Restaurant operator and caterer Restaurant Associates is one of many companies that have been forced to change their business model on the fly during the COVID-19 pandemic. As businesses began to reopen this summer, Restaurant Associates and other businesses have likely started to show optimism about a return to a pre-COVID environment, but the Delta variant of the coronavirus could make that optimism short-lived. , reports the New York Times.
“We were really hoping that by September we would start to come back strong,” Restaurant Associates general manager Dick Cattani told The New York Times. “(Now) we don’t know what’s going on, what’s next. “
Cattani is not the only one wondering what will be the future of his company because of this new variant. Kevin Thorpe, chief economist at commercial real estate services company Cushman & Wakefield, noted that the more COVID-19 is present, “the more transformative it will be.” This leaves a big question mark for the service economy in cities – restaurants, hotels, taxi services and entertainment venues employ millions of workers – can they bounce back from the many waves of COVID- 19 who drove their customers away? The answer may not be known until employers and workers reassess their view of proximity and density to space, according to the Times.
Researchers estimated that from April to December 2020, half of the working hours in the U.S. economy came from employees’ homes. They believe that figure will drop to around 20% after the pandemic. Even if this estimate is correct, it is still about four times the number of hours of homework provided in 2017 and 2018.
The impact of remote work on the economies of cities
Most of the remote work will likely be done by the highest paid workers in dense, populated areas. Workers in highly skilled and information-rich services like finance and insurance were still working remotely in January, the researchers said. Plus, big cities could lose their most skilled workers and the customer service savings they support, reports The New York Times.
“As a result,” the researchers said, “they may decrease in size unless they manage to deliver benefits that justify the costs of urban density when residential choices are freed from considerations of proximity to the workplace. “.
Currently, 18% of offices in the central business districts of the United States are empty; 12% were vacant before the pandemic, according to Cushman & Wakefield. Big companies like Twitter and United Airlines are reducing their CRE footprint, while sports equipment retailer REI has sold its headquarters and has chosen to build three smaller satellite sites in Seattle areas for employees to operate. they want it.
“We felt there are times when being physically together makes a difference, but it doesn’t have to be all the time,” said Christine Putur, REI’s executive vice president for technology and operations. “We want to move forward with more habits, new standards – let the results determine when and how we come together. “
Remote work and salary change
Some companies offer a telecommuting option, but will base their employees’ salaries based on where they live. Google has adopted this practice and provided employees with a calculator so they can see how their workplace can impact their pay. If workers still choose to work remotely, out of town despite the potential wage shift, downtown spending could drop 5-10%, the researchers said. The remote work shift would be financially damaging to restaurants, bars and other places that rely on office worker spending.
“Some of the leisure and hospitality activities will follow people who are no longer in the downtown area,” University of Chicago researcher Steven Davis told The New York Times. However, suburban businesses might not see a bump, as workers are likely to have fewer outside lunches and happy hours than when they worked in their respective cities.
When will things get back to normal?
As long as remote working options remain for office workers, businesses in surrounding restaurants and stores are likely to remain limited. However, new employment opportunities are emerging, reports The New York Times. For example, warehousing and transportation added more than 200,000 jobs. Part of this increase is because Amazon and other e-commerce companies are trying to keep up with the increase in online shopping. Unfortunately for cities, warehouse work often takes place outside the area.
If cleaning requests are any indication, it could be some time before offices return to pre-COVID vacancy levels. Currently, 3,000 of the 21,000 office cleaners in Local 32BJ of the Service Employees International Union are waiting for their buildings to reopen. That number is down from what it was last spring (7,000), but progress has stalled as companies have started to delay their return to the office.
“Six weeks ago we had so much momentum,” said Dennis Johnston, head of the union’s commercial buildings division. “For our unemployed members, the idea that the reopening will not take place until next year … it’s ugh.”
If there’s anyone who could slow the trend towards remote working, it’s employers concerned about productivity levels, according to economist Enrico Moretti of the University of California at Berkley. Jobs that allow working entirely remotely have dropped from around 2% of openings to 6-7% after the start of the pandemic, he said. The numbers have not changed since.
“(Remote working) remains a niche phenomenon,” Moretti told The New York Times.
Moretti also doesn’t expect full-time remote numbers to increase much, as it doesn’t allow for as much interaction, collaboration, or innovation as face-to-face environments in buildings.
Cattani hopes he’s right, and there are a number of reasons that could work in his favor. Workers likely won’t want to cut telecommuting pay, others will continue to get vaccinated, while others are fed up with Zoom meetings and can’t wait to interact in person again. However, there is no guarantee.
“The crystal ball is very cloudy,” Cattani said.
Joe Dyton can be contacted at [email protected]