A Rocket Ship to a Better Economy?

The pandemic brought a surge in startups. Will it last?

Good morning! 

Here are today’s highlights:

  • Americans are preparing to break out this weekend.

  • We’re in a “she-session”—with participation rates for women in the workforce returning to ‘80s levels.

  • And are employee wellness programs a massive waste of money?

STARTUPS

A new study suggests that last year’s startup surge is continuing: “We don't have many details about what exactly the new businesses created during the pandemic are doing, or how big they're gonna get. ... The data suggests the biggest surges occurred at the beginning and tail ends of the pandemic, which is consistent with the idea that this was a pendulum swing. But [University of Maryland economist John] Haltiwanger offers a second, more optimistic theory, which says this is about way more than just a pendulum swing: it's a rocket ship to a better economy. As painful as the pandemic has been, he believes it has forced the business world to drop outdated ways of doing things and embrace technology in a new way.”

  • “‘I don't think any of us had a clue that we could do so much business activity remotely,’ Haltiwanger says. ‘That sparks all kinds of new ideas.’”

  • “It's forced businesses to fully embrace technologies that enable a whole raft of new business practices, including remote work.”

  • “Moreover, he argued, these changes may finally result in real productivity growth after so many years of stagnation.” READ MORE

RETAIL

A shoe chain is moving to self-checkout: “DSW is piloting self-checkout stands in stores in ‘response to hiring challenges,’ said Karen Cho, senior vice president of human resources at Designer Brands, owner of the shoe chain, in an email. Cho said the self-checkout test started last year to also address health concerns with workers and employees trying to social distance. Cho said the company has ‘relatively lower hiring needs’ because many full-time store workers stayed on throughout the pandemic, but ‘hiring has been more challenging than in past years’ for part-time employees. The company is also offering signing bonuses to recruit employees and expanding health care benefits and subsidies for child care.” READ MORE

HUMAN RESOURCES

Women’s workforce participation rates are at lows not seen since 1988: “The situation has been especially dire for Black and Latina women, who are more likely to work at low-wage and service industry jobs. The May unemployment rates for Black and Latina women were 8.2 percent and 7.4 percent, respectively, compared with 4.8 percent for White women. And it’s been devastating for many mothers. Workforce participation among prime-aged women — those most likely to be raising children — dropped slightly in May, according to an otherwise positive jobs report from the U.S. Bureau of Labor Statistics.”

  • “The pandemic’s economic downturn has inspired a cutesy nickname: ‘the she-session.’”

  • “‘If we continue on with the rate of change that we saw in the April jobs report, it will take women 28 months to return to their pre-pandemic employment levels. That’s staggering,’ says Cherita Ellens, chief executive of Women Employed.” READ MORE

Gene Marks says it’s time to consider unlimited paid time off: “For some employers, the idea seems outrageous. But that attitude is changing. About 20 percent of corporate respondents in a recently released survey from asset management firm Mercer say that they offer unlimited paid time off to at least some employees compared with 14 percent two years ago. Unlimited paid time plans are becoming a ‘top emerging benefit,’ according to a 2019 study by insurance firm MetLife and are already a significant part of the benefit offerings for many larger corporations.”

  • “A survey of more than 1,500 U.S. workers released earlier this year found that the top most requested benefit — for the third year in the row — is paid leave.”

  • “Some studies have found that employees actually take less time off than when they have a traditional ‘use it or lose it’ plan.”

  • “That may sound good for the bottom line, but smart employers also know that taking too little vacation can be potentially detrimental to their employees’ mental health.” READ MORE

Are wellness programs a massive waste of money? “Employee wellness programs were popular before Covid -- 53 percent of smaller employers offer them and 81 percent of large ones -- and, after Covid, it's likely even more businesses will consider adding to their offerings. That seems logical, but according to a rigorous new study it also might be a massive waste of money. Researchers randomly assigned employees at dozens of BJ's Wholesale Club stores to either participate in the company's wellness program or not and then tracked them for three years. They found wellness programs were pretty much worthless ...”

  • “While those who were assigned to participate in the programs showed a modest uptick in self-reported healthy behaviors—the number of employees who said they exercised improved by 11 percent, for instance—when the researchers measured hard-and-fast outcomes like obesity rates and blood pressure, they saw no difference between those who enrolled and those who didn't.”

  • “One of the big motivations for employers for introducing these programs is saving money on employees' health insurance. Here, again, the wellness programs disappointed.”

  • “Nor did they find any evidence that job performance went up for those enrolled in the wellness program.” READ MORE

AMAZON

Want to sell something to Amazon? You may need to give up a piece of your business: “The technology-and-retail giant has struck at least a dozen deals with publicly traded companies in which it gets rights, called warrants, to buy the vendors’ stock in the future at what could be below-market prices, according to corporate filings and interviews with people involved with the deals. Amazon over the past decade also has done more than 75 such deals with privately held companies, according to a person familiar with the matter. In all, the tech titan’s stakes and potential stakes amount to billions of dollars across companies that provide everything from call-center services to natural gas, and in some cases position Amazon among the top shareholders in those businesses.”

  • “While the deals can benefit the suppliers by locking in big contracts, which can also boost their share prices, executives at several of the companies said they felt they couldn’t refuse Amazon’s push for the right to buy the stock without risking a major contract.” READ MORE

BUSINESS TRAVEL

You’ve heard that business travel will never be the same? United is betting otherwise, announcing the biggest aircraft purchase by a U.S. airline in a decade: “By 2026, the expansion, which the company is calling ‘United Next,’ will increase the number of seats per United flight in North America by nearly 30 percent and increase the number of premium seats per flight by 75 percent. In expanding the number of first- and business-class seats for sale, United is hoping to lure away affluent and business travelers from Delta, which markets itself as a premium airline.” READ MORE

REOPENING

Americans are preparing to break out this weekend: “Travel for the July Fourth holiday weekend is expected to reach levels not seen since before the Covid-19 pandemic, as millions of Americans make bucket-list trips or reunite with family and friends after a year-plus of lockdowns and distancing. With 46 percent of Americans fully vaccinated, according to the U.S. Centers for Disease Control and Prevention, and mask mandates lifting in theme parks and cities nationwide, the travel industry expects a frenzy from now through Labor Day weekend. AAA forecasts that some 47 million people are expected to travel from July 1 to 5. This weekend is expected to have the highest auto-travel volume on record, surpassing 2019 levels. Pent-up demand among travelers has caused shortages and price spikes.”

  • “Daily rates for rental cars are currently at $166, about a 140 percent increase from 2019 prices, according to the automobile association.”

  • “Jon Gray, chief executive of RVshare, a peer-to-peer RV rental marketplace, said the platform is seeing double the number of bookings this year, compared with last year, as travelers seek more affordable alternatives to airline tickets, rental cars and hotels.”

  • “Restaurants and shops that operate in airports haven’t been able to hire quickly enough to fully reopen, leading to long lines for passengers.” READ MORE

AGRICULTURE

In Central California, the drought is transforming America’s richest farmland: “In America’s fruit and nut basket, water is now the most precious crop of all. It explains why, amid a historic drought parching much of the American West, a grower of premium sushi rice has concluded that it makes better business sense to sell the water he would have used to grow rice than to actually grow rice. Or why a melon farmer has left a third of his fields fallow. Or why a large landholder farther south is thinking of planting a solar array on his fields rather than the thirsty almonds that delivered steady profit for years.”

  • “By 2040, the San Joaquin Valley is projected to lose at least 535,000 acres of agricultural production. That’s more than a tenth of the area farmed.”

  • “And if the drought perseveres and no new water can be found, nearly double that amount of land is projected to go idle, with potentially dire consequences for the nation’s food supply. READ MORE

THE 21 HATS PODCAST

Episode 66: The Constant Struggle of Marketing: This week, we take another crack at some questions that don’t have definitive answers: Should business owners outsource their marketing or bring it in house? Either way, how do you know you’re picking the right agency or the right person? Is it possible to get someone great for what smaller businesses can afford to pay? Paul Downs tells us what happened when he hired a firm to audit his website. Dana White tells us why she dumped the agency she’d retained for $50,000. And Jay Goltz sums it up: When it comes to the mechanics of marketing, he says, “We’re all in the dark.” Plus: Dana gives a franchising update and Jay starts his own business group.