Billionaire Mark Cuban just shared some insight into why so many Americans are quitting their (typically low-paying) jobs, and as it turns out, wealth tied to gains in the cryptocurrency market has a lot to do with it.
Wow 4% of people in the USA have quit their jobs because of Crypto gains, and the vast majority made under 50k. Now we know why so many people quit low paying jobs. And this was BEFORE the current runup @cnbc @elerianm @novogratz @Austan_Goolsbee https://t.co/0K5ozoOw1j— Mark Cuban (@mcuban) November 3, 2021
As Cuban - who has previously said that he's "more of an eth guy" - pointed out in a tweet (citing an article published a few days ago by Civic Science) that, according to at least one survey, 4% of Americans shave quit their job over the last year due to "financial freedom earned by investing in cryptocurrency" and another 7% say they know somebody who has.
Source: Civic Science
While these single-digit number might not seem like much at first glance, as Cuban points out, there's an important piece of context here: most of these people quitting their jobs aren't bitcoin millionaires. In fact, it's just the opposite: most of those quitting their jobs are in "the lowest income brackets". In other words, they will be back to work some day. Whether demand for work returns gradually, or all at once, will be a key question for markets and the economy going forward.
Put another way: one factor driving the worker shortage is the fact that millions of workers who aren't used to having extra money in the bank have suddenly found themselves with tens of thousands of dollars (at least on paper). Some may have cashed out and sold their crypto to the legion of institutional buyers now rotating into the market (thanks to offerings like BITO). Others might be borrowing against it, or selling a little at a time.
But one factor that's clear is that the money raised by many of these investors isn't exactly life-changing. While it may have been enough for some to retire permanently, most are using it as another form of asset diversification, not a source of income. At some point, if crypto prices fall, or if they at the very least don't keep rising in perpetuity
This data implies that while investing in crypto may have provided life-changing levels of income for some, the wealthier owners of crypto use it more as another form of asset diversification rather than source of income.
Those in lower-income brackets mostly aren't used to having so much money, and since job openings (especially for lower-paying jobs) are so plentiful - and most in lower income brackets are so used to living paycheck to paycheck (or having little in savings) - they're essentially seizing the opportunity to take some time off from work while they pivot to the play the role of amateur crypto speculators, like many Americans did with tech stocks back in the 1990s.
And now that retirees and more institutional investors can buy into the crypto market via BITO, wealthier investors are
What's more, for many people, it appears that trading crypto has acted as a kind of gateway drug to trading stocks, the record highs in stocks, particularly the surge in so-called "meme stocks".
Finally, younger investors have more of a tendency to see cryptocurrency as a long-term investment...
...and they're also more likely to see crypto wealth as a pathway to becoming wealthier than their parents were.
The American economy is of course complex, and not everybody sitting at home instead of working is sitting on a cushion of crypto wealth. The federal government and the states have handed out enough stimulus money that this labor shortage really shouldn't be a surprise to anybody. That many (mostly younger) people turned around, took that money and bet it on crypto shouldn't come as a surprise to anyone.
If anything, this data is just the latest reminder that in the age of "the everything bubble", everything in the world of markets and the economy truly is connected.
Though, of course, if you ask Jerome Powell, he'll tell you the labor market shortages are due to workers' fears of COVID.