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Economics in the News - May 31-June 6 How economics impacts our lives on a daily basis

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics.

"Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work." -- Stephen King, author
Global supply shortages of many goods reflect the challenges that many companies have had during the COVID-19 pandemic because of the decades-long practice of companies limiting their inventory.

The business practice of ‘Just In Time’ manufacturing has been popular among businesses to cut inventory costs and adapt to changing market demands. The practice delivers parts to factories just as they are required, minimizing a stockpile from accumulating. As the pandemic forced the closure of factories, parts needed ran behind schedule. The shortages of many goods raise questions about whether companies have too aggressively slashed inventory to save money. Some experts believe companies will change their habits on ‘Just In Time’ manufacturing, but others are skeptical that cost savings will remain a top priority. [The New York Times]

The housing market continues to soar. Building a new home in the United States has never been more expensive. In some cases, the cost to build a home has soared 100 percent since the COVID-19 pandemic began.

The boom comes from a variety of factors, including: the shortage and escalating costs of raw materials, rock-bottom mortgage rates, the real estate boom, and too much demand for builders and suppliers. [Bloomberg]

Small businesses in large developed countries have struggled to survive during the COVID-19 pandemic. However, the struggle for survival is even more pronounced for small business owners in developing countries where there has been minimal or no support from government aid.

Small businesses in developing countries with fewer than 50 employees account for 70 percent of jobs in those countries, according to the U.N.’s International Labor Organization. These businesses have lifted many owners out of poverty into the middle class. But their threatened survival has put many in jeopardy of returning to poverty. [The Wall Street Journal]

United Airlines is investing in supersonic travel. The airline announced that it would purchase 15 supersonic aircrafts from a Denver-based startup. Each plane would fly between 65 to 85 passengers at 1.7 times the speed of sound or approximately 1,300 miles per hour. United plans to use the planes for passenger flights by 2029, cutting travel times in half.

Commercial supersonic airplanes were used by British Airways and Air France in the early 2000’s but were retired due rising operational costs and depreciating revenues. Some within the airline industry are skeptical of the implications that supersonic planes have on the environment, considering the aircraft is known for unusually high emissions. However, Boom – the Denver-based start-up manufacturer – insists that multiple measures can be made to make the plane carbon neutral. [NPR]

Could blue-collar workers in the United States have leverage over their employers? Labor shortages in many industries have made companies more innovative in acquiring workers. Not only are they willing to pay their workers more, but they are also providing training and offering flexible hours. March had a record number of open jobs. It also had a record number of workers who left their jobs voluntarily.

The trend began several years ago when unemployment rates were low. But the recent economic surge has bolstered the demand for labor. Many workers aren’t yet ready to return to work because they can still access the $300 a week in the extra unemployment benefits. Many remain unvaccinated and fear becoming infected. Others have young children and no access to childcare. [The New York Times]

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All images credited to iStock