The world is changing
The long-term effects of recessions are tough to see but consider this.
From 2007-2009 there was a financial crisis. Initially it led to heavy layoffs in the financial sector but that sector fully recovered in time. Meanwhile, it was the goods producing sector that was decimated, declining by 16% and it still hasn't recovered.
That was followed by waves of blue collar anger that put Trump over the top in the Presidency and led to his attack on the global trading system.
No one could have possibly foreseen any of that as the financial crisis was unfolding.
The pandemic recovery will be the same.
Here's an interesting parallel. In the financial crisis, it was men who largely lost their jobs but this time, it's women. In a paper released today, the Hamilton Project illustrates how the recovery for women is trailing men for the first time in modern history.
That begs the question? In what way will women workers push back in the voting booth?
I strongly suspect it will be child care, maternity leave and working conditions. We're already seeing something of a rebellion in the healthcare sector.
With that, I think that workplace flexibility is now a must. I don't think I'm breaking any new ground here but going back to the office is never going to be the same and it's tough to see how that changes the world. As someone who has worked from home for 13 years, I can say that it's a learning curve. I pity anyone who's been working at their kitchen table for the last 18 months. It probably takes 5 years to get it right and during that time we might see disappointing labor productivity and poor growth. At the same time, what about the people who have jobs where they can't work from home? Will they demand to be compensated more?
Another great question for central bankers is whether women will return to the labor force in full numbers at all. The Hamilton paper shows that 35% of working mothers and 42% of working fathers plan to work less or pursue a less demanding job.
Maybe people are learning to like all the time they're spending at home and with their families?
