Impact of COVID-19 Pandemic on Business Travel and Related Expense Reimbursements Revealed
Changes in Employee Expenses During the COVID-19 Pandemic
The economic landscape has undergone significant shifts due to the COVID-19 pandemic, and this is reflected in the changes seen in employee expenses across various industries.
Healthcare and related sectors have been the most affected, with a notable rise in healthcare costs. This increase is attributed to the intensified utilization of behavioural health services, the emergence of new and expensive prescription drugs, and higher hospital costs due to more complex procedures and severity in claims.
In contrast, manufacturing industries have seen relatively stable employee-related expenses such as average weekly hours and overtime, indicating less pronounced changes.
Other industries have experienced moderate changes in wages, with a slight increase in earnings due to inflation.
The pandemic has primarily affected employee expenses through increasing healthcare-related costs and modest wage inflation, while hours worked have remained stable or decreased slightly.
In the world of finance and insurance, expense claims dropped by 47% year over year in the last week of March 2020. The information industry followed a similar trend, with a 63% year-over-year decrease in expense claims during the same period.
Office expenses have increased across every industry due to the shift to working from home. This transition has resulted in a significant spike in office supplies, with an 80% growth in March alone. Many companies have transitioned to working from home to enforce social distancing or comply with shelter-in-place mandates.
Travel-related expenses, such as airfare, hotels, baggage fees, taxis, and trains, saw a 9% decrease between March 2019 and 2020. However, life sciences companies experienced a 3% increase in expenses during this time, with the trend line pointing towards a decrease in the weeks ahead.
In early February 2020, overall expenses still rose by 8% compared to the previous year, but this declined to about 7% by March. In information businesses (mostly software and media), expense claims fell over 63% year over year in the last week of March 2020.
In summary, the pandemic has caused a shift in employee expenses, with healthcare costs rising significantly in healthcare sectors, office expenses increasing due to the shift to working from home, and travel-related expenses decreasing. Other industries have experienced moderate changes in wages, with a slight increase in earnings due to inflation. Industries less reliant on healthcare-related employee expenses and with stable working hours have experienced smaller changes.
Sources: [1], [2], [4], [5]
- The rise in healthcare costs and the increase in office supplies expenditure are contributing factors to the shift in employee expenses observed during the COVID-19 pandemic, particularly in sectors such as healthcare and those that have transitioned to working from home.
- Despite moderate changes in wages across various industries, the financial and insurance sector witnessed a significant decrease in expense claims last year, while the information industry followed a similar downward trend.
