What Investors Should Know About a Company's Workforce

• Since 1985, 20% of S&P 500 constituents turn over every five years on average, with company lifespans in the index dropping from 29.3 years in the 1970s to 18.3 years in the 2020s
• Social Security's trust fund could be depleted by 2032 (earlier than expected), potentially triggering a 20-25% benefit cut without reforms combining higher taxes, later claiming ages, or benefit formula changes
• Four key workforce data points for investors: employee profiles (hiring/attrition patterns), job postings (forward-looking hiring plans), employee perception (insider sentiment), and salary benchmarks (bargaining power indicators)

Workforce Analytics as Investment Intelligence

Key Insights

The Motley Fool featured workforce analytics as a critical investment tool in a recent podcast with Dr. Ben Zweig, CEO of Revelio Labs and NYU professor. The discussion highlighted how employee data can provide actionable investment signals.

Main Thesis

Labor represents the largest expense for most companies, making workforce analysis essential for investment decisions. Four key data categories matter: employee profiles, job postings, employee perception, and salary benchmarks.

Notable Case Study

Zweig's firm successfully predicted Meta Platforms (META) strategy shifts by analyzing hiring patterns. The methodology demonstrated how workforce data can anticipate corporate pivots before public announcements.

Market Context

The podcast also covered broader market dynamics:

• S&P 500 constituent turnover has accelerated—average company tenure dropped from 29.3 years (1970s) to 18.3 years (2020s)
• 20% of index constituents turn over every five years since 1985
• Six of the "Magnificent Seven" tech stocks were added within the past 25 years

Economic Concerns

• Social Security trust fund depletion projected by 2032 (earlier than expected)
• Potential benefit cuts of 20-25% without legislative fixes
• Consumer Price Index at 2.7%, with essential expenses (shelter, food, medical care) rising faster
• Job market weakening: probability of finding new employment within three months fell to 43.1% (lowest since 2013)

Investment Implication

Workforce analytics provide forward-looking indicators of company performance, potentially offering advantages over traditional financial metrics alone.