Local business leaders had the opportunity Thursday to hear from experts during the virtual 2020 Economic Outlook Forecast, which discussed how the COVID-19 pandemic is shaping the local and global economies.
Hosted by the Santa Clarita Valley Economic Development Corp., speakers included: Eric Willett, director of research with CBRE; Peter Zeihan, a geopolitical strategist with Zeihan Geopolitics; and Mark Schniepp, director of California Economic Forecast.
COVID-19 has changed how we work
Remote work existed long before the pandemic. In fact, from 2004-18 the number of employees who worked from home grew by 80% — vastly outpacing the growth in workers in a traditional workplace setting, according to Willett.
“All that’s to say that the adoption of remote work is something that was occurring before COVID-19, but accelerated in dramatic magnitude as a result of the pandemic,” he said, adding that safety protocols, such as physical distancing, will play a large role in the future of full-time remote work.
A CBRE survey with 130 large corporate real estate firms showed that some form of remote work is here to stay.
“In the pre-COVID times, 63% of these companies that were surveyed didn’t have remote work as part of their corporate real estate strategy,” said Willett. “But there’s been a dramatic flip today. Looking ahead to the future, the same companies report that 70% of them see remote work as in some way, shape or form being a part of their strategy, and perhaps even more dramatically, only 10% conclusively say that there will be no remote work strategy for their company.”
With about 61% of those companies now expecting their employees to have some level of work optionality, the pandemic has accelerated a trend toward a hybrid workplace model, the study showed.
The traditional model follows a more hierarchical approach, whereas a hybrid one embraces a networked series of working environments. For example, Willet said, a worker in a traditional model would go to the same office every day, and in the new model, the employee could start at a cafe and then move to a flexible working space environment for project meetings.
Similarly, changes are seen in the residential and retail models, such as moving from retail to warehouse distribution centers for a company’s e-commerce fulfillment.
Sectors affected the most
As the local and national economies reopen, layoffs and unemployment claims have diminished over time but multiple sectors have suffered along the way, according to Schniepp.
In the SCV, with an estimated 11,000 currently out of work and unemployment rate of about 15%, the leisure and hospitality sector, which includes Six Flags Magic Mountain, saw the highest job declines, with more than 4,500. Local government (more than 1,000), manufacturing (slightly north of 1,000) and retail (just less than 1,000) followed behind, while finance and real estate fared well throughout the pandemic.
What’s the economic forecast?
Public Health protocols will lead most of the decisions impacting the economy, said Schniepp, adding that, depending on vaccine availability, the pandemic could officially end by summer 2021, leading to more reopenings and more economic growth.
In the SCV, this could translate to about 4,500 jobs and an improved unemployment rate.
“The national economy will continue to recover, labor markets are going to create more jobs for the rest of this year but the rate of increase is going to be a lot slower than in May, June, July and August,” said Schniepp.
To see the complete event, visit the SCVEDC Youtube channel.