Gregory S. Smith - The New Normal in IT

The International Monetary Fund leveraged the United Nation's (UN) International Labour Organization (ILO) and concluded that “the reduction in work hours in the second quarter of 2020 was equivalent to the loss of 495 million full-time jobs, “which added to the equivalent of 160 million full-time jobs lost in the first quarter” of 2020. 33 The UN's ILO goes on to predict the following impacts across the globe:

Losses to continue into the third quarter of 2020 equal to 345 million full-time positions19.8 percent in the Americas12.4 percent in the Arab states11.6 percent in Europe and Central Asia11.5 percent in Africa10.7 percent in the Asia-Pacific region

Losses are projected for the fourth quarter of 2020 to be 245 million full-time jobs 34

How long it takes to recovery jobs lost worldwide is anyone's guess. Economists are struggling to determine by industry how long if ever certain job sectors will recover to pre-Covid-19 levels.

According to the United States Congressional Research Service (CRS), the impact from the recent 2020–2021 coronavirus pandemic on the U.S. job market was worse than compared to the end of the Great Recession in 2009. 35 The Congressional Research Service reported that unemployment increased from 5 percent in 2007 to 10 percent in October 2009 compared to the Covid-19 pandemic unemployment rate of 3.5 percent in February 2020, before peaking at 14.8 percent in April 2020 (see Exhibit 1.2). 36 The Congressional Research Service indicated that “the peak represents the quickest month-over-month increase in employment rates and the highest overall unemployment rate since the CRS data started being collected in 1948. 37

The Congressional Research Service went on to indicate the following other impacts in the United States:

During the first three months of the pandemic in 2020, unemployment was concentrated in sectors that provided “in-person services” such as leisure and hospitality, which experienced an unemployment rate of 39.3 percent in April 2020. Exhibit 1.2 Historical Unemployment Rate in the United States (1948–2021)Note: Shaded regions indicate recessionary periods as identified by the National Bureau of Economic Research.Source: U.S. Congressional Research Service, April 14, 2021.

Part-time workers experienced an unemployment rate “almost twice that of their full-time counterparts” by April (24.5 percent compared to 12.9 percent)

Workers without a college degree experienced 21.2 percent unemployment compared to 8.4 percent workers with a Bachelor's degree or higher.

Teenage women experienced an unemployment rate of 36.6 percent compared to 28.6 percent of teenage men.

Women aged 25–54 years old experienced 13.7 percent unemployment compared to their counterpart males of the same age range of 12.1 percent.

Unemployment rates by ethnicity from the peak of the pandemic in April to the end of 2020 was reported as 16.7 percent for Black, 14.1 percent for White, 18.9 percent for Hispanic workers. 38

Unemployment rates recovered to lower levels by March 2021 but varied by racial group (see Exhibit 1.3) with Black unemployment at 9.6 percent, Asian unemployment at 6 percent, followed by White unemployment of 5.4 percent. 39

The Hackett Group, a strategic consultancy and leading enterprise benchmarking firm to global companies, looked at impacts of the pandemic from a few different perspectives. In a recent study, the 2020 Covid-19 Poll, which included participation from 250 global companies, Hackett found that five times more high impact organizations cut their IT budgets as a result of impacts from the pandemic (see Exhibit 1.4). 40

Exhibit 1.3 Unemployment Rates by Racial Group in the United States (2020–2021)

Notes: Black and Asian workers experienced their peak unemployment rate in May 2020. White workers' peak rate occurred in April 2020.

Source: U.S. Congressional Research Service, April 14, 2021.

Exhibit 1.4 IT Budget Impacts from Covid-19

Source: COVID-19 Poll, The Hackett Group, 2020.

Several companies in a variety of sectors did very well throughout the hardest hit portion of the Coronavirus pandemic between 2020 and 2021. With many indoor dining establishments closed due to state and local restrictions, food delivery services like Door Dash, Grub Hub, and Uber Eats, all gained a larger customer base during the pandemic. 41 I personally witnessed fast-food restaurants doing well with car lines consistently high during meal times, especially for large chains like McDonalds, Chick-fil-A, Kentucky Fried Chicken/Yum brands, and others that operated through drive-through windows. Online retailers like Amazon and Walmart also did well during the pandemic as shoppers feared in-person store shopping during the height of the pandemic. 42 Technology and online meeting vendors like Citrix, Microsoft, Cisco, and Zoom did especially well as organizations flocked to tools for online meetings and remote access solutions for corporate staff. 43

Chipotle digital sales “jumped 134 percent as customers order ahead through ‘Chipotlanes' which allow customers to pickup orders through drive through lanes.” 44 The company reported the following information:The chain opened 40 new locations in the recent quarter with more than 50 percent of the new locations offering drive-thru lanes to pick up digital orders.

Digital sales accounted for over half of the companies total $1.7 billion in revenue, a 24 percent increase compared to the same period a year ago.

Chipotle reported that it closed only five stores during the quarter, bringing the total number of locations to 2,803.

Chipotle anticipates opening about 200 new locations in 2021. 45

Grocery stores and supermarkets did exceedingly well during the peak of the pandemic, with many large and small chains adapting their stores to delivery and pick-up aisle options for customers who didn't want to enter their brick and mortar stores. 46 Hand sanitizer products and cleaning solutions like Clorox Wipes were hard to find commodities early into the Covid pandemic. 47 I vividly remember stores rationing the number of products allowed per customer during the early days of fear when recently stocked shelves would become bare within minutes of announcing the product. My wife to this day still maintains a cache of these products, as she's anticipating recurring waves of Covid-19 as we enter the flu season in the fall.

Liquor, wine, and beer stores were an unlikely success to me, but it was validated recently when I spoke to a number of operators about their sales in the past year. 48 They explained their rationale quite clearly to me. When patrons can no longer go to restaurants and bars to drink, people buy products to consume at home. It's just that simple. Also, these businesses were deemed “essential” due to the potential impact of a run on hospitals for people that abused alcohol in their daily lives. Hospitals didn't want a run on their businesses due to alcohol shortages as their primary focus was managing Covid-19 patients.

Lastly, streaming services such has Hulu, Disney+, Netflix, HBO Go, and so forth experienced a significant surge in customers and use through the peak period of the pandemic. 49 Netflix alone added nearly 16 million new subscribers in the first quarter of 2020 and its growth numbers doubled what the company expected. 50 The 2020 first quarter was Netflix's “largest three-month jump” in the company's 13-year history. 51 As someone who doesn't like being cooped up in their home for over a year, Netflix and Hulu helped get me through this pandemic with some terrific programming options.