Impact of the COVID-19 Pandemic on Business Travel and Related Expense Reimbursements: Three Key Aspects
Impact of COVID-19 on Business Expenses: A Breakdown Across Industries
The COVID-19 pandemic has brought about profound changes in business operations and expenses. Here's a closer look at how various industries have been affected.
Rising Employee Expenses
During the pandemic period ending early 2025, employee expenses, measured by compensation costs, have increased differently across industries. The healthcare sector has seen considerable cost pressures, with wages, salaries, and benefits rising due to inflationary impacts, complex medical procedure mixes, and a higher demand for specialized skills (PwC, 2025). Additionally, unionized sectors have experienced a higher increase in compensation costs compared to non-union sectors (BLS, 2025).
Slower Growth in Employee Expenses
On the other hand, the information sector has seen notably weaker pay growth since the pandemic began, with both Employment Cost Index (ECI) and average hourly earnings (AHE) showing slower increases or even stagnant growth relative to pre-pandemic levels (Brookings Institution, 2025). Non-union sectors have also experienced relatively modest increases in compensation costs.
Shifts in Business Expenses
The pandemic has also led to significant changes in other business expenses. For instance, demand for subscription-based services such as video conferencing software rose as employees began to work from home. In information businesses, expense claims fell over 63% year over year in the last week of March 2020. Travel-related expenses, such as airfare, hotels, baggage fees, taxis, and trains, dropped 9% between March 2019 and 2020 (BLS, 2020).
However, finance and insurance companies saw a significant surge in subscription expenses, over seven times higher than 2019. Construction companies, on the other hand, saw the most significant rise in office supplies expenses, five times higher than the previous year. Both life sciences and construction industries showed an uptick in transportation mileage during March.
Expenses in categories such as subscriptions, training, and internet were 20-25% higher in March compared to the same month in 2019. AppZen saw variation by industry, with construction companies having the most significant rise in office supplies expenses.
The Future Outlook
As the economic landscape becomes uncertain, companies are taking difficult actions to cut spending due to a severe downturn of unknown length. In finance and insurance, expense claims fell by 47% year over year in the last week of March 2020. Life sciences and construction industries showed an uptick in transportation mileage during March.
In conclusion, the COVID-19 pandemic has had a significant impact on business expenses, causing shifts in areas such as travel, office supplies, and subscription services. Employee expenses have increased differently across industries, with healthcare and unionized sectors experiencing the most significant increases, while the information sector and some non-union industries have experienced the least changes or slower growth in employee costs.
References:
[1] BLS (2025). Employment Cost Index - March 2025. https://www.bls.gov/news.release/eci.nr0.htm
[2] PwC (2025). Healthcare Cost Trends: What to Expect in 2025. https://www.pwc.com/us/en/services/health-industries/healthcare-cost-trends.html
[3] Brookings Institution (2025). The Pandemic's Impact on Wages: What's Next? https://www.brookings.edu/research/the-pandemics-impact-on-wages-whats-next/
- The surge in subscription expenses, observed particularly in finance and insurance companies, indicates a critical shift in business spending in the technology sector.
- As a result of the pandemic, the lifestyle sector has shown a notable decrease in travel-related expenses, with expenses such as airfare, hotels, and taxi fees experiencing a 9% drop between 2019 and 2020.
