Unemployment vs. the Bulls

Source: Bureau of Labor StatisticsThough they might start to use staff more efficiently, rather than doing the same work with less people, many bars and restaurants will rehire staff members after this crisis is over — assuming people are indeed eager to go out again. Most crisis-related unemployment is in the lowest 20% wage bracket. Firing and recruiting there is easier than for high-paid specialty jobs.Beyond restaurants and bars, a 2019 Brookings study shows that the most vulnerable jobs to automation are in office administration, production, transportation, and food preparation. Entertainment jobs are safer from automation. So what to expect?A new attitude on what is efficient workThis crisis will drive automation in several sectors that were (indirectly) affected by the lockdown. But probably more significant are questions around work efficiency. Partially because this crisis is not only a small-business problem. Many employees in the sectors directly affected by the shutdowns, work for larger firms. For example, airlines can shrink staffing costs by say 10% by shifting to a leaner business model — not an option for a one-man shop.So to finish, why are markets not responding to job cuts. Two reasons, one fact, one speculation:Fact: The very largest market players are the least affected by Covid. In fact, 18% of the total S&P 500 market cap is in the “FAAMG” basket (Facebook, Apple, Amazon, Microsoft, and Google) which are doing pretty well right now.Speculation: Markets are seeing an opportunity for positive corporate reform (making earnings expectations not too grim).How does this Covid-period change our attitude as consumers, and as employees? If even the most stubborn dinosaurs can get used to socializing on a screen, the market (and we) might as well be positive. People that used to be afraid of computers are now ordering groceries online (because they fear the virus even more). The experience of Covid might accelerate intended corporate reforms, and trigger new consumer demands. Jobs that are lost for now might come back — with a different title.The Capitalhttps://medium.com/media/3b6b127891c5c8711ad105e61d6cc81f/hrefUnemployment vs. the Bulls was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Author: Isa Verkes

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