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It’s a good idea to begin saving a small percentage of your salary as soon as possible. It’s a simple way to ensure you’re prepared for retirement.
As a rule of thumb, most financial advisors suggest you save 10% to 15% of your earnings.

Here’s a case study assuming you start with no savings, plan to retire at 65 and have investments that earn 6% annually.
If you want to retire with $2 million, you’ll need to invest about 12% of a salary of $100,000 starting in your 20s. Waiting until you’re older will require a larger portion of your pay. If you wait until your 30s, then that number is closer to 17% of your salary. In your 40s, the percentage of your salary you’ll need to save jumps to 35%. This does not account for variables such as a possible pay increase or decrease, employer match, inflation or any other of life’s curveballs.
Watch this video to find out how much money you will need to invest to save $2 million for retirement, broken down by age.

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At around 35,000 feet, the Virgin Orbit rocket will be deployed over the Atlantic, carrying nine small satellites into orbit in what is known as a horizontal launch.
Crowds are expected to gather to watch the event, with Spaceport Cornwall having invited the general public to witness what they have described as a “historic moment.”
The designated launch event will also include a “silent disco” tent.

The modified Boeing 747 plane, named “Cosmic Girl”, will take off from Spaceport Cornwall in southwest England.
Hugh Hastings / Stringer / Getty Images

LONDON — The first orbital rocket launch in Western Europe is set to take place in the U.K. on Monday evening.
The modified Boeing 747 plane, named “Cosmic Girl,” will take off from Spaceport Cornwall in southwest England at 10.16 p.m. local time if conditions allow, but back-up launch dates have also been scheduled for later this month.

At around 35,000 feet, the Virgin Orbit rocket will be deployed over the Atlantic, carrying nine small satellites into orbit in what is known as a horizontal launch.
Launching in this way is more cost-efficient than the spectacle of vertical take-offs and shows that the U.K. can be nimbler in its space efforts than the U.S., currently the leader in the global space industry, according to Rafel Siquier, CEO of British space startup Open Cosmos.
“It’s a horizontal launch and that gives them a lot of flexibility to target a specific orbit to launch from locations where it usually wouldn’t be possible to. And that’s what’s enabling actually the U.K. to have this scrappy deployment capability very effectively,” Siquier told CNBC in an interview in November at the Web Summit tech conference.
Open Cosmos’ DOVER Pathfinder satellite will be among the nine satellites on board the LauncherOne rocket. It is designed to demonstrate new navigation capabilities.
Other technologies being sent into space as part of the commercial launch are the first satellite to be launched by Oman, focusing on Earth observation, and the first satellite designed and built in Wales, as well as satellites from various U.K. and U.S. government departments.

Launching rockets from British soil allows the country to “be more responsible with the ways [it’s] putting products into space,” Melissa Thorpe, head of Spaceport Cornwall, told the BBC’s “Today” show Monday.
Crowds are expected to gather to watch the event, with Spaceport Cornwall having invited the general public to witness what they have described as a “historic moment.” The designated launch event will also include a “silent disco” tent.
Virgin Orbit had lowered its forecast for launches in 2022 to three, having initially expected to make between four and six earlier in the year.
On announcing its third-quarter results for 2022 in November, Virgin Orbit also said it raised $25 million to boost its depleting cash reserve. The money came from Virgin Group, the wider conglomerate owned by British billionaire Richard Branson which also includes airline Virgin Atlantic, gym group Virgin Active and financial services company Virgin Money.
Shares of Virgin Orbit hit a three-week high Friday, trading at $2.11.
—CNBC’s Michael Sheetz contributed to this article.

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Tens of thousands of workers have walked out across industries in recent months to demand better working conditions and pay rises in line with inflation, which is still running at double digits in the U.K.
Sunak told reporters during a visit to a London school on Friday that he is seeking a “grown up, honest conversation with union leaders about what is responsible, what is reasonable and what is affordable for our country when it comes to pay.”
His comments came just a day after his government announced new anti-strike laws in a bid to “enforce minimum service levels” across key public services.

LONDON, Jan. 6: UK Prime Minister Rishi Sunak speaks to the media as he visits Harris Academy in Battersea.
Henry Nicholls – WPA Pool/Getty Images

LONDON — U.K. Prime Minister Rishi Sunak is preparing to meet union leaders this week for what he hopes will be “constructive” talks as he seeks to halt nationwide industrial action, even as his government prepares controversial anti-strike legislation.
Tens of thousands of workers have walked out across industries in recent months to demand better working conditions and pay raises in line with inflation, which is still running at double digits in the U.K.

U.K. inflation slowed to 10.7% annually in November from a 41-year high of 11.1% in October, and the country’s independent Office for Budget Responsibility projects that British households are set to experience their sharpest fall in living standards on record.
Sunak told reporters during a visit to a London school on Friday that he is seeking a “grown up, honest conversation with union leaders about what is responsible, what is reasonable and what is affordable for our country when it comes to pay,” according to Reuters.
His comments came just a day after his government announced new anti-strike laws in a bid to “enforce minimum service levels” across key public services, including the National Health Service, schools, rail networks, nuclear commissioning and the fire service.
The legislation, which Sunak’s government plans to introduce in Parliament within the next few weeks, would allow bosses to sue unions for disruption and sack employees who participated in industrial action.
The full details of the plan may be laid out as soon as Thursday, according to The Times newspaper, but the initial announcement was met with outrage by union leaders.

The Royal College of Nursing (RCN), which has been undertaking the first strike action in its 106-year history in recent weeks, called the move “undemocratic,” while the general secretary of the Fire Brigades Union (FBU) said the entire trade union movement would “fight this pernicious attack on workers by all means available.”
Over the weekend, Sunak softened his tone further on the nurses’ strikes, telling the BBC that he is open to talks over a new pay deal that is “responsible” and “affordable,” with further walkouts in NHS workplaces across England slated for Jan. 18 and 19.
On the same BBC show, RCN General Secretary Pat Cullen called Sunak’s shift a “chink of optimism” and urged the prime minister to meet her “halfway.”
Talks between the government and union leaders are scheduled for Monday, but Unite, one of the country’s largest unions which also represents NHS members including ambulance workers, accused Sunak of “misleading the British public” over pay negotiations.
Unite General Secretary Sharon Graham, in a statement Sunday, reiterated that no progress on the upcoming (2023/4) NHS pay review could be made while the current 2022 NHS pay claim remains unresolved.
“I have repeatedly called for the prime minister to come to the table on this. All the general secretaries representing NHS workers stand ready to negotiate with him at any time,” Graham said.

“But this meeting on Monday has been misrepresented on almost every level. It is not a negotiation, it is not on current NHS pay and it is not with the prime minister.”
Graham added that unless Sunak “accepts the need to make real progress on the current pay claim, there will still be strikes across the NHS this winter.”
A total of 2,600 Unite ambulance workers are set to strike on Jan. 23 with further action in Wales on Jan. 19.
The NHS is facing an unprecedented crisis, with hospitals full, patients lying in corridors and ambulances queueing outside emergency departments unable to offload patients or respond to new calls. Health trusts and ambulance services around the country have declared “critical incidents” in recent weeks as services are overrun.
Sunak held an emergency meeting with health leaders over the weekend and told them that “bold and radical” action would be needed to guide the NHS through the crisis.
National rail networks have also been heavily disrupted by strikes over the past four weeks, with the latest 48-hour walkout by members of the Rail, Maritime and Transport Workers union resulting in only around one in five trains across Great Britain running on Saturday.

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Unlike in the United States and China, India’s electric vehicle market is dominated by two-wheel vehicles instead of four-wheel passenger cars.
EVs make up only about 2% of total automobile sales in India, but the Indian government has targets to increase EV adoption in the next decade, focusing on raising purchases of two-wheel vehicles.
Sales in India are expected to rise by between 40% and 45% by 2030, at which point 13 million new vehicles will be sold annually, according to projections from Bain & Co.

Electric vehicle charging stations from Tata Power can be found on 350 of the 600 highways in India.
Puneet Vikram Singh, Nature And Concept Photographer, | Moment | Getty Images

When most people think about electric vehicles, they think cars.
From brands like Tesla and Rivian in the United States, to Nio and XPeng in China, global sales of electric vehicles have surged. Two million EVs were sold in just the first quarter of 2022 — that’s a significant jump from a decade ago when sales hit only 120,000 cars worldwide, the International Energy Agency reported.

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India’s different. The United States and China have focused on the adoption of EV cars. But in India, the world’s fifth-largest economy, two-wheel vehicles such as scooters, mopeds and motorbikes, dominate the market.
James Hong, head of mobility research at Macquarie Group, said two-wheel vehicles are in higher demand than cars in India, and that shouldn’t come as a surprise.
Underdeveloped road infrastructure and lower personal incomes make it more convenient and affordable for people to own scooters, motorbikes or mopeds, rather than cars, Hong said.
Still, adoption remains low.

EVs make up only around 2% of total automobile sales, but the Indian government has ambitious targets to increase EV adoption in the next decade, focusing on raising purchases of two-wheel vehicles.

Sales in India are expected to rise by between 40% and 45% by 2030, at which point 13 million new vehicles will be sold annually, according to projections from Bain & Company published in December. 
India’s four-wheel vehicle sector is poised to grow by only 15% to 20% by 2030, with 1 million new vehicles sold annually, the consulting firm said.
Growth of India’s four-wheel EV segment is expected to be smaller because the cars are mostly owned only by drivers who travel out of the city on longer routes, said Arun Agarwal, deputy vice president of equity research at Kotak Securities. 
Bain & Co. predicts that total revenue across the full supply chain of India’s EV industry will generate $76 billion to $100 billion by 2030.

Reducing cost to increase adoption 

People in India have long preferred two wheels to four, and the country is home to more than 10 startups serving the market, Agarwal said.
For India to increase purchases of two-wheel vehicles, they need to be cheaper, and more charging infrastructure needs to be in place, Jinesh Gandhi, equity research analyst at Motilal Oswal Securities, told CNBC. 
Gandhi said that 90% of two-wheel vehicles with internal combustion engines cost between 70,000 rupees ($845) and 140,000 rupees ($1,690). The starting price of electric two-wheel vehicles can be as high as 160,000 rupees.

Read more about electric vehicles from CNBC Pro

The cost of EVs will come down if battery prices drop, Kotak’s Agarwal said.
High inflation and disrupted supply chains have driven batter prices higher in 2022, Bain & Co. said. The cost would have to fall by an additional 20% to 30% for EVs to compete with internal combustion engine vehicles.
Arun Kumar, chief financial officer of two-wheel EV manufacturer Ola Electric, said it’s a “myth” that EVs are more expensive than internal combustion vehicles because the “lifecycle cost of ownership of an EV is lower” than a two- or four-wheel vehicle that runs on fuel.

Ola Electric’s two-wheel scooters, and upcoming motorbike and four-wheel passenger car, all range between $1,000 and $50,000.
Ola Electric

That means the amount of money EV owners can save in fuel and maintenance costs can offset the higher initial purchase price, he said.
Ola’s two-wheel scooters, an upcoming motorbike, and four-wheel passenger car range between $1,000 and $50,000, he said.
“There’s no coming back to [internal combustion engine] vehicles. It’s a single direction,” Kumar added. 

Government help

Central and state governments in India have been providing incentives to encourage consumers in India to make the switch to EVs, Kotak’s Agarwal said. 
According to the International Energy Agency, government programs have provided funding to ramp up production of EV public buses and taxis, as well as increase charging stations around India.
EV owners are also granted road tax exemption at the time of purchase, and will receive a deduction on their income tax, the Accelerated e-Mobility Revolution for India’s Transportation said.
Including taxes, owners of two-wheel internal combustion engine vehicles in India typically pay 3,000 rupees a month for their vehicle, Kumar said. Government initiatives coupled with money saved on petrol would therefore mean that the monthly installment on a vehicle becomes largely free to a customer, he said.

‘Range anxiety’

As the adoption of electric vehicles is set to increase, so will charging infrastructures around the country. That remains a factor deterring people from making the switch away from carbon-intensive vehicles, Kotak’s Agarwal said.
“If you are stranded on the road, you don’t have any option but to get the vehicle towed to the nearest charging station, which is time- as well as a cost-consuming,” Gandhi said.
India’s charging infrastructure will need to significantly expand to support the number of EV companies that are set to come on the roads, the Bain & Co. report said, noting that several companies have made early investments and are committed to increasing the availability of chargers.

Tata Power claimed that it has built about 2,500 charging stations over 300 cities and towns in India.
Tata Power

One of them is Tata Power, India’s largest privately owned power generation company. 
Tata Power claimed it has built about 2,500 charging stations in 300 cities and towns in India. They can be found on 350 of 600 highways in the country, said Virendra Goyal, the firm’s head of business development.  
Many EV owners suffer from “range anxiety” when the distance between charging stations is too far, and bridging the gap would encourage more drivers to migrate to e-mobility, he said.
The company aims to have 25,000 chargers across India by 2028, Goyal said.
Correction: This article has been updated to accurately report where India ranks among the world’s biggest economies. An earlier version misstated its ranking.

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About a month after Guangzhou city resumed in-store dining, local coffee shop owner Timothy Chong said revenue was recovering — to 50% of normal levels.
For the year ahead, Bain partner Derek Deng said China’s consumer spending likely wouldn’t even return to 2021 levels due to macroeconomic developments.
Chen Xin, head of China leisure and transport research at UBS Securities, does expect hotels in the country can see business recover to 2019 levels by the end of the year.

Tourists visit ice sculptures in Harbin, Heilongjiang province on New Year’s Day 2023.
China News Service | VCG | Getty Images

BEIJING — It’s going to take time for Chinese consumers to really start spending again, despite China’s abrupt shift toward reopening.
About a month after Guangzhou city resumed in-store dining, local coffee shop owner Timothy Chong said revenue was recovering — to 50% of normal levels.

“In late December, customer flow gradually normalized, with a slight upward trend, but [a recovery in] business volume still needs to wait,” he said in Chinese, translated by CNBC.
He expects it will take at least three or four months before revenue can return to normal. For the past six months, revenue had dropped to 30% of typical levels, Chong said. He said Bem Bom Coffee’s first store opened in late 2019, followed by a second store and a coffee academy in August 2021.
China’s retail sales were down slightly for 2022 as of November, official data showed. Consumption has lagged overall economic growth since the pandemic began nearly three years ago.
For the year ahead, Bain partner Derek Deng kept a lid on expectations. “The hope is we at least get back to the first quarter of 2022 level,” he said, noting that was just before the Shanghai lockdown.

Retail sales for the first three months of 2022 were up by about 3.3% from a year ago, but had slowed to a decline of 0.7% for the first half of the year, according to Wind Information.

A return to 2021 — when retail sales rebounded by 12.5%— would be an optimistic scenario, Deng said. “I don’t think people are seeing that as sort of the base case, mostly because the macro factors are actually less favorable compared to 2021.”
The bulk of Chinese household wealth is tied up in real estate, a one-time hot market that’s slumped in the last year. Mainland Chinese stock markets dropped in 2022 for the first time in four years. Exports, a driver of China’s growth, have started to decline in the last few months as global demand wanes.
Deng also noted fears of a second Covid wave, the highly contagious XBB omicron subvariant coming in from overseas and geopolitical uncertainties.
“I think that has also impact on people’s perceptions on their disposable income, or whether they need to save to weather all those uncertainties,” he said.
Chinese consumers’ penchant to save reached record highs last year, according to People’s Bank of China surveys.

Hopes for a travel rebound

Analysts are closely watching the upcoming Lunar New Year holiday for indications on consumer sentiment. The travel season for China’s big holiday runs this year from around Jan. 7 to Feb. 15. — with about 2.1 billion trips expected, according to official estimates.
That’s twice what it was last year, and 70% of 2019 levels, China’s Ministry of Transport said Friday. It noted most of the trips will likely be for visiting family, while just 10% will be for leisure or business travel.
This year, many more Chinese will finally be able to travel overseas. The country is restoring the ability of Chinese citizens to go abroad for leisure, after tightly controlling the mainland borders for almost three years. On Sunday, China also formally removed quarantine requirements for inbound travelers.
However, Chinese travel overseas is unlikely to pick up until around the next public holiday in early April, said Chen Xin, head of China leisure and transport research at UBS Securities.
By that time, people will have been able to process their passport applications, while the number of international flights may have recovered to 50% or 60% of 2019 levels, Chen said. He added that measures such as pre-flight virus testing requirements to visit certain countries could be relaxed in a few months.
Within China, Chen expects travel will get another boost after February when business trips pick up, bringing hotel business back to 2019 levels by the end of the year. That’s based on an industry metric that measures revenue per available room.

Not everyone is going out

China’s big city streets are getting busier as the first wave of infections passes.
But it’s mostly younger and middle-aged people who are out and about again, UBS’s Chen said, noting that older people might be more cautious about venturing out.
After a gradual rollback in Covid controls, Chinese authorities last month suddenly did away with the bulk of the country’s virus testing and contact tracing measures. However, vaccination rates for China’s elderly have been relatively low. Only domestically made vaccines are generally available in China.

Read more about China from CNBC Pro

Bain’s Deng is also watching whether consumers will start to go out more. During the first three quarters of 2022, about 56% of consumer spending was at home — the reverse of the pre-pandemic trend, he said.
If the share of out-of-home spending can go up by even a few percentage points, that will affect how malls and restaurants consider their business strategy, especially for delivery services, Deng said.
In the last 18 months, Chinese e-commerce giant JD.com shortened the delivery window for many products from next-day to just one hour. That’s through its partnership with Dada, now majority owned by JD.
Figures from the company showed that for the Dec. 16 to Jan. 1 period, the one-hour delivery platform saw sales for vegetables, beef and mutton roughly double from a year ago. Sales of refrigerators soared by 700%, while flat-screen TV sales jumped tenfold from a year ago, according to the data.

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Technology and business are inextricably linked. Entrepreneurs harness technological advances and, with skill and luck, turn them into profitable products. Technology, in turn, changes how firms operate: electricity enabled the creation of larger, more efficient factories, since these no longer needed to depend on a central source of steam power; email has done away with most letters. But new technologies also affect business in a subtler, more profound way. They alter not just how companies do things but also what they do—and, critically, what they don’t do.The history of capitalism is a story of such reorganisations. The Industrial Revolution put paid to the “putting-out system”, in which companies obtained raw materials but outsourced manufacturing to self-employed craftsmen who converted these into finished products at home and were paid by output. Instead, factories strengthened the tie between worker, now employed directly and paid by the hour, and workplace. The telegraph, telephone and, in the 20th century, containerised shipping and better information technology (IT), have allowed multinational companies to subcontract ever more tasks to ever more places. China became the world’s factory; India became its back office. Nearly three years after the pandemic began, it is clear that technology is once again profoundly redrawing the boundaries of the firm.In the rich world, fast broadband internet and new communication platforms like Zoom or Microsoft Teams mean that a third of working days are now done remotely. Jobs are trickling out from corporate headquarters in metropolises to smaller cities and towns. And the boundary between collaborating with a colleague, a freelance worker or another firm is blurring. Companies are drawing on common pools of resources, from cloud computing to human capital. By one estimate, skilled freelance workers in America earned $247bn in 2021, up from about $135bn in 2018. The biggest firms in America and Europe are becoming more reliant on outsourcing white-collar work. Exports of commercial services from six large emerging markets have grown by 16.5% a year since the pandemic began, up from 6.5% before it (see chart 1). On January 9th Tata Consultancy Services (TCS), an Indian IT-outsourcing giant, is expected to report another bump in profits. On Coase inspectionA useful lens for understanding these changes was offered by Ronald Coase in his ground-breaking paper from 1937 entitled “The nature of the firm”. Stay small and you forgo the efficiency afforded by scale. Grow too big and a business is too unwieldy to manage—think of Soviet-style command-and-control economies. Most commerce happens in between those extremes. But where on the continuum? Coase, whose insights earned him a Nobel prize in economics, argued that firms’ boundaries—in other words, what to do and what not to do yourself—are determined by how transaction and information costs differ within firms and between them. Some things are done most efficiently in house. The market takes care of the rest.For example, between the 1980s and the 2010s, globalisation and the IT boom boosted economies of scale and, as a result, encouraged market concentration. But the two factors also increased competitive pressures and reduced the cost of communication and collaboration between firms. This caused companies to shrink their scopes. In research published last year Lorenz Ekerdt and Kai-Jie Wu of the University of Rochester found that the average number of sectors in which American manufacturers were active fell by half between 1977 and 2017. By the 2000s many sprawling industrial conglomerates like Germany’s Degussa, which had a hand in everything from metals to medicine, or British Aerospace, which was dabbling in automobiles, had unwound themselves and picked the knitting to stick to (chemicals and aircraft, respectively). Today Coasean forces are ushering in a new type of corporate organisation. It resembles a 21st-century putting-out system—not for artisan craftsmen but for the sort of white-collar professionals who epitomise modern Western economies. Micha Kaufman, boss of Fiverr, an Israel-based marketplace which matches freelance workers with corporate clients around the world, observes that firms are getting better at measuring workers’ performance based on their actual output rather than time spent producing it. This is true both of employees and subcontractors. The result is a reorganisation of businesses both internally and in relation to other companies in the economy.Start on the inside. Using data from America’s Quarterly Census of Employment and Wages, The Economist has examined jobs in three sectors particularly compatible with remote work: technology, finance and professional services. Our analysis finds that such jobs have become far more distributed across America since the pandemic. Big metropolitan areas have lost out to smaller cities and even the countryside (see chart 2). Since the fourth quarter of 2019, the number of jobs in the three sectors has grown by five percentage points more in rural areas than in San Francisco and New York. Firms are also distributing work across more borders, often in new ways. Oswald Yeo, who runs Glints, a recruiting startup in Singapore, says that his firm hires employees in batches by country. That helps the new recruits from Indonesia, say, form in-person connections with colleagues there, while expanding Glints’s talent pool, Mr Yeo explains. There is a premium for locations without a big time difference because, as a study last year from Harvard Business School found, cross-border teams collaborating on non-routine tasks often work into their leisure time in order to work synchronously with colleagues in different time zones. In Glints’s case, that is places like Indonesia. For American companies, it is increasingly Canada. Microsoft, which opened its first Canadian office in 1985, created a big new one in Toronto in 2022. Google is tripling its Canadian workforce to 5,000. A study last year by CBRE, a property firm, of the 50 cities in America and Canada with the most tech workers found that four of the top ten were Canadian. Together, the four added 180,000 tech jobs between 2016 and 2021, an increase of 39%. By comparison, the top four American cities gained just 86,000 jobs, or 8%, over the same period. Lower costs doubtless helped; the Canadian quartet were among the 16 cheapest cities among the 50, as measured by housing costs.Barriers to immigration are another factor forcing firms to look abroad, says Prithwiraj Choudhury of Harvard Business School. Mr Choudhury has documented a growing class of firms that help employers forge stable relationships with overseas employees without hiring them directly. One example is MobSquad, a firm that recruits skilled workers unable to obtain visas to America and employs them in Canada instead. Its American clients include Betterment, an investment firm, and Guardant Health, a biotechnology company.MobSquad’s recruits sit somewhere in between outsourced temps and full-time employees. This sort of arrangement points to the bigger Coasean shift—to how firms demarcate which tasks they perform on their own account and which they subcontract. A survey of nearly 500 American firms conducted by the Federal Reserve Bank of Atlanta in August 2022 found that 18% plan to use more independent contractors; only 2% said they would use fewer (see chart 3). On top of that, 13% want to rely more on leased workers, compared with 1% who want to reduce this reliance. MBO Partners, a workforce-management firm, estimates that the number of American workers engaging in independent work for at least 15 hours a week increased from 15m in 2019 to 22m in 2022. Official figures from the Bureau of Labour Statistics are more conservative, but still show that nearly 1m more Americans are self-employed than at the start of 2020. Pandemic-era job losses forcing people into less desirable work arrangements cannot be the whole story; a similar surge in self-employment did not occur after the global financial crisis of 2007-09. The shift is once again enabled by technology, such as the proliferation of platforms for all manner of freelance work. Having grown slowly, from 9% of America’s labour force in 2000 to 11% in 2018, self-employment is becoming much more common. Gig work is no longer the preserve of ride-hailing or food delivery. Whereas earlier freelance platforms, such as Taskrabbit, focused on routine tasks, emerging new ones increasingly recruit freelance workers for complicated work. Upwork specialises in web development; Fiverr is known for media production. Amazon turned to Tongal, another freelancing platform, when it needed a team to rapidly produce social-media content for its Prime TV shows. Besides making it easier for companies to rely on non-employees, technology is enabling new ways of collaboration between businesses. In 2020 Slack, the messaging platform of choice at many a firm, launched a feature that allows users to communicate directly with other companies as they can within their own organisations. More than 70% of companies in the Fortune 100 list of America’s biggest firms by revenue use the feature. The Atlanta Fed’s survey found that 16% of responding firms were planning to increase domestic outsourcing and 12% envisioned more offshoring. Already, combined revenues for six big IT-services firms with large operations in India—Cognizant, HCLT, Infosys, TCS, Tech Mahindra and Wipro—grew by 25% between the third quarter of 2019 and the same period last year (see chart 4). Pinning down just how much firms depend on outsiders is tricky—companies do not advertise this sort of thing. To get an idea, Katie Moon and Gordon Phillips, two economists, look at a firm’s external purchase commitments in the upcoming year as a share of its cost of sales. As a snapshot of the economy, this measure of “outsourcing intensity”, as Ms Moon and Mr Phillips call it, must be treated with caution; it does not capture all types of outsourcing and different firms account for external purchases in different ways. But it usefully illustrates changes over time.The Economist has calculated the measure using data from financial reports for a sample of large listed firms from America and Europe (see chart 5). We find that companies are indeed growing more reliant on others. Average outsourcing intensity across our sample has nearly doubled from 11% in 2005 to 22% in the most recent year of data (either 2021 or 2022). This growth is especially pronounced among tech titans such as Apple and Microsoft; businesses that grew little over the analysed period, such as Unilever, a British consumer-goods giant, saw only small increases. This is consistent with research which finds that as firms grow ever larger and adopt more technologies, thus becoming more complex and unwieldy, they outsource more operations—precisely as Coase would have predicted. As technology evolves, the contours of the firm will continue to be redrawn. The result is that companies have greater flexibility to seek out new workers for new tasks in new places. Portugal has created a special visa for digital nomads, who will be able to work from the country for a year. Argentina wants to introduce a preferential exchange rate for freelance workers selling their services abroad: the “tech dollar” would ensure that they will not be exposed to the rapidly devaluing peso. For Western white-collar types, this stiffer competition for work may translate into compressed wages. According to a working paper published last year, by Alberto Cavallo of Harvard Business School and colleagues, wages differ less between countries for occupations that are more prone to outsourcing. For the global economy, though, it means greater efficiency and, hopefully, faster growth and higher living standards. And for Coase, it means continued relevance. ■ More

Health care costs have been rising over the past century
System reforms have also led to patients having to pay more at the point of care.

Widespread medical debt is a uniquely American problem. Roughly 40% of U.S. adults have at least $250 in medical debt, according to a survey conducted by Kaiser Family Foundation.
“The history of medical debt is basically a history of the changing answer to the following question: When the patient can’t pay the bill, who foots it?” said Dr. Luke Messac, an emergency physician at Brigham and Women’s Hospital in Boston who is writing a book about the history of medical debt.

As health-care prices rose over the past fifty years, patients were being asked to pay more out of pocket when they received care.
There are many complicated reasons for the rise in the cost of care such as not prioritizing preventive care or a lack of price transparency, but one of the biggest catalysts for inflation was the rise of health insurance.
“It was when you get this third-party payer system where the patient doesn’t have to pay all of the cost of it directly, the insurer pays a chunk of it,” said. Dr. Peter Kongstvedt, a senior health policy faculty member at George Mason University. “That gives you relentless upward pressure on pricing, because if you’re going to get paid, why not get paid some more?”
In the early 2000s, federal legislation led to a major restructuring of how insurance plans shared costs, with the 2003 Medicare Modernization Act spurring a boom in high-deductible health insurance plans.
A deductible is the amount a policyholder has to pay upfront before their health insurance plan kicks in. The average deductible for an individual in 2022 is around $1,760, which is double what it was in 2006 when adjusted for inflation.

Roughly 70% of lower-income adults said they wouldn’t be able to afford a $500 unexpected medical bill. Nearly a quarter of those in households with an income of at least $90,000 also said they wouldn’t be able to immediately afford it.
“It doesn’t really take a Nobel Prize in economics to realize that if most people can’t afford a $500 bill, and the average deductible on a health plan that someone gets at work is north of $1,500 now, that’s that’s going to create a problem,” said Noam Levey, senior correspondent for Kaiser Health News. “You can’t walk into an emergency room or a hospital in this country and get out usually for less than a few thousand dollars.”
Watch the video above to learn more about how medical debt became so common in the U.S. health care system and what we can do to change it.

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Airlines are raising the bar for travel perks, like lounge access and elite status.
During the Covid pandemic, airlines allowed sidelined travelers to extend frequent flyer status.
Carriers are also rethinking cabin configurations to fit more business-class or premium economy seats.

The new Delta SkyClub at Los Angeles International Airport (LAX), Terminals 2 and 3 where the reimagined state-of-the-art facilities will soon welcome millions of guests each year.
Media News Group | Long Beach Press-Telegram via Getty Images

When United Airlines gate agents call the first boarding group, Ted Cohen notices something he never saw in his decades crossing the globe as a music industry executive: crowds.
The “preboarding” group includes members of United Global Services, an invitation-only status for top customers, and United Premier 1K, an upper-level tier in the airline’s Mileage Plus frequent flyer program.

“It used to be two or three people, and you used to say, ‘Who is that?’ And now it’s a small army,” said Cohen, who leads a digital entertainment consulting firm and has lifetime elite status on United and American Airlines.
Welcome to air travel’s era of mass luxury.
Travelers willing to shell out more for tickets and popular rewards credit cards are swelling ranks in front cabins and airport lounges. Now airlines are trying to handle the surge of big spenders — without compromising the appeal of their lucrative loyalty programs and most expensive seats. This year, not everyone will make the cut.
The largest U.S. carriers — Delta Air Lines, American and United — are raising spending requirements to earn some elite frequent flyer tiers that grant free upgrades, early boarding, discounted or complimentary lounge memberships and other perks.
Executives say the richer requirements are the product of the pandemic. Airlines had extended frequent flyer status without requiring travelers to meet the usual annual thresholds because would-be passengers were sidelined. In the meantime, customers kept spending on their rewards credit cards, racking up points and perks along the way.

“We feel like we’re royals even though we’re not rich at all,” said Damaris Osorio, a 27-year-old based in New York who runs a vintage clothing business.
Osorio frequents airport lounges on trips booked with rewards points that she earned through strategic credit card use and sign-up bonuses. Last year she and her fiance traveled to Brazil, Chile, Argentina and Italy, all on flights she paid for with points.
She said she cares little about sitting in the front of the plane, but has a preference for the American Express Centurion Lounges, which she gets into with one of her Amex cards. Osorio realizes she’s not alone.
“You notice how much busier it’s getting at the lounges,” she said. “I go as early as possible to maximize what I’m taking away.”
Next month, Amex Platinum cardholders will be charged $50 for each guest they bring to a Centurion Lounge. Those cardholders can currently bring in two guests for free.

‘If everyone is special, no one feels special’

For the airlines, hordes of high spenders are a good problem to have two years after the pandemic drove them into a $35 billion hole, despite billions in taxpayer aid. Airlines are profitable again, with travel roaring back and flyers who are willing to pay up for a little bit more space or privacy on their trip.
Airlines’ lucrative credit card partnerships helped them stay afloat in the pandemic. They sell miles to credit card companies, and bringing in billions of dollars.
Now they have a lot of travelers itching to cash in rewards.

If they call biz class boarding and it’s like the start of the Indy 500 … it’s not going to be a pleasant experience.

Henry Harteveldt
founder of Atmosphere Research Group

Delta said in an investor presentation last month that premium products and non-ticket revenue will make up 57% of its sales this year, up from 44% in 2014 and 53% in 2019, before the pandemic. That category includes revenue from top-end international business-class seats, extra-legroom seats and other sources, such as its partnership with American Express.
After some customers complained about crowds and long lines at its Sky Club airport lounges, Delta said late last year that it will raise the prices and the requirements to gain access to those facilities. Earlier in 2022, it also instituted a three-hour time limit for lounge use and created a VIP line for high-status holders.
CEO Ed Bastian said recent policy changes aim to address pandemic-era status extensions and the rise of customers spending more for travel.
“We’ve got to address that in some way to be fair to everybody, because as they say, ‘If everyone’s special, no one feels special,'” Bastian said in an interview last month. “We’re trying to do it in a fair way.”
United’s chief customer officer, Linda Jojo, put it similarly at a recent industry conference. “If everybody has status then nobody has status,” she said.
In November, United said it was raising the requirements to earn status and perks.
United also opened a new mini-lounge at its hub at Denver International Airport, catering to customers on the go who are flying on regional feeder jets, a move that could help free up space in larger facilities for travelers hanging out longer.

United Airlines Polaris lounge at Newark Liberty International Airport
Leslie Josephs | CNBC

Last month, American Airlines said customers will have to spend or fly more to reach the lowest elite tier in its AAdvantage frequent flyer program. Customers will soon need 40,000 so-called loyalty points instead of 30,000 for Gold status.

Bigger space for big spenders

Delta, American, United and American Express have been opening bigger airport lounges to fit more travelers.
American and its trans-Atlantic partner British Airways in November opened new, high-end lounges at John F. Kennedy International Airport with showers, bars and lots of workspace. The three lounges roughly double the square feet that American previously offered at JFK to about 65,000 square feet, an airline spokeswoman said.
“There’s a tremendous demand for it, and we got to make sure that we are taking care of customers how they want to be taken care of,” American Airlines CEO Robert Isom said at the JFK lounge opening.
Several full-service carriers have also moved away from long-haul first class cabins in favor of more premium economy seats — in between business-class and standard coach seats — and larger business-class cabins that fit scores of travelers, particularly on long flights.
Many of the newer business-class seats are roomier and come with more amenities than first-class seats of the past.

A new American Airlines and British Airways lounge at John F. Kennedy International Airport, November 29, 2022.
Leslie Josephs | CNBC

American Airlines is planning to get rid of a separate first class on some older planes used to fly longer routes in favor of a single, expanded, business class featuring new suites with doors.
The airline said premium seats on its long-haul fleet will increase by more than 45% by 2026.
But with the expansion of that cabin comes the risk of diluting the premium feel, said Henry Harteveldt, a former airline executive and founder of Atmosphere Research Group.
“If they call biz class boarding and it’s like the start of the Indy 500 and you have 70 people jostling to get down the jet bridge, it’s not going to be a pleasant experience,” he said.

‘I don’t sit behind the wing’

With demand still strong, redeeming miles for flights this year might cost more.
Michael Calarco, a part-time consultant who helps travelers book trips with their rewards points, said it’s been harder to find seats lately because planes are flying so full after travel restrictions lifted, including to international destinations.
He recommends flyers be as flexible as possible with their dates if they want to cash in their points for a trip, and to avoid major holidays.
“There’s not much I can do if someone wants to go to the Maldives two months away,” he said.
Some travelers say comfort is worth cashing in chunks of the points they’ve been sitting on.
“I don’t sit behind the wing,” said Mark Ophaug, 40, who works at an educational technology company and has a top-tier status with United’s Mileage Plus program. He and his husband are planning to visit his in-laws in Buenos Aires this year and plan to use United PlusPoints to upgrade to lie-flat seats.
“It’s a long flight, and I want to lie down,” Ophaug said.

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