Pandemics—the worldwide spread of a new disease—have had profound effects on society and, as a result, on business. The current coronavirus is raising concerns around the world.
What does this mean for your business and can you do anything about it?
Impact of prior pandemics
The plague that hit Europe and Asia in the mid-1300s, also known as the Black Death, killed as many as 60% of the population and transformed the lives of survivors and their economy in the aftermath. Because there were fewer workers after the epidemic passed, wages rose. Lords began to keep sheep, which required fewer workers to manage. Peasants, who previously never left home, moved away from the estates they were on. Laws changed to reflect new economic times, including England’s Statute of Labourers (1351), which attempted to keep the old status quo upon penalty of imprisonment (workers weren’t supposed to get higher wages and food vendors weren’t supposed to hike their prices); this law obviously was ineffective.
The Spanish flu of 1918, labeled the deadliest pandemic in history, killed an estimated 50 million people. It too impacted the economy. One newspaper report referred to in a publication by the St. Louis Federal Reserve said, for example, that Little Rock, Arkansas merchants saw declines in their businesses ranging from 40% to 70% and retail grocers had their businesses reduced by one-third.
It’s too soon to say how severe the current pandemic will become and whether it will directly impact your area and your business. But indirect impacts are certain. Concerns about the coronavirus caused the stock market to decline by more than 400 points on January 27, 2020, as new cases in the U.S. were announced.
Sickness and death, in any numbers, are always very sad and bad news. But there’s some good news to keep in mind. The Federal Reserve study found that: “most of the evidence indicates that the economic effects of the 1918 influenza pandemic were short-term. Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Other businesses that specialized in health care products experienced an increase in revenues.”
If the pandemic proves to be severe, it’s going to cost many lives and billions of dollars. “Some businesses could suffer revenue losses in excess of 50 percent. Others, such as those providing health services and products, may experience an increase in business (unless a full quarantine exists). If the pandemic causes a shortage of employees, there could be a temporary increase in wages for remaining employees in some industries.”
What can you do?
The Fed report goes on to say: “Local preparedness by health departments and hospitals, volunteer services (e.g., Red Cross) and private businesses, and responsible actions of the population are likely to mitigate the effects of a modern-day influenza pandemic.”
Healthwise, the best strategy for your business is to follow common sense rules applicable for any flu (as explained in an earlier blog. This includes encouraging healthy workplace practices and discouraging presenteeism (by getting workers to stay home). At present, the flu is posing a greater health threat than the coronavirus, so be sure to observe those practices in any event.
From a financial perspective, if the pandemic grows in your area, depending on the nature of your business, be prepared for reduced revenues. Of course, today many businesses don’t depend on foot traffic, and if people are quarantined, online sales may continue…or even grow.
During the period of concern about the coronavirus as well as after it, keep plenty of Purell or other hand sanitizers on hand to fight the spread of germs. The CDC has information on “Handwashing: A Corporate Activity.”