”We might not be too useful overall, but we’re the ones that get called to do the job when everything else is going to sh*t”
— Fall Semester, 2017. College professor explaining why a degree in Economics might be a good idea.
Sometimes the real world is better than the wild stories we can find in a book or movie.
With massive layoffs and rising inflation levels, it seems safe to say we’re experiencing a crisis and correction in the market. Applied economics is not that fun, is it?
Are we passing through the same old road of the last crash? Should we hang on to cash? What about job security? Wasn't the pandemic enough? How is it going to end?
Before getting ahead of ourselves, let's briefly recap how we ended up in this mess, shall we?
The Good Old Days of 2019
The US economy in 2019 was generally strong and expanding, with several key economic indicators suggesting continued growth 🌈💰
Gross Domestic Product (GDP), a measure of the value of all goods and services produced in the US, increased by 2.3% in 2019 (Federal Reserve Bank of St. Louis, 2019). Unemployment continued to fall, reaching a 50-year low of 3.5% in December 2019 (Bureau of Labor Statistics, 2019). Consumer spending remained strong, buoyed by a tight labor market and low inflation. The housing market also showed signs of strength, with rising home prices and low mortgage rates (Federal Reserve Bank of St. Louis, 2019).
Why are we mentioning all this? Because in 2019, the overall US economy appeared to be relatively healthy, with many key indicators suggesting continued growth and expansion, although there were some areas of concern and uncertainty. We were young, naive, and we had no idea what was about to unfold...
Looking at a bigger scale, the world economy in 2019 was characterized by a mix of positive and negative trends, with significant variation across different regions and countries.
Global GDP growth remained relatively stable at around 3% The US and China continued to grow, although at a slower pace compared to previous years (International Monetary Fund, 2019) Emerging market economies like India and Brazil also experienced relatively strong growth (International Monetary Fund, 2019)
However, there were several challenges that weighed on the world economy in 2019. Trade tensions between the US and China intensified, leading to higher tariffs on a range of goods and uncertainty for businesses and investors (Chen, 2019).
In addition, instability and social unrest are soft words to describe the year's political situation around the world. We can not forget to mention the Trade War between the US and China, Brexit, and the protests that took place in several countries, including Hong Kong, Chile, and Lebanon, which created additional uncertainty and economic disruption (Chen, 2019). There were also concerns about the potential impact of climate change and natural disasters on economic growth and stability (International Monetary Fund, 2019).
In conclusion, the US economy in 2019 showed promising signs of growth and expansion, with a low unemployment rate, strong consumer spending, and a healthy housing market. However, the world economy in 2019 was characterized by a mix of positive and negative trends, with significant variation across different regions and countries. The challenges of trade tensions, political instability, social unrest, and climate change weighed heavily on the global economy. While the economy appeared relatively healthy in 2019, no one could have predicted the unprecedented events that would unfold in the following years, impacting the workforce and businesses worldwide.
2020 Started on The Verge of WW3, Remember?
Tensions between the US and North Korea intensified during the holiday break. Happy 2020 to you too! 🎉
In January and February 2020, the US economy continued to appear relatively healthy, with low unemployment and steady economic growth (Bureau of Labor Statistics, 2020). However, there were rumours of a powerful virus 🦠 that originated in China and spread rapidly throughout the world - recent events of 2023 have put some light on this matter, but that's another topic.
By March 2020, widespread shutdowns and social distancing measures were put in place, leading to a sharp decline in economic activity. We were officially going through a global pandemic AND-WE-WERE-NOT-PREPARED-FOR-IT.
Unemployment spiked rapidly, with millions of people losing their jobs as businesses closed and cut back on operations. The hardest-hit sectors of the economy in the first trimester of 2020 were those that relied heavily on face-to-face interactions (International Labour Organization, 2020).
The already stressed manufacturing industry was heavily affected by the pandemic, with numerous disruptions to the global supply chain.
The travel and tourism industry was also hit hard by the pandemic, with many airlines, hotels, and cruise lines experiencing a significant decline in business. Major airlines such as United Airlines, Delta Airlines, and American Airlines saw a sharp decrease in demand for air travel, leading to layoffs and furloughs of thousands of employees (International Labour Organization, 2020).
Retailers had many companies filing for bankruptcy or closing their stores permanently while the entertainment industry was falling apart, with movie theaters, concert venues, and sports stadiums closed or operating at reduced capacity. They also had delays in production and release schedules, leading to financial losses for studios and all the companies involved.
Also, the pandemic heavily impacted the restaurants and hospitality industry, with many restaurants and bars closing permanently due to the decline in business. Hotels and other lodging establishments have also seen a significant decline in occupancy rates, leading to layoffs and furloughs of employees.
In contrast, sectors that were able to shift to remote work, such as technology and professional services, were generally less affected.
Global GDP fell sharply in the first trimester of 2020, with many countries experiencing their largest quarterly drops in GDP since the 2008 financial crisis (International Monetary Fund, 2020). In many countries, businesses were forced to close and cut back on operations.
The impact of the pandemic on the world economy was felt unevenly across different regions and countries, with some areas being hit particularly hard. For example, the European Union experienced a particularly severe economic contraction, while China's economy was able to recover relatively quickly after being the first country to be hit by the pandemic (International Monetary Fund, 2020).
With many organizations going under business, the global workforce situation in 2020 was marked by unprecedented challenges and disruptions caused by the COVID-19 pandemic (International Labour Organization, 2020).
The International Labour Organization (ILO) estimated that global working hours fell by 14% in the second quarter of 2020, equivalent to the loss of 400 million full-time jobs. The pandemic also exposed and exacerbated existing inequalities, with vulnerable and marginalized groups, including women, youth, and informal workers, being disproportionately affected by the economic downturn.
Many countries responded with various measures aimed at supporting workers, such as wage subsidies, expanded unemployment benefits, and social protection programs. Governments and central banks worldwide also responded with support and stimulus to the economy, including direct payments to individuals, expanded unemployment benefits, and a range of business lending programs (International Monetary Fund, 2020).
It's Just Two Weeks...
It wasn't just a two-week lockdown. During the second and third trimesters of 2020, both the world economy and the US economy continued to be heavily impacted by the COVID-19 pandemic and the measures taken to control its spread.
The world economy saw a gradual improvement as many cities began to reopen and ease restrictions on businesses and activities. However, the pace and extent of the recovery were uneven and varied widely across different regions and countries. Some sectors, such as tech and e-commerce, experienced strong growth, while others, such as retail, hospitality, and many emerging economies, continued to struggle.
Unemployment remained high throughout the second and third trimesters, although it gradually improved from the peak levels seen earlier in the year. The federal government and the Federal Reserve continued providing economic support and stimulus, including additional direct payments to individuals, expanded unemployment benefits, and business lending programs.
GDP in the US fell by an annualized rate of 31.4% in the second trimester, the largest quarterly decline on record. However, the economy rebounded strongly in the third trimester, with GDP growth of 33.4%, fueled by a surge in consumer spending and government stimulus.
Global GDP fell by an estimated 4.4% in 2020, with advanced economies experiencing a larger decline than emerging markets and developing economies. Unemployment remained high in many countries, particularly in sectors that were most affected by the pandemic.
Overall, the second and third trimesters of 2020 were marked by a gradual improvement in the global and US economies, but with significant challenges and uncertainties remaining as the world continued to grapple with the ongoing impacts of the COVID-19 pandemic.
The Psychological Impact of The Pandemic
The COVID-19 pandemic had a significant psychological impact on people around the world in 2020. The pandemic was a highly stressful and uncertain experience for many individuals, as it disrupted daily life, caused widespread illness and death, and created economic and social disruption.
The pandemic led to feelings of anxiety, fear, and uncertainty as people worried about their health and the health of loved ones, as well as the long-term impacts of the pandemic on the economy and society. The lockdowns and social distancing measures put in place in many countries also led to feelings of isolation and loneliness, as people were unable to connect with friends and family in person.
The pandemic also disproportionately impacted certain groups, such as frontline healthcare workers, who faced high levels of stress and burnout, and those who lost loved ones to the virus and experienced grief and trauma.
The psychological impact of the pandemic was also influenced by factors such as age, gender, and socioeconomic status. For example, older adults and those with pre-existing mental health conditions were more vulnerable to the psychological impact of the pandemic.
Many people also experienced significant changes in their work and personal lives, such as working from home, homeschooling their children, and adjusting to new routines and daily habits. These changes added to the stress and uncertainty of the pandemic and, in some cases, led to burnout and other mental health challenges.
Overall, the psychological impact of the COVID-19 pandemic during 2020 was significant, and the long-term effects on mental health and well-being are likely to continue to be felt for some time. However, there have also been efforts to provide mental health support and resources to help individuals cope with the stress and uncertainty of the pandemic.
Covid-19, Work and Life Balance
Stressful jobs can significantly impact an individual's mental health and well-being. The COVID-19 pandemic increased stress and anxiety for many people, particularly those in high-stress jobs, such as healthcare workers, first responders, and essential workers.
In addition to the existing stressors of their jobs, these individuals have also had to navigate new challenges and uncertainties related to the pandemic, such as increased exposure to the virus, the need to work long hours, and the fear of spreading the virus to loved ones.
At the same time, the pandemic has also led to changes in work patterns and expectations. Many people need to work remotely or adjust their schedules to accommodate new needs, such as caring for children or elderly family members.
However, many companies were too slow to adapt to these new needs and have not provided the necessary flexibility and support to help their employees cope with the stresses and uncertainties of the pandemic.
This lack of flexibility played a role in exacerbating the stress and anxiety of individuals in high-stress jobs, as many felt unsupported and undervalued by their employers. This can also contribute to burnout and other mental health challenges, which can have long-term consequences for the individual's health and well-being, as well as their productivity and job performance.
Therefore, it is still important for companies to be proactive in addressing the mental health needs of their employees, particularly during times of crisis such as the COVID-19 pandemic. This can include providing resources and support for mental health, flexible work arrangements, and regular communication and feedback to help employees feel supported and valued. By prioritizing their employees' mental health and well-being, companies can create a more resilient and productive workforce, even in the face of challenging and uncertain times.
What Happened Later...
The chaotic experience of the pandemic started some interesting movements that shaped the workforce in the years to come.
Starting in China in 2021, as a response to the country's intense work culture and economic pressures, the "lying flat" movement, also known as the "tang ping" or "lying down" movement, began. This protest was characterized by individuals who rejected participating in the rat race and instead sought a more relaxed and stress-free lifestyle. Supporters of the movement advocate for rejecting traditional societal expectations and focusing on personal well-being and happiness.
Maybe some companies took their workers to a limit, and it started to backlash. Some people moved the trend from a lying down movement to "quiet quitting", also as a form of protest against the traditional work culture, which often prioritizes loyalty to a company over individual well-being and personal growth. In contrast to lying flat, instead of actively resisting or protesting, "quiet quitters" choose to withdraw from the system quietly by leaving their jobs and seeking alternative ways of living. This movement emphasizes the importance of taking control of one's life and priorities rather than being controlled by external expectations and pressures.
Both movements have gained traction in China and other countries where long working hours and high-pressure work environments are common. They reflect a growing dissatisfaction with the traditional work culture and a desire for a better work-life balance and personal fulfilment.
However, it's important to note that these movements obviously involve controversy and criticism. Some view the "lying flat" movement as a form of escapism or laziness, while others argue that the "quiet quitting" movement is a privilege afforded only to those with financial stability and resources.
Nevertheless, these movements have sparked important discussions about work culture, productivity, and well-being, and they continue to challenge traditional notions of success and fulfilment in the workforce. The toxic hustle culture was no longer the accepted standard. Companies squeezing their employees suffered a sudden drop in productivity since employees were taking control of their life-work balance.
With the complex political/economic world situation and companies fighting to survive the effects of the pandemic, massive layoffs are on the rise. It shouldn't be a surprise that big tech companies are the ones taking the first step since they were the first to overstaff during the pandemic.
The spike in unemployment, mixed with the increased cost of living caused by the influx of money during the pandemic and the rising interest rates, seems to complete the list of the perfect conditions for another economic world crisis.
Did We Mention AI and Robots?
An already fragile ecosystem receives the year 2023 with a strong trend of Artificial Intelligence (AI) tools and technological advances. The rapid development and implementation of AI technologies have led to concerns about the potential impact on the workforce.
AI has the potential to automate many tasks that are currently performed by humans, which could lead to job displacement and even job loss in certain industries. While some experts argue that AI will create new job opportunities and enable humans to focus on higher-level tasks, others predict that the displacement of low-skilled jobs will have significant social and economic consequences.
One of the main threats of AI is its potential to replace human workers in a range of industries, including manufacturing, transportation, and customer service. As AI systems become more sophisticated and capable of performing complex tasks, they may be able to perform many jobs more efficiently and cost-effectively than human workers. This could lead to the displacement of millions of workers and significant disruption to the labor market.
Another concern is that AI could exacerbate existing inequalities in the workforce. For example, if AI primarily automates low-skilled jobs, workers who lack education or training may be disproportionately affected. On the other hand, workers who have the skills and expertise to develop and operate AI systems may benefit from new job opportunities and higher wages.
Furthermore, the rapid pace of AI development may make it difficult for workers to keep up with the required skills and training. This could result in a skills gap between workers and the demands of the labor market, leading to long-term unemployment and lower wages for some workers.
However, it is also important to recognize that AI can create new job opportunities and enable humans to focus on higher-level tasks. For example, as AI automates certain tasks, workers may be able to take on more creative, strategic, and problem-solving roles that cannot be performed by AI systems.
The key to thriving in the future of work and the age of AI is to adapt to new changes and continuously develop new skills and abilities. This may require workers to reskill and upskill in order to stay competitive in the labor market and remain relevant in their careers.
It is important for workers at risk of job displacement to proactively seek new opportunities and skills to help them transition into new roles. This could include pursuing additional education and training, seeking out new career paths, or developing new skills through self-study and online resources.
For employers, supporting and investing in their employees' development, particularly in digital skills and technology, is important. This can include providing opportunities for training and education and fostering a culture of continuous learning and development.
In conclusion, while AI may cause job displacement for unqualified workers, it is also an opportunity to adapt to new changes and learn new abilities. By proactively developing new skills and staying up-to-date with the latest technologies, workers can remain competitive in the labor market and thrive in the future of work.
The Future of Work
The COVID-19 pandemic profoundly impacted the world of work, leading many people to reassess their priorities and seek new opportunities. As companies faced economic uncertainty and layoffs, many workers turned to entrepreneurship, starting their own businesses and agencies. This trend towards entrepreneurship was driven by a desire for greater flexibility, autonomy, and control over one's work and life. With the rise of remote work and the need for specialized expertise in many industries, many entrepreneurs saw an opportunity to offer their skills and services to companies in need.
The evolution of work culture and the changing priorities of workers have resulted in a shift towards alternative work arrangements, including the "lying flat" and "quiet quitting" movements. These changes have forced companies to reassess their work approaches, leading to massive layoffs in some industries. However, instead of traditional hiring practices, many companies are opting for a more flexible and cost-effective solution: "quiet hiring".
Quiet hiring involves partnering with smaller agencies or consultants to help with specific projects or departments. This approach allows companies to access the expertise they need without the commitment of full-time hiring, which can be especially beneficial during uncertain times or periods of economic uncertainty. Quiet hiring offers benefits for both companies and workers. For companies, it provides access to specialized expertise and reduces costs, as they only pay for the services they need. For workers, it provides greater flexibility and independence to choose the projects and clients they work with, helping to reduce burnout and improve work-life balance.
In fewer words...
The COVID-19 pandemic has profoundly impacted the global economy, leading to significant changes in the world of work. In 2019, the US and world economy were experiencing growth and stability, however, in 2020, the pandemic resulted in widespread illness, death, and economic disruption. This disruption affected various industries, including healthcare, hospitality, and retail, and had a significant psychological impact on individuals, leading to feelings of anxiety, fear, and uncertainty.
In response to the changes brought on by the pandemic, there were a number of protest movements, including the "lying flat" and "quiet quitting" movements, which sought to challenge traditional work culture and promote a better work-life balance and personal fulfilment. Additionally, the rise of AI and its potential impact on the workforce was a major concern, with fears of job displacement and a skills gap between workers and the demands of the labor market.
Despite these challenges, the COVID-19 pandemic also provided new opportunities for entrepreneurship. The rise of remote work and the need for specialized expertise in many industries has led to a shift towards alternative work arrangements, including quiet hiring. This approach allows companies to access the expertise they need without the commitment of full-time hiring while providing workers with greater flexibility and independence.
In light of these changes, it is important for both companies and workers to be aware of the potential benefits and challenges of quiet hiring and to have clear agreements in place. By understanding their rights and responsibilities, companies and workers can thrive in this new era of entrepreneurship and the future of work.
In our entrepreneurial show, Survival Instincts, we talk about everything entrepreneurship, from overcoming challenges and adapting to change to finding new opportunities and thriving in the entrepreneurial economy. We invite you to subscribe to our channel and join our virtual community at Bussco.com as we explore the exciting world of entrepreneurship and the future of work because, at the end of the day, it's like the professor said, "We might not be too useful overall, but we’re the ones that get called to do the job when everything is going to sh*t"
And by the way, don’t worry. We don’t work and tell 🤐😉
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