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Post-COVID tech-leveraged economy may be more difficult for some workers, Fed Chairman says

The COVID-19 pandemic has accelerated changes that were already happening in the economy and these changes may make it more difficult for out-of-work individuals to return to the workforce.

The post-COVID economy will be one marked by more telework and accelerated automation, said Federal Reserve Chairman Jerome Powell on Thursday.

“We’re not going back to the same economy,” Powell said during an online panel at the European Central Bank Forum on Central Banking 2020. “We’re recovering, but to a different economy, and it will be one that is more leveraged to technology.”

Powell’s comments mirror what other economic and business leaders have said about the future of work post COVID-19, but the central banker also gave a warning about the negative economic effect these trends would likely have.

Remote work is here to stay

Google CEO Sundar Pichai, told TIME magazine that he sees the software company having a more flexible workplace going forward even if they aren’t 100% remote. 

In May, CEO Mark Zuckerberg said Facebook would allow many of its workers to stay remote and that the company would focus on remote hiring.

Twitter has said that if “employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.

In October, Microsoft announced a more flexible workplace, where most employees can work from home part of the time (less than 50%).

And in a March 2020 interview, Chris Kozup, CMO at Aruba, told TechRepublic that even among organizations that don’t stay completely remote after the pandemic, many will continue allowing remote work .

The pace of business automation will increase

When ZDNet’s Editor in Chief Larry Dignan and I discussed the workplace trends that COVID-19 would accelerate back in March, the increased use of process automation was at the top of our list after increased remote work. Since then, more research has come out that supports this idea.

In a May report, analyst firm Forrester said that companies “will look to automation as a way to mitigate the risks that future crises pose to the supply and productivity of human workers. They will invest more in cognitive capabilities and applied AI, industrial robotics, service robots, and robotic process automation (RPA).”

In September, Gartner predicted that the market for  robotic process automation (RPA) software will grow 19% in 2021 and account for nearly $2 billion in revenue. Gartner research vice president Fabrizio Biscotti said that COVID-19 is driving a lot of the uptick in RPA use.

TechRepublic’s own September 2020 research report, Digital transformation plans shift due to COVID-19, found that 39% of respondents were focusing more on IT and business process automation because of COVID-19.

SEE: Virtual hiring tips for job seekers and recruiters (free PDF) (TechRepublic)

Many workers will be left behind

Both the increase in remote work and automation will have a profound effect on workers, businesses, and communities.

Fewer people spending time in a physical office means the service industry jobs that rely on workers being in those offices may disappear. Likewise, worker population shifts that comes as are result of  employers expand their hiring pools outside of major tech hubs will likely cause significant disruption to existing service sector businesses.

Lastly, business automation will eliminate jobs . Futurists, business leaders, economists may argue about which jobs will be lost , over what time period the losses will occur and what the net effect on workers and the economy will be, but few believe the increase in automation won’t cause significant upheaval in the job market , especially in the short term. The COVID-19 pandemic is accelerating this change and giving workers less time to adapt .

Powell echoed these concerns and said he was worried that the shift to an economy “more leveraged to technology” would make it difficult for many unemployed workers, especially low-paid, public-facing workers in the service sector, to return to their old jobs or find new ones.

“And I guess that for me, the main takeaway from all of this is that even after the unemployment rate goes down and there’s a vaccine, there’s going to be probably a substantial group of workers who are going to need support as they find their way in a post pandemic economy, because it’s going to be different in some fundamental ways.”

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