During the pandemic, Google, along with most other large corporations, told their employees to work from home. An unintended consequence of this remote work trend was the big savings realized by both companies and workers.
Bloomberg reported that Google, according to regulatory filings, saved about $268 million in expenses in the first quarter of 2021. This was achieved by cutting down costs related to promotions, travel, entertainment and in-office perks offered to workers. If you’d annualize the quarterly savings, it would be over $1 billion.
To be fair, it’s not always accurate to base the future on only one point in time. Once companies bring back workers, there will be additional expenses incurred related to potential legal liabilities concerning risks to the health of employees. Alphabet, Google’s parent company, employs more than 135,000 people, along with a comparable amount of contractors. CNBC reported, “As Google prepares to return workers to offices in 2021, it is warning it may take a productivity and financial hit in the process, according to the company’s annual 10-K report.”
Bringing back a large percentage of these folks will be a large and costly endeavor. Google said in its financial statements, “As we prepare to return our workforce in more locations back to the office in 2021, we may experience increased costs as we prepare our facilities for a safe return to work environment and experiment with hybrid work models, in addition to potential effects on our ability to compete effectively and maintain our corporate culture.”
Google wasn’t alone in declaring savings attributed to the pandemic. During the early days of the covid outbreak, CNBC reported that the giant online retailer Amazon “saved nearly $1 billion in employee travel expenses this year, as the coronavirus pandemic kept employees from hopping on airplanes.” Brian Olsavasky, Amazon’s CEO said “There’s some benefits going on right now,” as “Travel ground to a halt,” and employees stayed at home.
For many fortunate white-collar workers who were able to hang onto their jobs and work remotely, they’ve been able to squirrel away some money. In the absence of costly daily roundtrip commutes to work, no longer needing to purchase suits and ‘work clothes’, having three meals at home instead of going out to eat or ordering food to the office, enabled families to get their finances in order. During the lockdowns, people weren’t able or elected not to attend concerts, sporting events, taking vacations, dinning at restaurants and other activities outside of the home.
As people avoid spending money, they were able to put it into the bank, invest in the stock market or purchase a new home. The U.S. personal saving rate hit a record high 32.2% in April, according to the U.S. Bureau of Economic Analysis. This amount of savings was nearly twice as large compared to the previous record set in May 1975, during a rough recession. While savings increased, consumer spending dropped by 12.6%. To put these figures into perspective, the average savings rate over the last ten years was about 6 to 8%.
Many Americans and people around the world were not so lucky. In the U.S. over 80-million Americans filed for unemployment benefits after losing their jobs. Food insecurity and poverty hit uncomfortably high modern-day levels. Those who couldn’t work from home had to endure the risks of catching and spreading the disease to family members, and weren’t able to reap the benefits of that many professional-class people realized during the outbreak.
Fortunately, as companies and families saved money, and cities and states such as New York are planning to reopen, the economy will start booming, requiring companies to aggressively hire. This tide will lift all boats and it’s likely that we’ll see a hot job market offering lots of opportunities for people to improve their careers and financial circumstances.
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