How the pandemic has made the rich richer
Welcome to “Not Pretty, Not Rich,” a twice-weekly newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything.
A disclaimer: I’m neither a financial expert or professional. I’m just a guy who writes about money, and this newsletter is a place for me to share my opinion, views, and resources. It’s unaffiliated with my employer, and all views contained within are my own.
And there was no newsletter last Thursday, I needed a break.
Once again we’re off. Like a herd of turtles. It’s Tuesday, May 26, 2020.
How the pandemic has made the rich richer
A recent report from the Institute for Policy Studies and Americans for Tax Fairness, left-leaning think tanks, shows that between the middle of March and the middle of May, the ~600 billionaires in the U.S. saw their collective, total net worth increase by $434 billion, from $2.948 trillion to $3.382 trillion.
That, of course, occurred as tens of millions of people lost their jobs. As you can imagine, people aren’t happy about that.
On the surface, it makes sense. People like Jeff Bezos, for instance, likely would see their net worth increase as most of Amazon’s brick-and-mortar competitors were forced to shut down during the crisis. But aside from guys like Bezos who’ve been able to use the pandemic as a business opportunity, the report says that the factors that have allowed the rich to get richer during the crisis are the use of tax cuts, tax exemptions, and offshore tax havens.
As with all studies, though, you should take a look at the methodology and data to draw your own conclusions. It’s very likely that many billionaires are seeing their wealth increase during this time as others struggle. And with the market down, it opens up more opportunities for people with means to increase their wealth: Competitors will go bankrupt or be sold for cheap, money can be borrowed for nothing, and stocks are cheap.
In fact, this is what happened during the Great Recession, too: The rich got richer.
Working from home is cool and all, but it has its drawbacks
You may be working from home right now — or you may be wishing that you are working from home. While I’ve been working from home now for two and a half months, I have to say that it’s nice to skip the commute. I’m actually more productive, too. In short, I could get used to it.
And while you may have seen recent headlines regarding some companies’ decisions to allow their employees to work remotely indefinitely — that is, forever, if they want to — it may make you a little jealous. Well, in a previous job, I worked remotely exclusively for nearly four years. It had its advantages, for sure, but it also had drawbacks, and I feel like it’s worthwhile to bring those up as some employers weigh giving workers the option to go full-remote.
First of all, remote work is great in that you save a lot of money. You don’t need to commute, saving you money on gas, or bus or train fare. You also aren’t spending money grabbing coffee, going out to lunch, and then happy hour, etc. It’s easier to eat healthy, and eat cheap. You’ll also claw some hours back in your day by not commuting, which is incredibly valuable.
But as a remote worker, I became a little too comfortable. I lost my fire for a little bit. I had opportunities that came my way that I sidestepped because, hey, I had a pretty cool gig being at home. And I regret it.
What you miss as a remote worker are the little conversations with coworkers. The opportunities to connect and network at lunch, to grab coffee or chat at happy hour. These are the connections that, at some point, could help you move up, move over, or take over. Depending on where you are in your career (if you’re an intern, for example) these are the opportunities you should live for.
Of course, if you’re a parent of young children, working remotely can be a godsend. It all depends on your situation.
Now, a lot of this is drawn from my own experience. But millions of people are now seeing what it’s like first-hand to work remotely. It can be great, but all those Zoom happy hours...aren’t all that great, are they?
Anyway, just something to consider if you hope to work remotely after things return to normal.
Action item: Be decisive, or learn to be
We all have friends, bosses, coworkers, and other people in our lives who can’t seem to make a decision. Where do they want to eat? You decide. What’s next on the agenda? I don’t know, what do you think it should be? Usually, the inability or refusal to make a decision stems from the fear of making a bad or unpopular one — and yet, somebody’s gotta make the call.
This is particularly problematic when the person in question is in charge. That’s why I believe that being decisive, or learning to be decisive, is an incredibly valuable skill that we should all develop.
We’ve recently seen what’s at stake when the person (or people) in charge are reluctant to make a decision. The coronavirus pandemic, so far, has killed around 100,000 people in the U.S. Research from Columbia University epidemiologists shows that if we were to have instituted social distancing measures to combat the virus one week earlier, we could have saved 35,000 lives — or, reduced the number of the dead by around 40%.
The point is, there’s been some very public reluctance by people in charge to make some tough decisions regarding this pandemic. Some, like certain governors, have probably overreacted — in their minds, it’s better to save lives and take the heat later. But the point is, when you’re in charge, you need to step up. When someone asks you to make a decision, make it. Hopefully, lives don’t hang in the balance. But being decisive is a skill we all should work on.
If you want to build your decision-making muscles, I’ll give you a place to start: Try and remove emotion from the process. It sounds easy in theory, but seriously, give it a shot.
As always, thanks for reading. See you soon.