After a Year of Lockdown Rules & Closures, What Were the Impacts on Businesses?
It is hard to overstate the effect that the COVID-19 pandemic has had on the global economy. The world has been at a stand-still like never before: from airlines and hotels to restaurants and live music, entire industries, have been upended and shocked to their core.
The International Labor Organization estimates that a staggering 114 million jobs were lost worldwide in 2020. Air travel decreased more than 60 percent. U.S. restaurant and foodservice sales were $240 million lower than expected, leading to the temporary or permanent closure of more than 110,000 restaurants. Oil futures prices even went negative for the first time in U.S. history.
The impact on small businesses has been especially pronounced. Half of all small businesses reported being in the red in 2020, compared to only a quarter of businesses in 2019. A July 2020 survey found that three-quarters of restaurant owners only had enough cash on hand to last, at most, 2 months.
Labor Department data shows that the majority of jobs lost during the pandemic have been in industries that pay low average wages, with the lowest-paying industries accounting for 30 percent of all jobs but 55 percent of the jobs lost from February 2020 to February 2021.
Of course, with the complexity of global economics it’s hard to know how much of the economic cost can be attributed to lockdowns, specifically. Slowdowns in supply-chain logistics have had domino effects even in areas that were never formally locked down.
For example, a recent study published by the Centre for Economic Policy Research found that a country like Sweden that did not impose a lockdown experienced a similar reduction in GDP as neighboring countries like Finland and Norway that did have lockdowns. A survey in September 2020 found that three out of four economists believed that the U.S. would have been in a better economic position that fall if lockdowns had actually been more aggressive at the beginning of the crisis.
Research on these topics is complex and multifaceted. The pandemic is poised to dramatically change human behaviors in ways that will profoundly impact many industries, especially with many organizations moving to implement remote work on a permanent basis.
Jackie Phillips, MD, March 30, 2021