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🛠️ Why fewer people are working

August 19, 2021 Sign up
TOGETHER WITH Finny

Happy Thursday. Can you guess how many US households got a new pet during the pandemic (according to American Pet Products Association)? a. 2.56 million, b. 6.71 million, c. 11.38 million. Check the answer in the "Trending" section below.

Here are the money topics for today:

  • The jobs economy is undergoing a transformation
  • Copper prices as a barometer for economic outlook
  • With more covid variants, will we ever return to work as we know it?

ECONOMY

The jobs economy is undergoing a transformation

As you’ve likely gathered by now, the way we work will probably never be the same. Although it might seem like 2020 represented a great shift in the jobs economy and worker mentality as a whole, it really just hit the fast-forward button on an already prevalent trend. 

The US Labor Force Participation Rate, a measure of employed citizens over the age of 16, is at its lowest point in over 4 decades, at about 62% as of the end of June 2021. It dropped off 3% from 2008-2012 and took another dip last year at the onset of the pandemic. 

Why is that? 

The rate has been falling pretty consistently for the better part of four to five decades, so it’s not just the pandemic that’s at fault here. Remaining stimulus benefits and health-related issues may be undermining our recovery to some degree, but not enough to reverse the bigger picture.

  • McKinsey Global Institute predicts that by 2030, 45 million Americans would lose their jobs to automation: That’s a quarter of the workforce, and it’s a trend that’s already been in play for over a decade. In 2019, self-serve Kiosk sales rose by 17.9%—we just don’t need humans for everything anymore. 
  • Also noted by Oxford Economics: Approximately 45% of the 7 million jobs yet to be recovered from the pandemic unemployment lapse are highly susceptible to automation. It’s not likely, or efficient, to return back to exactly how we did things before. 
  • More Baby Boomers are retiring: In 2020, the number of Boomers who retired more than doubled compared to a year prior—up to 3.2 million, and up from 2.2 million in both 2017 and 2018. These employees have played a big role in the workforce for a long time, many of them valuing loyalty to their company more so than the younger generations. Ultimately, we’re losing a generation of workers that won’t be fully replaced. 
  • Drugs, mental health, and frustration: Overdose deaths rose by 30% in 2020 amidst a tough year for many. An unforeseen pandemic induced anxiety and chaos, both financial and physical, and workers are unsatisfied in many cases. It’s easy to just say no one wants to work, but in reality, it’s much more complicated.

The future of the workforce

Moving forward, it’s fair to ask, where do we go from here? The answer is probably the same place we’ve always gone: forward. Things change all the time, and the economy and the people within it eventually adapt accordingly. 

It won’t be a sweeping motion of changes where everyone’s job is taken over by automated intelligence and driverless vehicles, but more of a gradual shift towards a new kind of economy.

There will certainly be growing pains and incongruencies along the way, but we can remain hopeful that 2020 and this evolving labor force will eventually coalesce to form something new and better, and perhaps we can look back on this pivotal period as simply a time of change, growing pains and innovation.

INVESTING

Copper prices as a barometer for economic outlook

As you might expect, copper does in fact have a broad range of uses throughout the world, and therefore the economy. The world consumes about 24 million metric tons of the stuff every year, and the US made use of over 3.3 million of those metric tons in 2020. 

Copper is primarily used in electrical applications, which make up 65% of its consumption, followed by 25% industrial usage, and 10% between transportation and other miscellaneous uses.

Does it matter?

In general, rising copper prices have indicated strong demand and global economic strength. 

Historically, the price of copper has been strongly correlated with the price of gold, oil, the Chinese economy and world trade. Base metals like copper are often viewed as a hedge against price inflation and tend to do well as economic activity recovers, just as we saw earlier this year. 

So, how’s the weather? 

Well, copper prices have been on a strong upward trend since early 2020, reaching near 2011 levels after having tapered off over the last decade. However, prices fell noticeably in July, and with the potential for a copper shortage coming sometime in the near future, some investors are concerned.

Copper price chart per pound

Source: Macrotrends.net 

Quick take. But beyond near-term macro-economic trends and inevitable fluctuations as quarantine measures impact copper mining abilities and country-specific reopening plans (and therefore copper demand), long-term changes such as accelerating cleantech and renewables projects, electric vehicle adoption and the increasing potential for major infrastructure spending in the US may bode well for copper in the long run.

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WORK LIFE

With more covid variants, will we ever return to work as we know it?

Alpha, beta, gamma, delta... lambda. What will we start naming the variants once Covid successfully mutates enough times for us to run through the Greek alphabet? But more importantly, will we ever work the same again? 

Remote and hybrid working environments were already a trend on the uptick before the pandemic hit, and as we already covered in the prior section, 2020 forced us into the future a bit earlier than expected. With the newfound acceptance and appreciation many of us now have for our new working situations, and the pandemic still unresolved, we might need to strap in.

So, let’s make the case for the new normal. And data is one of the best ways to say a lot with a little, so we'll get to the point.

  • Presence alone is not productive: The average worker is only productive for 2 hours and 53 minutes per day while on the clock. Most tasks simply don’t take 8 hours—efficiency is more important than logging hours. 
  • Maybe time doesn’t equal money: Luxembourg is the #1 most productive country in the world with an average productivity per hour per person being approximately $71. The average hours worked per person there? Just 1.512. 
  • Per surveys by ConnectsSolutions, working remotely can increase productivity up to 77%: It makes sense. Without the monotony of having to deal with travel, variables, distractions, and all the stress involved with it all, it seems much simpler.  

And some more data...

  • Remote workers are 52% less likely to take time off
  • 86% of employees prefer to work alone
  • It takes an employee an average of 23 minutes to refocus after being distracted by in-house variables, which occur on average every few minutes

Progress

Data finds that approximately 37% of jobs in the US can be done completely remote, with significant local variations of course. Of course, 63% of jobs remain. Millions of people clock into their jobs every day to do work that is required to keep the country going, and we certainly acknowledge this. 

That being said, when we find ways to increase both our quality of life and productivity simultaneously, it’s an opportunity employers must jump on if they can. Cutting out all the metaphorical middlemen involved with office settings could lighten the load for workers, and it’s probably safe to say we’re never going back to what we considered normal just a couple years ago.

ASHU'S CORPORATE CORNER

Today's Movers & Shakers

  • Macy’s (+3.7%) as the retailer tops revenues and earnings estimates. Kohl’s (4%) for the same reason
  • Tapestry (-2.3%) the purveyors of Coach and Kate Spade brands in spite of beating the street and raising dividends
  • Robinhood (-9%) as the retail trading platform warned investors on a slowdown in trading
  • Cisco (-2%) beat earnings numbers but its guidance was shy of analysts' forecasts—reason being higher costs and supplier issues
  • Bath & Body Works (+2.7%) the renamed L Brands after beating the street's forecast. Victoria Secret, which was spun off from L Brands, is down 8.6% on weaker sales
  • Nvidia (+1%) after earnings and revenue for its fiscal 2Q beat Wall Street estimates amid strong graphics cards sales
  • Toyota (-3%) after sharing that it will cut production by 40% as a result of the chip shortage. GM is also down as investors weigh in on the shortage as well
  • Pfizer is down 1% after a UK study found that the vaccine loses effectiveness after three months

This commentary is as of 9:26 am EDT.

✨ TRENDING ON FINNY & BEYOND

  • Answer. An estimated 11.38 million U.S. households got a new pet during the pandemic, according to a survey conducted by the American Pet Products Association last September (Today's Veterinary Business)
  • Pet health insurance they actually need. Carefully crafted in collaboration with their vet team and lots of excited pet parents, Lemonade* has customizable coverage your pet actually needs. Starting from just $10/month (Lemonade)
  • Companies pull out all the stops to fill jobs in a market like we have never seen (Morning Brief via Yahoo)
  • Finny lesson of the day. With remote work in play, how many of you got a pandemic pet or two? If you did and you've cleaned out your wallet more than once thanks to an unexpected pet expense, find out if pet insurance is worth it:

Finny is a personal finance education start-up offering free, game-based personalized financial education, a supportive discussion forum, and simple stock and fund tools (aka Finnyvest). Our mission is to make learning about all things money fun and easy! 

The Gist is Finny's newsletter to our community members who are looking to make and save more money, protect their finances and be their own bosses! Finny does not offer investment or stock advice. The Gist is sent twice a week (Tues & Thurs). The editorial team: Austin Payne and Chihee Kim. Thanks to Ashu Singh for Today's Movers & Shakers.

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