Changes that will be sticky & changes that will snap back post-pandemic

[vertical_doug]

Single data point but an important one, ATMO, that backs up some of the work related change predicted by others above.

On the call about first half financials, WPP which is a major advertising agency conglomerate, said that in the first half they had pandemic related cost SAVINGS that they expect to continue such as travel that amounted to 200 million dollars. (I am scientific wild ass guessing that it is almost 100% travel as first half numbers are too soon to include pretty much anything else like real estate).

That ain’t chicken feed.

And it is just one company that is not huge in the scheme of things.

“That they expect to continue”.

No, costs savings always equal headcount reductions. They just not advertising it. (pun intended)

T&E Travel down -46% 1h20 which was 77mm. However, they cut staff by -170mm which was -4.6% . Pretty standard move, cut 5% of the workforce.
https://www.wpp.com/investors

Page 14 from analyst presentation

But those numbers include robust numbers from Jan/Feb.

If you look by month, the trend is now -80% for TE/Travel (Personal). The same is true for headcount. Trend looks like -12.8% now in June for run rate.

Heads roll, that's how this works.

I think the 14mm continuing claims in the US are essentially permanent unemployed. That number may inch higher. MGM in Vegas just laid off 18,000 today. NFP will be interesting next Friday.

I spoke to my advisor today at a large bank, she said there is zero discussions about going back to the office in Wealth Management. My friend in London who is also married to a Japanese woman, decided since there are no plans for at least 6 mo to return to the office, decided to put things in storage, and the two of them are moving to family home in Fukuoka. He decided it is better to WFH in Japan. London hours will be 5pm- 1 am, so looks like he can enjoy much more riding during the day in northern Kyushu. I am a dumbsh!t and should do the same.
https://www.thelancet.com/journals/l...342-4/fulltext

The Lancet had a paper discussing the long term effects of people being comfortable at home. The longer they stay home and the more comfortable they become, the harder it is to get people back to work.... The clock is ticking.

[caleb]

I think the 14mm continuing claims in the US are essentially permanent unemployed. That number may inch higher. MGM in Vegas just laid off 18,000 today. NFP will be interesting next Friday.

I suspect there's a whole lot more coming in the next four to six months. State and local governments are largely living on pre-Covid budgets, and higher ed is currently staffing for residential education.

[caleb]

On the urge to normalcy, per the WSJ last week sit-down restaurant dining was up from the same time last year.

[j44ke]

Local farm owned by the Rockefeller Foundation is begging for apprentice dairy farmers. They have two slots open and incl. room and board. My wife and I are trying to gently prod our nephew to give it a shot. He did not have a good school year as a freshman at Syracuse. Sort of an understatement. Sub 2.0 grade point average. He cannot engage with education via teleconference. Needs hands on in-person interaction. One of many students I suspect. Anyway he’s lost all his hard won financial support, so we said hey why not try something else for a while. This program includes science, modern farm business and practical know-how alongside physical labor. He’d do well at it, but leading horses to water etc.

Maybe these apprenticeships will become more common. They certainly feel like more of a real world approach than paying $50K a year to watch professors lecture via Zoom conference.

[ides1056]

I began college at 22. The four years off made a world of difference. Spent two of them working on a farm.

Hit the ground running. Summa PBK.

[caleb]

I just renewed my drivers' license online for the first time ever. Now that such a system is up and running, I have to imagine the days of the in-person DMV are coming to a close.

[caleb]

This is number one on my list as well.
Higher ed has looked like a bubble to me for the last 10 years. I think it's been popped and things are going to look much different 10 years from now.
Harvard will still be Harvard, and perhaps always will be, but tremendous change is coming for the non super-elite, the other 99%.

University mission creep is a major issue that'll have to be addressed.

The large social issue for which there doesn't seem to be a solution on the table is that there's tremendous demand from parents and students for a soft, supportive, nonmilitary transition into adulthood. That's an incredibly expensive bundle of services to provide. It's not chalkboards and professors driving the cost increases of higher ed (the average faculty member at the front of the room is paid less today in real dollars than they were in 1970), it's the larger environment and staffing that goes with it.

I don't know what's coming, but I'll spitball two sorts of disruption, one good and the other really bad.

The good version is led by the state branch campuses that educate most students in the US who get four year degrees. The model retains a highly supportive, in-person environment for the first year or so. It's expensive, but the value added from a first year in-person is huge. After that, students move off campus, and coursework is mostly online. It's cheap, and students could be invited to string it out while working. The idea would be that they'd accrue minimal debt while making progress toward a degree. At the end, students could again take some capstone classes in-person before graduation. Out of pocket costs could be decreased by downsizing the supportive umbrella that drives costs. Opportunity costs to the student could arguably increase due to the increased time to degree, but the average time to degree for lots of places is seven years anyway. The basic logic of the model would be strategic in-person (and expensive) education, with cheap online coursework filling in the rest. This might not be the college experience everyone wants for their kids, but it's the one that many more people could afford.

The bad version comes from outside and works to provide an alternative for the 1%. A major name brand like Apple or Goldman Sachs creates an alternative training program that provides an ultra country club experience and is based strictly on job training. Maybe it's held at a seasonal set of resorts around the world. It's based on the corporate brand rather than conventional accreditation, and so there's no financial aid or student loans. It's a cash business for the 1%, by the 1%, with no larger social mission or aspiration of inclusiveness. The promise is that if you are successful in this program, you will get a job with the respective company in charge of it. The cost to students would likely be significantly less than the sticker price at top private universities, and the payoff/job for a certain level of performance would be contractual.

Whether through what I've described above or some other model, if someone figured out a way to siphon off the top 1% and provide them with an alternative, it would break higher ed as we know it in the US. I actually see that as a more likely outcome than the positive disruption of lower cost alternatives for the middle class.

[beeatnik]

On the urge to normalcy, per the WSJ last week sit-down restaurant dining was up from the same time last year.

Did the article mention that these numbers likely reflect that fact that no one is using cash? That phenomenon could have a large effect on debit/credit card use at places like Denny's and other casual dining restaurants.

[Colinmclelland]

Did the article mention that these numbers likely reflect that fact that no one is using cash? That phenomenon could have a large effect on debit/credit card use at places like Denny's and other casual dining restaurants.

That's true. ALL our families spending has switched to credit cards. It's what we have if you don't want cash...

[Bingissimo]

I spoke to my advisor today at a large bank, she said there is zero discussions about going back to the office in Wealth Management.

I work for a large bank. Every WFH employee has just been given a small budget ($250) that is to be renewable quarterly to purchase things to make WFH better (and presumably more ergo than the dining room table). Desk, decent chair, whatever, it's $250/quarter for the duration and when this ends the items are not subject to return. Now $250/Q doesn't seem like much but we have approx 90000 employees, so scale that.

This is in addition to 2nd monitors that have just arrived this week. I have the bank provided laptop and a dual monitor setup attached. I do my work on one screen and am currently streaming Flobikes TdF on the other.

Duration? We have been advised that our Chief Medical Officer is projecting his permission for a limited return only after June 30 2021, pending a successful vaccine launch in Q1 2021 and an additional quarter for sufficient population uptake and immunity.

[Tom]

Similar situation and they said you could go in and retrieve a monitor - but those that they bolted to swing arms, you couldn't take the whole assembly out of a cubicle. I laughed.

I set myself up a long time ago. A decent wired keyboard, monitor and USB mouse were not that much money plus I liberated a docking station. My boss made me get a decent USB headset when I worked on the office so I am all set.

A while back we went to 'travel cubes' where nobody has an assigned spot. I got kicked out of my office into one of those because none of the nine people that report to me are company employees, all contractors. I'll be interested to see how that shakes out but I told my boss they can go pound salt, I'm not working out of there any more. They can do without me if they get all bent out of shape over it.

[caleb]

Did the article mention that these numbers likely reflect that fact that no one is using cash? That phenomenon could have a large effect on debit/credit card use at places like Denny's and other casual dining restaurants.

Good question, I'm not sure. I do forget that cash is still a thing at some restaurants, which could definitely skew the transactions.

[vertical_doug]

Good question, I'm not sure. I do forget that cash is still a thing at some restaurants, which could definitely skew the transactions.

VISA releases card transaction aggregate data.

Their latest numbers for 'CARD PRESENT' which is still down -10% YOY. However, 'CARD NOT PRESENT' excluding travel is up 30%. Overall card usage is up about 10% now.
I just look at my own usage- curbside beer pickup. curbside takeout, which is the majority of my spend are all things I never did until recently. All card not present.

I just don't book travel related and entertainment related online now.

[caleb]

Hot take: work from home sucks

Sounds like you're on the same page as Netflix CEO Reed Hastings when it comes to WFH. In an interview today:

WSJ: Have you seen benefits from people working at home?

Mr. Hastings: No. I don’t see any positives. Not being able to get together in person, particularly internationally, is a pure negative. I’ve been super impressed at people’s sacrifices.

WSJ: It’s been anticipated that many companies will shift to a work-from-home approach for many employees even after the Covid-19 crisis. What do you think?

Mr. Hastings: If I had to guess, the five-day workweek will become four days in the office while one day is virtual from home. I’d bet that’s where a lot of companies end up.

WSJ: Do you have a date in mind for when your workforce returns to the office?

Mr. Hastings: Twelve hours after a vaccine is approved.

WSJ: I like that.

Mr. Hastings: It’s probably six months after a vaccine. Once we can get a majority of people vaccinated, then it’s probably back in the office.

This is coming from the top of a company that has arguably created more value and disruption by turning tangible, physical activities into virtual ones than any other.

[snotrockets]

Sounds like you're on the same page as Netflix CEO Reed Hastings when it comes to WFH. In an interview today:

Netflix are notorious in tech for breaking their engineers. It's not as worse in the creative/production org in Burbank, because those people wouldn't have it the Netflix way. Lots of internal issues about that, ton of rivalry and putting legs between the Burbank andLos Gatos offices.

Unlike most tech, who tries to create an image of caring about their employees, Netflix just don't even pretend to care about burn out. Yes, they have their PR promote how great the culture is, because they need new engineers. It's like Amazon giving tours showing how great it is to work in their warehouses (they really did that, pre-COVID ofc) no one publicly talks about how shitty their work is. At least Netflix pays better than Amazon for engineers – it's known that Netflix pays best, and Amazon pays worst.

Most tech companies were very WFH-friendly even before COVID, a lot of engineering teams had an official or unofficial "WFH day", with two noteable exceptions: Facebook, and Netflix. Both has the thinking that being crammed in a physical space with managers watching over your shoulder is necessary (FB taken this to the extreme: their offices are known to be the most crowded of all FAANG and FAANG-wannabes). The pandemic made FB change, I guess it'll take more to unf*ck Netflix.

David Graeber, who died last week, wrote about what he called Bullshit Jobs – how work used to be in bursts: you did a lot of work planting. e.g., then didn't do a lot until harvest. And it was mostly unsupervised, in the current way we regard work: even in feudalism, the landowners wasn't looking over the field workers shoulder 24/7 – they just expected a certain amount of produce by a certain time (or else…).

With the industrial revolution, we stopped selling the fruit of our labors, and started selling our time: we now sell out 9-5 to our employer. And with that, the notion that some of that time might "go to waste" came along, hence creating all kind of supervision and unneeded tasks to make sure we are dedicating every minute of those 9-5 to our employer. Graeber gives the example of a receptionist that was given unnecessary tasks, like sorting paperclips, to perform while waiting for the phone to ring, just so she won't be "doing nothing". Those bullshit, no value produce task have a negative mental affect on the workers, making people miserable (also consider Marx's alienation.)

I would have liked it if the pandemic erodes some of that ownership-of-time notion, reverting back to work-for-hire, but I don't think it'll happen. Too much power is already vested in the former.

[snotrockets]

Obligatory link https://harpers.org/archive/2018/06/punching-the-clock/

[vertical_doug]

Well, on Friday, news broke that some Bay Area firms were cutting salaries for people choosing to work from home outside of the bay area. I am surprised it took this long to make COLA adjustments.

Denver discount to Bay area is a -12% haircut on salary, and San Diego is -8% for numbers I saw. I know my own daughter is paying less for her house in a gated community with a pool, than she did for her one bedroom in Palo Alto.

If you move to Vancouver, you will really get tagged.
https://www.bloomberg.com/news/artic...eeing-bay-area


https://www.numbeo.com/cost-of-livin...ity2=Vancouver

[caleb]

I would have liked it if the pandemic erodes some of that ownership-of-time notion, reverting back to work-for-hire, but I don't think it'll happen. Too much power is already vested in the former.

I think that's all possible, but it sure seems like there would be other trickledown effects.

If we see a large-scale work from home, work for hire model, that's another way of saying that people are piecework contractors of a sort.

And any remote contractor model results in a massively increased global labor pool.

In the short and middle term, I see where workers are able to capture some benefits. But in the long term, it sure seems like a purer commodification of labor that eventually bids down the price, the same dynamic as American manufacturing in the late-twentieth century, just for the twenty-first.

@vertical_doug I had heard a couple weeks ago that Facebook was cutting salaries for people who moved beyond a certain set of zip codes. The percentages in the Bloomberg article seem pretty conservative.

[snotrockets]

Well, on Friday, news broke that some Bay Area firms were cutting salaries for people choosing to work from home outside of the bay area. I am surprised it took this long to make COLA adjustments.

It's not COLA. It's marketed as such, but it's bullshit. It's cost of jumping ship.

As I've written earlier in this thread, part of tech eng's compensation is to what it takes to deter them from from switching employers. As the Bay Area has more opportunity, the cost to the employer here is higher. Consider the jump in tech salaries in the bay area about 11 years ago before the anti-poaching conspiracy between major tech employers (Google, Apple & Pixar, Intel, Adobe, Lucasfilm and eBay) was made public and that conspiracy was halted by the courts.

It is a widely known "secret" amongst most employees of a certain huge tech employer with primary-colored logo that the best way to get a raise is to leave and work somewhere else for a year, then return to higher leveling and extra pay. Much harder to do when there are less possible employers in the region.

[vertical_doug]

I am back in London and the city has made more progress on providing segregated bike lanes. I don't see as many people out and about on cycles in the morning because most people are still not commuting to work. Pre-Covid, I'd go out for a morning loop, and on the return back into central London, I'd have to ride with the many commuters on their bikes. Right now, not nearly as much.

A lot of the loop in Richmond Park is closed to cars. It has never been so nice.

The other really interesting point is people are not taking public transport, so some people are trying to commute in London by car. All the west end roads get just jammed with cars trying to cross the bridges in the morning and evening. To add insult to injury, both Hammersmith and Vauxhall Bridges are closed for repairs. The ensuing gridlock reminds me of the bad old days of the late 90's when trying to cross central London by car was a horrid experience. I wonder how long all this lasts.

And my final note is concerning the rule of 6 and Turkeys. Since the GOV is restricting family gatherings which is expected to affect Christmas, farmers are slaughtering their Turkeys early because they expect demand for big birds will be down.