Penn on the World after COVID-19, International Trade & Finance The Economy Is Already Looking Beyond the Pandemic
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August 19, 2020
Mauro F. Guillén | Penn on the World after COVID-19
Penn on the World after COVID-19 is a joint project of Penn Global and Perry World House. We've asked some of Penn's leading faculty, fellows, and scholars to imagine what the global pandemic will leave in its wake.
Mauro Guillén is Zandman Professor of International Management, Sociology, and Education at the University of Pennsylvania.
Consumers, workers, investors, and companies are the most important actors in the economy. Three of these four actors have already adjusted to the economy of the world after COVID-19 awaiting us. Consumers across all ages and (nearly all) income levels have embraced e-commerce. Investors have clearly taken position in a new environment filled with technological possibilities and the Fed’s largesse. And most companies have either pivoted to catch the changing winds or recognized that their business models may need to be seriously reconsidered. A few have seen demand for their products or services skyrocket.
Missing from this general picture of adaptation and change are workers. Nearly 40 percent of them have been laboring from a distance. The other 60 percent have either lost their jobs or found that they had no option but to work on the company’s premises. It is hard to see a future in which all work will be remote, unless automation becomes truly rampant, as I will analyze below. The advantages of remote work are obvious, and so are the disadvantages in terms of loneliness, burnout, stress from not being able to separate work and personal/family time, lack of coordination, and difficulties onboarding new employees.
Remote work itself will continue to benefit certain types of workers over others. Remote tasks and jobs can be offshored. Thus, if we continue to go down that path, we will witness the emergence of a truly global labor market—with no associated migration. A radiologist in one country may interpret an X-ray taken in another. Software engineers in different locations can collaborate on a project. Inevitably, remote work technology will benefit workers with unique skills, knowledge or experience. They will be in a position to receive offers of employment from companies the world over, and they will not find it necessary to move in order to accept the most attractive one. By contrast, workers without such differentiated skills will be subject to a global price for their labor, which could degenerate into a race to the bottom.
Automation will be the longest-lasting effect stemming from the pandemic. Companies have learned that they cannot afford to see their supply chains break down or their assembly lines (disassembly in the case of meat-packing) stop because workers fall sick. Meanwhile, interactions with customers in the service sector have changed as a result of physical and social distancing guidelines. Hotels, outpatient medicine, transportation, and retail will go through a massive wave of automation. Some unemployed workers may find that their jobs have disappeared. Technological change has destroyed the livelihoods of entire communities in the past. Governments, nonprofits, and businesses would be wise to put in place mechanisms to prevent further social dislocation from occurring.
These changes in the economy clearly indicate that globalization is far from over. This crisis may represent a temporary decline in trade, but there are so many other ways in which the dynamic of the market and the power of technology will reinforce, rather than halt, globalization. This crisis is not a discontinuity. It’s mostly an intensification of trends, including inequality as well as each of the others driven by the shifting behavior of consumers, investors, companies, and workers. And while the first three have largely adapted to the pandemic economy, supporting the latter will need to remain the focus of policy interventions.
The views expressed in Penn on the World after COVID-19 posts are solely the author’s and not those of Penn, Penn Global or Perry World House.