Good Friday Morning! Except for the Wheel Of Fortune production team, which started paying Vanna White $3 million a year 18 years ago and hasn’t given her a raise since. Pat Sajak made $15 million a year as host of the show, and White is looking to make half that now, arguing she’s as much a face of the show as he is. That is a no-brainer to me as an easy handoff between Ryan Seacrest and Sajak, but we’ll see. The two sides have yet to agree.
This week, I will walk you through the three tensions I see pulling at the threads of post-pandemic society. The question is whether or not we want a 2019 world or to continue with a version of what we have now. How that gets decided will dramatically impact localities, states, and the federal government—links to follow.
- Bud Light continues to flounder. Compared to last year, Bud Light is selling 28% less than it did, losing out on $26.4 million in revenues. Glass bottling companies with contracts to bottle Bud Light have been forced to shutter their production lines due to the ongoing boycott. That has put 600 people out of work. Bud Light competitors are now shifting their resources into the fall Oktoberfest season, anticipating that the lagging Bud Light sales will cripple it during that critical sales season. Former Bud Light executives are calling for the CEO to step down to help stem the tide. Bud Light attempted vouchers over the 4th of July weekend that made its products nearly free to win back customers, but there’s no sign that’s worked. It’s worth noting, aside from Bud Light, the beer industry is booming.
- A case to watch for the next Supreme Court term is US v. Rahimi. On the last day of the term, the court granted cert in this case, which deals with red flag laws and the Second Amendment. The direct issue is this: “Whether 18 USC § 922(g)(8), which prohibits the possession of firearms by persons subject to domestic-violence restraining orders, violates the Second Amendment on its face.” Amy Howe has a solid write-up on it over at SCOTUSBlog. Justice Amy Coney Barrett encountered a similar question in the case Kanter v. Barr from 2019. Her opening dissent reads, “History is consistent with common sense: it demonstrates that legislatures have the power to prohibit dangerous people from possessing guns. But that power extends only to people who are dangerous. Founding-era legislatures did not strip felons of the right to bear arms simply because of their status as felons. Nor have the parties introduced any evidence that founding-era legislatures imposed virtue-based restrictions on the right; such restrictions applied to civic rights like voting and jury service, not to individual rights like the right to possess a gun.” Also notable: CA Governor Gavin Newsom has already filed an amici brief with the court in support of the red flag law.
- The first GOP Presidential debates are getting closer, with the first scheduled for August. Trump has started his “will he or won’t he” schtick on attending the debates. I’d put the odds of Trump skipping the debates near zero; he’s trying to drum up a news cycle. DeSantis has confirmed he will go to the debates. It’s still clearly a two-man race. The DeSantis campaign raised a staggering $20 million in its first six weeks post-launch, and his primary Super-PAC, Never Back Down, has raised $130 million since launching in March. Trump raised $9.5 million in his campaign’s first six weeks and $19 million over the January – March period. There’s little to speak of for any of the other candidates. The donor requirement is choking out several other candidates from making it to the debate stage – Asa Hutchinson only has 5,000 of the necessary 40,000 individual donors.
Where you can find me this week
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[07/03/2023] Ignore liberal Karens, America – Shoot those Fireworks! – Conservative Institute
[07/07/2023] Biden White House Lies About… Cocaine – Conservative Institute
The Three Tensions Pulling at the Threads of Post-Pandemic Society
On the last day of the Supreme Court term, we got the opinion on student loans. The Supreme Court struck down the Biden administration’s executive order attempting to forgive many student loans. That the court struck it down wasn’t surprising. The only tricky legal question in the case was whether one of the parties involved could prove they’d been harmed, which gave them standing to sue. Once that hurdle was cleared, the arguments for striking down the statute were straightforward (and the dissents strained).
What caught me off-guard was that this won’t end this fight. Several journalists reported that the Biden administration was already preparing for a loss and their next move. The notice on StudentAid.gov changed to this:
The Supreme Court issued a decision blocking us from moving forward with our one-time student debt relief plan.
Learn more about the actions President Biden announced following the decision and find out how this decision impacts you.
For a federal agency, this was a pretty political statement. “The Supreme Court prevented us…” is quite the spin on “the Supreme Court found the Biden administration’s executive orders unconstitutional.”
Regardless, Biden has ordered a rulemaking process to investigate ways to achieve student loan forgiveness through another statute. The Supreme Court case dealt with Biden using the HEROES Act to try and forgive student loans. Plan B is to use the Higher Education Act to try and forgive or “release” loans.
I don’t expect this plan to work any better. I’m starting with student loans today because the reality is that people haven’t had to pay them for three years, which has reorganized society. People with them do not expect to start paying for them again. Look through the website’s FAQs, and that point becomes clear. Biden going from reluctant to deal with the issue to scrambling and making any attempt to forgive loans is another clue to how politically toxic it is for Democrats. They’re terrified of repayments starting up on their watch.
Student loans aren’t the only thread getting pulled. Despite the pandemic being over, we don’t exist in a 2019 world. Three broad things exploded with the pandemic but are now ending.
First, the three-year pause on student loan payments freed up money otherwise going to loan servicers. Second, the pandemic created a boom in Work From Home white collar jobs. Employers pivoted hard into remote work and sold their office spaces. And three, the explosion of remote work combined with the pandemic caused a boom in tech-specific services subsidized by a flood of cheap money from the Fed and extra cash from consumers.
In three years, the world as we know it got picked up and shaken like a snow globe, and people reoriented their lives around those three factors. What’s equally remarkable: the Federal government and employers are pulling on the threads for all three points. There’s a concerted attempt to unravel rapid changes over the last three years, which will profoundly impact what happens next.
I’m not picking sides either way in these disputes. I’m making a point that there’s the pre-pandemic world and what we built in the ensuing years. Returning to a 2019 status quo will take a lot of work to achieve.
A month ago, the Wall Street Journal highlighted the dangers employers are hitting. The insurance company Farmers Group told its employees they could remain remote, but last month, they reversed that decision:
After insurance-industry company Farmers Group told employees last year that most of them would be remote workers, many made significant lifestyle changes in response to the policy. Some sold their cars, others expanded home offices or moved their families to new cities.
Then last month, Raul Vargas, who recently took over as chief executive, said he was reversing the approach. He would require the majority of Farmers employees to be in the office three days a week.
That decision sparked worker outrage. More than 2,000 comments have been posted on Farmers employees’ internal social-media platform, most of which were negative or crying and angry emojis, according to postings viewed by The Wall Street Journal and interviews with employees.
A little further down, you get the crux of the divide:
A Farmers spokeswoman said the new system will include about 60% of the company’s U.S. workforce of about 22,000 employees. She pointed out that the announced policy wouldn’t go into effect until September, giving workers three months to adjust and make arrangements.
Farmers believes that as business conditions change, “so must business approaches,” the spokeswoman said. Employees said the shift is unfair because they made life decisions based on statements made by the company that the remote policy would be permanent.
The WSJ piece also says that Farmers had allegedly sold some of its leased office spaces to cut costs from moving remote. That was not an unusual move. I’ve chatted with friends in the insurance and legal sector, and they all saw the same thing. Corporate America sold off land or got out of leases they no longer needed due to employees shifting to remote work. Many companies sold off half or more of their office space.
Companies pursuing “return to office” policies have hit a stall in the interim: office occupant rates still sit around 50% nationwide. That is far too low to consider an office an expense worth keeping. That means you have to do one of two things: 1) Get rid of it, or 2) Bring people back.
At the core of many comments is whether the prepandemic status quo is worth saving.
“Everything from daycare to public transportation, toll roads, fuel and fuel taxes, auto purchases and maintenance, dry cleaners, nail spas, restaurants, clothiers, hair stylists, dog walkers, nannies and office leases suffer when people work from home,” said Dean Porter of Houston. “Mayors and governors and too many managers want people back commuting.”
Workers who do a good portion of their job remotely contend they aren’t obligated to prop up the office, or an office-centric economy.
“It is not my responsibility to save downtown by going back to the office,” said Merrik Wright of Miami. “The average worker should not be in charge of something that just costs us time and money.”
Again, this shift has only existed for three years, yet everything has gotten radically altered. And the question is, which world wins: a pre-pandemic world or the post-pandemic setup?
The stalemate will likely continue as long as employees keep the upper hand over employers, with legitimate threats of leaving. Employers still need talent, and keeping that talent requires them to pay for it if they want people in the office.
The other problem with the return to office plan is that it limits the employee pool. Corporations that sold off offices or broke leases have a smaller geographic footprint. If you want employees in the office, you have to pull from those geographic locations, even if it’s hybrid work. I heard one executive say that the plan was to get employees within a 50-mile radius of core office hubs that remain. I’ve checked with other friends, and they’ve confirmed similar ideas elsewhere.
Somehow, this divide has to resolve itself. That’s our second tension.
The third tension deals with the post-pandemic service economy. This is the era of easy money. For the last 15 years, the Federal Reserve has poured trillions of dollars into the economy via quantitative easing.
That allowed these companies to focus on user base over profits. We went from Silicone Valley telling everyone that clicks on websites mattered to user counts mattered more than anything. Here are the faces of that movement; these companies are not profitable:
- Casper Mattress
- Blue Apron
- Snap (Snapchat)
There are many others. There’s a reason why the layoffs we’ve witnessed so far have primarily been in the tech sector. They were able to prop themselves up for decades under an easy money regime where credit was cheap to offset the need to have profitability. But with interest rates rising, the bill is coming due.
But these easy money companies have also impacted how business is done, and people arrange their lives. If we watch them go belly-up, that will cause even more ripple effects. Thus, our third tension.
The post-pandemic world relied heavily on these influences. The millennial and gen-z generations suddenly had the weight of student loans taken off them, so they sent their money elsewhere. We witnessed an explosion in the housing sector, ramped up further by the pandemic push to dramatically expand remote work. After three years, people rearranged their lives around this reality. Silicon Valley happily jumped into the fray to help make this a reality, as the Fed shoved trillions of even cheaper money into the economy to save it during the pandemic.
Now, the Fed is trying to dry up all that loose money and reverse decades of abuse of its policy tools. Student loans are coming due once again. And employers are trying to pull people back into offices. In short, the post-pandemic world is getting the threads removed out of it from all sides.
The possibility of a recession freezes this fight in place, too. Employers hesitate to eliminate employees or make dramatic moves that could cost them in a downturn. Fear of student loans and job losses in the white-collar sector has made these employees lose their leverage over their pandemic employers. A recession could also limit employee power by reducing the number of employees a business can handle. Conversely, those real estate holdings and leases get extra heavy. Cutting costs by going remote is easy.
How society organizes itself in the next decade will determine how this settles. Amazingly, one pandemic and three years have dramatically reshaped how business gets done. We now have to answer whether or not that is sustainable long-term and which sides end up getting the upper hand in all of this.
I don’t have an answer to this, but I know the tensions will only increase. How they resolve will eventually impact the political world – it doesn’t know that yet.
But it’s easy to see. States that experienced a boom during the last few years may slip if markets pivot back to a 2019 footing. Conversely, states that lost people and businesses are eager to get them back. Tax revenues, salaries, and where people work were radically altered. Now it’s a matter of whether or not this is the new normal or more change is to come.
Links of the week
The Racism of the ‘Anti-Racists’ Is Unconstitutional – Douglas Murray, NYPost
Freedom wins: Supreme Court web designer ruling is victory for free speech rights: The court affirmed public accommodation rights, while also standing firmly on the side of free speech rights and against government-compelled speech. – USA Today
New Chinese Law Raises Risks for American Firms in China, U.S. Officials Say: U.S. counterintelligence officials say revised Chinese law potentially turns normal business activities into espionage – WSJ
AI robots could play future role as companions in care homes – Yahoo Finance
Moms for Liberty supporters were doxxed and physically threatened – Washington Examiner
Twitter Thread(s) of the week
Satire of the week
Air Force biolab criticized for toxic work environment – Duffel Blog
Thanks for reading!