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A fascinating chart has been making its way through the Twitter financial sphere this past week that shows the total number of employees to total revenues of the S&P 500 throughout time.

In 1986, it took 8 employees to generate $1 million in revenue. Today, the S&P 500 is 70% less labor intensive that it was in the 80s.

This statistic is interesting on many fronts:

  • It underlines the amazing transformation of the economy via innovation from the physical to the digital world. The great picture below (posted on Reddit, where else) captures this sentiment:

  • Part of the down trend in the number of employees per million dollars in revenue is the increased representation of the technology sector in the S&P 500. Technology companies, in general, need fewer employees to generate their revenue than traditional manufacturing or industrial companies. As technology becomes a larger share of the S&P 500, the employees per million metric has a larger impact on the index. As can be seen in the charts below, technology has risen steadily from 5% in 1990 to around 27% today (much more so than the other sectors), meaning this metric has become more skewed by tech over time.
  • For the very observant, the Communications sector took a very large jump in September of 2018 due to the reshuffling of the sectors. Companies such as Facebook and Google, were moved from the Tech sector, and companies like Comcast and Netflix were moved from Consumer Discretionary into the Communications Sector.

Source:  Bloomberg L.P.


  • Additionally, companies outside the tech sector also implement more technology into their own day-to-day operations, further driving up productivity per unit of labor.
  • This trend has also been a deflationary force. If less labor is required per unit of economic output, each worker is generating more output than 40-50 years ago and ironically giving labor less negotiating power due to the risk of technological replacement – which means wages tend to be kept in check. The positive side for consumers is that overall prices for many products and services are also driven lower.
  • The main benefit of our labor and output is the time it provides us. And increased productivity means we can accomplish more in less time, which in turn gives us more time to do the things we think will help us find fulfillment (unique to any particular person). Think back this past week, maybe you loaded some laundry while cooking your dinner in the oven, while listening to music on your phone via Bluetooth speaker, while scanning the scores on a sports app or reading a book on a digital device or requesting a ride on an app. How long would all of this have taken in 1921? 1951? Why are we able to consume so much more today than in the past? Because someone invented a machine that washes our clothes for us, a machine that cooks our food for us, a machine that allows us to find information at our fingertips, enjoy a book from an infinite library, or request a ride in a moment’s notice.
  • The trend underlying the chart affects much of modern society and leads to both positive and negatives, which in-turn society continues to grapple with and shape.
General Disclosures: The content contained in this article represents the opinions and viewpoints of Cardan Capital Partners only. It is meant for educational purposes and not meant for consumer trading decisions.  All expressions are as of its publishing date and are subject to change.  There is no assurance that any of the trends mentioned will continue in the future.  Market performance cannot be predicted, so nothing in our commentaries is ever meant to provide any kind of trading advice or guarantee of future results.  Certain information contained herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Any reproduction or distribution of this presentation, as a whole or in part, or the disclosure of the contents thereof, without the prior consent of Cardan Capital Partners, LLC, is prohibited. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.
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