The Economics Of... Stay-at-Home
As the world’s macro-economies contract and evolve in response to the COVID-19 global pandemic, our governments are responding with social distancing requirements they refer to as “Shelter-in-Place” or “Stay-at-Home” orders. As the name implies, Stay-at-Home orders prohibit non-essential departures from a citizen’s residence with increasingly defined exceptions that include grocery or take-out attainment, distanced outdoor exercise, and commuting of essential workers. While FINRA suggests that these workers carry documentation verifying that their “essential” employment requires his or her physical presence, there is a question of how the short-term physical restrictions of business will impact the valuation of traditional professions in a post-pandemic world economy.
Many Stay-at-Home orders specifically define places of public amusement as non-essential businesses, jeopardizing the survival of “centers of entertainment” with low substitution costs, like theaters and concert halls. According to The Hollywood Reporter, “some analysts believe COVID-19 could [have] already result[ed] in a loss of at least $5 billion from diminished box office revenue and impacted production” in China at the end of February due to the shutdown of their film market, the second largest in the world. In the same weekend, a year-over-year report on box office revenue in South Korea, the world’s fifth largest, showed revenue down 80%. These nations saw an early wave of coronavirus cases, indicating their box office losses may foreshadow an even more staggering total capital loss in the American film industry, considering its magnitude and our infection rate, throughout the months of March and April. Actors, producers, and creatives in this industry have found a solution to their loss of income by adjusting to the limitations of their consumer and publishing content on major social media and streaming platforms: Facebook, Netflix, and YouTube. While Netflix streaming is not a self-publishing platform, The New York Times reports nearly equal growth in daily traffic of website streaming on YouTube (16% for Netflix compared to 15.3% for YouTube) and even more dramatic growth in website streaming on Facebook (27%) through the end of March.
In the same way that late-night entertainment shows have turned to a home-video format, live actors are creating compilations of multiple self-recordings for their own productions, like this lip-sync performance by Broadway actors of “One Day More” from the classic Les Misérables. Government crisis funding plays a massive role in keeping performers’ careers secure during the pandemic. The National Theatre in London, a beneficiary of the Arts Council England’s £160 million emergency package in response to COVID-19, will be broadcasting on YouTube every Thursday with their most popular recorded productions.
As sources of entertainment adjust to the limitations of the consumer, so too are food retailers. Restaurants have seen reduced financial profits from foot traffic as a result of Stay-at-Home orders; according to the U.S. Census Bureau’s Department of Commerce, the national total sales estimates of “food services & drinking places” dropped 26.5%, $66.1 billion to $48.6 billion, from February to March of 2020 (adjusted for seasonal variation and for holiday and trading day differences, but not for price changes.) Conversely, in the same month with the same adjustments, total sales estimates of “grocery stores” increased 26.9%, $58.4 billion to $74.2 billion.
So, what strategies have restaurants employed to encourage take-out and delivery sales, and how does the sudden influx of grocery sales affect these stores’ supply chain? America’s National Restaurant Association suggests to industry participants that minimizing loss of revenue during mandated social distancing is increased modification of menu items to respond to item shortages, which is often a result of suppliers prioritizing grocery supply chain in the short-term. They also suggest expanding takeout and delivery options, including patron customizations, to drive higher demand. The Vice President of The Food Industry Association, Doug Baker, identifies a method called supply pacing as a way to address temporary product shortages in grocery stores, such as in a natural disaster or crisis such as COVID-19. “This ensures that there is an equal distribution of product across the supply chain during a crisis — one store doesn’t get a 100% of their order while another store only receives 30% of their product order.” As many news outlets have reported over the previous weeks, America has no issue responding to grocery stores’ increased demand regarding food production, but rather in the logistics of product delivery as our access to labor has been restricted.
In an effort to better contextualize the economic impact of Stay-at-Home orders, Forbes attempts to quantify the labor production of stay-at-home mothers into a dollar amount, or hypothetical salary, by promoting the Mom Salary Wizard tool, provided by Salary.com. The calculator reports that the national median of quantified labor produced by a stay-at-home mom is a staggering $118,899 annually (given the average number of children in an American household is nearly two and most children are between the ages of 6 and 18.) Great, what about dad? The same inputs reveal a national median of quantified labor produced by a stay-at-home dad to be $67,228 each year with a national high of $100,687 per year, the latter of which you might notice is well below the median estimate for moms’ labor. While this disparity is extreme, one explanation that Forbes identifies is the value of add-on tasks traditionally completed by the female caretaker in a household such as cooking, transportation, event planning, and supplemental education.
Salary.com
Why does this matter in the context of the COVID-19 pandemic? These add-on tasks and general childcare are forms of insourcing that can create universal cost savings for households during Stay-at-Home that had previously chosen to outsource parenting tasks where their career and travel arrangements required. According to University of Michigan’s Parenting in Context Research Lab in a survey of 562 parents published on March 26th, financial concerns (52%) and social isolation (50%) interrupted Americans’ ability to parent as a result of the Stay-at-Home orders and widespread school closures. In other words, the value of insourcing parenting tasks has increased as resources are limited. The largest adaptation to parenting reported by those studied (68%) was playing games more than usual over the past two weeks, including a full week of school closures. That might explain why the board game aisle looks as barren as the paper goods or shelf-stable aisles!
Stay-at-Home orders across America, and around the world, are set to expire in May or June and are expected to reoccur periodically over the next year or longer, which leads to the question of macroeconomic consequences. The Dow Jones and S&P 500 fell about 35% each between February 20th and March 23rd of 2020 and have each nearly halfway recovered now, five weeks after the trough. Investment loss has been great, but so has the rise of opportunity to purchase equity and real estate. Job loss has been great, but so has the increase of demand for creative supply chain and online product delivery. It is impossible to predict the exact recovery timeline and comparative result of COVID-19 and resulting Stay-at-Home orders, but economic survival will be awarded to those who identify and improve solutions in our new reality.
““Some analysts believe COVID-19 could [have] already result[ed] in a loss of at least $5 billion from diminished box office revenue and impacted production[...]””
Works Cited
ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, MARCH 2020.” Department of Commerce, U.S. Census Bureau, 15 Apr. 2020, www.census.gov/retail/marts/www/marts_current.pdf.
Baker, Doug. “How Is the Grocery Supply Chain Responding to Coronavirus?” The Food Industry Association, 11 Mar. 2020, www.fmi.org/blog/view/fmi-blog/2020/03/11/how-is-the-grocery-supply-chain-responding-to-coronavirus.
“COVID-19 BUSINESS CONTINUITY PLANNING BASICS.” National Restaurant Association, 2020, restaurant.org/Downloads/PDFs/business/COVID19-Business-Continuation-Resource-Flyer.pdf.
“The Economics Of Stay-At-Home Moms.” Forbes Magazine, Investopedia, 11 Aug. 2011, www.forbes.com/sites/investopedia/2011/05/10/the-economics-of-stay-at-home-moms/#18501d9e5963.
Koeze, Ella, and Nathaniel Popper. “The Virus Changed the Way We Internet.” The New York Times, The New York Times, 7 Apr. 2020, www.nytimes.com/interactive/2020/04/07/technology/coronavirus-internet-use.html.
Lee, Shawna J., and Kaitlin P. Ward. “STRESS AND PARENTING DURING THE CORONAVIRUS PANDEMIC.” Parenting In Context Research Lab, University of Michigan, 26 Mar. 2020, www.parentingincontext.org/uploads/8/1/3/1/81318622/research_brief_stress_and_parenting_during_the_coronavirus_pandemic_final.pdf.
Roxborough, Scott, et al. “Global Film Industry Facing $5 Billion Loss Amid Coronavirus Outbreak.” The Hollywood Reporter, 10 Mar. 2020, www.hollywoodreporter.com/news/film-industry-facing-5-billion-loss-coronavirus-outbreak-1282038.
“State ‘Shelter-in-Place’ and ‘Stay-at-Home’ Orders.” FINRA.org, 2020, www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
