SmileDirectClub Frowns, Job Hops Slow, and Office Space Waste

Smile Direct goes bankrupt: Smile Direct Club, a company that provides teeth-straightening services through remote clear aligners, filed for Chapter 11 bankruptcy protection on October 1, 2023. The company faced several challenges, such as declining revenues, legal disputes, and the impact of the COVID-19 pandemic, that led to its financial troubles. The company had $499 million of assets and more than $1 billion of liabilities at the time of filing. The company said it intends to continue providing oral care to its customers without disruption and has secured financing from its founders and other lenders.

Few Americans are switching jobs: Despite the so-called “Great Resignation” that has seen employees leaving their jobs in record numbers, the rate of transitioning to a different employer has declined to 4.1% in July 2023, compared to 5.9% in July 2022. According to a survey by PBS, NPR, and Marist, 38% of U.S. workers said they changed jobs in the past two years, similar to the 32% who said the same in 2018. The most common reason for changing jobs was better pay (32%), followed by better job opportunities, relocation, job loss, more flexible hours, and the option to work remotely. The survey also found that millennials, Gen Z workers, lower-income workers, and Democrats were more likely to report receiving a pay raise in the last year.

Office real estate is still getting crunched: The office property market is facing a crisis as vacancy rates, rents, and values are falling due to the effects of distributed work and artificial intelligence. In the first quarter of 2023, U.S. office vacancy topped 20% for the first time in decades, and office building appraisal values were down 25% from a year ago. Office attendance is still below 50% of its pre-COVID level, and a third of all office leases expire by 2026, which could lead to higher vacancies and lower rents. Some landlords are defaulting on their loans or threatening to return the keys to the banks, which could negatively affect banks, pension funds, city tax revenues, and the economy.

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