Here’s What Could Have Happened If The Pandemic Struck In 1990
It’s something you hear people muse on often. Wow, as bad as the coronavirus pandemic has been for lives and livelihoods, imagine if it had hit 30 years ago, or even 10. At least we have the technology that means some people can work from home, saving lives and keeping parts of the economy going that could otherwise have failed.
One set of academics took this beyond idle speculation. They created a model that used data to estimate how prevalent working from home would have been if the pandemic had hit in 1990, the impact on workforce productivity, how this might have affected commercial real estate rents and the wider impact on society.
The counterfactual was part of a wider paper produced by Rutgers Business School professor Morris Davis, University of North Carolina-Chapel Hill associate professor Andra Ghent and University of Wisconsin-Madison associate professor Jesse Gregory that looked at how the productivity of working from home evolved during the pandemic and the implications that might have for property and the economy.
So what did they find? Commercial real estate, in the form of office rents, would actually have fared a lot better in a hypothetical 1990 pandemic than it is likely to in 2021 and beyond. Good news right? Hmm, not so much. It fared better because working from home was not an option without the technologies we have today. That meant most people would have still gone to the office or would have been unable to work at all, so a lot more people would have died, and the economy would have been hit even harder.
The paper, The Work-From-Home Technology Boon And Its Consequences, highlights just how remarkable and revolutionary the tools that have allowed us to work from home have been. Super-fast internet, email, smartphones and cloud computing technology have facilitated the video calls and data sharing that have essentially allowed huge swathes of the economy to keep operating while people work remotely.
In terms of the implications of these technologies, the paper goes so far as to compare their potential to reshape society with the widespread utilisation of electricity, which engendered a consumer spending boom and “liberated women from the more menial tasks associated with home production.”
So what does the researchers’ model hypothesise about what would have happened had the pandemic hit in 1990? The technology of the time was so unable to cope with the demands of business that the number of hours worked from home for skilled workers would have only risen from 0% to 1%. Go through your average day working from home during the pandemic and ask whether fax machines, one-on-one phone calls and bike couriers would have allowed you to do your job effectively.
Social distancing measures would have been put in place in offices, which would have made working in an office much less efficient than before the pandemic. But it still would have been better than working from home, so people would simply have continued to go into the office, the researchers predicted — the alternative was not being able to work at all.
The number of effective hours worked per worker in a 1990 pandemic would have dropped by 64%, the researchers theorised. Income for workers would have dropped by between 20% and 36%, compared to a range of 14% to 20% for workers in 2020.
“Incomes for both low- and high-skill workers would have declined by much more than implied by the counterfactual experiments for the current (2020-2021) pandemic, because workers in 1990 cannot offset the decline in productivity at the CBD by working from home,” the paper said.
People would have by and large kept coming in to the office, and so demand for space from existing occupiers would have been largely unaffected, the paper hypothesises. Rents would have dropped, because of the impact of a deep recession, but not by as much as at the start of the 2020 pandemic. The researchers said that at the start of the 2020 pandemic CBD office rents theoretically dropped by 68% in the U.S., although this wasn’t really tested because no one was really signing leases at that point. In 1990 on the other hand, rents would only have dropped by 37%, they said.
The biggest consequence for society of a pandemic in 1990 would have been the likelihood of a higher death rate, the paper said.
“These simulations show that worker behavior after the onset of a pandemic in 1990 would not have changed much, and the virus would have been much more lethal and costly in terms of income,” the academics said.
They point to research from a team led by professor Martin Eichenbaum of Northwestern University, which found that about 17% of Covid-19 transmissions occur in workplaces.
More people in workplaces rather than working from home equals more cases, and more cases equals more deaths. The debate about the efficacy and productivity of working from home will continue for years to come. But during the pandemic itself, technology like Zoom and cloud computing saved lives.