We are continuously hearing about "The Great Resignation," but I don't think there is enough talk about "The Great Substitution."
You can find substitution occurring everywhere — and this affects your life and your finances. For example, during the pandemic, many of us substituted streaming services for cable. But that is just an obvious substitution.
It is natural that people pursue higher-paying jobs, and that's especially true at the lower economic rungs where a job may not be a career. If Amazon can pay $20 an hour for an entry-level position, they will draw from places that pay less.
Hospitality generally offers lower-paying jobs that cannot pay those rates, so one of the first great substitutions is service in the hospitality industry. Finding housekeeping is more difficult for hotels, so daily room cleaning is a dirty concept. Finding staffing for restaurants is challenging, so we are seeing reduced hours and service.
But reduced hours and poor service push consumers to substitute going out with staying in. As non-cooks become more comfortable making meals, this shift means that they can create an enjoyable experience at home allowing them to more easily pay for the rising costs of food. Diminishing hotel service makes substituting VRBO or Airbnb a better alternative — at least you can spread out in the vacation place.
The ability to work from anywhere creates a real estate substitution. No, this is not a treatise on the decline of the cities, this is a simple statement: If some people don't need to live near their office, they won't. We can't tell yet how permanent a substitution this will represent, but there is certainly appeal for someone who has a job that can be performed in a place with high-speed internet and lots of nature for significantly lower lifestyle costs.
Not only can people work from a variety of places, but we don't need as many people to be working. Market-dominant technology companies are far more scalable than current manufacturing companies because they don't need as many workers to fuel their growth. Technology is a substitute for people (and robots are only the beginning).
Technology is also a substitute for education. Google's Certificate Program for some is a viable alternative to trade schools or college. While it may not be the same experience that someone gets from obtaining a two- or four-year degree, it still will result in solid employment opportunities. In this way, advancements in technology substitute inflation for deflation.
