In the immediate post-COVID era, the world will be collectively poorer—explicable by simple arithmetic: In the first three quarters of this year, the income earned by workers around the world fell by more than 10%—a loss caused by the pandemic equivalent to more than $3.5 trillion, or 5.5% of global GDP. Notably, this doesn’t yet take into account the mass lay-offs that are looming (like the 28,000 workers at Disney).
From an economic standpoint, the outlook clearly takes the shape of a “K” recovery: A sizeable portion of the global economy will emerge even stronger (with tech and health the big winners here) while elsewhere poor performance will persist with a recovery beset by bankruptcies and a subsequent rise in unemployment (hospitality and travel & tourism are most at risk).
Those who live in the downward leg of the “K” are entering an age of diminished expectations. For those who, all of a sudden, find themselves worse off than they had expected after losing their job or suffering a sharp reduction in income, optimism and excitement about the future are replaced by a sense of heightened vulnerability and the realization that life from now on will be a struggle.
In light of this, we can expect the issue of financial wellness to come increasingly to the fore, particularly in the US, where the market deficiencies (i.e., the market doesn’t work for a large segment of the population) are the most obvious.
The Worker Financial Wellness Initiative is proof of this. Established jointly by Just Capital and PayPal in collaboration with the Financial Health Network and the Good Jobs Institute, it aims to make workers’ wellbeing a C-suite and investor priority by focusing their attention on the financial security and health of the workforce. The priority issue has to be to abandon the widespread mentality that labor costs should be kept as low as possible and, hence, pay a decent living wage to all employees.
As Tudor Jones (Just Capital’s CEO) said, too many CEOs “spend a lot of their time philanthropically when, in actuality, the first place to start is under the roof of your own business.” So true! For the wellness industry, the coming challenge in a very difficult economic situation is to ensure that it walks the talk of financial wellness by remunerating its employees well enough so that they can all make ends meet.