Congress and the Federal Reserve have pumped nearly $3 trillion into the U.S. economy to combat the damage caused by the coronavirus, and are currently considering a fresh relief package. But while payrolls are being subsidized by the government, it’s being done uniformly without taking into account the differential impact of COVID-19 on individual sectors, some of which have fared far worse than others due to an inability to create remote workforces.
HR Technology News: Censia Talent Intelligence Platform Now An SAP Endorsed App Available On SAP App Center
A new research paper co-authored by an MIT Sloan School of Management and a Northwestern Kellogg School of Management professor led the researchers to conclude that more targeted intervention is necessary to support the sectors hit hardest by the coronavirus crisis. The study offers policymakers a blueprint with which to deliver a second round of stimulus.
“It seems crazy that you could run an IT consulting firm seeing a trebling of demand and you’re just as eligible to receive payroll subsidies as a movie theatre that hasn’t opened in months,” says Lawrence Schmidt, Assistant Professor of Finance at MIT Sloan, who co-authored the study. “A more targeted policy would provide more bang for the taxpayers’ buck.”
HR Technology News: Return To Work Safely With The New Work | Space App, By Equal Experts
The paper analyzed federal data and nationally representative surveys that asked Americans how they allocate their time—including questions about ability to and past experience with working from home—in order to isolate the supply-side disruption from other factors that have shut down entire sectors and roiled the economy, such as a collapse in consumer demand caused by uncertainty. The research found remote work was a key determinant of whether businesses could maintain operations during the pandemic. And it showed that sectors unable to telecommunicate—such as hospitality, entertainment, food services and travel—suffered more severe disruption compared with industries such as technology, that could perform tasks remotely.
In one finding, the study found heavily disrupted firms suffered an 8% slide in analysts’ revenue forecasts for the second quarter of 2020; a 7% fall in stock market performance to date; and a 0.22% rise in chance of default in the next six months. And while analysts expect the worst effects of the crisis to be short-lived, the study concluded that an inability to work remotely is still a predictor of expected revenue growth over the next two years.
HR Technology News: TecHRseries Interview with Saray Ben-Meir, Chief of Staff at SQream