The NFX Podcast

The Great Unbundling Of Housing & Jobs, with Jed Kolko and Pete Flint

Episode Summary

Few people can see what Jed sees about the relationship between real estate and labor markets and the downstream effects of their recent untethering. And, ultimately, what this means for startup life after the pandemic. Now, and in the years to come, Founders will need to design their startup teams in all-new ways. Today is the beginning of building a new playbook for startup life. NFX General Partner Pete Flint talks with Jed to uncover this unbundling, covering key shifts like: - Unemployment Kickstarting Dislocation - The Continued Unbundling Of Where You Live And Where You Work - Commercial Real Estate, Reimagined - The Transportation Spiral - Cities Changing From Centers of Production to Destinations of Consumption - & New Considerations For Where To Live Jed is currently the Chief Economist at Indeed, the world’s largest online jobs site. Previously he was Chief Economist and VP of Analytics at Trulia, the online real estate site. Follow Jed on Twitter here -

Episode Transcription

Hi, Jed. Great to have you on the podcast today, 

Pete. Great to talk to you again. Yeah, it's been a, it's been a few years. So it's a, where are you today?

Uh, this very moment. I am at home in San Francisco. Uh, I'm now the chief economist at indeed, uh, the job search site. Um, we're headquartered in Austin, but I still live in San Francisco and during the pandemic, uh, I have stayed put, um, in my, uh, place in San Francisco, right in the mission. Um, you know, despite the smoke, um, you know, the has been, uh, actually a great place, um, during the pandemic, uh, there aren't enough things open, uh, for takeout and delivery that there are still people on the street. And so life feels, um, maybe a little bit closer to normal than it might in other places.

That's um, yeah, no, I'm, I'm in SF too. And, um, it's certainly certainly different, but know familiar, just help me visualize like what I like for, for kind of folks listening. So like, you know, maybe downtown or, or kind of where you are like what's, um, what's different about that the city today than perhaps a year ago?

So my immediate neighborhood is around the 16th and mission Bart station. Um, there are definitely fewer people on the street. Um, uh, lots of retail is, um, uh, closed, um, though, um, not as much as boarded up there was that period, uh, late March and April, there were lots of stores actually boarded up. Um, uh, very few are now boarded up and that makes it feel a little bit more like normal, um, still some outdoor diamond, um, until, uh, this current set of rules, uh, came in. Uh, and so, um, fairly lively in terms of like seeing people on the street most times a day.

Yeah, no, I, I, I think things, uh, things are quieter, but, um, and certainly silly airy, but, but familiar. So, so you said that you were, uh, the, uh, the current chief economist at, at indeed. And then we, um, we got to know each other over a couple of years working together where you were the chief economist at Trulia. Um, and so you have this really unique vantage point of, of being, um, studying deeply kind of housing markets and the real estate market, as well as understanding labor market. And so this is just a kind of crazy, crazy time, a crazy year. And hopefully this will be a fascinating conversation around kind of the combination of two and the relationship between labor and real estate. So maybe just, uh, you know, here we are. Um, and, and this is the season of 2021 predictions, like after crazy, um, 2020, like what, what are you seeing in the economy right now? Take us through your kind of economic view of what you're seeing in the economy.

Well, in the economy right now, we can start with some good news and that is, uh, the, uh, at least in the U S is in better shape right now that almost everybody predicted, um, back in the middle of the year, um, unemployment is much lower. Um, lots of sectors have rebounded, uh, in a way that, you know, wasn't obvious, uh, it's going to look like this, um, in, uh, may or June. Um, so we're doing much better right now than some of those worst predictions on the economic side obviously drove a worse, uh, right now than we ever could have imagined, uh, in terms of new cases and deaths from the virus. Um, at the

same time, um, the economic picture isn't quite as good right now as it looks. Um, and that's because, uh, a lot of the rebound, a lot of the improvement has been, um, the easier gains, um, places that have shut down reopening, um, businesses that could bounce back quickly doing so, uh, but there's a growing amount of longer-term chronic damage.

Uh, it's been building, um, people who are permanently unemployed rather than temporarily laid off. Um, people who have now been permanently unemployed, uh, for more than six months and are about to lose benefits. Um, and, uh, there's also been job losses in some of the sectors that weren't as directly affected by the pandemic. So when you look at the kinds of sectors where people can work from home, uh, like tech and finance, um, uh, there being, uh, job losses almost as steep as in the great recession, uh, from 2008, 2009, 2010, obviously not as much damage as in hospitality and tourism, um, but a lot of damage by historical standards.

And so just as you think about, um, you know, w you obviously were deeply involved in, in real estate industry during the global financial crisis, and then obviously it's tech experience, I think, um, and kind of back in 2000 hour, like what's different. Like what, what is, um, what's different about today and the recession today versus the previous recession?

Well, one thing that's different is how Southern this was, you know, when you look at the job losses, this is a set shut down. What took, you know, many months to build during the great recession, um, happened close to overnight, um, this past year. Uh, and so the suckiness, um, the fact that it was really, um, you know, this pandemic, um, hurt services industries, um, the types of sectors that tend to be more resilient. Um, you know, the great recession, uh, was center on housing and construction, um, which, you know, tend to be more volatile industries generally. Um, the world of real estate, um, is much more accustomed to booms and busts, um, then, um, retail or restaurants, um, or arts and entertainment are, uh, and so it was a different mix of industries affected this time. Um, and also so much of the difference was how much of the pain, um, is likely to be temporary.

And that's good news. Um, the share of unemployment, uh, that is temporary layoffs was almost 80%, uh, this past April, um, normally, um, including during the great recession, temporary unemployment is only about 10 to 15% of the overall unemployment rate. Uh, and so you have this intense, but hopefully brief period where lots of jobs were lost. Lots of people are out of work. Um, and that means that that kind of public policy that we have needed during this pandemic, um, has been relief, um, to bridge both people and businesses during this period, rather than ongoing stimulus as we did back in 29, uh, 2009, um, to fundamentally restart the economy

And so, and so just, you know, thinking through you, you mentioned here kind of like the temporary and, um, impact, what, what are some other examples of temporary pain or short-term damage and, um, just like, what is, what is coming back? Um, you know, I think, I think so much has happened over the last nine months. What's, what's been surprisingly faster to come back

The best examples of sectors that have rebounded are certain kinds of services that had to shut down. Um, but as soon as they opened people wanted to catch up, um, for what they hadn't been able to use. Um, I mean the best examples are, uh, uh, hair salons, um, beauty shops, barber shops, um, and dentist offices. Um, there was a while when people couldn't get their teeth quote, couldn't get their hair cut. Um, and now, um, those businesses are booming, uh, as people are essentially catching up, um, from, uh, all the hair appointments and teeth cleaning that they couldn't get for a period of time. Um, and so, um, our site on indeed, we actually see, um, job postings, um, in those sectors, um, above where they were a year ago. Um, so, uh, not only rebounded, but, um, more than back to normal.

And, and, you know, I guess from an economist perspective, this is we're performing of the series of amazing experiments right now. Um, and obviously some of them are kind of like, um, temporary, but some of them are like to be permanent. Um, you know, w what, what do you, what do you anticipate in terms of some of the more permanent changes to our society, to the way that labor markets work to the way that people work, how do you think things will evolve over the next several years?

So I think we can think about, um, three different kinds of, uh, longer-term shifts. Um, one is, um, a more macro economic, uh, shift, um, in that, um, we are even with this recovery, um, it will be a long time before we get back to that three and a half percent unemployment, uh, where we were, um, back in February when the pandemic started, that means that, you know, with a higher level of unemployment, um, you know, probably for some years to come, uh, the labor market is not as tight. Uh, it won't be as hard for employers to find workers. Um, wages might not rise as fast. Um, we might see, um, a wider inequality, uh, cause one of the things that happened were employment's really low and labor markets are tight. Um, it's that employers, um, look beyond their traditional workforces, um, and basically become more open-minded uh, about who they might hire.

Um, so I think that's the first trend that, uh, it's likely to persist. Um, I think a second trend that we really don't know what's going to happen, um, uh, in the future is about, uh, consumer spending patterns. Uh, so this year there's a huge shift away from services toward goods. Uh, people buy exercise equipment instead of paying for their gym memberships, uh, people buying instant pots, uh, and other cooking equipment rather than eating in restaurants. Um, it's unclear whether people have developed new habitat, but want to keep, um, there may be some people who will want to keep cooking. There might be some people who will never want to turn the stove on again. Um, and so I think, uh, there's a lot of uncertainty longer-term about whether we've seen a more permanent shift in spending patterns, and this is especially relevant for housing, uh, because a lot of those shifts are about investing, um, in one's home, essentially in sourcing, uh, lots of kinds of services, um, to do yourself with physical stuff you might buy as opposed to going out and spending on services for other people to do it.

Um, I think the third shift, um, is about how we work. Um, and this is probably the shift. Uh, that's the safest bet will continue. Um, and that is, uh, more of us will be working remotely once the pandemic is over then we did before the pandemic started. Um, of course not as much as at the height of the pandemic this year. Um, but I still think, uh, there will be a permanent increase in people working.

remotely, um, or going into the office, uh, less often. And that has big implications, both for residential and for commercial real estate.

Yeah. Yeah. I mean, it's, I think remote work for certainly in Silicon Valley that's, um, you know, the huge question on people's minds. So, so maybe let's, let's talk a little bit about kind of remote work and, um, maybe before we do that, just like help us understand the kind of relationship between labor markets and real estate markets. And is there some sort of, um, sort of expression between the two or kind of, you know, visualization what's, what's the relationship, what's the fundamental economic relationship between those two, those two marketplaces,

The fundamental relationship, um, is that generally speaking people live and work in the same metropolitan area, um, and metropolitan areas are basically defined by commuting patterns. Um, uh, and, uh, it's very rare, uh, at least initially that somebody might live, uh, in a different metropolitan area than where they work because that's too far to commute. Uh, and so, um, uh, housing demand, uh, depends very much on how the local economy is doing, um, more jobs and more income in those jobs. People have more spending power and they consume more housing, um, sometimes, um, for certain kinds of jobs when they boom, um, people might want to live very close to work. I think part of the boom, uh, in, uh, residential living in many urban neighborhoods that we saw over the past decade, um, had to do with people wanting to, you know, have a shorter commute to work, um, uh, and, uh, wanting to be able to take transit or cycle or even walk to their jobs. Um, remote work really changes that relationship. Um, remote work means that people, uh, end up being able to live farther away from their jobs. Um, if they're only going in once a week or once a month, or basically never, um, to their office rather than every day, um, and remote work therefore means that, um, how a local labor market is doing, um, might end up having less to do with how the local housing market is doing or how the local, uh, commercial real estate market's doing that independence.

Yeah. It's, I mean, it's, it's sort of incredible unbundling of those two. Um, let's do marketplaces together and it's, you know, you, you bring up something interesting. I think, I think, I think because we've been sort of deep in sort of confinement this year, it seems like, um, a binary option between remote work and in office work. And I think you kind of alluded to some sort of hybrid version there. Like I just sort of, I guess, in terms of you think about this from a labor perspective, um, you know, there's an unbundling in some respect, but it's not a complete unbundling in terms of people thinking about, um, you know, some sort of hybrid option in between, uh, how do you, how do you think that might play out?

Oh, absolutely. It's, it is definitely not binary. Uh, first of all, um, maybe only a little more than a third of jobs, um, can be done from home in the first place. Um, tech jobs can finance shops can other professional jobs can, um, but you know, almost two thirds of people in the U S work in jobs that really can't be done from home. Um, so already we're talking about, uh, a minority of the workforce. Um, it's a, um, better paid and more highly educated part of the workforce. Um, but it's still a minority. Um, then within that, um, you know, some people might work permanently remotely, um, but uh, more likely is people will be going into the office, um, once a week, maybe every other week, um, which means they're still commuted. Um, they might be able to, um, manage a occasional two hour commute, um, rather than wanting to be within half an hour, uh, where they work, um, and could therefore see people, um, moving farther away from down headphones, but still within, um, the same, uh, uh, larger labor market. Um, you know, I think relatively few people will actually be in a position and wanting to move, uh, entirely out of, uh, that labor market or metropolitan area where they are now, um, to the mountain top or the Island, um, or wherever the sort of fantasy a place to live is.
So, so, I mean, that's, you know, potentially a big change. Does this mean the death of cities as we know it?

I don't think it means about them cities at all. Um, I think we, uh, are likely to see, um, some changes in real estate prices, um, where, uh, for lots of more urban neighborhoods, there could be lower demand at least initially. Um, but that doesn't mean that housing disappears. It means that housing might become more affordable and therefore the reasons that people choose to live in cities and in dense neighborhood changes, you know, it's less about minimizing a commute to work, um, and maybe more about, um, wanting to live in cities, uh, for, um, for consumption rather than production, um, on lifestyle entertainment, um, rather than just because that's where your job is. Um, in some ways this could make cities a much better. Um, if, uh, you have more people who are living in cities, um, because they want to be in the cities for personal reasons rather than just that's where their job is. Um, but, uh, it's, uh, probably means a decline in real estate values, um, as part of that transition.

Yeah. I imagine decliner where to say values within cities, but in that sort of, you know, the suburbs, then I think there's been a kind of appreciation in some respects, um, if those values and what do you, just, in terms of you talk about that, um, the change of the cities, like just from a sort of purchase versus rental, um, you know, how do you see that evolving sort of rapidly or, you know, and, you know, people are, you know, people in their twenties are kind of like, uh, doing one month here, one month here, Airbnb seems to be booming. Like w what is the sort of makeup of the housing stock change?

Well, I think there are two things that are going on at the same time. Um, one is that, um, there are, uh, probably people taking advantage of this moment to, uh, accelerate some housing decisions they would have made anyway. Um, so buying their first home, um, moving to a good public school district, um, there may be people who plan to do that two or five years from now, um, and are moving that up, um, in this period, uh, because, um, they walk more space during the pandemic. Um, but I think the other trend, um, is, uh, people, um, perhaps checking out places sampled before thinking about temporary moves that are largely going to be rentals, um, partly out of experimentation, but also, um, independently, people are less likely to take risks. You know, this, you know, there's been so much change this year and so much uncertainty about what happens afterward, uncertainty about whether your job will be there, whether your job will let you work remotely, um, that, um, some people might be much less likely to buy a new place rather than to rent, um, until there's much more certainty in the world.

Yep. And there's a lot of, um, kind of speculation in the media and on, on, um, Twitter, um, in Silicon Valley around around just how this will change. So Francisco in particular, and, uh, you know, you talk about this sort of a third of jobs that can be re remote in know one with think, and I'm sure it's the case in San Francisco. That number is higher. And you've got a lot more sort of perhaps, um, tech companies that are sort of comfortable with, with, um, remote work sort of interfaces, lot more developers, um, just, just like, is this, is this the end of like Silicon Valley in terms of, should we all be moving to Miami and starting our tech companies there? And how do you see it playing out at San Francisco?

Yeah. When we think about who or what might leave San Francisco and the Bay area, um, I think it depends a lot on what stage people in companies are at, um, for, um, people who are in a job that they're likely to be in for a long time. Um, people who already have a really strong professional networks, um, that can therefore be maintained virtually, um, people who already have funding. Um, those are the types of people or their companies, um, that might find it easier to move. Um, but places like San Francisco, um, still have huge advantages, um, for people who are still building out their personal networks or who are still looking for funding or who are looking to take risks. Um, I think there's a big difference between people who, uh, are, um, able to move, uh, settled. They don't need as much in-person interaction, um, as people who are starting out, um, or, um, earlier in their path, um, virtual communication is much better at maintaining relationships, um, than, um, building new ones.

Um, onboarding becomes much more difficult, um, to do remotely then, um, maintaining work relationships with coworkers that you already have. Um, and so I think, um, there are some functions in some people, um, who will find it easier to leave the Bay area or leave Seattle or leave New York and other clusters. Um, whereas other people, uh, will find that they want to stay connected geographically to those clusters. People think about leaving, um, uh, not only, uh, if their current job lets them, but also, um, if their future job search might also be remote. Um, but for someone who, you know, can work remotely in their current job, um, but might want to be on the job market again in the next year or two, uh, and might be looking at jobs that aren't remote. Um, those people, uh, are a lot less likely to leave the Bay area and move across the country.

Yeah. I mean, yeah. I mean, it's, you know, NFX, we we're big students of network effects and we've certainly seen both the sort of network effects of, of the, um, the physical talent, um, that is, you know, I think surprisingly or not, or, or not surprising or surprising, not persistent within Silicon Valley because it's, um, the real value in that network, plus the, the cultural differences as well, um, which, you know, is fundamental to helping companies succeed. And that imagine that cultural, um, aspects of much harder to transfer into different, um, new ecosystems to develop startups
That's right. Um, and those network effects matter much more for some kinds of peoples and kinds of roles and kinds of companies then for others.

Yeah. In that, in this, particularly in that early growth stage where you're trying to recruit talent front to build connections that, you know, in the steady state, you could see how it might make sense to the transition. Um, let's talk a little bit about the surrounding city infrastructure and the whole ecosystem. You know, it lets you know, this, this shift from kind of, um, uh, you know, from a, uh, largely in-office work environment to potentially a kind of meaningful portion of people working remotely, what does that do to our offices? What does that do to our coworking spaces? The retail help us kind of think through what are the, what what's that gonna look like over the next year, assuming that there's going to be a portion of people that are going to like this remote work, which I think, you know, many people do and companies, companies are going to sort of accept them except that their work, some sort of hybrid model in the near future.

Yeah. So for the companies and people, um, who are able to work remotely, um, either all or most of the time, um, first of all, I mean it, uh, uh, creates a big questions for the demand for commercial real estate, um, in a world where you have people coming in, uh, one or two days a week, um, for, uh, an organization there's obviously a tension between trying to, um, uh, therefore reduce real estate costs, um, which works if those, if your staff are all coming in on different days, but at the same time, um, for productivity, you would want everyone to be coordinated and coming in that same one or two days, um, you know, so your in office time is more coordinated and more intentional. Um, you know, it is, it's hard to have that both ways, um, to cut way back, uh, on your commercial office space and make it possible, uh, to bring everybody together regularly.

Um, one thing I expect, uh, we could see at least for some companies, is that commercial real estate, um, become, you know, it takes a few steps toward being, um, internal conference space, um, space that's designed to bring people together intentionally, um, as opposed to, uh, for when people come in, uh, for solitary work, um, that could mean, um, uh, fewer desks, more conference rooms, more flexible spaces and so on. Um, it could also mean, um, other services if, um, more of the time people spend in the office, um, is people actually traveling longer distances to work, um, maybe even staying overnight, uh, for part of a week as opposed to daily commutes. Um, and so I think that, you know, puts pressure on and potentially opens up, um, new models for different kinds of, uh, configurations and sharing. Um, but you know, all of this so much depends on the details of remote work. Um, it's really different if someone is working, um, 90% of the time remote, um, and you know, coming in, you know, once every other week, as opposed to someone who's working 99% remote, um, and 10 live anywhere, uh, and is only coming in for an offsite once a quarter, um, and needing to stay overnight. Um, those two scenarios have hugely different implications for where people might live, um, and what the office space might look like. But,

But I think with, um, I mean, th the fundamental sort of expectation is that it's going to be a meaningful reduction in required office space and the reformatting of existing office space. And then the, you know, the downstream implications for that are going to be, um, you know, reductions in transportation systems and retail, and kind of all that. And clearly that's going to create a lot of distress, but, you know, as, as, um, you know, builders of startups that also presents a bunch of opportunity. Um, and I'm curious if you think about, you know, one of the patterns that we've observed is just how, um, these market dislocations create incredible opportunities. And if often, if they're unlocked there's technology, which unlocks them. So, you know, in the case of 10 years ago, ish, uh, Airbnb was hoping kind of people make extra money and the technology enabled them to, to, to more effectively utilize, um, spare space, Uber and Lyft helped to kind of unlock value and in cars and transportation, sort of, you know, building another set of supply for that. I'm curious, do you see, you know, do you see a C what do you see as do you see a world where there's going to be some of this vacant space being repurposed re re transformed? And if so, what is that, is that feasible in the near term?

I think that will be both opportunity and pressure for some of that reconfiguration. Um, it may be, uh, converting some commercial space, um, to being more hotel, like space for employees to stay overnight if their visits to the office are longer trips rather than daily commutes. Um, but I think even more than, um, uh, transportation, commercial real estate, um, is that we may be in for, you know, the need to transform transportation, uh, especially if, um, public transit, um, ends up in a downward spiral. Um, of course, so much of that depends on, uh, federal government funding, uh, for mass transit. Um, but, uh, some of the most productive cities are highly dependent, uh, on infrastructure, heavy mass transit systems. Um, and I think there's a real risk that we get into a spiral where, um, people are using mass transit less, um, uh, their finances suffer services continue to get cut back, uh, which causes more people to look for alternatives to mass transit, um, leaving mass transit to be, um, uh, uh, more infrequent, uh, and, um, uh, less useful, uh, for people, um, at least those who can afford alternatives. Um, and I don't see how that, uh, cycle in and, you know, just, maybe it's a little red premature, but do you see that? I mean, clearly there's a lot of emerging technologies around transportation. Um, you know, whether that's, self-driving you think that will be just disconnected between the people that need it. I imagine that the, you know, perhaps people rich people with their Teslas versus the people that use the public transportation systems, it's, it's, it's unlike to solve the problem in the near term.

That's right. I think there'll be huge inequalities in terms of transportation access and then the ability to manage, um, with, uh, less transit service.

So generally speaking in, as you think about these sort of tectonic shifts in, in real estate and labor, um, and I'm curious if you see many opportunities opening up for new starters, many of the audience, uh, startup founders or executives, and just when there's a dislocation that presents opportunity, what, how would you think of that from an economic perspective?

So, first of all, I think there are likely to be opportunities around the technology of communication of, uh, ways in which, uh, remote communication, uh, continue to get better. Um, you know, we're at a point where lots of people have, uh, now been working remotely and discovered that in many ways, it's better than they expected. Um, people are investing and still want to invest, uh, in the remote work setups. Um, some of that is physical stuff, uh, like better cameras and lights and desks. Um, but there's also probably a lot of room still for innovation about how to make, um, virtual conferences, uh, approach some of the advantages that real in-person conferences have, um, ways to, uh, improve, uh, team meetings, um, document sharing. Uh, so I think there's a whole, uh, set of opportunities around, um, making remote work better and more efficient. Um, there, uh, are certainly gonna be opportunities I think, around, uh, how to sort of share commercial real estate better.

Um, you know, w uh, everything from like, uh, how to, uh, schedule, um, uh, uh, rotating or shared use of space, um, to, uh, you know, much more flexible, um, uh, tools for finding and renting a commercial space, including, um, event space. Uh, I think there'll be, um, very strong demand for, um, uh, uh, ways for companies to bring people together who are working remotely, um, in a much more intense ways than in the past. Um, I mean, you know, I think, you know, many of us has been in a world where yes, we do travel the headquarters to visit other offices and it's sort of ad hoc way. Um, sometimes the people you want to see her in the office, sometimes they're traveling. Um, but I think a lot of companies will be shifting to a world where many people are working remotely. Um, but when they come together, uh, it is very intentional and very coordinated and that time becomes that much more precious.

Speaker 2 (33:00):

Um, and so any way to, um, make those times, um, even more productive and efficient, um, and, um, engaging, uh, for, uh, teams, um, I think that creates a lot of opportunities. Um, and then the transportation piece, um, you know, this, uh, question of how you get, um, people, uh, from near and far into dense downtowns, um, if, uh, mass transit, um, isn't at the level of what it used to be. Um, and I think that's probably the most challenging question, but longer term, um, you know, this, this not necessarily, uh, something entirely on the private sector to fix, uh, certainly some of that is on the public sector, uh, to fund. Um, but there are lots of models, um, of transportation from around the world, uh, that are a mix of public and private. Uh, so there could be huge long-term opportunities for figuring that out.

Hmm. Really interesting. That's great, great startup photo, um, for the entrepreneurs out there. So you will, you recently published the indeed 2020 labor market review, um, which is, you know, great redone and fascinating. I'm curious, like any feedback you're getting from that. And, you know, in addition, just maybe how are our consumers using, how are they changing the way that they're searching for jobs there must've been probably be some, some big changes in the way that consumers are searching for employment opportunities.

Yeah. There are lots of people, of course, who are unemployed far more than they were before the pandemic. Um, one of the ways in which job search has changed, um, is, uh, there are more people who are, um, very hurt at work because they're unemployed, um, and may be on the verge of losing their health insurance. Um, since that's so tied to employment in the U S um, at the same time, um, in a downturn, um, lots of people are less likely, uh, to search for new job if they've already got a good one. Um, you know, this is, uh, you know, for many people, not the time to be the last person hired at a new company. Um, you know, if, you know, there's, you know, risk of a second downturn. Um, and so, uh, there are probably more people searching desperately and fewer people searching sort of casually or opportunistically. Um, I, the other thing that's been really striking this year with the job search is, um, more, more people want to work remotely. Um, but, uh, the real boon and labor demand has been for in-person jobs that support the stay-at-home economy. Uh, so warehouse jobs, driving jobs, construction jobs, um, you know, these are all jobs that can't be done from home. Um, and so there's a real, uh, boom and job opportunities, um, has been, um, jobs that support the state home economy, um, which are not jobs that can be done from home.

Yeah, yeah. It's, um, uh, there's a look, you could see a big change there in terms of demand. So if we take a step back in terms of April this year, no labor economists and sort of macro economist, Adam, do you have the, well, that is quite different than where we are today? What did they get wrong? Like w w what, what did, um, what did economists get wrong about, um, the, the state of things, um, and the forecast just nine months ago?

Well, I think there were some, uh, hugely important factors that were simply unknown, um, you know, above all, um, what the path of the virus would look like, um, how it spread, um, how possible it would be to open up certain businesses, uh, without introducing lots of new health risks. Um, I mean, I think one, um, surprise on the upside, uh, is, you know, how much we learned about treating, um, COVID, uh, and, um, uh, even at demographics side, uh, that, um, fatality rates, um, are, uh, more favorable now than they were, um, at that worst moment, um, in, uh, late March and April. Um, so I think that's one thing that like was unknowable then. Um, I think though that something that was a bit of a headache, um, was that, um, so much of the unemployment, um, was temporary, uh, you know, in the unemployment, uh, spite to almost 15%, um, which was, you know, essentially the highest since the great depression, um, that big difference that really made that number.

Um, unlike other periods of high of employment, um, is that almost 80% of people said that they, uh, that their unemployment was likely temporary. Um, and you know, the headline number, um, doesn't make that distinction. You've got to go one or two levels down to understand that, you know, an unemployment rate at 15%, um, is in flight, um, an unemployment rate of 15%. Um, the last time we saw it, um, in the 1930s. Um, and so I think, you know, just the nature of this being so different, um, naturally led people to interpret a lot of the headlines differently. 

And what, and where do you think about looking forward to 2021? What do you think of some of the things that people are getting wrong? I might be getting wrong around forecasting. What's going to happen in the next year.

So one thing that people might get wrong, um, is around, um, goods versus services, um, and the extent to which, uh, patterns that have changed this year, um, will persist. Um, you know, it could be that the stuff people bought a lot of this year they'll continue to buy. Um, it could be that, um, uh, people will continue to want larger homes, do lots of home improvements. Um, but we could be in for a bounce back, um, and maybe a bounce back that even overshoots in the other direction. Um, all the home improvement projects people have done this year, um, might just be that they pulled forward, you know, five, the next five years of plan home improvements, um, to this year. Um, and they don't need to do them, um, then next year and beyond, um, you know, maybe that, um, there is such a strong demand, uh, for travel in the second half of next year.

Um, once it becomes possible, um, because people are catching up on all the destination weddings and birthday parties and conferences and everything else that got canceled. Um, you know, it's, you know, we're not going to have two whole years of travel all packed into the second half of 2021, but, um, there will probably be more than six months of travel demand in that six month period. So we could actually be in this period where, um, we get into capacity constraints, um, that, um, demand for travel and hotel rooms and restaurants and other services, um, bounce back much more quickly than supply chain. You know, if it takes time to bring planes back online and to, uh, retrain pilots who certifications have lapsed and so on. Um, so we could be in for, um, uh, uh, an unexpected set of, uh, supply constraints, um, or at least much higher prices. Um, as you know, everyone's trying to hold their events, you know, the same month next month.

So I mean, that, what you're describing sounds a bit like the Royal in twenties, do you think we're in for the, the roaring twenties and this sort of snap, you know, potentially snap back into this luxury goods, decadence, and maybe no decadence, but, but, um, you know, with, uh, with a very high savings rate in the economy right now, there's like this for some segments of the population there's excess cash that, that could be put to work there.

Yeah, I, I think, um, that depends so much on how quickly we get to widespread widespread vaccination and the virus relating under control. Um, uh, we could still be in for a lot of academic economic damage, um, if, uh, the viruses with us, you know, longer into next year than we expect. Um, and also, um, if there is not some kind of a leaf, uh, that helps, um, both struggling households and struggling businesses, um, make it, um, until the virus is under control, um, that we could be in for a period where, uh, more restaurants go under, uh, more, uh, gyms and retailers and other personal services, uh, go under which, um, not only of course, you know, who it's the owners and customers of those businesses. Um, but, um, you know, again creates another sort of, uh, supply constraint once, you know, there's a huge jump in demand, uh, for all those services.

Yeah. So, um, so we talked a lot about cities and labor. Just, just take a step forward and I know, you know, your, your economist. So, um, uh, so I won't ask you to bet your career on it or reputation, but just like let's just future gaze for a minute and think about cities in 20, 30 years time. What, what are the three things you think that will be the most different from where we are today? And then what are the three things that you think might, um, just be the same?

So I think 20 to 30 years time, um, the things that might need the most, most similar to stay, um, is, um, the value on, um, things that are face-to-face and things that are immersive. Um, I think, you know, there are, um, pretty basic human needs, uh, about, uh, wanting to work, socialize, um, in person, um, you know, cities, um, have long been, um, not only labor markets, but also dating and marriage markets, uh, where, uh, and, you know, some of that moves online, but, uh, and so often is the case, um, as technology advances, um, that online experiences ended up, um, reinforcing and complementing, uh, real world experiences rather than substituting for them. Um, so, uh, that kind of demand, um, uh, along with all the challenges of how to manage density, um, uh, I think, uh, we'll still be with us. I think some of the biggest, um, differences, um, might be around why people choose to pay the premium to live in cities and denser neighborhoods.

Um, it may be less about, um, proximity to jobs and professional opportunities and more about, uh, proximity to, um, entertainment, uh, people, uh, and social opportunities. That's a re that's a trend that's been underway, um, uh, increasingly, uh, uh, cities, uh, have become, um, uh, uh, places for consumption, um, not just places for production. Um, and I think that's an, uh, uh, a change that continues. I think the biggest change though for cities, um, is whether some cities become a livable, um, because of climate change and other environmental shifts, um, you know, places that are, uh, uh, near or below sea level, uh, that are risk of floods or hurricanes or wildfires and smoke, um, may become much less livable putting pressure on other cities, um, that, uh, face fewer of those stresses. Um, so we could, you know, 20 or 30 years out, um, see very big shifts, um, from, uh, you know, cities at risk from climate change, um, to cities less at risk.

Yeah. Gosh, okay. Pandemic plus climate change. There's a really, um, four minute bore depressing, but, but hopefully we'll, we'll have some technology and startups help to solve some of those or improve some of those problems. Um, so, so as you, um, you know, you, you've had this very unique vantage point being a, um, chief economist and, you know, access to huge amounts of data. Um, and I'm curious from your, you know, seeing, seeing the role in analytics and data of over the last decade or so, like curious, what advice would you give early stage founders out there and kind of how to think about the opportunities and challenges with, with data within, within their startups?

First piece of advice is, um, that, um, everyone in organizations working closely with data, um, know that there are, um, much bigger problems and challenges, uh, with those data, um, that everyone else in those organizations who aren't working as directly with data, um, uh, there's often a big gap between what, um, you know, people in other parts of the business and certainly people on the outside, um, think, um, is possible and doable with data. Um, then what the, uh, data engineers and data scientists, um, actually know about the challenge of using data. Um, and I think a lot of that, um, you know, needs to be handled early on, um, making smart decisions and investing in data infrastructure, data documentation, um, at the beginning, um, rather than later on, like I've never seen or heard of an organization, um, that wishes they had waited longer to set up no proper data infrastructure and data governance.

Um, and I think, uh, you know, one, one area that, um, makes a huge difference in how much organization benefits from its data is, um, whether, um, data are organized in a way that's compatible with external norms, whether that's, um, uh, using, uh, standard geographies, um, or using standard formats, using standard tools, um, whatever, uh, you know, there are lots of directions in which it's possible, um, for, uh, data, for infrastructure to be more compatible with how the rest of the world works rather than less compatible. The more compatible data are, um, the more other data sources that can be combined with. Um, the more you're likely to be able to find, um, data scientists and data engineers who already have the skills you need on the outside. Um, you know, I think those are the ways. in which, um, companies, you know, large and small, uh, can get much more, um, out of the data that they have.

Yeah. That's really interesting. So yeah, we see that time and time again, it's like I'm building access to the data and storing the data, but then I think it's, it's a, it's a good call out, make that kind of data usable by kind of using the tools, the technology, the formats, um, just having the data is, is, you know, sometimes just too unworldly and too are manageable to get the insights from it. Um, so Jen, thank you for your time today. Um, this was just a terrific and fascinating conversation. Um, so, um, we'll pleasure to connect again and hear your insights on labor and real estate. Thanks for joining us today.