Regional Businesses Returning to Pre-COVID-19 Operations
The COVID-19 pandemic forced a lot of businesses in our region to undertake significant transformations. Numerous businesses scrambled to accommodate employees working from home, conducting important meetings virtually, and rethinking business operations. However, as vaccine rates continue to climb and states begin to fully reopen, businesses in our region are returning to operations seen prior to the pandemic. According to the Richmond Fed’s May survey of businesses across the region, firms are allowing workers back into the office. Additionally, businesses reported some work-related travel.
Employees Begin Their Return to the Office
Results from our May surveys of manufacturers and service sector firms show that Fifth District businesses are opening their doors to employees. Almost all (83 percent) of businesses in our sample allow any worker to work at the physical location. Of course, many workers might choose not to work on-site, thus the physical locations might have fewer workers than pre-COVID-19. According to one West Virginia professional services firm, “We are comfortable with everyone being in the office, albeit still masked.” Almost all firms (95 percent) expect to allow employees on-site by the end of the year.
Longer term, businesses anticipate having fewer workers fully in the office. According to one of our recent surveys, businesses expect an increase in hybrid and fully remote work. Service sector firms, in particular, expect the percentage of employees working fully remote to double post-COVID-19 and to have fewer workers on-site full time.
Employees Begin Hitting the Road
COVID-19 essentially shut down business-related travel. Travel broadly is starting to come back, albeit, at lower levels than 2019. On May 19, 2021, there were roughly one million more daily travelers going through Transportation Security Administration Precheck compared to May 19, 2020 – about a million less than on the same day in 2019. According to our May survey, almost 70 percent of businesses in our region have resumed business travel, albeit, at lower levels than pre-COVID-19. Although only about 10 percent of businesses have already resumed business travel at levels similar to pre-COVID-19, more than 60 percent of firms in our sample expect to resume pre-COVID-19 business travel by the end of this year. By the end of 2022, almost 90 percent expect to be back to pre-COVID-19 levels of business travel.
What the Future Has in Store for Regional Businesses
In spite of the continual economic improvement, COVID-19 is still with us. Firms in the Fifth District do not anticipate business travel reaching its “new normal” until the end of 2022. Further, the pandemic may have permanently increased the propensity of an employee to work remotely. According to a recent study by PwC, 83 percent of employers and 71 percent of employees feel that remote work has been successful. Thus, it is not surprising that in our surveys, more employers plan to continue to operate at higher levels of remote or hybrid work. Nonetheless, by the end of the year, our firms anticipate returning to the “new normal” with respect to on-site work, and most anticipate that business travel will resume. We do not know yet the lasting impact that COVID-19 will have on the way businesses operate in our district. However, as our region’s economy evolves, we will continue to monitor how our businesses are adjusting to life after COVID-19.
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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
