COVID-19: Business Recovery & Ricochet Effects

Monday, April 27, 2020

Many businesses right now are focused on the portion of the iceberg that remains visible amidst COVID-19 disruption – including lost revenue, uncertainty, and an unnerved workforce.   

If you’ve been following, you’ll remember that on March 1, 2020, we provided food for thought (a warning) about the considerations business should be thinking about in a COVID-19 world at this link.  We followed this up with this comprehensive blog write-up on March 5.   

We’re back to do the same now.  Forward-leaning businesses should start to consider the path to recovery NOW, as they will need to be ready to combat further disruption that will be left in the wake of COVID-19. 

Below the surface, we are already forecasting more challenges for Americans that businesses need to begin to consider.  The shortlist includes: 

  • Family issues, including marital strife 
  • Child care issues, including a dearth of providers 
  • Degraded mental health, even substance abuse 
  • Health care concerns, with unknowns regarding long-term costs 
  • Retirement plans may be dashed for many, especially those close to retirement. 
  • Ultimately, employees may be harder to retain given financial pressures 

First and foremost 

Revenue pressures have as much of a trickle-down effect on employees in dark times as they do in the good times.  Reductions in force, reductions in hours, and reductions in wages all spell financial disarray to a workforce that has largely already been crippled by the ongoing affordability crisis.  

Employers have been hard-pressed to recruit talent over the past several years, but on the upswing, will it be a buyer’s market?  Time will tell. 

Many Americans are living with little to no savings to fall back on.  In several recent surveys, such as this survey from Salary Finance, American workers who reported earnings from less than $15,000 to over $200,000 consistently reported that they were living paycheck-to-paycheck.  After several weeks (maybe months) without a paycheck, they will be anxious to get back on track.  

The difficult fact to stomach is that many employees who have been impacted by COVID-19 will be on sale but to the highest bidder.  Employees will be eager to replace lost wages, and for many, the highest velocity means to do so is to put themselves on the market.  Employers should be prepared for added challenges to retain those that they let go or may have not felt that they were supported as well as other employees were during these times.

Go back and re-read this section, as it is critical to understanding what lies ahead.  There are items of minimal cost (IE: time to educate, engage, etc) and those that have long-term cost repercussions (IE: health benefits, an aging workforce, etc).  Employers should consider a comprehensive approach to lessen these impacts during recovery.  

The dark side of COVID-19 recovery 

The real dark side of COVID-19 is one that few are willing to think or talk about – at least not yet.  Within each one of these dark corners, there are opportunities for employers. 

Will 2020 begin to look like 1984?  This earns the top spot on the list.  Part of the key to the re-acclimation process will be how companies reintegrate their workforce, and how business can go on again as usual.   

In many ways, “virtual’ has already withstood challenges far better than “brick and mortar.”  Will the dine-in restaurant experience fade away?  Will curbside grocery pickup become the norm?  Will employees walk away from their employer, or other business due to privacy concerns – or will they flock to more progressive businesses that have a deeper connection with employees as a result of the pandemic?  It’s too early to tell, but we can start to imagine.   

Picture this: you walk into work on the first day and your day starts with completing a health affidavit, having your vitals taken, and discussing your whereabouts for the past two weeks.  Before going to your desk, you’re provided a wrist band that vibrates when you are too close to another coworker. 

Or, let’s say you’re finally ready to get away.  You prepare to board your flight, but you’re asked to give a blood sample for a rapid COVID-19 test. 

While all of these may sound farfetched, but they’re already happening.   

There are other items hanging in the wings, such as location tracing, movement restrictions, and more, which many may see as an invasion of privacy, but at the same time are seen as instruments to insulate against future threats to our economic and national security. 

Opportunity: There are ways to help to turn this into a positive – as we are already forecasting several changes that may very well occur in the months or years ahead: 

  • The  (slow) death of the 5 day work week 
  • Resurgence of in-house medical care at a place of business 
  • Business that will see new found value in ownership of their health benefits program 
  • Did we really need all of those meetings, anyways? 

Marital strife – When was the last time that two-parent working households spent an extra 40+ hours a week together, while also spending what should be “quality time focused on everything from finances to finding ways to feed their family?     

Money related conflicts are not only the number one cause of marital arguments, but they are also frequently cited as a reason for divorce.  Overextended individuals, living paycheck-to-paycheck, were likely unprepared for COVID-19 and caught flat-footed.    

The ricochet effect on employers will include everything from increased presenteeism, and ambitions to consider higher-paying options to help with funding a divorce, alimony, child support, and more. 

Opportunity:  Consider how you and/or your benefits program can be enhanced to support couples, including items like marital counseling, financial guidance, and legal support.  Finding other means to help with debt that may be piling up is another more progressive thought. 

Domestic violence – This threat should be seen as paralleling marital strife.  With individuals cooped up, but also stressed about finances, putting food on the table, and rooves over their heads, this added tension may lead to added issues. 

Employers should be acting NOW to help provide a safe-haven, outlets, and resources to their employees.  This includes everything from creating awareness around shelters, to supporting these shelters, promoting the EAP, and more. 

Female employees should not be the only focus, as children are also often the victim.  While complaints of child abuse may be decreasing, experts believe that such cases are on the rise but going unreported – and rather will result in a landslide when issues begin to resolve themselves. 

Opportunity: Take a break from COVID-19 updates to provide reminders on local organizations to support those suffering from domestic violence, child abuse, etc.  You may also wish to promote resources like your EAP as a confidential outlet. 

Child care issues – How many daycare centers will be able to keep their doors open for weeks (maybe months) with dramatically reduced revenues, assuming they were able to stay open at all?  

Many employers have been especially accommodating (thus far) when there is an ability to perform work from home – thus presenting many families with the task of performing two jobs at once (day job + child care). 

The fact of the matter is that when we return to normalcy, there will be an increased challenge when it comes to providing coverage both at work and with children.  This will be less of a concern for school-age children, and more of a concern with toddlers and infants – unless their children were attending private school, in which case those plans may be dashed as well. 

Opportunity: Consider solutions for back-up day-care, dependent care FSA programs, and more, if not already offered.  Employers should also consider opportunities for an extended work-from-home for those that are having difficulty finding a new child care provider. 

Degraded mental health – Studies already show that Americans are already lonelier than ever, so how will weeks of self-quarantining impact this trend?  Time will tell, but right now, the read is that it will continue to cause further issues with overall mental health and wellbeing.   

This will help to create added costs for employers in several areas – not only with the treatment of issues like depression but also with the potential concern for a reduction in productivity while at work.   

As sad as it is, some employers should prepare for some employees to never return to work, after falling victim to suicide.  “Social connection” is often a strong deterrent to suicide – however anxiety, isolation, concern, and uncertainty may give way to underlying demons, as covered in this article. 

Opportunity: Consider how your benefits are designed to help support mental health, including the number of in-person visits, as well as virtual mental health, and even an EAP program.  Create workshops, or other learning opportunities to help be supportive of Employees. 

Addiction and substance abuse – The isolation is driven by social distancing, along with heightened anxiety around food, money, and the world, in general, may trigger relapses among recovering addicts.  Did you notice all of the shopping carts filled with toilet paper and beer?   

Many states where marijuana has been legalized have reported surges in buying.  The issue is less about individuals spending their time alone and getting stoned, but the mere fact that this should underscore similar behavior.  During quarantine, how many medicine cabinets with opioids were tapped to help “pass the time?” 

Ensuring that a support system is in place for these sorts of issues will be essential for some employees to continue to recover. 

Opportunity: Very similar to mental health, consider how your benefits are designed, and create opportunities for individuals to seek and receive help if needed. 

Health care concerns – These are more of a three-headed monster:  

  • Primary concerns: Avoidance of care.  Sick people go to doctor’s offices, hospitals, and urgent care centers.  During a pandemic, many (all) of these could be seen as a high-risk area, thus many individuals may be delaying care for underlying health concerns or foregoing medications for managing a chronic condition.  

For these reasons, this should be a primary concern for employers.  Anyone avoiding or mismanaging their care will become a ticking time bomb over the next several weeks – especially if they forego COBRA coverage, which may be less common amidst a pandemic, but still a challenge as much as it is a financial burden. 

  • Secondary concerns: Delayed care.  The delayed care will primarily be in the arena of more elective procedures.  Many individuals have made a choice individually to put off elective surgeries, and other items, however in some cases hospitals have canceled these to make-way for potential overload from COVID-19 patients. 

The reason this is a secondary concern is that this means that employers could be faced with individuals “doubling down” on items they’ve been putting off once they return to work.  If these hit at the same time that new elective procedures are arising, as well as fall-out from the concerns above and below, it could be of added consequence to employers and their health spending. 

  • Tertiary concerns:  Fall-out from COVID-19 treatments and care.  For most businesses (depending on their location) this will be of far less consequence.  Most individuals continue to work through COVID-19 with mild symptoms, thus requiring little to no treatment.  Time will tell on the actual costs, however, currently, they range from double-digit (testing) to six-digit (ICU) costs. 
  • Honorable mention: wellness.  We could also add here that sitting inside and binge-watching Netflix for several weeks isn’t necessarily good for your health either – however those who were physically active before will also likely find ways to remain active even in a quarantine scenario.  Food insecurity, however, has been amplified for individuals, which could have added repercussions long-term.  

Opportunity:  Employers should consider every opportunity to take more ownership of their health plan.  A byproduct of this is the ability to detect and begin to remedy items like gaps in care, while also better managing costs. 

Retirement plans dashed – Did you have employees that were planning on retiring in less than five years?  Yeah, about that… 

Similar to the 2008 financial meltdown, many had to cancel retirement, often looking for new options to extend their careers by years to replace the funds routed from their retirement portfolios. 

There are two sides to this coin: 

  • Experienced employees grow in value and cost more to retain 
  • Older employees cost more to insure 

This simply becomes the icing on the cake for employers amid all of the other challenges presented above.  It’s nothing new for many, especially if they are a mature business that saw the same impact from 2008, however it is still an important point to keep top of mind, and Employers should be focused on options to help put these individuals back on track. 

Opportunity: Employer match programs have been a casualty of COVID-19, so this should be toward the top of the list once the business is healthy again.  Seek guidance from an advisor on how to ensure that your plan is optimized. 

Events where life didn’t go on – The sad part about life during quarantine, is that it still goes on – even though funerals, weddings, and other life events. 

We mention these as a consideration point because undoubtedly there will be individuals that will need to find/create time for these once normalcy returns.  Employers may consider a special “un-quarantine” leave policy to help make up for the lost time.    

Getting ahead of even simple issues like these by extending bereavement policies or creating new rules for anticipated exceptions will be a welcome relief while folks have a lot on their mind. 

Opportunity: Recognize these issues now, and begin to evaluate your response, whether through policy changes, or added flexibility during the reclamation to the workplace. 

All of these boil down to opportunities for employers to double-down on retaining employees, but also optimizing their total compensation and rewards package.  While many health benefit offerings weren’t ruggedized before COVID-19, we expect many employers to consider options to do so in the wake of it. 

The ricochet and recovery from COVID-19 will perhaps be as strange as living through it.  These items should be considered as potent food for thought to prepare your business for the new realities that we will all be presented within the weeks, months, or years ahead.  

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