Fact Pack! Automation is Coming
By Hightower Las Vegas and RCG Economics on September 8, 2023
Can Las Vegas balance automation’s efficiency with job security for its workers?
That’s the question asked here by Cryptopolitan, and answered by our own John Restrepo, co-publisher of this newsletter and chief economist at RCG Economics:
John Restrepo, a principal at RCG Economics, asserts that diversifying the economy is a key strategy to mitigate Southern Nevada’s heavy reliance on tourism and hospitality. By fostering industries like technology, healthcare, and renewable energy, the Las Vegas metro area can cultivate a more robust economic ecosystem that is less vulnerable to fluctuations in the tourism sector. The investment in workforce retraining and educational programs can help the region build a diverse talent pool, attract new employers, and fortify its economy against future uncertainties.
Paperform.com provides a slew of statistics related to automation in the U.S., including these:
As of December 2022
More paperform.com stats:
50 percent of today’s work can be automated (McKinsey). The most commonly automated tasks:
As of December 2022
- 94 percent of workers say they perform repetitive, time-consuming tasks in their role (Zapier).
- 88 percent of small business owners say automation allows their company to compete with larger companies (Zapier).
- One in four jobs in the United States will face a high risk of automation job displacement by 2030 (Brookings).
Hiring
Hiring remained robust in August:
As of August 2023
Apartment Construction
The largest increase in apartment supply since the 1970s happened between 2020 and 2022 when 1.2 million apartments were completed across the U.S., according to Apartment Construction Report. Another 460,000 units are expected to be completed by the end of 2023, possibly setting a new annual record.
For 2023, Las Vegas is ranked America’s #25 apartment builder, with 5,017 new apartments already built or expected to be built.
- The 2023 surge in new apartments in the Las Vegas metro follows the pandemic construction boom when 8,575 units were added to the market.
- In Las Vegas, 6,078 units were completed in the last three years with another 3,436 scheduled for completion in 2023.
- In Henderson, 2,497 units were completed in the last three years with 877 more scheduled for completion in 2023.
State Budget
The Guinn Center for Policy Priorities recently released a report examining Nevada’s state government budget for the 2023-25 biennium. A few highlights:
- The state budget for the 2023-2025 biennium amounts to approximately $53.4 billion, an increase of roughly 19.0 percent over the previous budget of $44.9 billion.
- Federal dollars constitute the highest share of total 2023-2025 biennial statewide revenues (27.7 percent).
- Sales and Use Taxes ($3.9 billion) make up the largest share (33.2 percent) of the State General Fund revenue forecast for the current biennium.
- With expenditures of approximately $20.4 billion, the Department of Health and Human Services is Nevada’s largest department. Its share of state expenditures for the 2023-2025 biennium is 38.1 percent.
- Education accounts for one-third (33.3 percent) of expenditures for the current biennium.
Revenue recap:
As of legislative passage of the state budget in May 2023
The state budget over the years:
As of September 2023
Click here to download the full report. For a two-page summary, click here.
Credit Card Defaults
U.S. credit-card defaults hit a 10-year high in August, per Equifax:
As of August 2023
The Income Ranking of U.S. Metros
When it comes to the U.S. cities with residents averaging the highest incomes, it may as well be 1980. For the most part, according to this blog post on regional economic trends for the Department of Commerce’s Regional Economic Research Initiative, the high-income cities of 40 years ago remain high-income today, and low-income metros are still relatively low-income.
In addition, metros with the highest average incomes today tended to have even higher average incomes in the past. Scatterplot showing 1980 and 2021 income for the 110 largest metro areas:
As of 2021
Among these 110 largest metros, six were found to be among the top 10 for income in both 1980 and 2021:
- San Jose
- Fairfield County, CT
- San Francisco
- Seattle
- Washington, D.C.
- Denver
Additionally, cities with higher income in 1980 tended to have faster income growth from 1980 to 2021, contributing to the widening gap between higher- and lower-income places.
Unsurprisingly, the two measures found to most closely align with less year-to-year income volatility are educational attainment and occupational mix. The correlation between local college degree share in 1980 and 2021 is 0.87 – slightly stronger than the correlation for average income.
Rankings of interest:
As of 2021
What’s been going on in Fayetteville, one wonders? Among large metros that were not already in the top third in 1980, Northwest Arkansas had the biggest percentage increase in per capita income. Its inflation-adjusted income nearly tripled between 1980 and 2021.
Metro Provo-Orem UT had the second-largest increase, with inflation-adjusted income 2.4 times higher in 2021 than in 1980. Nashville and Austin had the next largest increases in income among large metros not already in the top third in 1980.
Finally, the Commerce Department blog post notes that since 1980, many places across the U.S. have had substantial job or population growth — but job creation on its own does not ensure incomes rise. There’s very little correlation between employment or population growth and rising incomes:
As of 2021
(Note: Some places with high-income growth from 1980 to 2021 also had strong job growth, including the aforementioned Northwest Arkansas, Provo-Orem, UT, Austin and Nashville.)
Our own Las Vegas-Henderson-Paradise metro, which has seen strong population growth, did not fare quite as well on the income growth side of the equation:
As of 2021
Fact Pack co-publisher John Restrepo:
One reason few metros in the Commerce Department’s analysis have seen upward average income growth is that faster-growing, higher-paying sectors tend to cluster in the same regions over time. Technology, finance, and other professional services, which pay higher wages, have increased their share of the economy, and companies that provide peripheral goods and services tend to follow the same trend, creating tight correlations of economic activity that tend to provide self-sustaining growth over time.
CEO to Worker Pay Ratios
Four years after the CEOs of some of the nation’s largest companies promised a more egalitarian approach to business in order to benefit employees, little has changed, per a Semafor analysis of corporate filings.
Profits are still primarily shared with shareholders, not employees, and CEO pay has continued to soar, vastly outpacing raises granted to hourly workers.
In 2018, the average CEO made about 140 times what his or her average employee took home. Last year, that ratio was 186 to 1, and in/among the 20 largest firms that were the 2019 Business Roundtable’s 181 signatories, CEO pay has risen from 324 times that of the median worker in 2018 to 441 times in 2022:
As of 2022
Related: The 25 Best Stocks by Shareholder Wealth Creation (1926-2022)
Visual Capitalist graph:
As of June 17, 2023
Global Leapfrogging
“Emerging and developing countries have the most potential to leapfrog their development trajectory by adopting digital technologies. These countries lag considerably behind in internet connectivity, a key enabler for adopting and using digital technologies.” So says the IMF, which notes that globally, about 2.7 billion people still need to be connected.
So what’s the price tag for getting all humans online? IMF estimates show that $418 billion in digital infrastructure is needed to connect unconnected households.
As of 2023
Once infrastructure is installed, there’s another issue: Internet subscription costs are high in low-income developing countries, where, relative to average incomes, the average cost is nine times the amount citizens in advanced economies spend.
As of 2020
The IMF argues that government should subsize internet costs for households unable to afford the cost.
Digitalization enables governments to leverage technology to enhance revenue collection, improve efficiency of public spending, strengthen fiscal transparency and accountability, and improve education, health-service delivery, and social outcomes.
Digitalization can also improve the effectiveness of social spending and the quality of public service delivery. Digital interventions, such as providing students with equipment and software, can improve education outcomes. In healthcare, [it] can help improve quality of care, increase the coverage of underserved populations, and optimize resource utilization. Electronic health records, telemedicine, and digital platforms for patent licensing, procuring medicine, and monitoring infectious diseases are areas of digital innovation in health care.
On the Horizon
Mike PeQueen: All Hail Wednesday’s inflation report! The consumer price index is widely considered the most important gauge of inflation, and market participants would love to see a low annualized number to help confirm the idea that the Fed is done raising rates. If it comes in hotter than that, expect higher rates for longer.
Next week’s MarketWatch calendar:
