Discover more from The 21 Hats Morning Report
Women Are Returning to the Workforce
And that has the potential to ease the labor shortage and slow the increase in wages.
Here are today’s highlights:
Amazon’s retrenchment is having ripple effects across the country.
Gene Marks says some businesses will lose tax breaks this year.
What’s next after the Great Resignation and Quiet Quitting? How about Bare Minimum Mondays?
Developers and progressives agree on something: America has too many parking spaces.
A top economist warns that a debt default would be catastrophic: “The U.S. economy could quickly shed a million jobs and fall into recession if lawmakers fail to raise the nation’s borrowing limit before the federal government exhausts its ability to pay its bills on time, the chief economist of Moody’s Analytics, Mark Zandi, warned a Senate panel on Tuesday. The damage could spiral to seven million jobs lost and a 2008-style financial crisis in the event of a prolonged breach of the debt limit, in which House Republicans refuse for months to join Democrats in voting to raise the cap, Mr. Zandi and his colleagues Cristian deRitis and Bernard Yaros wrote in an analysis prepared for the Senate Banking Committee’s Subcommittee on Economic Policy.”
“The report also warns of stark economic damage if Mr. Biden, in an attempt to avert a default, agrees to [Republican] demands. In that scenario, the ‘dramatic’ spending cuts that would be needed to balance the budget would push the economy into recession in 2024, cost the economy 2.6 million jobs and effectively destroy a year’s worth of economic growth over the next decade.”
“‘The only real option,’ Mr. Zandi said in an interview before his testimony, ‘is for lawmakers to come to terms and increase the debt limit in a timely way. Any other scenario results in significant economic damage.’” READ MORE
As Amazon retrenches, communities across the country are feeling the impact: “For years, Amazon has been in super growth mode, expanding its workforce by tens of thousands of employees each year and opening dozens of warehouses, delivery centers, corporate offices, data centers, and other facilities that allow it to get packages to customers’ doors in just a day or two. As part of that growth, communities across the country lined up to offer incentives to attract the jobs. They can be a boon, particularly in areas where traditional industries have dried up or moved abroad.”
“Perhaps most famously, the Seattle-based company spent more than a year running a beauty contest to attract the best economic incentives for its second headquarters, drawing hundreds of applications from cities around the country before landing on the rather obvious choices of New York City and the D.C. area.
“But now some projects — including HQ2, as it is known, in Arlington, Va. — are facing delays and some communities worry the projects may never materialize.”
“‘Attaching yourself to Amazon and using public funds to persuade Amazon to locate in your community is very risky, and it has a lot of downsides,’ said Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance. ‘A lot of places don’t have provisions in terms of what happens if the company doesn’t do what it says.’”
“‘That’s how hungry these little communities are,’ said [Bill Proctor, a county commissioner in Tallahassee, Fla.]. ‘You say Amazon and everybody just rolls over.’” READ MORE
Women are returning to the workforce, which should ease the labor shortage: “Women have gained more jobs than men for four straight months, including in January’s hiring surge, pushing them to hold more than 49.8 percent of all nonfarm jobs. Female workers last edged higher than men on U.S. payrolls in late 2019, before the pandemic sent nearly 12 million women out of jobs, compared with 10 million men. The onset of Covid-19 and social-distancing measures in early 2020 struck female-dominated jobs in services that require close personal contact, such as housekeepers, nurses, and daycare instructors. Many mothers in white-collar jobs also left the workforce to care for their children after schools moved to remote instruction.”
“Even as job opportunities grew a year later, nearly 1.5 million fewer mothers were actively in the labor force in March 2021 than in February 2020 amid child-care disruptions and health concerns. Some economists feared women would face challenges re-entering the longer they were out of work.”
“Virtual schooling, daycare closures, and fear of Covid-19 are subsiding. Other factors, such as the lure of higher pay, adoption of remote work and financial pressures, are spurring more women to seek jobs.”
“‘A job paying $10 an hour might not be attractive for women struggling with school schedules, said Claudia Olivetti, an economics professor at Dartmouth College. ‘But if that same job starts paying $15, $16 per hour or offers benefits, then I might take it,’ she said.” READ MORE
“Bare Minimum Mondays” is the latest workplace buzz term to go viral: “Marisa Jo Mayes, 29, told Insider she was working in sales when she found herself burnt out. So, she quit her job at a medical manufacturing company and co-founded a productivity tools startup called Spacetime Monotasking, according to her LinkedIn. But it didn't fix anything for the Atlanta resident. ‘I was still approaching work the same way as in my corporate job,’ she told the outlet, in a ‘cycle of stress and burnout.’ Mayes then decided on a new approach. Instead of creating a massive to-do list every Sunday and burning herself out trying to accomplish it every Monday, she set a new mandate: do the bare minimum on Mondays.”
“‘Bare minimum Mondays’ means only what needs to be done to get through the day, Mayes said, including not scheduling meetings and doing more ‘creative’ tasks, and focusing on self-care.”
“Mayes claims she's received online hate for the concept, such as people calling her a ‘lazy, unmotivated person who lacks work ethic.’”
“‘If being called lazy is the price I have to pay to be happier, healthier, and more productive overall—I'll take it,’ she wrote in response to the criticism.” READ MORE
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Thanks to expiring provisions in the 2017 Tax Cuts and Jobs Act, Gene Marks says some businesses will lose tax breaks in 2023: “The first has to do with research and development expenses. These expenses are generally costs related to a company’s efforts to develop, design, and enhance its products, services, technologies, or processes. Examples of these costs include the cost of salaries, contractors, equipment, computer software, materials, and overhead expenses. Although more common in industries like pharmaceuticals and technology, just about any company in any industry can have eligible R&D expenses if they’re making a new product or updating an existing one.”
“Up until recently, a business could fully deduct those costs in the year they were incurred. But no more. Starting in 2022 a business now has to amortize — gradually write off — those expenses over five years and can only deduct 50 percent of those expenses in the first year.”
“There’s another popular business tax deduction that will begin being phased out this year: ‘bonus’ depreciation. That’s a rule allowing most small businesses to deduct up to 100 percent of the cost of new assets purchased—equipment, machinery, computers, software, and furniture—in the first year they buy it, as long as it’s placed into service that year. Unfortunately, that percentage has dropped to 80 percent in 2023.”
“It gets even worse: the bonus depreciation deduction decreases to 60 percent of eligible capital expenditures in 2024, then 40 percent in 2025, and 20 percent in 2026. ‘So even though it’s less this year, we’re telling our clients to take advantage of the deduction before it goes down even more,’ said [Mitch Gerstein, a senior tax advisor at Isdaner & Co. in Pennsylvania].” READ MORE
Does America have too many parking spaces? “Scrutinizing their parking regulations, cities across the nation are rolling back requirements for new development. The United States has about two billion parking spots, according to some estimates — nearly seven for every car. In some cities, as much as 14 percent of land area is covered with the black asphalt that engulfs malls, apartment buildings and commercial strips. The fact that the country is awash in parking spots stems from America’s longstanding love affair with the car, compounded by arcane zoning codes that mandate off-street parking for real estate projects.”
“But paving over paradise, to paraphrase Joni Mitchell, is now being blamed for a number of societal woes, including the housing crisis, climate change, and the rise in fatalities among pedestrians and cyclists.”
“But in city after city, minimum parking requirements, as they are called, are being struck down, thrilling progressives and real estate developers alike. ‘It’s snowballing,’ said Jeff Speck, a city planner and the author of ‘Walkable City: How Downtown Can Save America, One Step at a Time.’” READ MORE
Parents are increasingly willing to pull kids out of school to take a (less expensive) vacation: “Airfare and hotel prices are high right now, particularly for popular travel dates around spring break or summer vacation. Sightseers are back in force. To circumvent the added cost and headaches, many families are opting to pull their children out of school for trips.”
“In many parts of the country, a family vacation may not be considered an excused absence, and some teachers wouldn’t be required to accept late assignments, says Hedy N. Chang, executive director of Attendance Works, a nonprofit.”
“Tim Cavey, a middle-school teacher from Vancouver, British Columbia, says he is open to parents pulling their children out of school to go on trips, so long as the absence doesn’t stretch too long.”
“In the past, Mr. Cavey, who also runs a YouTube channel devoted to teaching strategies, says he would prepare assignments for students to do over vacations. Now he doesn’t bother, unless a parent with a guilty conscience asks for it: ‘Experience told me that work just usually does not get finished.’” READ MORE
A slice of Boston’s startup community has picked up and moved to Puerto Rico: “Before Covid, Brent Grinna and Patrick Campbell ran startup companies in Boston’s Downtown Crossing, about a seven-minute walk apart, and they’d often bump into each other. A few blocks away, near Fort Point Channel, Maria Cirino reported for work at the offices of the venture capital firm .406 Ventures, driving in from Needham. All three now mostly work from home — not unusual for these Zoom-centric times. But home is now Puerto Rico. They’re part of a community of Boston tech sector emigres that has taken root on the tropical island since 2020.”
“[Tim Ericson] says his lifestyle in Puerto Rico is ‘a lot more active’ than it was in Charlestown, even though he rode his bike every day and belonged to a gym. Now, he goes ocean kayaking, hikes in a rainforest, walks his dog on the beach, and swims regularly in the Atlantic.’”
“Venture capitalist Maria Cirino made a ‘recon visit’ to the island in August 2020, and moved there in December. She sold homes in Needham and Fort Lauderdale, Fla., and now considers a beachfront condo at Dorado Beach, a Ritz-Carlton managed complex, home.”
“She attends Monday meetings of her Boston venture capital firm via Zoom. Her complex is home to many hedge fund and private equity managers, she says, and she has invested in several funds that would have otherwise been difficult to put money into without personal relationships, she says.”
“Since 2012, Puerto Rico has offered a bundle of tax incentives to attract people like Cirino and Ericson, nixing taxes on interest, dividends, and capital gains income — like a company being acquired.” READ MORE
THE 21 HATS PODCAST: MARKETING WORKSHOP
Turning a Failing Nut Shop into Nuts.com: This week, Shawn Busse and Loren Feldman talk to Jeff Braverman about why he walked away from a career as an investment banker and went to work in the family’s nut store, the Newark Nut Co. “My dad and my uncle told me I was nuts,” says Jeff. But with an instinct for taking calculated risks—like acquiring the URL Nuts.com—Braverman has turned the family business into a direct-to-consumer juggernaut, unleashing years of explosive growth. And despite being a former investment banker, he’s managed to do that without taking any outside capital. And he’s far from finished. “To this day,” he says, “we're doing deep brand research: What is Nuts.com? What can it be? Can it scale? Can it transcend just the word nuts?”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren