The economy--macro and micro--after the pandemic

Still running: Iowa Running Co. in May 2020

In the halcyon days that were the middle of the last decade, my Corridor Urbanism co-founder Ben Kaplan did a series of what he called Urbanist Goodreads... annotated bibliographies of writing on a particular topic. I am shamelessly stealing this format as a way of starting to sort through the vast array of writing on how the pandemic will affect the future of cities. Today's topic: the future of the economy and work.

The economic impact of the coronavirus pandemic has been huge in the short-term, and may continue huge in the medium-term. The May 2020 report from the Congressional Budget Office forecasts an impact on real gross domestic product at the end of 2020 of negative 7.6 percent, which doesn't struggle back to zero until the end of 2030. GDP is a blunt measure of economic strength, but it certainly indicates tough times for many individuals; state governments have also seen substantial lost income and sales tax revenue (Dadayan 2020).

We began this decade with a bunch of economic questions, even in a long bull market: Can the American economy provide careers and opportunities for all our citizens? (After a ten year bull market, a quarter to a third of Americans were financially fragile, Watkins 2020.) Can governments at all levels find some degree of financial stability? Is ever-rising economic inequality a problem in itself, a symptom of a systemic flaw, or both? Now these are joined by others: Was there a better set of policy responses that could have forestalled some of this damage? (Backward-looking, I know, but possibly useful for next time?) Will there be jobs for everyone who needs one? Will some areas be disinvested as they were after the 1960s? Is there anything government can do at any levels to lessen pain and/or increase resilience? And how will the nature of work change?

"How Government Jobs Programs Could Boost Employment," Urban Institute, 6 May 2020

The liberal think tank calls for government job creation to accelerate the recovery, although "Many of these jobs will come back as people return to normal life" anyway. Government efforts could include public works jobs, improvements to the unemployment insurance program, and subsidies for private-sector employers, either generally or targeted at certain areas or sectors. The choice of futures seems to be a bleak 2021 with familiar-looking recovery thereafter, or intense government involvement with intriguing but unstated possibilities for the long-term future of work.

Kirston Capps, "The Rent is Getting Paid. How?" City Lab, 8 May 2020

May rent payments are by and large getting made, which is something of a miracle. The various shutdowns have thrown a lot of uncertainty at people's financial situations, particularly those with little savings and/or more vulnerable to job loss. The pandemic will seemingly last longer than the federal unemployment insurance and stimulus payments will. Renters' income is one link on a brittle chain that includes the businesses that would hire them and the landlords who depend on their payments for income and maintenance. The article quotes Rutgers University law professor Rachel D. Godsil: "Even [government relief] plans with the best of intentions only defer the problem." Are we heading for a rental housing crisis, then?

Texas, for example, had halted evictions (by judicial action) in March; that ban was lifted May 26, though some local protections remain (Garnham 2020). The article continues: "The number of people who could be impacted by lifting the eviction moratoriums is not known because there's no data available yet to understand who is covered by the patchwork of regulations in the state."

Kim Hart, "Federal Coronavirus Relief for Cities is Still Uncertain," Axios, 14 May 2020

Cities and states face dramatic financial shortfalls in the wake of the coronavirus; the main driver is, depending on your perspective, either lost revenue and increased obligation in this calamity, or irresponsible spending and obligations taken on before the virus hit. This controversy is playing out at the federal level as politicians debate a massive aid package. In any case, the amount state and local governments need in the next two years in order to save their credit totals to hundreds of billions of dollars; without that money there will be immediate impacts on public employment as well as senior living, mass transit, and higher education services. 

The Wall Street Journal reports state and local governments cut 1 million positions in April 2020. A study by a Harvard economist estimates a $1.50-2.00 negative impact on the American economy for every dollar states and localities cut (Harrison 2020 [paywall] via Daily Deduction). Where does the money come from, if not from the national government? Tax increases large enough to make a difference seem unlikely (Zaretsky 2020).

Some towns will not survive as cutbacks are passed down the federal ladder, writes Chuck Marohn in "We're In the Endgame Now for Small Towns" (Strong Towns, 1 June 2020). Analyzing the budget of his hometown of Brainerd, Minnesota, Marohn finds locally-generated revenue accounts for slightly more than half of the town's 2020 expenditures; removing debt obligations from the table actually makes it less than half. "Brainerd is a ward of the state," he concludes, and worries what will happen when the state government retrenches in the wake of the pandemic and its attendant financial contraction. Smaller towns are in even more perilous shape; large cities like Minneapolis and St. Paul are in better condition but are also cautioned not to risk their prosperity. Writing from Wichita, Russell Arben Fox (2020) argues that the old way of approaching local budgets is more dangerous than ever now.

Lloyd Alter, "Will the Office Be Killed by the Coronavirus?" TreeHugger, 5 May 2020

Like many white collar workers, I've spent the last two months working from home, and it has its advantages and disadvantages. So does office work. Do I hanker to return to my college office? Well, I have been showing up there once a week; by prior arrangement, my colleagues are elsewhere. Alter provides the guidelines of one design firm, Bergmeyer of Boston, Massachusetts, which contain (by my count) 17 rules for the conscientious employee to follow in addition to doing their actual job. Alter suggests that in the shadow of the coronavirus there are even more disadvantages to office work and the advantages are hard to take advantage of. It will be interesting to see, he muses, how many people are really, really desperate to get out of the house and how many have decided they would rather keep working from home. But do employees really get to choose? [I hear that employees are now finding all those meetings were wastes of time. Well, guess what? We knew that already... but we weren't the ones calling the meetings!] Maybe it's different for designers, but a lot of our employers own our asses and will put them wherever they want them, particularly if the burden of keeping things sanitary can be put on the employee as well.

Indeed, says Washington Post columnist Helene Olen ("Telecommuting is Not the Future," Washington Post, 21 May 2020), employers in the long run "will likely remember that money spent on real estate is often money well spent" because of better collaboration and better control. Workers, too, might find working-at-work means better work-life separation and feeling more connected/included.

The coronavirus causes some second looks at the fashion for "open" offices, especially after nearly half of workers in a Seoul call center caught the virus in February, but probably will result in revision not abandonment, writes Sarah Holder ("Even the Pandemic Can't Kill the Open-Plan Office," City Lab, 14 May 2020). Expect more space between employees, fewer client drop-ins, smaller or virtual meetings, modular furniture and room dividers, and new air filtration systems, rather than a sudden outbreak of walls.

When I do return to teaching this fall, how will it work? Dr. Wendy Bashant, a former Coe colleague spending the year at Jiaotong University in China, reports on that institution's re-opening last week: hand-washing stations and hand sanitizer everywhere, check-in tents, temperature-taking security gates, students required to stay on campus, social distancing regulations with printed and verbal coaching... but mingling during breaks hard to manage. Can American students behave even that well? I'm thinking about:

• What am I supposed to do if a student in my class does not abide by social distancing practices?
• How are we going to manage access and egress to classrooms and buildings?
• Is Marketing going to put something stupid on my face shield?

These are surely "first world problems," in that I have the luxury to worry about stuff like this instead of how will I eat and where will I live? But few people are truly shielded from economic pain; it gets to us eventually, we're more connected than we think, and we're all better off when the system works for everyone.