Employers: Lessons from the Pandemic
This pandemic taught us a lot, from the importance of financial planning in Palm Beach to having an emergency fund and having a sufficient stockpiling mindset in preparing for life’s uncertainties. We’ve seen how people across the globe changed their lifestyles in response to COVID-19. It will be interesting to see how U.S. businesses adjust their operational models to account for the potential for future pandemics or other catastrophic events.
What Lessons Have We Learned during this Pandemic?
A Work-Life Balance May Look Very Different
According to the employment-population ratio, nearly half of the U.S. population was out of work (which includes those no longer actively looking for work), with economists predicting 30 million jobs must be created to return the ratio to its 2000 peak. 1
If your household has suffered a job loss or reduced income and you need assistance with financial planning in Palm Beach, or if you’re just not sure about your future retirement income and want to create a plan, please contact us. We’re happy to evaluate your financial circumstances and provide guidance.
Work-life balance was a problem before the pandemic, but now that issue is being experienced in another context. Many employees have been able to migrate seamlessly to working from home using software to stay connected with colleagues and clients. However, with children home from school and now responsible for online learning, work-life balance can be even more difficult.
Many white-collar professionals have discovered the need for one — or two — in-home offices for spouses who are working professionals. While many are able to get their work completed independently, it is important to still be accessible to colleagues at certain points of the workday. Despite these challenges, some companies may increasingly find remote working to offer lower-cost, higher-productivity benefits if they can overcome some of the issues they currently face.2
As for working from home this year, it will be interesting to see if tax laws change before filing season next April. Furthermore, according to a recent report from the Federal Reserve Bank of Dallas, more than 35% of Americans employed in May of this year were working entirely from home — up from just over 8% in February. Unfortunately, the Tax Cuts and Jobs Act disallowed W-2 employees from being able to deduct home office expenses.3
Job Stability May Increase
A work-from-home business model could also expand the net for recruiting talented employees. Likewise, many top companies are located in big cities where real estate sells for a premium. This is a tough life for young adults saddled with student loan debt. With a mobile workforce that allows employees to live wherever they want, companies can offer a competitive advantage when it comes to attracting top talent. In turn, Millennials and Gen Zers can move away from big city life and buy homes in less expensive areas.4 This could potentially help them save more money and turn around the fortunes of the country’s more rural areas.
It would be nice to keep your job, move somewhere with a lower cost of living and be able to keep your salary level. However, some economists claim that’s not going to be the case moving forward. Because many businesses have lost revenues due to reduced consumerism throughout this pandemic, wages are likely to stagnate for several years. Then again, the cost of living isn’t expected to increase dramatically in the near-term either.5 By moving to a less expensive locale, employees may be able to save more money even if they don’t get a salary bump in the foreseeable future.
Unfortunately, that means that any wage cuts employees received this year may not recover anytime soon. According to economists at the Federal Reserve Board, businesses initially cut wages by nearly two times as much due to the pandemic than they did during the Great Recession.6
Where to Find Financial Planning Advice in Palm Beach?
If your family has suffered a job loss or lowered income, and you need help with creating a budget, don’t hesitate to seek help from Legacy Financial Partners. We can also help you make an income plan to feel secure about your financial future.
Content prepared by Kara Stefan Communications.
1 Yung Li. CNBC. June 29, 2020. “Nearly half the U.S. population is without a job, showing how far the labor recovery has to go.” https://www.cnbc.com/2020/06/29/nearly-half-the-us-population-is-without-a-job-showing-how-far-the-labor-recovery-has-to-go.html. Accessed Aug. 12, 2020.
2 Knowledge@Wharton. May 4, 2020. “Working from Home: Navigating the Pandemic’s New Normal.” https://knowledge.wharton.upenn.edu/article/working-from-home-navigating-the-pandemics-new-normal/. Accessed Aug. 12, 2020.
3 Kelly Phillips Erb. Forbes. Aug. 12, 2020. “The Ultimate Forbes Guide to Working from Home.” https://www.forbes.com/sites/kellyphillipserb/2020/08/12/taxes-vpns-and-office-hours-the-ultimate-forbes-guide-to-working-from-home/#90a042442e7e. Accessed Aug. 12, 2020.
4 Parag Khanna and Kailash K. Prasad. Politico. May 13, 2020. “How Coronavirus Could Make People Move.” https://www.politico.com/news/magazine/2020/05/13/how-coronavirus-could-upend-human-migration-251715. Accessed Aug. 12, 2020.
5 Jessica Peres. TheDenverChannel.com. June 30, 2020. “Economists say wages will stay stagnant amid pandemic.” https://www.thedenverchannel.com/news/national/coronavirus/economists-say-wages-will-stay-stagnant-amid-pandemic. Accessed Aug. 12, 2020.
6 Carmen Reinicke. Business Insider. June 26, 2020. “Pandemic wage cuts are roughly double what they were in the Great Recession, study shows.” https://www.businessinsider.com/wage-cuts-coronavirus-pandemic-twice-great-recession-fed-study-shows-2020-6. Accessed Aug. 12, 2020.
We are an independent firm helping individuals create retirement strategies using various insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
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