The unemployment rate in the United States is sitting near historic lows. This is impressive, especially post-COVID chaos, because it took nearly a decade to reach the ~3.5% unemployment rate after the Global Financial Crisis in 2008-2009.
My concern at the moment is there is a strong probability that the unemployment rate will push higher over the coming weeks and months. The Federal Reserve is being forced to tighten financial conditions in an attempt to bring down the 40-year high inflation that Americans are experiencing. As they pursue this strategy, the stated goal is to destroy demand from consumers.
That demand destruction will ultimately lead to lower revenues for businesses, which will apply financial pressure and likely lead to layoffs. But the market doesn’t always act in a perfect, sequential manner. Many business owners are anticipating the demand destruction, and potential economic downturn, so they are implementing hiring freezes or cutting material percentages of their workforce.
Layoffs have been reported across industries, including companies like Tesla, Unity, Coinbase, and Tencent in recent days. This comes at a time where there are more than 11 million open jobs in America. No one said understanding the economy would be easy.
But that isn’t even the most interesting part of the labor force analysis in my opinion.
There are hundreds of jobs available to job candidates where they can drastically increase their salary. Take Walmart for example — they are now paying truck drivers more than $100,000 in their first year on the job. If you walked down the street and polled the general public, not many people would assume that you could make 6-figures driving for Walmart.
Not everyone wants to take the time to get CDL certified and have the life of a truck driver though. It can be long hours, many nights spent away from family, and it doesn’t exactly scream “active lifestyle!” Truck drivers are essential to our economy. Not everyone is cut out for it though.
So where will the people flow after they are laid off?
In my opinion, many of them will start companies and others will gravitate to the fastest growing industries. We have historically seen an explosion in new business formation during times of economic uncertainty. We saw it around the Global Financial Crisis. We saw it during 2020. And I think we are going to see it again over the next 12-18 months.
Not everyone wants to start and operate a business though. A large percentage of the population wants to work at a great company, with great compensation, and an important mission. This is why I anticipate that a material number of people who are laid off, especially from the technology and finance industries, will ultimately transition into the bitcoin and crypto industry. The technology is intellectually stimulating, the mission is important, and the compensation/benefits is attractive.
There is one problem though. A good portion of people who will try to transition into the bitcoin and crypto industry are good at their respective roles (marketing, operations, customer service, accounting, etc), but they don’t have the industry-specific knowledge to get through the interview process. Similar to how the truck driver has to acquire the knowledge and skills included in the CDL certification, there is a need for upskilling among the new individuals coming into the bitcoin and crypto industry.
This is why my team created a 3-week training program to upskill and place job candidates. We have helped everyone from mortgage loan officers to new college graduates to former public defenders find work in a matter of weeks. The program has more than 60 events packed into the 3 weeks, including lectures, discussion groups, interview prep, resume review, and much more.
People who go through the program will leave with a basic understanding of every aspect of the industry, know how to run their own node, successfully execute self-custody, and make memes (no, seriously 😂). If we successfully do our job, we will drastically increase the quality of the workforce across bitcoin and crypto. As we get more and more highly skilled and knowledgable workers, we can accelerate our progress as an industry.
If you’ve been laid off or know someone who has been laid off, you can check out the training program here: Get upskilled to work in bitcoin and crypto [Next cohort starts in July]
As I continue to look at the macro environment, I am worried that most of the attention has been captured by the inflation conversation. Inflation is out of control in the United States. We should be watching it closely. But if the Federal Reserve is successful in their demand destruction goals, we are about to see many more unemployed individuals. Don’t take my word for it — former Treasury Secretary Larry Summers believes we will need 5 years of unemployment over 5% to quell inflation.
If Summers’ diagnosis is remotely accurate, we are going to need all hands on deck. The inflation problem is going to turn into a recession problem, which will turn into an unemployment problem. Brace yourself. Hope for the best, but be prepared for the worst.
Hope everyone has a great weekend. I’ll talk to you on Tuesday.
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