purchase. Contactless pickup and delivery became the norm. COVID reduced our need for cash since (if we could) we moved much of our buying online. We stopped going to ATM cash machines. Our COVID work on shopping and banking shows that today cash is our fourth preferred way of buying. Only paying by check is less popular.
COVID accelerated us into cashlessness in two years. Otherwise, it might have taken twenty.
Uber and Lyft
During the height of COVID, ride-sharing ground to a halt. Most of us had nowhere to go. If we did have to be somewhere, then the last thing we wanted was to be in a confined space with a stranger.
But Uber’s problems extend beyond fear. Massive investment in Uber enabled it to grab market share by subsidizing as much as 60% of rides. These subsidies are coming to an end, and Uber’s price advantage is waning if not disappearing. After a year or more away from Uber, many customers have been shocked by the increase in fares.
It is also tough to find an Uber of Lyft ride; the same labor shortage that is making it nearly impossible to find employees to serve at restaurants, clean hotel rooms, or provide child or senior care is also affecting get-a-ride services. The only way all companies will find enough employees is by curtailing services or offering higher wages.
Last June, when we flooded back to stores and shopping malls, we were euphoric to be out of the house. In our Project, shoppers reported how important it was to be in stores, to see other shoppers (not too closely), to talk to salespeople, and to touch merchandise. We love the process. But we weren’t buying as much in person. We did the shopping to satisfy our need to get out and see people, but we did the buying online.
This evolution has been going on for 20 years. Our work shows that for those who never made an Internet purchase before March of 2020, within one month 40% did so. And the evidence is strong that the purchasing will never return to brick and mortar.
During COVID, online buying became a lifeline. It was also fun. We could alleviate our boredom through online shopping and then track our packages as they inched closer to our homes until we heard the doorbell ring. When the package arrived, there was a let-down as there was nothing more to look forward to. We solved that problem by going back online and buying more. (I’ll talk about Amazon as one of the biggest COVID winners next time.)
Commercial Real Estate
No surprises here. There is no one who manages an office who is not asking: 1) do we need all of this space or 2) do we need any space?
A war may be coming between employees who want to work from home part or all the time and employers who want everyone back in the office. But no matter how it shakes out, it is clear that more people will be working remotely than before March of 2020. A lot more.
A new model may emerge for some industries where staff are in the office Tuesday through Thursday and home on Monday and Friday.
Office space, a lot of it, will free up. That will change the nature of cities, public transportation, and even relationships among families. But there is likely to be a crisis in commercial real estate. Some of that space may be converted to residential (which is difficult and expensive) or other creative functions.
Our COVID Travel work makes a strong case that a third of business travel is gone forever. People travel for business for three reasons: 1) to build business, 2) to maintain business, and 3) for meetings and conferences.
Zoom and other video conference platforms have shown that maintaining business and meetings and conferences can be done well (or well enough) remotely. We will still travel to some meetings—the really important ones or those in exotic or desirable locations—but the COVID effect on business travel will be a permanent one-third loss. Travel to build business will remain as strong as ever. Before clients trust companies with large accounts or business, they want to shake hands, look people in the eye, and get to know them over coffee, drinks, or meals. In the next column we’ll see it is a very different story with leisure travel.
This was the big loser during COVID. The lockdowns and fear have created massive increases in our levels of anxiety, loneliness, and depression. Weight gain and increases in drinking during COVID show some of this. Mental health issues among Gen Z were at crisis levels before COVID. Our COVID work on Health shows that those 16-24 rate their mental health as poor—much worse than grandparents or those over 65. Gen Z respondents also rate their physical health as worse than those older groups. This is extraordinary and hugely worrisome.
Just as the those who lived through the Great Depression carried the mental toll for the rest of their lives, COVID is likely to remain with us. It would take a return to Pre-COVID normal to fully understand the depth of the impact on our mental health. Sadly, major employment opportunities will develop for mental health practitioners who will be called into workplaces and schools to help workers and students deal with the lingering vestiges of COVID.
With as much as 50% of the work force looking for new jobs, the Great Resignation is a clear signal of mental health issues ahead. Millions of workers are closely examining their futures asking whether they are on the right path. This is just the beginning.
Next time: The winners from COVID. It’s some of the companies and industries you expect and a few surprises.
Jeffrey Cole is the founder and director of The Center for the Digital Future at USC Annenberg.
See all columns from the center.
February 23, 2022