In the midst of a global panic caused by humans overreacting to a virus with an over 99 percent survivability rate we have seen some rather interesting economic data. While many low skill, low wage workers are unemployed and many small businesses are being closed, tech companies like Facebook, Amazon, and Apple had blow out quarters. We have also witnessed the second consecutive quarter of a surge in pending home sales. A boom in the tech industry and a boost in home sales coupled with high unemployment and closing businesses seems at first counter intuitive but that is only if you haven’t been paying attention at home.
The fact is that for sometime, at least since the recovery from the 2008 crisis, many jobs filled by human workers were unnecessary. The economic boom we had running for the decade before the Rona allowed businesses to operate inefficiently keeping people on the payroll to avoid feeling bad about letting them go even though they weren’t necessary to the business and in many ways hurt profitability. Everything was going fine as personnel directors didn’t have to make tough decisions about their low skilled workforce and then the Karens decided to freak out about young healthy people going to bars in the middle of March and the world changed forever.
The shutdown virus spread throughout the nation many of the biggest companies in America switched to work from home. Now these companies, in the tech field, already have a very small workforce comparatively but when they closed down their offices the workforces got smaller. As people worked from home the support staff that kept the offices running found themselves out of work. As companies have discovered their most valuable assets are more productive working from home than having to commute to an office they have decided to keep “work from home” indefinitely.
Keeping work from home as a policy has a distinct economic impact in that it benefits bigly the people who work from home and hurts bigly low skill workers. By not having to commute a computer programmer, for example, can choose to live in a lower cost area that is further away from the company he (yes he most programmers are male get over it) works for. He also doesn’t have to commute to work thus saving transportation costs, will likely eat at home more often thus cutting the food budget, and will have several extra hours in the day to enjoy. Working from home is a big benefit and adds more disposable income into the pockets of those who already had disposable income. These factors contribute bigly to the boom in tech and in home sales during the Rona freakout.
On the other hand you have cleaning staff, secretarial workers, facilities management, food service, and transportation workers who have all seen loss of wages at the least and in many instances loss of their jobs. Here is the thing subsistence workers have in most instances a flat economic impact, the cost of employing them being equal to the benefit they provide in economic activity, or they have a negative economic impact in the cost outweighing the benefit. What the data coming out of the second fiscal quarter has shown is that those who are unemployed still have little to impact on the economy. They are for lack of a friendlier word obsolete.
Now here is the real kicker and what I have been building towards in this piece. There is a whole other group that seems intent on proving how obsolete they are. That group is the teachers. As we go through this debate on whether or not to open schools what we will find in places they do not open is that the public will not have it. Teachers, who I generally like and find to be decent people, are way overestimating how important they are to the public.
If teachers won’t go to work the taxpayers will revolt, many already think they are spending too much on education as it is, and will demand deep cuts. In all honesty why would communities continue to pay high property taxes to fund schools if kids aren’t going to them. Much like the unintended consequences of the economic shutdown were to put low skill workers out of work permanently while boosting the disposable income of those able to work from home a teachers strike over the reopening of schools will boost private, charter, and homeschooling at the expense of the public education.
Here is the irony in all of this. As unemployment stays high and public education sees “yuge” funding cuts while GDP grows the left will scream about this being the work of evil Republicans when it was the Democrats and their desire to hurt the economy in order to defeat Orange Man Bad that created the environment in which this occurred.
We are going to see a major shift in demographics to the suburbs and rural parts of the country we haven’t seen since the white flight of 70 years ago. The cities are going to crumble as their tax base will be nonexistent. Public education will for all intents and purposes disappear as well off parents will opt for other forms of education especially as the teachers refuse to go to work. It will be fascinating to watch for sure and maybe a little bloody because before to long people are going to……..