Business

Remote work could spell doom for your favorite dry cleaner and lunch spot

Posted September 27, 2020 1:03 p.m. EDT

— Many Americans have been working from home since the pandemic started. But the shift to remote working could cause massive problems for the jobs and economy that have long relied on bustling offices and crowded business districts.

The office ecosystem -- the dry-cleaners, convenience stores, salad bars and coffee shops -- has suffered during the spring shutdown just like every other part of the economy. But rebounding will be harder for them if their regular customers don't return.

While the economy is on its long road to recovery from the pandemic recession, improvements are uneven.

For example, industries and jobs directly linked to office administration and upkeep, including janitorial services and office equipment rentals, are still much lower compared to pre-pandemic times, said Julia Pollak, a labor economist at ZipRecruiter, citing data from the Bureau of Labor Statistics.

Employment in administrative and support services was 12.7% lower in July compared to February, and jobs in parking lots and parking garages were nearly 44% lower over the same period, she said.

This transition away from office culture also has another facet to it, Pollak told CNN Business: "A lot of these office-related jobs are held by minority workers," she said.

Black workers, for example, account for 12.3% of America's workforce but make up nearly 30% of security guards, according to 2019 numbers from the BLS. Fewer jobs in these areas could leave unemployment higher for minority groups.

Even after the pandemic, the formerly office-bound people might continue to work remotely for at least some days a week as the office as we know it may cease to exist.

"There is plenty of evidence that much of the shift to working from home will be permanent," Pollak said.

And as more people stay home, the more the office ecosystem will have to adapt to the loss of foot traffic. Some businesses may no longer be viable.

"My guess is to say that the job losses that were associated with those businesses have already been counted," said Simona Mocuta, senior economist at State Street Global Advisors, referring to people the BLS counts as temporarily laid off, "but the business failures have not."

Economists expect the pandemic will also have a relocation effect, with people leaving inner cities for the suburbs because they no longer have to live near their offices, or moving from larger cities to smaller ones. This, too, will affect the timing of any recovery.

Another dark cloud ahead: the possibility of management and white collar layoffs in 2021.

Many companies, including Wall Street banks, said they would refrain from laying staffers off this year due to the pandemic. But as the year draws to an end, layoffs in may lie ahead, Mocuta said.

Our commenting policy has changed. If you would like to comment, please share on social media using the icons below and comment there.