Service industries may have changed forever
WASHINGTON — For years, personal trainer Amanda Tikalsky didn’t have to worry much about her job. The U.S. economy’s record-breaking 11-year expansion offered security to service workers like her.
Then came the coronavirus, which closed the Milwaukee athletic club where she worked for 15 years. She scrambled to organize online exercise sessions to keep money coming in. About 25% of her clients made the jump with her.
“It’s an adjustment for everybody,” she said. “We are used to being face to face.”
But even when the virus threat is gone, Tikalsky predicts that many customers will continue to exercise from home.
The shutdown is also likely to change her own shopping habits. She has a new appreciation for the ease of buying groceries online.
The pandemic is almost sure to leave a mark on the way people work, shop and socialize, perhaps permanently shifting the way many service industries operate.
Consumers will think harder about the health implications of squeezing into crowded restaurants and movie theaters.
More businesses will accept the effectiveness of employees who work from home, and the move to online shopping will accelerate.
“We’ve never had a crisis where we couldn’t socially gather with people,” said John Gordon, founder of Pacific Management Consulting Group in San Diego, which advises restaurants.
Until March, service workers — from dishwashers to real estate agents — had been enjoying a record winning streak in the job market. U.S. service jobs had risen for a decade.
The sector appeared almost immune to blips in the economy.
Not even low-wage competition overseas or automation seemed to threaten service jobs that require direct contact with customers.
Then the virus arrived. It upended the service economy, which accounts for 84% of U.S. private-sector employment. It wiped out 659,000 service jobs in March — 94% of the jobs that vanished last month as the U.S. economy plunged into recession.
It is sure to claim many more. In an interview Monday on CNBC, former Fed Chairwoman Janet Yellen predicted that unemployment rates could climb to Great Depression levels. But because the economy was in solid shape before the outbreak, she added, the return to normal employment could happen much faster than during the Depression or after the 2007-09 Great Recession.
When the economy goes into a nosedive, manufacturers, not services providers, are usually hit first and hardest.
Not this time. The virus has been a gut punch to businesses that depend on social gatherings — restaurants, cinemas, theaters, hotels, airlines, gyms, shopping centers.
More than 250,000 stores are now temporarily closed, accounting for nearly 60% of retail square footage, according to Neil Saunders, managing director of GlobalData Retail, a research firm.