Fun with statistics and observations
We are still rather clueless about how the post-coronavirus world will function. But many clues do exist. Some clues appear in reports analyzing economic, demographic, and various other trends. Other clues are found by observing our neighbors. To date, I have reached only one undeniable conclusion: I love my family but they are driving me crazy.
Nonetheless, I offer three predictions with a mixture of humility and confidence.
Personal care and service employment will continue rising. From 2010 to 2017, the compound annual growth rate (CAGR) for employment in this sector was 6%, which was the fastest growing segment of the job market for non-college educated workers. Within this sector, the employment CAGR for manicurists/pedicurists was 10.4% and skincare workers was 5.8%.
Although these jobs preclude social distancing, I believe these jobs will continue their robust growth once the economy reopens. Watching delivery drivers and lawn care workers working reminded me (1) low cost labor is abundant, and (2) much of this abundance is amply employed despite the economic meltdown. Although driverless vehicles and drones will replace the delivery drivers and others in the logistics industry, hairdressers and manicurists will not be deployed in the near future. We still need to look professional and healthy on Zoom calls.
Decreasing mobility trends will level off. Less than 10% of Americans changed residences in 2019, which is roughly half of the 18-20% annual moving percentages of the mid-1980s. This is the lowest percentage on record, which has been calculated since the late 1940s.
This trend is currently driven by millennials (ages 18-34). Their rate of moving consistently declined during the Great Recession and the decade-long recovery. This is unsurprising. Older millennials faced both the Great Recession and enormous college debt early in their careers, which delayed the start of their professional lives. Younger millennials are also saddled with college debt with severe underemployment. Job growth for manicurists dwarfs that for computer professionals (employment CAGR at 3.8%) and businesspeople (employment CAGR at 3%). Simply put, millennials cannot afford to move.
Telemedicine and the Internet of Things will cause the moving rate to remain constant or further decline. Technology adoption by-and for-America's rapidly growing over-65 population will enable senior citizens to stay in their homes even longer. Remote monitoring by senior citizens, their family members, and their doctors will provide volumes of data to make informed health and related decisions, including when to move out. Judging by the older people jogging past my house, millions will be staying in their houses for a long time.
Moreover, seniors will no longer fear losing their independence. Driverless cars and delivery services will eliminate the need to operate a vehicle.
IRS enforcement will increase. The federal deficit will likely be 101% of the total U.S. Gross Domestic Product by the end of this year. Neither the President nor Congress can blame COVID-19 in that the federal government added $4.7 trillion of debt during the first three years of the Trump administration, which were "good" economic years.
One easy way to reduce the budget without increasing taxes or decreasing expenditures is hiring additional IRS personnel. Overall IRS staffing declined annually from 2011 to 2017 with a 27% reduction in enforcement personnel. Thus, audits declined by 40%. Audit rates declined by greater rates for America's wealthiest families: households earning more than $10 million saw the number of audits decrease by 51% and households earning $5 million to $10 million saw the number of audits decrease by 62%. In total, it is unsurprising the General Accountability Office (GAO) recommended the IRS "evaluate actions to increase the agency's hiring capacity…"
With the debt owed by the federal government increasing, the federal government will increase its tax collection efforts to pay its bills.
Time will tell whether any of my predictions are correct. We will know soon enough.
• David Seidman is a principal at the law firm Fischel|Kahn and serves as a board member with the Business Executives Association. Nothing in this article shall be considered legal advice. He can be reached at dseidman@fischelkahn.com