Discover more from The 21 Hats Morning Report
Garage Doors Are a Nightmare
The home-building industry is struggling mightily with supply-chain issues, especially when it comes to garage doors.
Here are today’s highlights:
Would you buy a monthly subscription for air travel?
As Omicron recedes, more people are rejoining the workforce.
But employers and employees are looking at returning to the office very differently.
Half the cars that make it to dealer lots have already been sold.
Alaska Airlines is trying subscription pricing for flights: “The subscription economy is taking over more areas of our lives, offering new payment and service options while threatening to disrupt businesses that can’t keep up. And as the fifth largest carrier in the U.S., Alaska has the heft to shake up the marketplace. Subscription options include six, 12 or 24 roundtrip flights annually from 13 destinations in California to each other and to Phoenix, Las Vegas and Reno, Nevada.”
“Customers can pay as little as $49 monthly for the cheapest option, Flight Pass, providing six flights a year that must be booked at least 14 days in advance.
A more flexible option, Flight Pass Pro, starts at $199 a month, providing flights that can be booked up to two hours before departure.” READ MORE
Fewer people are out of work because of Covid: “The data offer an encouraging sign that more people could be returning to work in the near future, as the Omicron wave further abates. Almost one million people between the ages of 25 and 54 joined the workforce in January, according to the Labor Department, a sharp rise that came in a month when the Omicron variant was raging. The labor-force participation rate, which measures the share of people either working or actively looking for work, rose to 62.2 percent in January, the highest level since the start of the pandemic in 2020.”
“Employers added 467,000 jobs in January, a sign of resilience in the face of the pandemic. Wednesday’s Census release also found that the number of people who couldn’t work because they were caring for children out of school or daycare declined by about 278,000 to around 5 million.”
“And the number of people who weren’t working because they were afraid of catching or spreading the virus fell by about 200,000 to around 3 million.” READ MORE
There’s a disconnect between the way employers and employees look at returning to the office: “Workers' reasons for staying home are also increasingly unrelated to the pandemic. Pew asked teleworkers in October 2020 why they were working from home: 60 percent said due to personal choice, 57 percent cited fear of infection, 45 percent said child care responsibilities were keeping them home, and 9 percent said they'd moved away from their workplace.”
“In January 2022, the share picking each reason shifted to 76 percent, 42 percent, 32 percent, and 17 percent, respectively. Fewer people are staying home due to the virus or for their kids, and more are doing so because they prefer teleworking or have relocated.”
“The bottom line: After getting pushed back over and over again, return-to-work dates might finally stick this time. But companies are poised to face return resistance.” READ MORE
Some businesses whose employees move away are imposing pay caps instead of pay cuts: “Moving to a cheaper city comes with a pay cut at many tech companies, including Google, Twitter and Meta. But in a hot talent market, there’s another way to handle moves to cheaper locales. Instead of embracing geo-neutral pay, some tech companies just let things even out gradually. Executives at several startups have told Protocol they don’t cut employees’ salaries upon their move to a region with a less pricey labor market, but these moves do limit workers’ ability to get raises down the line.”
“‘Employees know not to expect really big increases for a bit until the [compensation] bands are more caught up with where they are,’ said Nikki Salenetri, the vice president of People at the employee fitness provider Gympass. ‘But we’re not cutting their salaries as they go, so people feel more supported if they need to move.’”
“Smaller companies can be more nimble than the tech giants when it comes to making these compensation decisions. ‘Some of the larger companies have to worry about these mass migrations because they’ve already had employee bases in other jurisdictions,’ [Foursquare CEO Gary] Little said. ‘One of the advantages we have at our size and scale is we don’t have to have that problem yet.’” READ MORE
A benefits company encourages businesses to share their leave policies on Twitter:
THE COVID ECONOMY
Retail sales leapt in January along with inflation: “Retail sales, a measure of spending at stores, online and in restaurants, rose by a seasonally adjusted 3.8 percent in January from the prior month, the Commerce Department said Wednesday. That marked the strongest monthly gain in retail spending since last March, when pandemic-related stimulus was being distributed to households. The jump added to signs that the U.S. economy started 2022 with plentiful jobs, sizable wage gains and consumers with cash to spend—despite surging inflation.”
“Employers added jobs at a rapid pace in January, and the unemployment rate was 4 percent. Layoffs also remained low in the nation’s tight labor market.”
“Business inventories rose 2.1 percent in December from the prior month, the biggest gain in records dating to 1992, the Commerce Department said on Wednesday. The gain was driven by retailers boosting stockpiles as some supply disruptions related to the pandemic eased.”
“‘If you look at consumers’ financial position and the strength of the labor market, you have to say that in general it’s pretty good,’ Joshua Shapiro, an economist at consulting firm Maria Fiorini Ramirez, Inc. said.” READ MORE
Investors bought a record share of homes in 2021: “Last year, investors bought nearly one in seven homes sold in America’s top metropolitan areas, the most in at least two decades, according to the realty company Redfin. Those purchases come at a time when would-be buyers across the country are seeing wildly escalating prices, raising the question of what impact investors are having on prices for everyone else. Investors were even more aggressive in the final three months of the year, buying 15 percent of all homes that sold in the 40 markets.” READ MORE
The home-building industry is really struggling with supply-chain issues—especially when it comes to garage doors: “A single house under construction in America today faces all kinds of problems, starting with a run on lumber, then bricklayers in demand, subcontractors with Covid, appliances on back order and plumbing fixtures out at sea. Get through all of that, and then comes one more hitch with what should be a straightforward finishing touch. ‘Garage doors are a nightmare,’ said Rick Palacios Jr., the director of research at John Burns Real Estate Consulting. If you had to rank the headaches homebuilders face, he said, ‘garage doors are the worst right now.’”
“Prices have doubled or tripled in the last year. Lead times have stretched from weeks to months. Homebuilders who would once order garage doors several weeks before finishing a house are now ordering them before the foundation is poured.”
“‘It used to take us 20 weeks to build a house,’ said Adrian Foley, the president and CEO of the Brookfield Properties development group, which develops thousands of single-family homes annually in North America. ‘And now it takes us 20 weeks to get a set of garage doors.’” READ MORE
AutoNation says half of the cars arriving on dealer lots have already been sold: “The market is even tighter for luxury cars: Nearly three out of four of those cars arriving at dealers in the next three months will be ‘pre-sold’ — meaning a customer has paid a deposit and is waiting to buy the car as soon as it arrives. ‘This tight-inventory situation is going to be around certainly through the first half,’ said AutoNation’s chief executive, Mike Manley. ‘I’m hoping we do see some improvement in the second half.’ Selling cars before they arrive from the assembly plant is a substantial change from the traditional industry practice of stocking dealers with hundreds or even thousands of vehicles that can sit for months before they are sold. It also means automakers will have a long road to restocking dealer lots with new vehicles.”
“The tight supply has enabled dealers to sell cars at their full list price, or even more. Those higher prices helped AutoNation reap record earnings in the final quarter of 2021, the company said Thursday.” READ MORE
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THE 21 HATS PODCAST
This week, Shawn Busse, Karen Clark Cole, and Jay Goltz discuss whether The Great Resignation, despite forcing companies to pay higher wages and work harder to find and keep talent, just might be a good thing for business owners. As Shawn says, “This puts more people into the marketplace looking for businesses where culture matters, where the owner has compassion and empathy, where families are valued, just on and on and on. And if you're that employer, you win.”
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren