💰 Why paychecks are getting bigger

Monday, May 17, 2021 by Robinhood Snacks |
_"When Uber surge pricing never ends" [Henrik Sorensen/DigitalVision via GettyImages]_

"When Uber surge pricing never ends" [Henrik Sorensen/DigitalVision via GettyImages]

Last Week’s Market Moves
Dow Jones
34,382 (-1.17%)
S&P 500
4,174 (-1.30%)
Nasdaq
13,430 (-1.91%)
Bitcoin
$48,044 (-3.98%)

Hey Snackers,

Netflix and chill just got a lot more wholesome: as movie theaters run out of studio films to show, they're starting to project Netflix flicks.

Stocks tumbled for the week as investors stressed about rising prices and inflation (#flated). Consumer prices jumped 4.2% in April, the biggest year-over-year increase since 2008. More on that below...

Tax Day: In case Monday wasn't scary enough, taxes are due today.

Pay

Check the math... Something strange is happening in US employment. 9M+ Americans are still unemployed, and companies are scrambling to hire as the economy revs up — but they can't find enough people. In March, job openings hit a record 8.1M... but exceeded hires by 2M+. And in April, the unemployment rate jumped. Now, companies are boosting wages to lure workers (and your Chipotle delivery just got pricier).

  • Amazon is now paying new hires an average starting wage of $17/hour (up from $15). It's also offering $1K signing bonuses.
  • Chipotle is bumping average pay for restaurant workers to $15/hour, and says employees can earn $100K/year after three years. Meanwhile, McDonald's is raising wages for 36K+ workers.
  • Uber and Lyft, which are dealing with driver shortages, are offering large bonuses to get people driving.
  • Walmart, aka: America's largest private employer, raised its average hourly wage to $15+.

Now add it up... Average hourly earnings for private-sector employees rose by 21 cents to $30.17 in April, as companies struggled to hire. A few potential reasons workers aren’t returning:

  • Unemployment $$$: President Biden extended the $300 extra/week benefit through September. Now, the average monthly unemployment payout is ~$2.5K (tax-free up to $10.2K). 42% of people receiving benefits earn more than they did at their jobs.
  • Childcare: Only 60% of the largest US school districts were fully open in April, leaving some without childcare. Women carried out the bulk of duties.
  • Corona: Workers are worried about catching Covid while rolling burritos side-by-side.
THE TAKEAWAY

The Hiring Dilemma could have two outcomes... #1: it could help workers and the economy through rising wages — real wage growth has been sluggish for decades. #2: it could become an Economic Dilemma. Wage growth could be canceled out by weaker purchasing power if prices continue to spike. Rising prices especially hurt low-income households. The labor shortage could also slow econ growth. Workers will likely return as benefits expire and schools reopen — but businesses may find it hard to lower wages, which could result in downsizing.

Events

Retiled the bathroom (five times)... Fresh off the House Hype of 2020, Home Depot and Lowe's report first quarter earnings this week. Home retailers thrived last year as home ownership rose, and we invested in our 24/7 biodomes — from $5 candles to pastel paint. Home Depot rode the DIY wave to its best quarter in 20 years. Lowe's also saw jaw-dropping growth. Investors want to know if the House Hype continued... or cooled with reopenings.

The Tractor Factor intensifies... Tractor legend John Deere rolls up with earnings on Friday. In February, Deere reported a killer profit and boosted its outlook as farming and construction perked up. Since then, US manufacturing and home building has boomed, sending lumber and steel prices soaring (#flated). We'll see if Deere experienced greener pastures last quarter thanks to its construction machinery.

Zoom Out

Crypto carbon in the spotlight... Cryptocurrency prices plunged last week after a bombshell tweet from Elon: Tesla will no longer accept Bitcoin payment, because it burns too much fossil fuel. At one point, as much as $365B was wiped from crypto market value. Now, Tesla is looking at altcoins that use <1% of Bitcoin’s energy. The big reckoning with crypto’s energy footprint could boost companies building greener crypto pipes… and potentially add volatility.

IPOh No... IPOs kicked off 2021 hot and heavy, raising a record $162B in the first quarter. But the momentum seems to be cooling: big IPOs like Bumble and Coinbase have struggled in recent weeks, as many inflation-worried investors move away from high-growth stocks. Now, a few IPOs are getting delayed as market volatility spooks companies.

ICYMI
  • Hack: The US' largest fuel pipeline got hacked by "DarkSide," causing gas shortages and panic-buying. Aaaand: it had to pay a $5M ransom.
  • AAPI: Asian American businesses have suffered “Twin Crises” and an outsized impact during the pandemic.
  • Swipe: Hot Vax Summer is coming, so we jumped into Bumble's expectation-beating earnings (psst: it wants to friend-zone you).

What else we’re Snackin’

  • Do: The myth of creative inspiration (and why the greats stuck to schedules).
  • File: Your tax questions answered, from crypto to stimulus checks.
  • Read: How women of color are using social media and their peers for investment advice.
  • Live: How to overcome "anticipatory anxiety" in 2021 (or whenever).

This Week

  • Monday: Tax Day. Earnings expected from Fisker and Purple (the mattress)
  • Tuesday: Earnings expected from Walmart, Home Depot, Baidu, and Macy's
  • Wednesday: Earnings expected from Target, Lowe's, Cisco, and TJ Maxx
  • Thursday: Oatly IPO. Weekly jobless claims. McDonald's annual shareholder meeting. Earnings expected from Ross, Kohl's, Tencent, Ryanair, Manchester United, and Victoria's Secret-owner L Brands
  • Friday: Earnings expected from John Deere, Foot Locker, and Supreme-owner VF Corp

Authors of this Snacks own shares of: Amazon, Uber, and Walmart

ID: 1650692