1/ A Thread on Unemployment
The dire reality of the shock to the labor market is on full display.
Many look through this data, calling it a “temporary” shock.
I like to use simple analogies to cover complex topics. Here’s one on why this thinking is flawed...
The dire reality of the shock to the labor market is on full display.
Many look through this data, calling it a “temporary” shock.
I like to use simple analogies to cover complex topics. Here’s one on why this thinking is flawed...
2/ Imagine you are the owner of a widget business.
You are pretty good at making widgets and typically do $100M in annual revenue and $10M in net profits.
Where does that $90M go? Well, it costs you $50M to make the widgets and another $40M to pay employees and cover expenses.
You are pretty good at making widgets and typically do $100M in annual revenue and $10M in net profits.
Where does that $90M go? Well, it costs you $50M to make the widgets and another $40M to pay employees and cover expenses.
3/ You’re happy with business. You don’t think much about efficiency. You’re pretty damn efficient and have the country club membership to prove it.
One day, you wake up to news of an outbreak of Murder Hornets. The government locks down the country.
Because, Murder Hornets.
One day, you wake up to news of an outbreak of Murder Hornets. The government locks down the country.
Because, Murder Hornets.
4/ All of your physical widget sales channels are closed. E-commerce is fine, but your widget sales are cut in half overnight.
You have to rationalize costs to minimize burn. You furlough 75% of your staff - sales, marketing, design, IT, etc.
You are left with a skeleton crew.
You have to rationalize costs to minimize burn. You furlough 75% of your staff - sales, marketing, design, IT, etc.
You are left with a skeleton crew.
5/ In the weeks that follow, your skeleton crew manages to keep the business alive.
Each employee is doing work that took 3-4 people pre-Murder Hornets. They have found new ways to work - more creatively, more efficiently.
“Wow, every cloud has a silver lining,” you think.
Each employee is doing work that took 3-4 people pre-Murder Hornets. They have found new ways to work - more creatively, more efficiently.
“Wow, every cloud has a silver lining,” you think.
6/ The War on Murder Hornets turns a corner. The economy begins to reopen. The furlough period nears its end.
What do you do?
“I don’t need to bring them ALL back,” you say, “We are so much more efficient now, and this Murder Hornet Benefits Act is helping them enough.”
What do you do?
“I don’t need to bring them ALL back,” you say, “We are so much more efficient now, and this Murder Hornet Benefits Act is helping them enough.”
7/ You bring back half of the employees.
Widget stores reopen, sales return. But your business is much more efficient - $100M in sales and $20M of profit!
You don’t worry about your former employees, the government will take care of them.
“Murder Hornets are great,” you say.
Widget stores reopen, sales return. But your business is much more efficient - $100M in sales and $20M of profit!
You don’t worry about your former employees, the government will take care of them.
“Murder Hornets are great,” you say.
8/ So you see, what we face is not just a temporary shock, but a permanent reset of our labor force.
How do we fight this? @mcuban proposes some great ideas on infrastructure and public works. It’s a start.
Leaders must change their tone. This isn’t artificial. This is real.
How do we fight this? @mcuban proposes some great ideas on infrastructure and public works. It’s a start.
Leaders must change their tone. This isn’t artificial. This is real.
