TIME Aviation

U.S. Airlines Expecting Highest Passenger Numbers in 7 Years

If numbers bear out, it would be most passengers since the financial crisis

The spring travel season could see U.S. airlines post their highest passenger numbers in seven years, bolstered by rising employment and personal incomes, says industry group Airlines for America.

Some 134.8 million passengers — or about 2.2 million people per day — are projected to fly in March and April, according to a press release.

If accurate, that would mean the most airline travelers since numbers peaked in 2007 — right before the financial crisis.

The 2015 projections are a 2% boost from the 132.2 million people who flew on U.S. airlines during the same period last year.

John Heimlich, Airlines for America vice president and chief economist, said high consumer sentiment and “the continued affordability of air travel” may contribute to a busy travel season ahead.

MONEY Economy

Most Americans Know Nothing About the Most Powerful Person in the Economy

Federal Reserve Board Chair Janet Yellen
Susan Walsh—AP Can you name this mystery woman?

Including her name

Does the name Janet Yellen mean anything to you? If so, that puts you ahead of most Americans.

To recap for the majority, Yellen is the chair of the Federal Reserve. As the central bank of the United States, the Fed sets monetary policy for the largest economy on earth. That includes things like keeping the dollar’s value stable and instituting policies to stimulate the economy, such as low interest rates and the now-completed quantitative easing program, during which the Federal Reserve bought $4.5 trillion worth of bonds.

So Yellen is kind of a big deal.

But most Americans don’t even know the chairwoman’s name. According to a NBC News/Wall Street Journal poll, 70% of the nation has no idea who Janet Yellen is. However, 92% of respondents said they were familiar with the Federal Reserve. That’s kind of like the vast majority of Americans saying they’d heard of the presidency, but couldn’t name the guy in office.

Too be fair, it’s understandable that Yellen would be less known than, say, Barack Obama, considering the policy-wonk nature of her work. After all, listening to someone talk about the finer points of macroeconomics isn’t most people’s idea of a good time.

And while most Americans may not know who Yellen is or what, exactly, the Fed does, they are clear on one thing: they want elected officials to keep out of its business.

TIME Oil

The Real (and Troubling) Reason Behind Lower Oil Prices

green-gasoline-pump
Getty Images

It isn't supply and demand, as most people believe

I am obsessed with how the top tier of finance has undermined, rather than fueled, the real economy. In part, that’s because of I’m writing a book about the topic, but also because so many market stories I come across seem to support this notion. The other day, I had lunch with Ruchir Sharma, head of emerging markets for Morgan Stanley Investment Management and chief of macroeconomics for the bank, who posited a fascinating idea: the major fall in oil prices since this summer may be about a shift in trading, rather than a change in the fundamental supply and demand equation. Oil, he says, is now a financial asset as much as a commodity.

The conventional wisdom about the fall in oil prices has been that it’s a result of both slower demand in China, which is in the midst of a slowdown and debt crisis, but also the increase in US shale production and the unwillingness of the Saudis to stop pumping so much oil. The Saudis often cut production in periods of slowing demand, but this time around they have not. This is in part because they are quite happy to put pressure on the Iranians, their sectarian rivals who need a much higher oil price to meet their budgets, as well as the Russians, who likewise are on the wrong side of the sectarian conflict in the Middle East via their support for the Syrian regime.

Sharma rightly points out, though, that supply and demand haven’t changed enough to create a 50% plunge in prices. Meanwhile, the price decline began not on the news of slower Chinese growth or Saudi announcements about supply, but last summer when the Fed announced that it planned to stop its quantitative easing program. Sharma and many others believe this program fueled a run up in asset buying in both emerging markets and commodities markets. “Easy money had kept oil prices artificially high for much longer than fundamentals warranted, as Chinese demand and oil supply had started to turn back in 2011, and oil prices have now merely returned to their long-term average,” says Sharma. “The end of the Fed’s quantitative easing has finally pricked the oil bubble.”

If this is the case, the fact that hot money could have such an effect on such a crucial everyday resource is worrisome. And the fact that the Fed’s QE, which was designed to buoy the real economy, has instead had the unintended and perverse effect of inflating asset prices is particularly disturbing. I think that regulatory attention on the financialization of the commodities markets will undoubtedly grow; for more on how it all works, check out this New York Times story on Goldman’s control of the aluminum markets. Amazing stuff.

Correction: The original version of this story misidentified Ruchir Sharma. He is the head of emerging markets for Morgan Stanley Investment Management.

Read next: The U.S. Will Spend $5 Billion on Energy Research in 2015 – Where Is It Going?

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MONEY Religion

Monks: The Original Hipster Entrepreneurs

In this Thursday, Jan. 9, 2014 photo, Father Damion, abbot at St. Joseph's Trappist Abbey, left, and Spencer Brewery director Father Isaac walk through their new, state-of-the-art facility in Spencer, Mass. The Spencer Brewery began brewing Spencer Trappist Ale recently becoming only the ninth certified brewery of Trappist beers in the world and the only one outside of Europe.
Stephan Savoia—AP Father Damion, abbot at St. Joseph's Trappist Abbey, left, and Spencer Brewery director Father Isaac, tour the monastery's brewery.

To keep monasteries operational, monks have started artisanal side businesses more often associated with another, trendier and more hedonistic counter-culture group.

They have a strong disdain for corporate greed and take great pride in running independent operations focused on high-quality, small-batch products like handmade coffins, craft beer, and gourmet coffee. Many have beards, and they all dress alike. This description could apply to hipsters in Brooklyn or San Francisco’s Mission District. Instead, we’re talking about monks.

Monks dedicate their lives to prayer, simplicity, and good works. Yet the monasteries they live in aren’t going to pay for themselves. Monks must make some money to cover their lifestyles, bare-bones and unflashy though they may be. What’s the plan?

For the monks of St. Joseph’s Abbey, a Cistercian (commonly known as Trappist) monastery in Spencer, Mass., the plan is to make beer. Inside the monastery grounds lies a 36,000 square-foot brewery—an award-winning one, no less—that produces thousands of barrels of Spencer Trappist Ale per year.

Strange as it may sound, St. Joseph’s is far from the only monastery to have a significant artisanal side business. Keeping a religious community fed, clothed, and operational is costly, and it’s common to find American monks running enterprises in a variety of industries.

In addition to monastic beer, there’s also Mystic Monk Coffee, made by Carmelite monks in Wyoming; coffins, manufactured by monks from a different St. Joseph’s Abbey in Louisiana; a greeting card business, run by the Benedictine monks of Conception Abbey in Missouri, and Mepkin Abbey in South Carolina, which sells high-quality dried mushrooms to fancy restaurants and local connoisseurs, just to name a few.

The thing about doing business as a monk is you generally can’t operate like a regular corporation. The goal of your average company is to make as much money as possible, generally through expansion and destruction of competing players. But monks are theologically restricted from doing any of those things.

In fact, the International Trappist Association requires all official Trappist operations to follow a strict set of rules that place a harsh limit on revenue. All commercial production is to be under the direct control and operation of monks, and all income must be proportionate to the needs of the monastery and its charities.

That means if Spencer Trappist Ale started flying off the shelves, St. Joseph’s couldn’t manufacture more beer unless it first recruited a bunch of new monks to work at the brewery—monks are the only people allowed to oversee operations—and vastly expanded its charitable activities in proportion to the increase in revenue. Even if none of those restrictions existed, production would still be constrained by the monastic schedule, which significantly limits the workday.

The monks realizes this, and have already planned to cap the brewery’s output at about 10,000 barrels a year. “If we can reach that goal, we should be able to provide most of the financial support to this monastery,” says Father Isaac, St. Joseph’s brewery director. Any expansion beyond that would be minuscule, and merely to keep up with the cost of living.

So how does one run the least capitalistic business in the world? Do what the hipsters in Williamsburg do. Sell a high-margin, high-quality artisanal product that doesn’t compete with mainstream alternatives. Isaac notes St. Joseph’s has changed businesses multiple times as big competitors moved in or their product became commoditized.

“Traditionally we were dairy farmers,” he explains. “When dairy farmers morphed into agribusiness, we moved to another agricultural product and began a company that produced jams and jellies.” Soon that field became too competitive as well. “We first looked at extending our jams and jellies operation” before moving on to ale, Isaac adds, “but we were a niche player in a saturated market.”

For now, craft beer is the perfect business for St. Joseph’s. It’s a fast-growing market with huge demand for unique, premium beers like Spencer Trappist Ale. And by selling their beer at a higher price—a four-pack can cost as much as $16.99—the monks can avoid fighting with larger brewers who target a more mass-market audience.

Other monasteries have also found this kind of upscale artisanal space to be a sweet spot for business. A spokesperson for Mepkin Abbey, the mushroom farming monastery, says the abbey’s monks are the only producers of oyster mushrooms in the area. The monks behind Mystic Monk Coffee can charge Starbucks-level prices because many coffee drinkers will pay more for boutique brands.

Some monasteries have taken a different route, essentially becoming gift shops for religious products that are often made elsewhere. A report on the monastic economy, released by the Assembly of Canonical Orthodox Bishops of North and Central America, shows 52% of U.S. Orthodox monasteries list the sale of religious items that are not produced by monastery as a primary source of income. (That number doesn’t include candle sales, which are themselves a major money maker.)

St. Joseph’s is happy to make money on merchandise as well. Anyone calling the abbey’s phone line will quickly learn this monastery is open for business. “Dial 1 for for a directory by name,” says a recording. “For the gift shop, dial 2.”

TIME Economy

Why Finance Is Still a Problem

TIME.com stock photos Money Dollar Bills
Elizabeth Renstrom for TIME

Inequality, tepid job growth, lack of innovation are partially the result of finance's warped incentives

Warren Buffett warned investors that bankers were still up to their old tricks in his recent investor letter. Vanguard founder Jack Bogle is writing about how high fee mutual funds are ripping off investors and endangering retirement security. And Fed Chair Janet Yellen is touting new, tougher capital rules for “Too Big to Fail” banks. Despite the recovery and strong jobs numbers last week, the re-regulation of the financial sector isn’t yet finished. But a deeper worry, and one that’s taking center stage amongst academics, is the fact that finance has yet to be re-moored to the real economy. That may be dampening the recovery for many.

A growing slew of research, including several just-published papers, has found that over a multi-decade period, the rise of finance is associated with lower capital investment in the real economy, greater inequality, and the demise of more productive industries. Brandeis International Business School professor Stephen G. Cecchetti and Enisse Kharroubi, a senior economist at the BIS, recently published a paper entitled “Why Does Financial Sector Growth Crowd Out Real Economic Growth?”

The answer: because finance looks for quick growth rather than long-term rewards. And because finance wants to invest in industries like real estate and construction where there are tangible assets to be collateralized, rather than intangible assets like the ideas and intellectual property that typically power more productive sectors like, say, technology, pharmaceuticals, or advanced manufacturing. What’s more, the disproportionate pay of bankers (they still make about three times what their similarly well-educated colleagues in other sectors do, even post crisis) continues to lure talent away from areas that create more and better jobs for the population as a whole. “When I was at MIT many years ago,” says Cecchetti, “everyone wanted to work in cold fusion or recombinant DNA. By the 1990s, nobody wanted to do that.” Solution? “I think we should take some proportion of the smartest people in the room and make sure they don’t go into finance,” says Cecchetti, only half joking.

Part of the problem with the rise of finance is that it encourages the culture of shareholder value over all else. That means CEOs focus more on buoying stock prices rather than making the best long-term decisions. The effects can be seen in the fact that since the 1980s, share buybacks and dividend payments have increased in direct proportion to a decrease in productive capital investment, according to a recent Roosevelt Institute paper entitled “Disgorge the Cash: The Disconnect Between Corporate Borrowing and Investment.”

What’s more, says JW Mason, a Roosevelt fellow who authored the paper, the low interest rates that have prevailed particularly since the 2008 crisis have sped up the trend as firms actually borrow money at lower rates to do more buybacks, rather than invest in the real economy. (The later is, by the way, what the Fed’s easy money policy was intended to encourage.) In fact, business investment dropped 20 % since 2008, as almost all borrowing went back to investors in the form of such payments. “It may be that we need to move to a more active control of investments to make sure that useful projects get funded,” says Mason, who says a kind of “World Bank for the US” might be one answer.

All this dovetails with the country’s inequality problem, which is an issue that will be big in the 2016 election cycle. As Wallace Turbeville, a Demos fellow who has done yet another influential paper on financialization points out, both the Republican and Democratic positions on inequality are lacking. Conservatives believe in bootstrapping, and liberals in redistribution of wealth. But if the very structure of our capitalism is designed to reward mainly elites (something Thomas Piketty’s best seller Capital in the 21st Century pointed out so well last year), then no amount of redistribution or hard work can fix the problem.

We need to fix the structure of capitalism itself and, in particular, figure out a way to make it work better for the masses. Turbeville has some of his own ideas about how to do this, including incentivizing long-term share ownership over high-speed trading, and limiting the use of derivatives. I hope that the economic debate in the primary season will be filled with many more.

Correction: The original version of this story misstated the surname of Brandeis International Business School professor Stephen G. Cecchetti.

TIME real estate

This Is The Salary You Must Earn to Afford a Home in America

Home
David Papazian—Getty Images

A homebuyer needs to earn $48,603 to afford a median-priced property, report says

To afford a typical house in the U.S., a homebuyer needs a minimum salary of $48,603 as well as a 20% downpayment, according to new research from mortgage publisher HSH.com.

HSH.com calculated the minimum salary a buyer must earn to pay the principal, interest, insurance and taxes associated with home purchases across 27 metropolitan areas, using fourth-quarter data from the National Association of Realtors (NAR) and average interest rates for fixed-rate, 30-year mortgages.

“Home prices in metro areas throughout the country continue to show solid price growth, up 25% over the past three years on average,” NAR chief economist Lawrence Yun told HSH.

San Francisco continues to top the list of most unaffordable cities, requiring a buyer to be paid $142,448, while New York City only requires $87,535; Boston, $80,049; Washington, D.C., $77,394 and Chicago $54,346.

If you want the most bang for your buck, head to Pittsburgh, where you’ll be fine with $31,716; Cleveland, $32,010; St. Louis, $33,323; or Cincinnati, $33,485.

Take a look at the complete list here.

Read next: These Are the Best (and Worst) States for Business

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MONEY Employment

Why It’s Time to Start Looking for Another Job

3 major economic indicators show why this might be the best time in a long time to start searching for other work.

Economists are pretty good at accounting for the unemployed and underemployed, but there’s one group that’s gone largely ignored during the economic recovery: people who have a job they don’t like, but are afraid to quit.

That’s probably because having a bad job was, at least until recently, seen as a pretty lucky problem to have. When times are tough and employment is scarce, any work is good work. But now the economy has sufficiently improved to the point where employees should stop feeling trapped in their current position and seriously consider making the change they’ve been longing for. Here’s why:

Hiring is way, way, up

Friday’s jobs report showed 295,000 jobs were filled in the month of February. That’s the 13th month in a row with more than 200,000 hirings, and the economy has added nearly 11.5 million jobs in the past five years.

Screen Shot 2015-03-06 at 9.22.13 AM

That’s a lot of jobs you could have instead of the one you’re stuck in.

Open positions are way up as well

Not only has hiring increased, but the number of positions has surged to a 14-year high. There were 5 million job openings at the end of last year, the most since 2001, and the ratio of unemployed job seekers to openings was 1.7, the lowest number since 2007.

Screen Shot 2015-03-06 at 6.27.18 AM

 

Employees are feeling more confident about quitting

A lot of smart people, including Federal Reserve Chair Janet Yellen, think one of the best indicators of economic progress is whether people have enough faith in the labor market to quit their current jobs. That statistic, known as the quit rate, has been rising and is now closing in on pre-recession levels.

Screen Shot 2015-03-06 at 6.23.43 AM

If you’re feeling like it’s time to leave for greener pastures, you’ll have a growing amount of company.

Read next:

How to Catch the Eye of a Recruiter in Just 7 Minutes

500,000 Walmart Workers Are Getting a Raise. Here’s How You Can Get One, Too

MONEY Jobs

Employers Add 295,000 Jobs as Economy Keeps Rolling

Amid signs of turmoil overseas, the U.S. economy keeps chugging along.

The U.S. economy gained 295,000 jobs in February, the 12th consecutive month employers added more than 200,000 to their payrolls. Meanwhile the unemployment rate dropped to 5.5%.

This is yet another sign of an improving — or what economists would call a “tightening” — labor market.

The rate at which workers are quitting their jobs has risen near levels not seen since before the 2007-2009 recession, implying that workers are feeling more secure that better opportunities lie ahead.

The number of unemployed workers who’ve been out of work 27 weeks or longer, while still high, is 31.1%, compared with 36.8% a year ago. Average hourly earnings grew by 0.1% last month, after rising 0.5% in January. Wages are up 2% over this time 12 months ago. That’s being be read by many analysts as a relatively sluggish number.

That last bit is important. While the labor market has been improving for more than a year, wage growth has disappointed. That in turn has kept a lid on inflation, which is one of the main reasons why interest rates have been next to nothing since the Great Recession and why the Fed, even now, will be “patient” in raising the cost of borrowing.

Even so “labor tightness is showing up in several high-profile labor disputes,” notes BMO chief investment officer Jack Ablin.

Recent anecdotal evidence points to workers having more power in their dealings with management — take striking port and refinery workers and pay raises for Wal-Mart and TJ Maxx employees. And the economy is still plugging along: an index that gauges non-manufacturing business rose a bit last month despite the headwinds from West Coast port strikes. “It was a miracle that the ISM non-manufacturing index managed to tick up for the second month in a row,” says Gluskin Sheff chief economist David Rosenberg.

Americans are feeling more confident about their finances, too. In the first three months of this year, the Wells Fargo/ Gallup Investor and Retirement Optimism Index jumped to its highest level since 2007. (Thank cheap gas prices.)

Wells Fargo Securities senior economist Sam Bullard believes the economy will continue to add workers this year at a clip of 224,000 per month.

“If realized, this strength in hiring would be enough to continue to pressure the unemployment rate lower and should result in a higher pace of wage growth–all supportive to a Fed tightening move in the coming months,” Bullard says.

TIME Economy

No Failures in Fed’s Annual Bank Stress Tests

The U.S. Federal Reserve Bank Building in Washington.
J. Scott Applewhite—AP The U.S. Federal Reserve Bank Building in Washington.

All 31 banks the Federal Reserve tested were deemed strong enough

For the first time since the financial crisis, the Fed isn’t handing out any Fs.

On Thursday, the Federal Reserve released the results of its annual bank stress tests. Of the 31 banks the Fed tested—which included the largest U.S. banks, like Bank of America, Citi, and Wells Fargo—as well as some sizable regional banks and the U.S. divisions of large international banks, all were deemed strong enough to weather a severe economic meltdown without any help from the government.

Still, a number of banks, including Goldman Sachs, weren’t far above levels that the Fed requires to pass its test. Regional bank Zions Bancorp, too, just cleared the Fed’s minimum on certain accounts. Zion was the only U.S. bank to fail the stress test last year.

Still, as was the case a year ago, the banks collectively cleared the test by a wider margin than they did in 2014. And the banks didn’t just have more capital — the amount of money they have in reserves to cover losses — than a year ago. The Fed also projected they would have fewer bad loans and fewer trading losses.

The positive stress test results serve as yet another example of how far the economy and the banking sector have recovered since the financial crisis. Lending in 2014 rose nearly twice as fast as it did in any year since the financial crisis. On Friday, the government’s employment report is expected to show that employers added 230,000 positions in February, which would be the 12th straight month in which that figure has surpassed 200,000.

Recently, though, U.S. banks have seen their bottom lines falter. That’s in part because of low interest rates, which has made lending less profitable. But some have wondered whether new regulations and other long-term changes to the financial system have made banks less profitable. Shares of the big banks have lagged the market for the past year.

Others stress the fact that the banks are now safer than they used to be, and that’s better for both the economy and investors. Some economists have even argued the shares of safer banks should be worth more.

All told, the Federal Reserve estimated that the 31 banks would lose just over $490 billion dollars if the economy were to enter a recession similar to the one we experienced in the late 2000s. That’s down from just over $500 billion in bank losses the Fed projected a year ago. Among the nation’s largest financial firms, Morgan Stanley came out looking the weakest. A key ratio the Fed looks at to measure financial strength, the so-called tier 1 common ratio, was projected to drop to the lowest level (among the U.S.’s six biggest banks) at Morgan Stanley. Goldman was in the second worst position. A Fed official said that the regulator included higher losses in stock and bond markets than in the past. That might have hurt Morgan Stanley and Goldman more than the other banks because both banks are more closely tied to trading markets than their immediate competitors.

The initial results appear to be a win for Citigroup and CEO Michael Corbat. Among the big banks, Citi had the highest tier one common ratio. JPMorgan Chase, again, had relatively disappointing results in the Fed’s stress test, coming out only slightly above Morgan Stanley and Goldman. JPMorgan’s large investment bank and trading operations could have hurt the bank’s performance.

The Fed conducted its stress test by looking at how much the banks could stand to lose in their loan portfolios and trading books under an adverse economic scenario. The scenario included a rise in the unemployment rate to 10%, a 60% drop in the Dow Jones industrial average, and a 25% drop in housing prices.

After simulating those losses, the Fed then figured how much capital a bank would have left as a percentage of its remaining loans and investments, weighted for risk. The Fed generally deems a bank healthy if it has enough capital to cover a 5% drop in its assets. At the worst of the financial crisis, the average so-called capital ratio at the largest banks dropped to 5.6%. But the Fed said the average capital ratios of the big banks would only dip to 8.5% in this year’s stress test. That was up from 7.6% a year ago.

This year’s results, though, were skewed by particularly strong results from Deutsche Bank, which scored a tier 1 common ratio of nearly 35% under the Fed’s severely adverse scenario. Then again, Fed officials said that only a small part, perhaps 15%, of Deutsche’s U.S. operations were examined in the test.

Besides the main test, the Fed also tested how banks would do under an economic scenario that was less severe but one that included quickly rising interest rates. The banks weathered that scenario as well.

A Fed official cautioned that while all the banks met the minimum capital levels, the regulator might still reject a bank’s request to increase dividends based on qualitative factors. The Fed will release those results next week.

This article originally appeared on Fortune.com.

TIME Economy

Hard Math in the New Economy

Rana Foroohar is TIME's assistant managing editor in charge of economics and business.

Tech is disrupting traditional work. Is that really a bad thing?

Technology has always been a net job creator. So why do so many of us feel that the robots (or algorithms) are about to take our jobs? A recent Kaiser Family Foundation poll of unemployed Americans ages 25 to 54 found that 35% believed that they’d been displaced by technology. It’s true that software can do more work that human beings used to do. But it’s also true that Silicon Valley hasn’t dealt particularly well with growing fears about tech-related job displacement, at least from a public relations standpoint.

The truth is that technology has long served as an easy target for employment alarmists–in no small part because innovators tend to tout new efficiencies and cost savings foremost. But as a recent Brookings Institution analysis put it, “Historically, technological progress has created winners and losers, but over the long run, [it] has tended to create more jobs than it has destroyed.”

If you look at the shift from an agrarian to an industrial society, that’s certainly true. From 1900 to 2000, the proportion of the workforce working on farms fell from 41% to 2%, yet agricultural output increased and farmers eventually found jobs in factories or, later, in cubicles. That’s not to say that periods of technological change aren’t fraught. There’s a reason the textile artisans who came to be known as Luddites started smashing knitting machines in 19th century England.

Nobody has started smashing their Laptops or iPads yet. But it is disturbing to see how unevenly the gains from the past 20 years of technological innovation have been shared. Many economists associate the middle class’s shrinking partly with the fact that technology is displacing people. Increasingly, there are jobs for Ph.D.s and hands-on laborers like, say, home health care aides, but more and more of what’s in between can be automated. Self-driving cars are coming for chauffeurs; drones threaten delivery drivers. A recent National Bureau of Economic Research paper co-written by economist Jeffrey Sachs hypothesized that software developers themselves might someday be replaced by the very programs they create.

There is a strong counterargument that the jobs and value technology create just aren’t being counted properly. “GDP was designed to measure the output of 20th century industrial nation-states making stuff, not a 21st century economy generating bytes and ideas,” says Zachary Karabell, whose book The Leading Indicators: A Short History of the Numbers That Rule Our World examines what our current system does and doesn’t tally.

Academics like the Massachusetts Institute of Technology’s Erik Brynjolfsson, who believes we vastly underestimate the productivity created by the “free goods of the Internet,” would agree, as would Silicon Valley entrepreneurs like Airbnb CEO Brian Chesky. His company may have 30 million users and only 1,600 employees, but Chesky says it creates many more “21st century jobs” by helping generate extra income for hosts who monetize their homes and for local businesses and such service providers as cleaners who benefit from the influx of vacationers. For New York City alone, Chesky puts the value of that additional income at $768 million annually, which the company claims supports 6,600 jobs. Of course, those are “jobs” without the health care, 401(k) or other benefits that a traditional position might provide.

Which underscores a disturbing truth about the new economy: it’s all on you. People who are smart, well educated and entrepreneurial may well do better in this paradigm. But what about those who aren’t as well positioned or at least need help in tooling up?

The obvious answer is for government to provide more help through a reformed educational system, workforce training and a social safety net to pick up slack. That’s what I consistently hear tech titans and other CEOs calling for. The hitch is that they are calling for it even as they pay a smaller share of the tax pie to fund it all. (About a third of all the corporate profit sitting in overseas bank accounts is from technology-driven firms.) Certainly some companies are making big private contributions to educational reform; Google, Microsoft and IBM are prime examples. But more will be needed.

For now, the power divide between the public and private sectors is only growing. The public sector holds most of the world’s debt, as well as responsibility for the welfare of those who are being “disrupted.” Big Tech has the profits but could stand to do some creative thinking about how better to share–or at least account for–the rewards of innovation. Otherwise it risks breeding a whole new generation of Luddites.


This appears in the March 16, 2015 issue of TIME.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

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