SUMMARY
AUTO INDUSTRY: WHAT IS FACT AND WHAT IS FICTION ABOUT GREEN CARS
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AMERICANS WARIER OF US GOVERNMENT SURVEILLANCE: AP-NORC POLL
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EX-NFL PLAYERS PLEAD GUILTY TO HEALTH CARE FRAUD SCHEME
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4 WAYS TO MANAGE RETIREMENT HEALTH CARE COSTS
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FACEBOOK SLAMS UK ANTITRUST WATCHDOG OVER CALL TO SELL GIPHY
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CHINA CHASES ‘REJUVENATION’ WITH CONTROL OF TYCOONS, SOCIETY
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DO WE NEED HUMANS FOR THAT JOB? AUTOMATION BOOMS AFTER COVID
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SOLAR COULD POWER 40% OF US ELECTRICITY BY 2035
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MISSION CONTROL: APPLE HEALTH INSIGHTS ABOARD INSPIRATION4
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FORD HIRES EXEC FORMERLY IN CHARGE OF APPLE’S CAR PROJECT
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COLLECTIBLE PRICES SKYROCKET, TO THE DISMAY OF HOBBYISTS
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AMAZON TO OPEN 2 CASHIER-LESS WHOLE FOODS STORES NEXT YEAR
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UNTIL 2023? PARTS SHORTAGE WILL KEEP AUTO PRICES SKY-HIGH
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WHAT IS APPLE DOING WITH ITS APP STORE?
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SILICON VALLEY FINDS REMOTE WORK IS EASIER TO BEGIN THAN END
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ELIZABETH HOLMES’ TRIAL TO DISSECT DOWNFALL OF A TECH STAR
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‘SHANG-CHI’ ADDS A THRILLING HERO TO MARVEL UNIVERSE
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IN ‘WORTH,’ WEIGHING THE PERSONAL LOSSES OF 9/11
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5 WAYS TO REIN IN IMPULSE SPENDING
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AS FLOOD ALERTS LIT UP PHONES, DID ‘WARNING FATIGUE’ SET IN?
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BITCOIN BRINGS HOPES, DOUBTS FOR SALVADORANS SENDING MONEY
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NO CASHIERS, PLEASE: FUTURISTIC SUPERMARKET OPENS IN MIDEAST
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2 ALASKA TOWNS ALLOW TEXTS TO 911 WHEN CALLING NOT AN OPTION
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CHINA’S ALIBABA PROMISES $15.5B FOR DEVELOPMENT INITIATIVES
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RESEARCHERS COMPLETE FIRST-EVER DETAILED MAP OF GLOBAL CORAL
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AUTO INDUSTRY: WHAT IS FACT AND WHAT IS FICTION ABOUT GREEN CARS
With all the developments in the auto industry you may think your next car will be electric, including a new federal target that would mean half of all new vehicles sold within a decade will have zero emissions. This will be a dramatic shift for car shoppers, and perhaps an unsettling one. With the future landscape in mind, the experts have cut through the misinformation and examined some of the most prevalent EV myths.
HYBRIDS AND EVS ARE TOO EXPENSIVE Hybrid and fully electric vehicles are more expensive than comparable gasoline-engine cars to purchase initially. But there’s more to the story. After your purchase, you’ll pay less to keep it running. For example, consider the frontwheel-drive 2021 Honda Passport SUV and the rear-wheel-drive electric Ford Mustang Mach-E. 07
The EPA estimates that an average American driver will pay $2,050 a year to gas up the Passport versus just $650 in electricity to drive the Mach-E for a year. Some estimates say it can take as long as eight years to recover the increased cost of a battery electric vehicle compared to a gas-powered one, but that doesn’t take into account available financial incentives that can significantly reduce that time. Many vehicles are eligible for tax credits, and the amounts vary depending on your location. There is additional cost to have a home charging station installed, but here too incentives can come into play. EVs also have fewer moving parts than internal combustion vehicles and are less expensive to maintain. Regular oil changes will be a thing of the past, and thanks to regenerative braking — using deceleration to generate power to recharge the battery — you won’t need to replace your brake pads as often. Overall, it’s a good idea to do your EV research and determine your savings before making the leap to electric.
EV BATTERIES ARE JUST AS BAD FOR THE ENVIRONMENT AS GASOLINE ENGINES The answer to this one is more nuanced than a true or false answer. Current battery chemistry relies on lithium. Lithium is commonly mined out of the earth in huge pits or extracted from the earth by pumping a brine solution into a bore hole and evaporating the solution in sprawling above-ground ponds. Neither option is environmentally friendly. Additionally, lithium 08
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mining will have to expand in lockstep to meet EV demand. But future mining sites could very well improve. One example is the planned mine site at California’s Salton Sea, which its backers promote as one of the least disruptive lithium prospects in the United States. Oil extraction and transportation has its own issues, as high-profile incidents such as BP’s Deepwater Horizon and Exxon Valdez spills have demonstrated. Refining crude oil into gasoline and other petroleum products comes with its own environmental hazards, both in terms of soil contamination and harmful emissions.
YOU CAN’T RECYCLE EV BATTERIES Actually, yes, it is possible to recycle lithiumion batteries. It’s just not economically advantageous to do that yet. There are several projects underway to make battery recycling more affordable, and it’s very likely that the company that pioneers the technology will reap huge rewards. In the event that lithium becomes scarce, that threshold for economic feasibility will also drop.
WHAT ABOUT CHARGING INFRASTRUCTURE? Charging stations are becoming more common, and installing a charger in your home or business has also gotten much easier in the last decade. With the development of DC fast charging, many new EVs can replenish 200-plus miles of range in only 20 minutes. The hidden component to worry about is where that energy comes from. More than 60% of electricity in the U.S. is generated using fossil fuels. But the share 11
of renewable energy has doubled since the 1980s, and trends suggest that the pace will accelerate. With the expected increase in EV sales, power consumption will understandably increase as well, straining an aging power grid. In energychallenged California, that could spell disaster during summer months when rolling blackouts are already common. For now, it seems that solar on every roof may be the most viable solution. It’s best to equate electric vehicles to the idea of paying more up front and reaping the benefits after a year or two of ownership, in terms of both financial and environmental impact. The key takeaway is that over the life of a gasolinepowered vehicle — including manufacture — it will produce far more greenhouse gases than an electric vehicle, even in regions where oil and gas power generation is dominant.
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AMERICANS WARIER OF US GOVERNMENT SURVEILLANCE: AP-NORC POLL
As the 20th anniversary of the Sept. 11, 2001, terrorist attacks approaches, Americans increasingly balk at intrusive government surveillance in the name of national security, and only about a third believe that the wars in Afghanistan and Iraq were worth fighting, according to a new poll. More Americans also regard the threat from domestic extremism as more worrisome than that of extremism abroad, the poll found. The poll by AP-NORC Center for Public Affairs Research shows that support for surveillance tools aimed at monitoring conversations taking place outside the country, once seen as vital in the fight against attacks, has dipped in the last 16
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decade. That’s even though international threats are again generating headlines following the chaotic end to the 20-year war in Afghanistan. In particular, 46% of Americans say they oppose the U.S. government responding to threats against the nation by reading emails sent between people outside of the U.S. without a warrant, as permitted under law for purposes of foreign intelligence collection. That’s compared to just 27% who are in favor. In an AP-NORC poll conducted one decade ago, more favored than opposed the practice, 47% to 30%. The new poll was conducted Aug. 12-16 as the Taliban were marching toward their rapid takeover of the country. Since then, Afghanistan’s Islamic State affiliate launched a suicide bombing that killed at least 169 Afghans and 13 U.S. service members, and experts have warned about the possibility of foreign militant groups rebuilding in strength with the U.S. presence gone. In a marked turnabout from the first years after Sept. 11, when Americans were more likely to tolerate the government’s monitoring of communications in the name of defending the homeland, the poll found bipartisan concerns about the scope of surveillance and the expansive intelligence collection tools that U.S. authorities have at their disposal. The expansion in government eavesdropping powers over the last 20 years has coincided with a similar growth in surveillance technology across all corners of American society, including traffic cameras, smart TVs and other devices that contribute to a near-universal sense of being watched. 19
Gary Kieffer, a retired 80-year-old New Yorker, said he is anxious about the government’s powers. “At what point does this work against the population in general rather than try to weed out potential saboteurs or whatever?” asked Kieffer, who is a registered Democrat. “At what point is it going to be a danger to the public rather saving them or keeping them more secure?” “I feel like you might need it to an extent,” Kieffer said. But he added: “Who’s going to decide just how far you go to keep the country safe?” Eric McWilliams, a 59-year-old Democrat from Whitehall, Pennsylvania, said he saw surveillance as important to keeping Americans safe. “I wasn’t for the torture stuff, which is why they did it outside the country. I wasn’t for that,” McWilliams said, referring to the harsh interrogation techniques used by the CIA to question suspects. “But as far as the surveillance is concerned, you gotta watch them — or else we’re gonna die.” Americans are also more likely to oppose government eavesdropping on calls outside the U.S. without a warrant, 44% to 28%. Another 27% hold neither opinion. About two-thirds of Americans continue to be opposed to the possibility of warrantless U.S. government monitoring of telephone calls, emails and text messages made within the U.S. Though the National Security Agency is focused on surveillance abroad, it does have the ability to collect the communications of Americans as they’re in touch with someone outside the country who is a target of government surveillance.
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About half are opposed to government monitoring of internet searches, including those by U.S. citizens, without a warrant. About a quarter are in favor and 2 in 10 hold neither opinion. Roughly half supported the practice a decade ago. The ambivalence over government surveillance practices was laid bare last year when the Senate came one vote short of approving a proposal to prevent federal law enforcement from obtaining internet browsing information or search history without seeking a warrant. Also last year, Democrats pulled from the House floor legislation to extend certain surveillance authorities after then-President Donald Trump and Republicans turned against the measure and ensured its defeat. Despite general surveillance concerns, six in 10 Americans support the installation of surveillance cameras in public places to monitor potentially suspicious activity — although somewhat fewer support random searches like full-body scans for people boarding commercial flights in the U.S. Just 15% support racial and ethnic profiling to decide who should get tougher screening at airports, where security was fortified following the Sept. 11 attacks. About 7 in 10 Black Americans and Asian Americans oppose racial profiling at airports, compared with about 6 in 10 white Americans. As the U.S. this summer was ending the twodecade war in Afghanistan, most Americans, about 6 in 10, say that conflict — along with the war in Iraq — was not worth fighting. Republicans are somewhat more likely to say the wars were worth fighting. 23
When it comes to threats to the homeland, Americans are more concerned about U.S.based extremists than they are international groups. FBI Director Chris Wray has said domestic terrorism, on display during the Jan. 6 insurrection at the U.S. Capitol, is “metastasizing” and that the number of arrests of racially motivated extremists has skyrocketed. According to the poll, about two-thirds of Americans say they are extremely or very concerned about the threat from extremist groups inside the U.S. By contrast, about onehalf say they are extremely or very concerned about the threat from foreign-based militants. While Republicans and Democrats are generally aligned in their concerns about international extremism, the poll shows Democrats are more likely to be concerned than Republicans about the homegrown threat, 75% to 57%. On other top national security matters, about half of Republicans and Democrats are concerned by North Korea’s nuclear program, and about 7 in 10 say the same about the threat of cyberattacks. Majorities of Republicans and Democrats also believe that the spread of misinformation is an extremely or very concerning threat to the U.S, though Democrats are slightly more likely to say so. But there’s a much greater partisan divide on other issues. Democrats, for instance, are far more concerned than Republicans about climate change, 83% vs. 21%. But Republicans are much more strongly concerned about illegal immigration than Democrats, by a margin of 73% to 21%.
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EX-NFL PLAYERS PLEAD GUILTY TO HEALTH CARE FRAUD SCHEME
Former NFL players Clinton Portis, Tamarick Vanover and Robert McCune pleaded guilty for their roles in a nationwide health care fraud scheme and could face years in prison, the U.S. Department of Justice announced this week. Portis, Vanover and McCune admitted to defrauding an NFL program set up to reimburse medical expenses not covered by insurance for retired players and their families, the Justice Department said. McCune could be facing life in prison after pleading guilty to conspiracy to commit wire fraud and health care fraud, 13 counts of health care fraud, 11 counts of wire fraud and three counts of aggravated identity theft. He is scheduled to be sentenced Nov. 19. Image: Phelan M. Ebenhack
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The DOJ said McCune orchestrated the scheme that resulted in approximately $2.9 million worth of false and fraudulent claims being filed and $2.5 million paid out between June 2017 and April 2018. Portis and Vanover each pleaded guilty to conspiracy to commit health care fraud and could face up to 10 years in prison. According to court documents, Portis was responsible for just under $100,000 and Vanover just under $160,000 in benefits for expensive medical equipment that were not provided. They agreed to pay back that money. Portis is scheduled for sentencing on Jan. 6 and Vanover on Jan. 22. An NFL spokesman did not immediately respond to a request for comment.
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The league established the Gene Upshaw NFL Player Health Reimbursement Account Plan after the 2006 collective bargaining agreement to provide tax-free reimbursement of medical expenses up to $350,000 per player. Portis, Vanover and McCune were originally indicted in the Eastern District of Kentucky in December 2019. Twelve other retired players had previously been charged and pleaded guilty to conspiracy to commit health care fraud, including former Chiefs and Saints receiver Joe Horn and longtime defensive back Carlos Rogers. The FBI investigated the case across the U.S., according to the Justice Department. McCune, 42, was a 2005 fifth-round draft pick who played eight NFL games at linebacker with Washington and Baltimore. Vanover, 47, was taken in the third round of the 1995 draft by Kansas City and played 77 games at receiver for the Chiefs and Chargers. Portis, 40, was a second-round pick of the Broncos in 2002 and won AP Offensive Rookie of the Year honors that year. The running back played 113 games with Denver and Washington from 2002-2010.
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4 WAYS TO MANAGE RETIREMENT HEALTH CARE COSTS
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Health care in retirement is a big-ticket item. Experts estimate that an average 65-year-old retired couple in 2021 would need about $300,000 in after-tax savings earmarked for health care costs in their post-work life, even with Medicare, according to Fidelity. The totals are daunting, but you can take steps to keep costs as low as possible with the right planning, good insurance choices and a healthy understanding of your conditions and coverage. Try these strategies — now and in retirement — to help control your health care bills.
1. TAKE ADVANTAGE OF AN HSA A health savings account allows you to put pretax money away for medical expenses. You can invest the funds, and both the principal and earnings are tax-free if you use them for eligible medical costs, today or in the future. This creates a powerful savings tool. To use an HSA, you must have a high-deductible health plan. If that kind of plan makes sense for you, experts recommend saving money to your HSA and leaving it untouched for as long as possible. In 2021, you can save up to $3,600 pretax as a single person or up to $7,200 if you have family coverage. “These accounts are the most tax-efficient plans available,” says Sallie Mullins Thompson , a certified public accountant and certified financial planner in New York City. “The main thing you need to do is contribute to it religiously whenever you can.”
2. MAKE A PLAN FOR LONG-TERM CARE A person turning 65 today has about a 70% chance of needing long-term care at some 38
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point, according to the Department of Health and Human Services. One of the best ways to approach this issue is to plan for it: How long do you intend to stay in your home? Where will you go when you can’t live there anymore? Who will help you with financial and health care decisions? “People don’t like talking about it because it’s uncomfortable thinking about getting old and people taking care of you,” says Carolyn McClanahan, a physician-turned-CFP in Jacksonville, Florida. But planning can help you prepare for a change in circumstances. This could mean buying a traditional long-term care insurance policy, which can cost thousands of dollars per year, according to the American Association for Long-Term Care Insurance. Or you might consider a hybrid insurance product that combines permanent life insurance with a long-term care rider. (You can use the benefit to pass money down to your heirs or — if you need it — you can tap it for long-term care expenses.) You could also self-insure by setting money aside annually for long-term care expenses. The important thing is to consider your options while you’re in your 50s or early 60s, before products get too expensive.
3. GET THE RIGHT MEDICARE PLAN Choosing the best Medicare policy once you turn 65 means finding one that includes your preferred doctors and your regular medications, helping you avoid high out-ofnetwork and out-of-pocket costs. You’ll also need to consider whether you want access to all doctors who accept Medicare — as with an Original Medicare plan — or whether you 41
want a plan that comes with extra benefits but a more limited provider network, such as a Medicare Advantage plan. One way to approach Medicare is to find an agent who can help you compare options. Find someone who’s certified to sell as many carriers as possible, meaning they’ll be able to present the full array of choices in your area, says Matt Chancey, a CFP in Tampa, Florida.
4. ASK QUESTIONS Be an active participant in your health care, no matter what life stage you’re in. When your medical provider orders tests, which can drive up your medical costs, make sure you understand why they’re being done. “Say to them, ‘What do you hope to learn from this, and is doing this going to change the treatment?’” McClanahan says. “It’s important to do that, because a lot of times, doctors order things rotely. It’s part of their protocol and they don’t stop and think, ‘Is it really needed in this case?’” The same goes for prescriptions. Ask your doctor whether there’s something less expensive you could take, or whether there are changes you could make that would help. “A lot of doctors won’t spend the time talking about lifestyle changes, so they throw pills at people,” McClanahan says. “You can avoid a lot of medications just by doing the right thing.”
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FACEBOOK SLAMS UK ANTITRUST WATCHDOG OVER CALL TO SELL GIPHY
Facebook has criticized the U.K. competition watchdog’s provisional decision ordering that it sell off Giphy because it said the acquisition of the company stifles competition for animated images. The social network’s strongly worded response to the Competition and Markets Authority sets the stage for a battle over the future of Giphy. In the letter, Facebook said the watchdog’s decision contained “fundamental errors.” The U.S. company questioned whether the authority’s call to sell Giphy after acquiring it last year would be effective or enforceable. “The CMA’s complete divestiture remedy is grossly unreasonable and disproportionate,” Facebook said. 46
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Giphy’s library of short looping videos, or GIFs, are a popular tool for internet users sending messages or posting on social media. The watchdog opened an investigation into the acquisition shortly after Facebook announced the deal reportedly worth $400 million. It found that the acquisition would hurt competition for GIFs among social media platforms and in the digital advertising competition market. Facebook said there are “serious questions” about whether the British regulator can enforce a global order for a company to sell off a business unit and whether it would be effective - issues it said the watchdog should consider “before taking the extreme intrusive step of ordering the sale of a company which does not carry on business in the U.K.” The CMA is due to its final report on the deal on Oct. 6.
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CHINA CHASES ‘REJUVENATION’ WITH CONTROL OF TYCOONS, SOCIETY
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An avalanche of changes launched by China’s ruling Communist Party has jolted everyone from tech billionaires to school kids. Behind them: President Xi Jinping’s vision of making a more powerful, prosperous country by reviving revolutionary ideals, with more economic equality and tighter party control over society and entrepreneurs. Since taking power in 2012, Xi has called for the party to return to its “original mission” as China’s economic, social and cultural leader and carry out the “ rejuvenation of the great Chinese nation.” The party has spent the decade since then silencing dissent and tightening political control. Now, after 40 years of growth that transformed China into the world’s factory but left a gulf between a wealthy elite and the poor majority, the party is promising to spread prosperity more evenly and is pressing private companies to pay for social welfare and back Beijing’s ambition to become a global technology competitor. To support its plans, Xi’s government is trying to create what it deems a more wholesome society by reducing children’s access to online games and banning “sissy men” who are deemed insufficiently masculine from TV. Chinese leaders want to “direct the constructive energies of all people in one laser-focused direction selected by the party,” Andrew Nathan, a Chinese politics specialist at Columbia University, said in an email. Beijing has launched anti-monopoly and data security crackdowns to tighten its control over internet giants, including e-commerce platform Alibaba Group and games and social media
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operator Tencent Holdings Ltd., that looked too big and potentially independent. In response, their billionaire founders have scrambled to show loyalty by promising to share their wealth under Xi’s vaguely defined “common prosperity” initiative to narrow the income gap in a country with more billionaires than the United States. Xi has yet to give details, but in a society where every political term is scrutinized for significance, the name revives a 1950s propaganda slogan under Mao Zedong, the founder of the communist government. Xi is reviving the “utopian ideal” of early communist leaders, said Willy Lam of the Chinese University of Hong Kong. “But of course, huge question marks have arisen, because this will hurt the most creative and lucrative parts of the economy.” Alibaba, Tencent and others have pledged tens of billions of dollars for job creation and social welfare initiatives. They say they will invest in developing processor chips and other technologies cited by Beijing as priorities. The party’s anti-monopoly enforcement and crackdown on how companies handle information about customers are similar to Western regulation. But the abrupt, heavy-handed way changes have been imposed is prompting warnings that Beijing is threatening innovation and economic growth, which already is declining. Jittery foreign investors have knocked more than $300 billion off Tencent’s stock market value and billions more off other companies. “I expect that over the next year or two we are likely to see a very rocky relationship develop 57
between the political elite and the business elite,” Michael Pettis, a finance professor at Peking University’s Guanghua School of Business, said in a report. Chinese officials say the public, consumers and entrepreneurs will benefit from higher incomes and more regulatory oversight of corporate giants. Parents welcome curbs announced last month that limit children under 18 to three hours of online games a week and only on weekends and Friday night. “I feel this is a good rule,” said Li Zhanguo, the father of an 8-year-old boy and a 4-year-old girl in the central city of Zhengzhou. “Games still have some addictive mechanisms. We can’t count on children’s self-control.” The crackdowns reflect party efforts to control a rapidly evolving society of 1.4 billion people. Some 1 million members of mostly Muslim ethnic groups have been forced into detention camps in the northwest. Officials deny accusations of abuses including forced abortions and say the camps are for job training and to combat extremism. A surveillance initiative dubbed Social Credit aims to track every person and company in China and punish violations ranging from dealing with business partners that violate environmental rules to littering. “Our responsibility is to unite and lead the entire party and people of all ethnic groups, take the baton of history and to work hard to achieve the great rejuvenation of the Chinese nation,” Xi said when he and the six other members of the new party Standing Committee appeared in public for the first time in November 2012. 58
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The party Central Committee shifted its economic emphasis “from efficiency to fairness” in late 2020, a researcher at a Beijing think tank wrote in August in Caixin, China’s most prominent business magazine. The party moved from “early prosperity for some to ‘common prosperity’” and “from capital to labor,” wrote Luo Zhiheng of Yuekai Securities Research Institute. He said leaders are emphasizing science, technology and manufacturing over finance and real estate. Prominent economists have tried to reassure entrepreneurs. “It is impossible to achieve common prosperity through ‘robbing the rich and helping the poor,’” the dean of the school of economics at Shanghai’s Fudan University, Zhang Jun, told the news outlet The Paper on Aug. 4. The 1979 launch of market-style economic reform under then-leader Deng Xiaoping prompted predictions abroad that China would evolve into a more open, possibly even democratic society. The Communist Party allowed freer movement and encourages internet use for business and education. But leaders reject changes to a one-party dictatorship that copied its political structure from the Soviet Union and watch entrepreneurs closely. Beijing controls all media and tries to limit what China’s public sees online. As the previous decade’s economic boom fades, “Xi sees himself as the only person capable of recreating the momentum,” said June Teufel Dreyer, a Chinese politics specialist at the University of Miami. 60
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Party members who worry reforms might weaken political control appear to have decided China’s rise is permanent and liberalization is no longer needed, said Edward Friedman, a political scientist at the University of Wisconsin. That means “anti-totalitarian elements of the reform agenda could be rolled back,” Friedman said in an email. “That is what Xi is doing, as manifest in his attack on purportedly gay and girlie culture as a supposed threat to a so-called virile militarism.” An Aug. 29 commentary by an obscure writer, Li Guangman, described “common prosperity” as a “profound revolution.” Writing on the WeChat message service, Li said financial markets would “no longer be a paradise for capitalists to get rich overnight” and said the party’s next targets might include high housing and health care costs. The commentary was reposted on prominent state media websites including the ruling party newspaper People’s Daily. That prompted questions about whether Beijing might veer into an ideological campaign with echoes of the violent 1966-76 Cultural Revolution, when some 5 million people were killed. Hu Xijin, the editor of the Global Times, a newspaper published by People’s Daily that is known for its nationalist tone, responded by criticizing Li’s commentary. Hu warned in a blog post against a return to radicalism. “The Cultural Revolution was a period of chaos, purposely unleashed by Mao because he felt comfortable in chaos,” Nathan said. “This is almost the exact opposite,” he said. “It is an effort to create tightly structured orderliness.” 63
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DO WE NEED HUMANS FOR THAT JOB? AUTOMATION BOOMS AFTER COVID
Ask for a roast beef sandwich at an Arby’s drive-thru east of Los Angeles and you may be talking to Tori — an artificially intelligent voice assistant that will take your order and send it to the line cooks. “It doesn’t call sick,” says Amir Siddiqi, whose family installed the AI voice at its Arby’s franchise this year in Ontario, California. “It doesn’t get corona. And the reliability of it is great.” The pandemic didn’t just threaten Americans’ health when it slammed the U.S. in 2020 — it may also have posed a long-term threat to many of their jobs. Faced with worker shortages and higher labor costs, companies are starting to automate service sector jobs that economists once considered safe, assuming that machines couldn’t easily provide the human contact they believed customers would demand. 67
Past experience suggests that such automation waves eventually create more jobs than they destroy, but that they also disproportionately wipe out less skilled jobs that many low-income workers depend on. Resulting growing pains for the U.S. economy could be severe. If not for the pandemic, Siddiqi probably wouldn’t have bothered investing in new technology that could alienate existing employees and some customers. But it’s gone smoothly, he says: “Basically, there’s less people needed but those folks are now working in the kitchen and other areas.” Ideally, automation can redeploy workers into better and more interesting work, so long as they can get the appropriate technical training, says Johannes Moenius, an economist at the University of Redlands. But although that’s happening now, it’s not moving quickly enough, he says. Worse, an entire class of service jobs created when manufacturing began to deploy more automation may now be at risk. “The robots escaped the manufacturing sector and went into the much larger service sector,” he says. “I regarded contact jobs as safe. I was completely taken by surprise.” Improvements in robot technology allow machines to do many tasks that previously required people — tossing pizza dough, transporting hospital linens, inspecting gauges, sorting goods. The pandemic accelerated their adoption. Robots, after all, can’t get sick or spread disease. Nor do they request time off to handle unexpected childcare emergencies. 68
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Economists at the International Monetary Fund found that past pandemics had encouraged firms to invest in machines in ways that could boost productivity — but also kill low-skill jobs. “Our results suggest that the concerns about the rise of the robots amid the COVID-19 pandemic seem justified,” they wrote in a January paper. The consequences could fall most heavily on the less-educated women who disproportionately occupy the low- and mid-wage jobs most exposed to automation — and to viral infections. Those jobs include salesclerks, administrative assistants, cashiers and aides in hospitals and those who take care of the sick and elderly. Employers seem eager to bring on the machines. A survey last year by the nonprofit World Economic Forum found that 43% of companies planned to reduce their workforce as a result of new technology. Since the second quarter of 2020, business investment in equipment has grown 26%, more than twice as fast as the overall economy. The fastest growth is expected in the roving machines that clean the floors of supermarkets, hospitals and warehouses, according to the International Federation of Robotics, a trade group. The same group also expects an uptick in sales of robots that provide shoppers with information or deliver room service orders in hotels. Restaurants have been among the most visible robot adopters. In late August, for instance, the salad chain Sweetgreen announced it was buying kitchen robotics startup Spyce, which makes a machine that cooks up vegetables and grains and spouts them into bowls. 70
Image: David Paul Morris
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It’s not just robots, either — software and AI-powered services are on the rise as well. Starbucks has been automating the behind-the-scenes work of keeping track of a store’s inventory. More stores have moved to self-checkout. Scott Lawton, CEO of the Arlington, Virginiabased restaurant chain Bartaco, was having trouble last fall getting servers to return to his restaurants when they reopened during the pandemic. So he decided to do without them. With the help of a software firm, his company developed an online ordering and payment system customers could use over their phones. Diners now simply scan a barcode at the center of each table to access a menu and order their food without waiting for a server. Workers bring food and drinks to their tables. And when they’re done eating, customers pay over their phones and leave. The innovation has shaved the number of staff, but workers aren’t necessarily worse off. Each Bartaco location — there are 21 — now has up to eight assistant managers, roughly double the pre-pandemic total. Many are former servers, and they roam among the tables to make sure everyone has what they need. They are paid annual salaries starting at $55,000 rather than hourly wages. Tips are now shared among all the other employees, including dishwashers, who now typically earn $20 an hour or more, far higher than their pre-pandemic pay. “We don’t have the labor shortages that you’re reading about on the news,” Lawton says. 73
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The uptick in automation has not stalled a stunning rebound in the U.S. jobs market — at least so far. The U.S. economy lost a staggering 22.4 million jobs in March and April 2020, when the pandemic gale hit the U.S. Hiring has since bounced back briskly: Employers have brought back 17 million jobs since April 2020. In June, they posted a record 10.1 million job openings and are complaining that they can’t find enough workers. Behind the hiring boom is a surge in spending by consumers, many of whom got through the crisis in unexpectedly good shape financially — thanks to both federal relief checks and, in many cases, savings accumulated by working from home and skipping the daily commute. Mark Zandi, chief economist at Moody’s Analytics, expects employers are likely to be scrambling for workers for a long time. For one thing, many Americans are taking their time returning to work — some because they’re still worried about COVID-19 health risks and childcare problems, others because of generous federal unemployment benefits, set to expire nationwide Sept. 6.
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In addition, large numbers of Baby Boom workers are retiring. “The labor market is going to be very, very tight for the foreseeable future,” Zandi says. For now, the short-term benefits of the economic snapback are overwhelming any job losses from automation, whose effects tend to show up gradually over a period of years. That may not last. Last year, researchers at the University of Zurich and University of British Columbia found that the so-called jobless recoveries of the past 35 years, in which economic output rebounded from recessions faster than employment, could be explained by the loss of jobs vulnerable to automation. Despite strong hiring since the middle of last year, the U.S. economy is still 5.3 million jobs short of what it had in February 2020. And Lydia Boussour, lead U.S. economist at Oxford Economics, calculated last month that 40% of the missing jobs are vulnerable to automation, especially those in food preparation, retail sales and manufacturing. Some economists worry that automation pushes workers into lower-paid positions. Daron Acemoglu, an economist at the Massachusetts Institute of Technology, and Pascual Restrepo of Boston University estimated in June that up to 70% of the stagnation in U.S. wages between 1980 and 2016 could be explained by machines replacing humans doing routine tasks. “Many of the jobs that get automated were at the middle of the skill distribution,” Acemoglu says. “They don’t exist anymore, and the workers that used to perform them are now doing lowerskill jobs.” 76
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SOLAR COULD POWER 40% OF US ELECTRICITY BY 2035
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Solar energy has the potential to supply up to 40% of the nation’s electricity within 15 years — a 10-fold increase over current solar output, but one that would require massive changes in U.S. policy and billions of dollars in federal investment to modernize the nation’s electric grid, a new federal report says. The report by the Energy Department’s Office of Energy Efficiency and Renewable Energy says the United States would need to quadruple its annual solar capacity — and continue to increase it year by year — as it shifts to a renewable-dominant grid in order to address the existential threat posed by climate change. The report released this week is not intended as a policy statement or administration goal, officials said. Instead, it is “designed to guide and inspire the next decade of solar innovation by helping us answer questions like: How fast does solar need to increase capacity and to what level?” said Becca Jones-Albertus, director of the Energy Department’s solar energy technologies office. Energy Secretary Jennifer Granholm said in a statement that the study “illuminates the fact that solar, our cheapest and fastest-growing source of clean energy, could produce enough electricity to power all of the homes in the U.S. by 2035 and employ as many as 1.5 million people in the process.” The report comes as President Joe Biden declared climate change has become “everybody’s crisis” during a visit to neighborhoods flooded by the remnants of Hurricane Ida. Biden warned Tuesday that it’s 81
time for America to get serious about the “code red” danger posed by climate change or face increasing loss of life and property. “We can’t turn it back very much, but we can prevent it from getting worse,” Biden said before touring a New Jersey neighborhood ravaged by severe flooding caused by Ida. “We don’t have any more time.” The natural disaster has given Biden an opening to push Congress to approve his plan to spend $1 trillion to fortify infrastructure nationwide, including electrical grids, water and sewer systems, to better defend against extreme weather. The legislation has cleared the Senate and awaits a House vote. The U.S. installed a record 15 gigawatts of solar generating capacity in 2020, and solar now represents about just over 3% of the current electricity supply, the Energy Department said. The “Solar Futures Study,” prepared by DOE’s National Renewable Energy Laboratory, shows that, by 2035, the United States would need to quadruple its yearly solar capacity additions and provide 1,000 GW of power to a renewabledominant grid. By 2050, solar energy could provide 1,600 GW on a zero-carbon grid — producing more electricity than consumed in all residential and commercial buildings in the country today, the report said. Decarbonizing the entire energy system could result in as much as 3,000 GW of solar by 2050 due to increased electrification in the transportation, buildings, and industrial sectors, the report said. To achieve such an increase, the U.S. must install an average of 30 GW of solar capacity per year
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between now and 2025 — double its current rate — and 60 GW per year from 2025 to 2030, the report said. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, said the study “makes it clear that we will not achieve the levels of decarbonization that we need without significant policy advances.” The solar group sent a letter to Congress from nearly 750 companies spelling out recommended policy changes. “We believe with those policies and a determined private sector, the Biden administration’s goals are definitely achievable,” Hopper said.
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MISSION CONTROL APPLE HEALTH INSIGHTS ABOARD INSPIRATION4
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Apple might be best known for its consumer electronics like iPhones and iPads, but behind the scenes, the Cupertino company is extending its interests far beyond. Right now, health is a key priority, with Apple investing billions in research and development to create products that help us live longer. However, Tim Cook and Co are now looking further afield: to space.
MONITORING HEALTH WITH THE APPLE WATCH In recent years, Apple has transformed the health and wellness landscape with its Apple Watch. Once considered a gimmick and something exclusively for fitness fanatics, the wearable is now one of the company’s biggest product categories, and it’s directly saved dozens of lives around the world. As Apple continues to introduce new technologies into the smartwatch, like blood oxygen level monitoring, Apple Watch is now an indispensable part of many people’s lives, with governments and health bodies actively integrating their services into the Apple Health app to utilize the data collected. iOS 15 introduces the ability to share health data with family and care networks to monitor trends like heart rate and cholesterol, and as future Apple Watches add even more important technology, like the reported blood glucose monitoring that could come in 2022, Apple’s tech is lightyears ahead of its rivals. Some of the biggest players in aerospace are taking notice. Apple has begun using its advanced health technology to expand studies for physiology in low or no gravity, the first step towards an exciting new chapter for the company. Whilst 90
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it’s true that Apple will likely never compete with SpaceX or Blue Origin when it comes to space exploration, it can still partake and play a significant role in successful missions. The idea of life on Mars is no longer exclusive to a David Bowie song - entrepreneurs including Elon Musk are committed to colonies on the planet in the coming years and decades, and with the right health monitoring technology from companies like Apple, the race could be sped up even further. SpaceX, for instance, will fly four private citizens to orbit on a three-day mission called Inspiration4, designed to help research. What’s most interesting is that, for the first time, Apple hardware will be key in a first-of-its-kind research study. The Apple Watch Series 6, iPhone 12 Pro, and iPad mini 4 will be used throughout the mission, funded by Shift4 Payments founder Jared Isaacman. Mission Commander Jared Isaacman, Mission Pilot Dr. Sian Proctor, Medical Officer Hayley Arceneaux, and Mission Specialist Chris Sembroski will all take part in health research studies whilst they’re in space in a collaborative study between SpaceX, the NASA-sponsored Translational Research Institute for Space Health (TRISH) at Baylor College of Medicine to see how risk can be minimized when it comes to human health and performance in space environments. As it’s external to NASA, TRISH researchers can be more risk-tolerant when using technology, and that’s perhaps why Apple products have been chosen over something cruder such as an in-house electrocardiogram. During the mission, each crew member will wear an Apple Watch Series 6 so that their ECG activity can be monitored, alongside their 95
movement, sleep, heart rate, and rhythm, as well as their blood oxygen saturation, and cabin noise. Researchers back at base can use the vitals from the Apple Watch as well as data captured from other sources, and the crew will be tasked with cognitive tests performed on an app on an iPad mini 4. Cognitive and physiologic data will be collected to improve understanding of how the general population will behave and perform in space travel, which becomes more relevant as more spaceflight passengers explore our solar system. The study will be led by Dr. Mathias Basner at the University of Pennsylvania Perelman School of Medicine, and although the Inspiration4 crew sample size is very limited to just four members, the data that’s collected from the research study can be combined with data from participants on future private spaceflights as well. As well as an Apple Watch and iPad mini, the study will use an iPhone 12 Pro as the data acquisition platform and screen for viewing images from an AI-guided organ scanning system called Butterfly IQ+. This tool will help to determine if non-medical experts can “selfacquire clinical-grade images without guidance from ground support” while also providing a “timeline of biological changes before and during spaceflight.” The mission is expected to launch on September 15 from the historic Launch Complex 39A at Kennedy Space Center in Cape Canaveral, Florida, using a SpaceX Crew Dragon capsule that previously flew NASA astronauts. It will likely be some time before we hear the results from the study, and indeed how Apple’s technology helped the researchers, but it’s the surest sign yet that Apple’s innovative 96
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hardware can be deployed in a number of space-specific cases.
THE FUTURE OF SPACE EXPLORATION AND APPLE Although Apple is not directly involved in the SpaceX mission, the company is undoubtedly keen to boost its activity in the field. Indeed, researchers estimate that space tourism will be worth around $8 billion per year by 2030, with consumers able to travel to faraway lands, and as Apple further diversifies its product portfolio, we’ll likely see more product announcements that not only benefit consumers here on Planet Earth but indeed in markets that we’re yet to hear about. One of those features is already in development with a rumored release this year, and that’s LEO satellite capabilities from the upcoming iPhone 13. Indeed, the company is reportedly set to introduce low earth orbit (LEO) satellite communication connectivity that would allow consumers to make calls and send text messages without 4G or 5G coverage. A new Qualcomm X60 baseband chip would support satellite communications, similar to SpaceX’s Starlink internet program. It’s thought that individual network operators will work with Globalstar and it wouldn’t cost consumers or network operators any additional fee. The technology would initially be used exclusively for emergencies, such as to call 911 or to send a text message to a family member in the aftermath of a disaster, but it could be rolled out further in the years and decades ahead. Apple is reportedly “optimistic” about the idea of satellite communications and has even set up a research 99
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and development team at its Cupertino, California headquarters, suggesting it sees LEO as a future priority. Another piece of kit that has long been rumored is Apple Glasses. Apple has been working on its own wearable headset technology for a number of years, and although the concept has changed several times over those years, from a successor to the iPhone to a gaming device to now something in between, it’s clear that Apple could make glasses work in the concept of space. The augmented reality glasses could overlay graphics in the real world around you, ideal for astronauts who need to be kept upto-date on the latest goings-on, and whilst it’s been reported that the glasses won’t be coming for many years, Bloomberg has suggested that Apple could even lift the lid on Apple Glasses this year, or later in 2022. It’s thought that Apple Glasses will run on glassOS, a forked version of iOS, and a patent has revealed Apple will use “rings” for tracking finger and hand movements. The glasses will help to protect users’ privacy with a removable camera module, and a mixed VR headset could be available in 2022 for around $1,000. The full Apple Glasses concept could come by 2025, according to experts, and it’s this product that excites those working in the aerospace sector. There are already a number of successful augmented reality deployments in the aerospace and defense world, but an affordable, consumer-friendly device would no doubt make space travel safer and more accessible to all, from NASA astronauts to Joe Bloggs who wants a vacation on Mars.
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The future of space travel has never been more exciting, and whilst Apple might not have a central role in new developments, its consumer technology will no doubt help to bridge the gap and help edge the world ever-closer to an intergalactic future Apple in Space is coming.
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FORD HIRES EXEC FORMERLY IN CHARGE OF APPLE’S CAR PROJECT
Ford Motor Co. has hired a former executive from Apple and Tesla to be the company’s head of advanced technology and new embedded systems, a critical post as the auto industry moves to adopt vehicles powered by electricity and guided by computers. Before Doug Field joined Ford, he was a vice president of special projects at Apple and a engineer at Tesla. Apple has been rumored to be working on its own car project for some time, but the details have been kept under tight wraps. Field also worked on Tesla’s Model 3 vehicle. Field will be in charge of building out passenger systems like navigation, driverassist technology, connected systems and cybersecurity across all of Ford’s products. He will also be in charge of making sure Ford products work well with other pieces of technology, such as a smartphone or watch. 108
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“I’m thrilled to be joining Ford as it embraces a transition to a new, complex and fascinating period in the auto industry,” Field said in a statement. “It will be a privilege to help Ford deliver a new generation of experiences built on the shift to electrification, software and digital experiences, and autonomy.”
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COLLECTIBLE PRICES SKYROCKET, TO THE DISMAY OF HOBBYISTS
Americans have become obsessed with collectibles, bidding up prices for trading cards, video games and other mementos of their youth. The frenzy has brought small fortunes to some, but a deep frustration for those who still love to play games or trade cards as a hobby. Among the items most sought after — and even fought over — are the relics of millennials’ childhoods. These include copies of trading cards such as Pokemon’s Charizard and Magic: The Gathering’s Black Lotus as well as Nintendo’s Super Mario Bros. game cartridges. Some cards are selling for hundreds of thousands of dollars and an unopened Super Mario game recently sold for an astonishing $2 million. This is more than a case of opportunistic collectors looking to cash in on a burst of nostalgia triggered by the pandemic. Everyone seemingly is angling for a piece of the pie. 112
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The corporations who own franchises such as Pokemon are rolling out new editions as quickly as they can print them; internet personalities are hawking the products and raking in advertising money; companies that tell collectors how much their possessions are worth are doing unprecedented businesses — and in at least one case getting financial backing from a prominent private equity firm looking to get in on the action. But while some collectors and investors see dollar signs, others complain about the breakdown of their tight-knit communities. Players looking to play in-person again after the pandemic are unable to find the game pieces they want; if the pieces are available, prices have gone up astronomically. Critics of rising prices have become targets of harassment by those who now consider trading cards, comics and video games no different than a stock portfolio. “Prices are going up, and access is going down,” said Brian Lewis, who operates a YouTube channel under the name Tolarian Community College. The collectibles frenzy has been fueled partly by a self-fulfilling cycle of YouTube personalities driving hype around collecting and the rising prices of collectibles. This can lead to big paydays as advertisers notice the frenzy stirred up among the influencer’s dedicated followers. With more than 23 million subscribers, Logan Paul made several videos where he simply opens up boxes of vintage Pokemon cards, hyping the prices he’d paid and bringing in millions of views. Australian YouTube personality Michael Anderson, who goes by the moniker UnlistedLeaf, has garnered millions of views doing similar videos. 115
“It may be a burgeoning industry, but this is still big business. Brands want to reach these audiences,” said Justin Kline, co-founder of Markerly, an influencer marketing agency. Based on standard industry metrics, he estimates Anderson earns upward to $50,000 in advertising revenue doing unboxing videos, while Logan Paul may earn six figures per video. The hype has sent collectors scrambling to find out if their Pikachu, Charizard, Mox Emerald or Ancestral Recall cards might be worth a fortune. To do so, they turn to grading services, which have been flooded with orders. The grading service Beckett’s has effectively stopped accepting any cards to grade unless the customer is willing to pay $250 per card for its ultra-fast turnaround service typically reserved for the costliest collectibles. The turnaround time for basic grading services is more than a year, the company says. In response to record demand, companies are releasing new versions of the games, including premium products that command higher prices. Whether the momentum is sustainable, at least when to comes to prices, is unknown. Other fads like Beanie Babies or Pogs blew up in the ’90s only to crater, leaving most collectors holding worthless junk. Pokemon and Magic have been around for decades, and have seen surges of interest before. In the meantime, auction companies and grading companies are making fortunes riding the current speculative frenzy. Based in Portland, Brian Lewis produces several videos a week under the nickname “The Professor,” in hopes of teaching new and existing 116
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players about his favorite hobby, Magic: The Gathering. With more than 600,000 subscribers, he also comments on the state of the game, particularly the issue of rising prices, both on the secondary market (cards purchased from shops) as well as the prices companies are charging for products like Magic. “I worry deeply that these rising prices will have an impact on the average person’s access to the game,” he said. “There’s a growing class of investors in Magic, and I think it’s not having a positive impact on the game.” But the frenzy goes beyond trading cards. The U.S. Mint released a 100th Anniversary collection of the Morgan silver dollar, considered by coin collectors to be one of the most beautiful designs ever made, early this summer. The products sold out in minutes. Three weeks ago, an unopened copy of Super Mario Bros. for the Nintendo Entertainment System sold for $2 million, making it the most expensive video game sold. Only a few weeks earlier, a copy of Super Mario 64 sold for a then-record $1.6 million. An unopened copy of Nintendo’s Legend of Zelda from 1987 sold for $870,000 in early July. Some members of the video game collecting community have questioned whether the prices paid have been exaggerated by the involvement of third parties like Rally, which sells “shares” in collectibles. Meanwhile, the trading card community is seeing its own lofty prices as players scramble to find coveted pieces for their collection. A mint condition Black Lotus from Magic: The Gathering’s first set known as Alpha, sold in 119
January for more than $510,000. That price is double what a card in similar condition sold for six months before in July 2020. Austin Deceder, 25, primarily buys and sells cards on Facebook and Twitter as a middleman between players wanting to get out of their games and new players. Based in Kanas City, he now travels the country buying collections as his full-time job, having to balance his enjoyment of the game with now being involved financially. Deceder had a used Black Lotus card that he says he sold for $7,000 in September 2020. “Here we are now and the price on that same card has doubled.” It’s not just the ultra-rare cards seeing inflation. Take the widely available Magic: The Gathering card named “Ragavan, Nimble Pilferer.” The card, depicting a bespectacled monkey sitting on a hoard of treasure, was $30 earlier this summer. The card now sells for closer to $90, Deceder says, as game stores have reopened after the pandemic. “Now that people can play in person, card prices are moving up again,” he said. Not everyone is happy, however. Some enthusiasts say the frenzy has brought out the worst in fans and speculators. Nowhere is this more evident than among collectors of Pokemon cards, with its motto “Gotta Catch ’Em All!” The frenzy in Pokemon began late last year when Logan Paul did his first unboxing videos, which only led other content creators to make similar videos and collectors to bid up prices on cards new and vintage, said Lee Steinfeld, 34, a long-time collector in Dallas who does videos, including unboxings, under the name Leonhart. 120
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“That’s when things went super crazy,” he said. Since then, boxes of Pokemon trading cards have been routinely sold out at hobbyist shops and big-box retail stores. Fistfights have broken out, requiring chains like Target to restrict the number of packs an individual customer can purchase. The Pokemon Company says it is trying to print as many cards as possible to keep up. “Pretty much the entire Pokemon community has deteriorated,” said Shelbie, a creator of Pokémon videos under the name Frosted Caribou on YouTube. While most of Shelbie’s content features unboxings or discussions about upcoming products, one of her most popular uploads was an hour-long video focused on the problems in the Pokemon collecting community since the frenzy began last year. Shelbie, who declined to give a last name to avoid being a target of harassment, said some harassment in the past has come from some of the community’s biggest collectors, particularly when she has talked about prices. Later this year, Pokemon will be releasing a set to celebrate its 25th anniversary. While typically an anniversary set would garner interest from any collector, this time Shelbie said she’s hesitant. “The set is going to be amazing. It’s also going to be impossible to get. It’s going to be awful actually,” she said. But the surge of interest has been good for the corporations and Wall Street. Hasbro’s Wizards of the Coast division makes the tabletop role-playing game “Dungeons 122
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& Dragons” as well as Magic: The Gathering. Wizards reported second-quarter revenue of $406 million, more than double year-ago revenue. Hasbro executives told investors in July they would soon be raising product prices. Wizards has introduced premium packs of cards with harder-to-find game pieces that sell for four to five times more than a regular packs. Wall Street has also ridden the wave of interest. Private equity giant Blackstone purchased a majority stake in Certified Collectibles Group, a company that grades collectibles like trading cards, in July for $500 million. The company has doubled its employee count since last year and is buying another 30,000 square feet of office space, President Max Spiegel said. Whether that’s good for the players who have long participated in these hobbies is unknown. Long-time collectors likely stand to make money in the future, but those who recently entered these communities may be purchasing overpriced cards hyped by those who stand to benefit the most, community leaders said. It’s not unlike the stock market craze that drove prices of GameStop and other “meme” stocks higher earlier this year. “There’s now a whole subculture who are using Pokemon as a stock market. I don’t know how those people can look at the community and say this is healthy,” Shelbie said.
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AMAZON TO OPEN 2 CASHIERLESS WHOLE FOODS STORES NEXT YEAR
There will be something missing at two Whole Foods stores opening next year: the rows of cashiers. Amazon, which owns the grocery chain, said this week that it will bring its cashier-less technology to two Whole Foods stores for the first time, letting shoppers grab what they need and leave without having to open their wallets. Cameras and sensors track what’s taken off shelves. Items are charged to an Amazon account after customers leave the store with them. But there will be an option for those who want to shop the old-fashioned way: Self-checkout lanes will be available that take cash, gift cards and other types of payment. Image: RJ Sangosti
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The company first unveiled the cashier-less technology in 2018 at an Amazon Go convenience store and has expanded it to larger supermarkets. But it will be the first time it has appeared at Whole Foods, a chain of more than 500 grocery stores Amazon bought four years ago. One of the new stores will be in Washington, D.C.; the other in Sherman Oaks, California. They will be stocked with the typical Whole Foods fare, including seafood, fresh-squeezed orange juice and organic vegetables. Even with the technology, Amazon said it will still hire about the same number of workers for the stores that it normally would, except they will have different roles, helping shoppers in the aisles or at counters instead of standing behind a register. The company declined to say how many people it will hire. The company also declined to say if it plans to bring the technology to more Whole Foods locations.
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UNTIL 2023? PARTS SHORTAGE WILL KEEP AUTO PRICES SKYHIGHMONEY
Back in the spring, a shortage of computer chips that had sent auto prices soaring appeared, finally, to be easing. Some relief for consumers seemed to be in sight. That hope has now dimmed. A surge in COVID-19 cases from the delta variant in several Asian countries that are the main producers of autograde chips is worsening the supply shortage. It is further delaying a return to normal auto production and keeping the supply of vehicles artificially low. And that means, analysts say, that record-high consumer prices for vehicles — new and used, as well as rental cars — will extend into next year and might not fall back toward earth until 2023. The global parts shortage involves not just computer chips. Automakers are starting to see shortages of wiring harnesses, plastics and glass, too. And beyond autos, vital components for goods ranging from farm equipment and industrial machinery to sportswear and kitchen 131
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accessories are also bottled up at ports around the world as demand outpaces supply in the face of a resurgent virus. “It appears it’s going to get a little tougher before it gets easier,” said Glenn Mears, who runs four auto dealerships around Canton, Ohio. Squeezed by the parts shortfall, General Motors and Ford have announced one- or two-week closures at multiple North American factories, some of which produce their hugely popular fullsize pickup trucks. Late last month, shortages of semiconductors and other parts grew so acute that Toyota felt compelled to announce it would slash production by at least 40% in Japan and North America for two months. The cuts meant a reduction of 360,000 vehicles worldwide in September. Toyota, which largely avoided sporadic factory closures that have plagued rivals this year, now foresees production losses into October. Nissan, which had announced in mid-August that chip shortages would force it to close its immense factory in Smyrna, Tennessee, until Aug. 30, now says the closure will last until Sept. 13. And Honda dealers are bracing for fewer shipments. “This is a fluid situation that is impacting the entire industry’s global supply chain, and we are adjusting production as necessary,” said Chris Abbruzzese, a Honda spokesman. The result is that vehicle buyers are facing persistent and once-unthinkable price spikes. The average price of a new vehicle sold in the U.S. in August hit a record of just above $41,000 — nearly $8,200 more than it was just two years ago, J.D. Power estimated. 133
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With consumer demand still high, automakers feel little pressure to discount their vehicles. Forced to conserve their scarce computer chips, the automakers have routed them to higherpriced models — pickup trucks and large SUVs, for example — thereby driving up their average prices. The roots of the computer chip shortage bedeviling auto and other industries stem from the eruption of the pandemic early last year. U.S. automakers had to shut factories for eight weeks to help stop the virus from spreading. Some parts companies canceled orders for semiconductors. At the same time, with tens of millions of people hunkered down at home, demand for laptops, tablets and gaming consoles skyrocketed. As auto production resumed, consumer demand for cars remained strong. But chip makers had shifted production to consumer goods, creating a shortage of weather-resistant automotivegrade chips. Then, just as auto chip production started to rebound in late spring, the highly contagious delta variant struck Malaysia and other Asian countries where chips are finished and other auto parts are made. In August, new vehicle sales in the U.S. tumbled nearly 18%, mainly because of supply shortages. Automakers reported that U.S. dealers had fewer than 1 million new vehicles on their lots in August — 72% lower than in August 2019. Even if auto production were somehow to immediately regain its highest-ever level for vehicles sold in the U.S., it would take more than a year to achieve a more normal 60-day 135
supply of vehicles and for prices to head down, the consulting firm Alix Partners has calculated. “Under that scenario,” said Dan Hearsch, an Alix Partners managing director, “it’s not until early 2023 before they even could overcome a backlog of sales, expected demand and build up the inventory.” For now, with parts supplies remaining scarce and production cuts spreading, many dealers are nearly out of new vehicles. On a recent visit to the “Central Avenue Strip” in suburban Toledo, Ohio, a road chock-full of dealerships, few new vehicles could be found on the lots. Some dealers filled in their lots with used vehicles. The supply is so low and prices so high that one would-be buyer, Heather Pipelow of Adrian, Michigan, said she didn’t even bother to look for a new SUV at Jim White Honda. “It’s more than I paid for my house,”she said ruefully. Ed Ewers of Mansfield, Ohio, traveled about two hours to a Toledo-area Subaru dealer to buy a used 2020 four-door Jeep Wrangler. He considered buying new but decided that a used vehicle was more in his price range to replace an aging Dodge Journey SUV. Mears, whose Honda dealership is running short of new inventory, said dealers are managing to survive because of the high prices consumers are having to pay for both new and used vehicles. He doesn’t charge more than the sticker price, he said — enough profit to cover expenses and make money. Nor does he have to advertise as much or pay interest on a large 136
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stock of vehicles. Many vehicles, he said, are sold before they arrive from the factory. Chip orders that were made nine months ago are now starting to arrive. But other components, such as glass or parts made with plastic injection molds, are depleted, Hearsch said. Because of the virus and a general labor shortage, he said, autoparts makers might not be able to make up for lost production. Some tentative cause for hope has begun to emerge. Siew Hai Wong, president of the Malaysia Semiconductor Industry Association, says hopefully that chip production should start returning to normal in the fall as more workers are vaccinated. Though Malaysia, Vietnam, Taiwan, Singapore and the United States all produce semiconductors, he said, a shortage of just one kind of chip can disrupt production. “If there is disruption in Malaysia,” Wong said, “there will be disruption somewhere in the world.” Automakers have been considering shifting to an order-based distribution system rather than keeping huge supplies on dealer lots. But no one knows whether such a system would prove more efficient. Eventually, Hearsch suggested, the delta variant will pass and the supply chain should return to normal. By then, he predicts, automakers will line up multiple sources of parts and stock critical components. “There will be an end to it, but the question is really when,” said Ravi Anupindi, a professor at the University of Michigan who studies supply chains.
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