Marketplace Podcast Summary: "Cyclical, Secular, Seasonal"
Release Date: December 6, 2024
Host: Kai Ryssdal
1. Labor Market Dynamics: Cyclical vs. Secular Jobs
[00:57 – 02:50]
Kai Ryssdal opens the episode by discussing the current state of the labor market, highlighting a "labor market trifecta" that includes the Job Openings and Labor Turnover Survey (JOLTS), ADP's private sector jobs report, and the upcoming government's official unemployment tally for November.
Justin Ho explains the distinction between cyclical and secular jobs:
- Cyclical Jobs: These are tied closely to the economic cycle, fluctuating with periods of growth and recession. Examples include manufacturing, construction, and retail.
- Secular Jobs: These are less sensitive to economic changes and persist regardless of economic conditions. Kathy Baschancik, Nationwide's Chief Economist, cites healthcare, education, and government sectors as prime examples.
Kathy Baschancik emphasizes the resilience of secular jobs:
"People are aging. So whether we're in a booming economy or a recession, there's still going to be a certain level of demand people require when they're older for health care." [01:34]
Justin Ho notes that secular sectors have driven significant job gains over the past year. However, Daniel Zhao from Glassdoor warns of potential vulnerabilities if secular trends shift, particularly in education where there's still a recovery from the pandemic-induced downturn.
Guy Berger, Director of Economic Research at the Burning Glass Institute, points out that cyclical jobs have remained stagnant due to current monetary policies:
"Right now, with monetary policy squeezing the economy at least a little, these sectors, you know, in general aren't generating the bulk of job gains." [02:26]
Berger further cautions that cyclical sectors could suffer if the economy weakens:
"Jobs in those cyclical sectors could take a hit if the economy were to turn south." [02:40]
2. Wage Growth Trends and Economic Implications
[02:58 – 05:10]
Ryssdal transitions to wage growth, highlighting expectations for the November unemployment report. Wage growth has hovered around 4% annually, with a slight dip anticipated. Notably, ADP's report shows a 4.8% wage increase for employees who remained in the same job, marking the first rise in over two years.
Mitchell Hartman discusses the historical context:
"Three years ago, the wage picture was great for workers, not so great for the economy. With severe labor shortages, workers had tons of bargaining power." [03:26]
Dean Baker from the Center for Economic and Policy Research views the current 4% growth as optimal:
"4% is pretty much the sweet spot, because as workers get more productive with AI and automation and better training, employers can afford to give out 4% raises without jacking up their prices too much." [03:47]
Despite rising wages, Mark Hamrick notes that many workers still feel financially strained:
"People lost buying power through a couple of years of outsized increases in prices. And so when we are talking about wages rising above the pace of inflation, we're really talking about sort of recapturing lost buying power." [04:14]
Hartman acknowledges that while 61% of workers received raises, nearly 40% did not, highlighting persistent income inequality:
"There is a kind of underclass of workers here. The federal minimum wage hasn't been increased." [04:42]
Marshall Cohen from Circana adds that the cost of working is increasing, with more employees required to return to physical offices, necessitating additional expenses for activities like eating out and updating wardrobes.
Mitchell Hartman remains optimistic:
"With unemployment low and skilled labor in short supply, workers leverage to get higher wages is likely to stay strong into 2025." [04:58]
3. Bitcoin's Surge and Environmental Concerns
[05:10 – 08:38]
The episode shifts focus to Bitcoin, which recently surpassed the $100,000 mark—a historic high, though it has slightly retreated since. This surge is attributed in part to optimism surrounding a crypto-friendly Trump administration.
Fred Thiel, CEO of Mara Holdings, a Bitcoin mining company, explains the profitability spike:
"There's this period of bull run, as the industry calls it, where miners can make a lot of money because price is running much faster than miners' ability to add capacity." [06:32]
However, increased profitability attracts more miners, potentially saturating the market:
"Eventually other bitcoin miners plug more and more of their machines into the grid to chase digital gold and teal as more competition." [06:43]
Liz Moran from Earthjustice raises environmental concerns:
"Bitcoin mining consumes a lot of electricity—more than the entire country of Poland in a given year." [07:07]
Kristen Smith, CEO of the Blockchain Association, notes that while Bitcoin is currently facing more political pushback than AI, the real solution lies in increasing clean energy sources:
"I don't think that we've seen that same level of scrutiny with AI. I certainly think it will probably ramp up as it gets bigger." [07:23]
Guy Berger adds that the clashing demands of AI and Bitcoin mining on energy grids necessitate sustainable energy expansions:
"The real solution is to add more clean energy sources to the grid in the first place." [08:04]
4. Retail Transformation: Butte Plaza Mall Sale and Future Plans
[08:38 – 14:00]
Alana Furco, manager of Butte Plaza Mall in Butte, Montana, shares insights into the recent sale and future redevelopment plans. The mall was sold in May to developers who aim to revitalize the space without disrupting the fourth-quarter business surge.
Alana Furco reflects positively on the change:
"Change is good and we're okay. Sometimes good things fall apart so better things can fall together." [09:50]
She details the redevelopment strategy, which includes demolishing the north department store to make way for a new grocery store—strategic positioning to ensure consistent foot traffic:
"We're going to clear a wider footprint for a grocery store. You always want to plant a necessity so that people have a reason to need to come to the property." [10:26]
As her tenure approaches its end with her 40th anniversary coming up, Furco expresses readiness for new chapters:
"I've got eight grandkids and more chapters to write. So I think my energy is just, it's pretty much spent." [11:13]
She also shares positive outcomes from the holiday season:
"We had a couple stores that say it was their biggest ever. We had a great weekend." [12:18]
5. Holiday Season Employment: Seasonal Workers at Dakin Farm
[16:01 – 19:55]
Ryssdal highlights the significance of seasonal employment during the holiday rush, directing attention to Dakin Farm in Ferrisburg, Vermont. The company relies heavily on seasonal workers to fulfill the surge in orders for their popular gift boxes.
Sam Cutting, owner of Dakin Farm, underscores the critical role of seasonal employees:
"We've got two weeks to ship basically 40,000 packages. And so in order to do that, we bring in about 120 seasonal workers and we're just moving packages all over the place." [16:10]
Mark Hamrick interviews long-term seasonal worker Jack Pilla, who has worked at Dakin for 40 years, valuing the reliable income it provides alongside his other jobs.
Max Rady Bicknell, a 25-year-old seasonal employee, shares his experience of transitioning from the restaurant industry to Dakin Farm after job losses:
"I was a bartender and a brewer and I'm hopefully going to get back into that. But the restaurant that I worked at closed about a month ago." [17:43]
Tricia Cole, the company's bookkeeper and HR manager, highlights the flexibility offered to employees:
"Employees... can sign up for as many shifts as they want. And the number of shifts available goes up a lot over the next two weeks." [18:09]
Diane Marcotte, a veteran worker of 37 years, appreciates the flexibility and benefits:
"If I need time off, they will give me that time off. If I want overtime, they'll give me overtime." [18:37]
The segment concludes with anticipation of continued seasonal demand into early January.
6. Energy Efficiency: The Rise and Challenges of Heat Pumps
[19:55 – 24:22]
The podcast delves into the potential of heat pumps as an energy-efficient alternative for home heating and cooling. Despite their benefits, heat pump investments in the U.S. have declined slightly, facing regional adoption challenges.
Kayleigh Wells reports that heat pumps are particularly popular in the South but are gaining traction in colder regions like Maine:
"Nathan Wilcox didn't let the winters in Portland, Maine deter him from making the switch to heat pumps in 2022." [20:37]
Christian Agulis, President of PAE Engineers, explains the functionality and efficiency of heat pumps:
"Heat pumps transfer heat and are two to four times more efficient than, say, a gas furnace." [21:32]
In Maine, high heating oil costs have driven the adoption of heat pumps:
"Before Nathan Wilcox decided to install his heat pump, he got an eye-watering bill from his heating oil company." [22:31]
However, outside these favorable regions, high electricity costs in places like Northern California hinder adoption:
"In some parts of the country, electricity is five times more expensive than natural gas." [22:57]
Ethan Elkind from UC Berkeley highlights a barrier in contractor expertise:
"The contractor who comes to save the day might not even know how to install a heat pump." [23:26]
Moreover, Kayleigh Wells points out that federal and state incentives are crucial but may be at risk if political support wanes:
"Federal and state incentives promise thousands of dollars to the homeowners willing to make the switch to heat pumps unless President Elect Trump makes good on his promise to claw back that funding." [23:48]
7. Final Notes and Holiday Insights
[24:22 – End]
Ryssdal wraps up the episode with lighter fare, referencing a Chicago Tribune feature on how various notable figures in Chicago spend their holidays. Highlights include:
- Austan Goolsbee, Federal Reserve Bank of Chicago President, desires 2% inflation and a membership to the Illinois Mycological Association.
Additionally, Ryssdal promotes Marketplace's vehicle donation program, encouraging listeners to donate old cars to support journalism:
"Give it new life by donating it to Marketplace... Go to marketplace.org/vehicle to donate your car today." [Final Segment]
Key Takeaways:
- Labor Market: A blend of secular job growth and stagnant cyclical jobs shape the current economic landscape.
- Wages: Moderate wage growth is beneficial but uneven across the workforce, highlighting ongoing income disparities.
- Bitcoin: The cryptocurrency's rise benefits miners economically but poses significant environmental challenges.
- Retail Evolution: Traditional malls like Butte Plaza are undergoing transformative changes to stay relevant.
- Seasonal Employment: Companies like Dakin Farm exemplify the critical role of seasonal workers during peak periods.
- Energy Efficiency: Heat pumps offer a sustainable heating and cooling solution but face adoption hurdles outside supportive regions.
Marketplace continues to provide in-depth analysis and diverse perspectives, making complex economic and business news accessible to all listeners.
This summary is based on the transcript provided for the "Marketplace" podcast episode titled "Cyclical, Secular, Seasonal," released on December 6, 2024.