This week on NewsTalk 830 WCCO, we’ve explored navigating the return to work from different perspectives -- employers and employees.
In the final part of our series, a business expert explains in what ways work could be changing permanently.
Different workforces and types of businesses have their own challenges, but all are wondering how to navigate returning to a normal work day safely.
Low-wage workers, who have been hard hit by the pandemic, may be discovering they need a bigger paycheck to justify their old jobs with mounting back paid bills. Paul Vaaler, professor at the U of M Carlson School of Management, said those workers are facing an opportunity cost: they might be more reluctant to come back due to the American Rescue Plan featuring some short-term enhancements to unemployment insurance.
“Those same workers have substantial bills like back rent or other bills that haven’t been paid, this money now will pay,” Vaaler said. “It’s a bet as to whether the amount of money they’re being paid is deterring them or the amount that’s being paid is going to obligations they’ve had in the past.”
Vaaler said how quickly low-wage workers return to their old jobs at small businesses depends on if the payments deter them. If the obligations are more costly and aid is gone, they will return without inflation in wages. Or in the short-term, they could return slowly over the next three to six months.
“We’re talking about workers that in the first quarter, say up to $30,000 a year for an individual or household -- they’ll be slightly more reluctant to go back, slower to come back,” Vaaler said. “But they will come back. At the end of the day they’re at the lower end of the pay scale and that work is not just a luxury to them, it’s fundamental to pay rent or basic bills and moving into the middle class.”
Many companies are strategizing how to return a large part of the white collar workforce, while weighing safety concerns and employees who are not vaccinated. Vaaler said it’s a dilemma for employers.
“I think we’re going to see a mix of both,” Vaaler said. “At larger companies we’re going to see offers from those companies to vaccinate individuals as they come into the workforce. In smaller businesses what I think we’re going to see is more flexible arrangements, if workers can demonstrate that they’re tested and negative on those tests if they’re unvaccinated and then there’ll be incentives eventually for them to go and get vaccinated that are coming from the state or from those small businesses if they want to move themselves to 100% vaccination.”
And then the question if downtown business corridors in Minneapolis, St. Paul and even Bloomington will be permanently changed by the pandemic with companies and employees knowing a flexible work environment is feasible. Will companies downsize their office space to save on rent and utilities?
“They have to figure out how to fill that space if, say, a third of the floors that used to be occupied during pre-pandemic times are now empty,” Vaaler said. “It’s also a challenge for the municipalities because a lot of tax revenue comes from downtown real estate and if downtown real estate is less occupied it’s less rich in terms of generating revenues and those are potentially shortfalls.”
None of these complexities are isolated locally, but Vaaler said Minnesota is in a unique position to navigate them.
“I think it’s one of the advantages we have going for us here in Minnesota as opposed to other parts of the country where they might have a nice economy, but they don’t have a headquarters economy,” Vaaler said. “They don’t really have individuals who can set standards and let others learn from them.
“They’re going to have to make the decisions sooner than the small businesses. It’s when they start bringing people back to work that the small businesses that serve them -- the restaurants, the convenience stores, the clothiers, and the like -- that’s when they’re going to open. They’re not going to open before Target starts bringing back people. They’re going to open when Target says they’re coming back.”
