EP39: Work From Home Injects Over $1 Trillion Into the Economy

 

 

There's a whole bunch of commuters that are used to driving to cities. And I think it would be good and very timely talk a little bit about some of the things that we've learned and this massive economy that is forming from the non-commuter economy, the non-commuter economic forces. Chris will perhaps give us a little bit of hope, as far as what the trends are with this new stay at home economy.

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In downtown Seattle, there are office buildings and those office buildings right now are pretty much empty as of today, July 14, 2020. And a lot of people thought this whole COVID thing would be over by now. I think with a record number of cases per day coming in or individual states like Florida are now number four in the world is where the country is. There's a kind of sobering up going on with regard to what’s happening. One of the interesting things is that we talked about it a little before is that the big companies always lead the way on this sort of thing for a bunch of reasons.

One is they've got the best information.

Two, they've got the best lawyers and their lawyers advise them as to what's why somewhat safe to do.

Three, they can often work the numbers better than the rest of us. And so what to us might be a small saving to them can be quite material.

Here's what we have today, roughly 48 million knowledge workers in America and they used to commute by car about 26 minutes each way.

So that's .87 hours of car time commuting. Anybody who's lived near a big city and commutes knows that is an understatement. That's just over 200 hours spent commuting by car which adds up to about 10 billion hours for those 48 million knowledge workers.

This has been time boldly wasted.

Commuting and that multiplied by the $50 an hour that most knowledge workers are paid, which clearly is less than they're worth and nobody ever gets paid what they're worth. That's $505 billion of labor that's being wasted commuting. And then if you throw in the car and just take the federal government's mileage reimbursement rate of 57 and a half cents per mile which accounts for gas, maintenance, wear and tear, tires.

And you take the number of miles committed 29 per day. It's about 6670 miles a year. That's $193 billion of commute costs and that's just raw costs again in the economy that's considered to be positive. Well, then it must have been worth it to them. But you know, it's not worth it to anymore.

Let's throw in a little something here for knowledge workers with children. This is really an illustration. It's not a huge number, but it's a big enough number. Knowledge workers with children are at about 40% and you've got to have some childcare costs averaged at $8 per hour. That alone is $33 billion.

The direct commute costs, just for the knowledge workers, which I will call pure waste is $731 billion.

That's a big number. And then if you look at the rest of the commuting workforce -  62,000,000 other people and they commute about the same amount of time each way. But what if we could actually improve their commute by 25% and what if they're being paid an average or they're worth an average of $35 an hour and you multiply those numbers together with those 53,940,000 commute hours.

Times $35 an hour and you take 25% of that you get yourself another $114 billion.

And so if you had $114 billion for the non-knowledge workers up with the $731 plus billion for the knowledge workers, the direct savings, we're getting pretty close to a trillion dollars - $845 billion dollars of direct costs. It's a big, big number. And it was considered to be essential, but we just have to do this right, and it's not considering everything else is not considering the environmental impact. It's not considering the geopolitical impact and what it means to have an economy that generates such a dependency on oil which doesn't always come from exactly where you would want it to come from, neither is the money always used exactly like you would want it to be used.

Ignoring all that it's $846 billion roughly that could be saved and is being saved. Today, this isn't a suggestion or something we do in the future. This is just saying, look what happened, look what's happening right now that 813 billion dollars is effectively being put in the pockets of consumers, one way or another, mostly as their own time. But we know that people figure out a good things to do with their time - the gig economy is about that. But people they value their time and we should consider them when their time is saved. They're getting value.

 

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