Remote Work is Hurting Gen Z & Whey Protein is Facing a Shortage

0:00Neal Freyman:Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewdaily. That's aflac.com slash morningbrewdaily. Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, protein is in a shortage. I repeat, protein is in a shortage.

0:37Neal Freyman:Then, Anthropic has filed to go public. I repeat, Anthropic has filed to go public. It's Tuesday, June 2nd. Let's ride.

0:50In the cutthroat, low-margin world of bars, one New York City pub is getting creative to stand out. Ahead of game one of the NBA finals tomorrow night between the Knicks and the Spurs, the Jeffrey on the Upper East Side of Manhattan announced a promotion with a prediction market twist. If the Knicks win, then everyone who buys food or drink there during the game will get their tab picked up by the house up to$100 a piece. And the Jeffrey is okay with that because they are hedged or de-risked. The owner Andy said he put$5 ,000 on the Calci bet for the Knicks to win game one so whatever happens in the game the jeffrey doesn't lose too much or might even come out on top toby is this the first instance of a bar turning into a hedge fund here's the math

1:30Neal Freyman:which is not my strong suit i was an english major but i'll do my best so they bet five thousand dollars on the knicks at 37 odds if the knicks wins the payout is roughly thirteen and a half thousand dollars total so they profit eight and a half thousand dollars on the bet itself they'll use part of that to cover the$100 free bar tab promo. If the Knicks lose, they lose the$5 ,000 bet, but they don't have to pay the free tabs all night. Plus, the place will probably slam, so they'll be having an above-average night anyway. So worst case, they eat the$5 ,000 as a marketing expense. Best case, they have a massive night and the hedge covers the promo.

2:09Neal Freyman:So sort of a win-win and definitely not the last time we'll see someone use a prediction market or as many pointed out just a normal sports book to hedge their bets in the hopes of having you know a great buzzy word of mouth evening and now a word from our sponsor sage neil would you say you're scrappy no i am too old and i've been working too long for that that's how sage feels too they build ai-powered finance payroll and hr software for businesses of all sizes a whopping total of six million plus businesses use Sage globally across 150 countries. This isn't a scrappy startup or niche tool. Sage is powering financial operations for companies in every industry from coffee shops to manufacturing plants across virtually every market.

2:54Neal Freyman:Sage can handle regional tax codes, payroll compliance, and regulatory requirements across different markets. That breadth of adoption means Sage has seen and solved just about every finance problem a growing business can throw at them. To learn more, head to sage.com slash morning brew. That's sage.com slash morning brew. It's a tough job market out there for recent college grads. The unemployment rate for these whippersnappers climbed to 5.6 % this March, up from 3.6 % in March, 2019. And if you listen to the booze rain down at commencement speeches, many blame AI for taking entry level jobs, But something else really big happened between 2019 and 2026, the pandemic and remote work.

3:36Remember that? And a couple of brand new studies found that the shift to remote work, not AI, has created the miserable job market conditions recent college grads find themselves in. In a paper published yesterday, New York Fed economists estimate that remote work accounts for nearly two thirds, 64 percent of the rise in recent college grad unemployment. That follows another fresh study where authors Peter John Lambert and Yannick Schindler of the London School of Economics in Oxford blame remote work for the entry-level job wipeout. Both papers offer the same reasoning. Essentially, remote work favors more experienced workers than junior ones.

4:09When you hire a young employee, they require teaching, training, and mentorship. Did this with Toby a couple years ago, which has made all the more difficult when you're at the other end of a Zoom call instead of in person. So in the remote work era, hiring teams are prioritizing veteran workers who require less handholding and can get up to speed more quickly. Neither of these papers rules out AI being hugely consequential to the job market going forward. But they do argue that a huge transformation occurred in the workplace over the past couple of years, remote work. And we don't really talk about it that much or sufficiently consider its impacts.

4:39Toby, are you convinced?

4:41Neal Freyman:I am convinced because mainly I just read really smart research papers like, yeah, I don't know. I kind of see what they're going for here. So researchers split jobs into remotable jobs. Those are white collar jobs like software engineering, accounting, finance, and non-remotable jobs, things like nursing and mechanical engineering, things that require in-person work. In remote family jobs, young grad unemployment jumped one full percentage point after the pandemic. In non-remote jobs, there was very little gap between younger and older workers. So that to me shows that there is some sort of durable causation correlation going on here, because when you divide it up by jobs that can be achieved remotely, you are seeing that unemployment cap develop right there.

5:25Neal Freyman:So, yes, at least the theory on paper is showing that a gap is developing between these two kind of non-remote versus remotable jobs. And here's the thing. Gen Z doesn't even want fully remote jobs. And a Gallup survey from May 2025 found that 71 % wants a hybrid arrangement, 6 % want fully on-site work, and the rest want fully remote. But that's a small percentage. In fact, they're the generation that is most opposed to fully remote roles, and they want to see their colleagues in person, maybe not for five days a week, but at least for a few days a week, probably because they are younger. They don't have families yet that they're thinking about taking care of.

6:01But Gen Z really wants to come in and see their colleagues in person, wants that mentorship, wants that development, but they're not getting it. And they're suffering as a result in the job market.

6:10Neal Freyman:And one other study analyzed data from Fortune 500 tech companies and found that software engineers got 20 percent more feedback when you were sitting physically near your coworkers. After the pandemic, a lot of that feedback plummeted because especially for younger workers, they were sitting at home next to their computer. So it's called work osmosis, really, that you need to pick up on things. How do you handle a sales call? How do you handle a difficult colleague? Once you log off remotely, you have no ability to tap into the knowledge of your elder statesman co-workers. How much have you learned from just sitting next to me over the past couple of years?

6:47Neal Freyman:I mean, I actually was just thinking our jobs would be infinitely harder because I remember one time where my mom actually was like observing you and I talking through stories. and she's like, I don't even know what you guys are saying because we almost do have like a language at this point where we've just sat next to each other for so long that that kind of stuff becomes second nature. And having to do, because I actually have done the job remotely as well, Slack only allows you to convey so much. We do have a very active Slack presence, but you definitely lose part of it. And it would just take, there's so much more friction to developing a story lineup when you're not in the same room.

7:22Neal Freyman:This does have long lasting effects through the economy though, because the concern from the New York Fed and the reason why they did this study is that if you have bad early career job market, that permanently damages your trajectory as a worker as you go forward. Researchers warn that when you start a career in a weak hiring environment, like we're seeing right now, that means you have long lasting wage and promotional disadvantages. So it's not just a current moment thing. Like these workers will be damaged for the rest of their careers if they don't get on the right track because these things compound over time.

7:57Neal Freyman:So whatever the reason, it can be very damaging, whether it's AI, whether it's remote work. That's the main concern here, is that this is like a failure to launch situation for a lot of these early career workers. Moving on, Ricky Bobby once said, if you ain't first, you're last. And it looks like Anthropic took that to heart. In the race for the public markets, Anthropic has nosed ahead of its rival OpenAI, confidentially filing for an IPO yesterday, putting it on track to go public later this fall. A confidential filing is not as spicy as a public filing. We don't get to look under the hood at the Claude Maker's financials.

8:31Neal Freyman:It's also not a guarantee that it even makes it to the public markets. Anthropic said in a statement that the filing, quote, gives us the option to go public after the SEC completes its review. As Martin Pierce from The Information wrote, that's not usually what companies say when they announce confidential filings. So the question is, why file at all, especially right after you raise$65 billion in your latest private round? The answer likely stems back to Ricky Bobby's mantra. The fact that Anthropic has made the first move towards the public markets puts it in contrast with OpenAI, which is still trying to get its ducks in a row to go public.

9:05Neal Freyman:Anthropic going first also gives it a chance to set the tone and be the AI company in the public eye. Neil, whatever Anthropic's reasoning for the filing, this is a company currently worth$965 billion, and its IPO price will almost certainly exceed that. So pray for San Francisco's housing market. So why is it so important to go first? And it's the same reason you want to be born first. And that's because younger siblings just don't get as much attention as the eldest child. And I know this from firsthand experience as the eldest child. Research has shown that IPOs tend to come in industry clusters.

9:38So you have maybe all these biotech companies rushing to go public. Or in this case, you have a bunch of A.I. companies going public. And they do this around the same time, around the same year. And there simply just isn't this crazy thing about, but there's not infinite money to spend on these stocks. And you also have the maybe 1.5 to 2 trillion elephant in the room, which is SpaceX, which is going to gobble up a lot of the attention and a lot of the money when it goes public next week, which it's aiming to. So Anthropic wants to be at least it's not exactly first in line. It is the second in line for these major one one plus trillion AI companies.

10:14And so it really is an advantage to go first because you get the attention and you get the money.

10:17Neal Freyman:The other concept that you should know about here is called poisoning the well. So if Anthropic goes public and it flops, then it makes it a lot harder for open AI to come later because this exact scenario played out back in 2019 with Uber and Lyft. I don't know if anyone really remembers this at the time, but Lyft went public first and did not do well, which made Uber's eventual public debut not as hot for, you know, the ride sharing industry. So it's not just like you want to be the AI company that people think about when you think about public AI companies. It's the fact that you could do poorly and then sink your younger sibling with you as well.

10:55Neal Freyman:Also, I talked about how Anthropic may or may not even pull the trigger on this IPO because right now the IPO market is extremely hot. It is wide open. The market loves AI companies. We just saw Cerebris Systems surge 68 % on its first trading day. That is a company that makes AI chips. Figma, even though it's done poorly in the months since, searched 250 % on its first day. So the message from investors in the markets right now is saying, hey, we will welcome you with open arms. That could change in a moment, though, because we still have a lot of geopolitical tensions out there. You know, the Iran war is still going on.

11:32Neal Freyman:The Strait of Hormuz is still closed. So maybe in a few months, Anthropik's looking at the IPO market and saying, this is not the time for us. So the benefit of filing now is you give yourself the option of going public when the going is good. And if the going gets tough, you don't actually have to pull the trigger. Moving on. It was only a matter of time. All the high protein snacks you've been buying is breaking the whey supply chain. Bloomberg reported that suppliers have run out of the whey protein they sell to food companies, causing a frantic hunt to stockpile the stuff. Prices have risen in kind.

12:04Wholesale whey powder prices have jumped by more than 50 percent since January, according to Food Dive. This is a direct result of Americans' insatiable demand for protein, which food makers have responded to by including it in every product imaginable. Starbucks cold foam, Eggo waffles, popcorn, Doritos, Pop-Tarts, Kraft mac and cheese, they all have a high protein version now. And dairy farmers can't keep up. Yes, the dairy industry sits at the center of the protein supply chain because they make this stuff. As cheeseheads know, whey is a byproduct of the cheese making process. Separate the curds from the whey.

12:36Now, historically, whey has been cheap and abundant. Dairy farms couldn't even give it away. An executive at the protein bar startup David told Bloomberg that dairy companies used to approach food companies to try to sell them their whey. Now, due to the protein mania, that relationship has been reversed. Buyers are calling up suppliers to make sure that they have enough whey to make their products. Toby, as most supply crunches go, this one starts on the more industrial end of the value chain, but eventually it could impact consumers.

13:05Neal Freyman:If we're in the trust tree right now, not a cheesehead, did not know that whey came from processing cheese. I guess in the back of my mind, I know it separates into curds and whey, but I thought of the different whey than the protein powder that actually makes it into your smoothies every morning. And this is a relatively new phenomenon. Farmers used to hate whey. They would dump it in rivers. They did not know what to do with it. They would spread it across their fields, feed it to livestock, but then technology improved whey processing, and now it is the go-to protein substitute because it's cheap, it's vegetarian, it's very abundant because we have a very robust dairy industry.

13:42Neal Freyman:But processing whey is not something, it almost sounds like the AI infrastructure at this point. You can't just spin up whey processing in a month. It takes years and a lot of money. One Atlantic reporter was kind of talking to someone in the industry and they accidentally dropped like, oh, what does a whey machine cost$100 ,000? And they're like, no, no, no. So it's millions of dollars. To get one of these facilities online, it can cost up to$1 billion. So when we talk about a whey shortage approaching and it's kind of here already, it takes a while for the industry to even catch back up to the demand that's out there right now.

14:16So what are food companies going to do? Maybe they have a stockpile of whey, but maybe they are scrambling to find supplies. Well, one alternative is to find alternatives. Use different types of protein sources to create your protein pop-tarts or your protein popcorn. And one of those alternatives is milk protein concentrate, which is cheaper. It's a cheaper alternative to whey-based products. Other companies are trying to go with pea protein, which is maybe something that those alternative meat companies have tried over the past couple of years. But the problem is when you start putting in new ingredients, and you can just use this in your kitchen home, if you use yogurt instead of sour cream or any sort of substitute, you're changing the taste.

14:53And for these food companies, they need to make a very, very consistent product. So when you're bringing in a new protein ingredient, it changes the mouthfeel, it changes the flavor, it changes everything. So it's really not easy just to substitute something else for whey protein. So this is a big problem.

15:09Neal Freyman:You know who looks very smart right now is a company you already mentioned, which is David Protein. They have a critical ingredient in their protein bars, which is EPG. It's this fat substitute. It's not actually a protein at all, but it is something that allows them to make these very low calories, very protein-dense bars and products. They bought their supplier out completely because I think they foresaw something like this coming with whey is that we don't want to be on the short end of the stick when it comes to losing out on the supply of a very critical ingredient. Everyone else in the industry is facing this down with whey right now.

15:44Neal Freyman:they at least secured their partner. So maybe that's something we see going forward is just buying out your supplier to ensure you have the supply so you don't get the rug pulled out from underneath you, which is what is happening to a lot of companies right now. And you mentioned like changing taste, but it's also some companies are like, we had this protein pancake mix. We substituted a different protein in the way. Now they're dry and dusty. So it is existential to these businesses. You need your inputs to be as good. So your outputs remain consistent. My only regret is that we didn't stumble onto this story last week because I did make cheese mozzarella over the weekend.

16:19I separated the courage from the way. I got this beautiful ball. But the thing is, when you make mozzarella cheese, you have – you use a gallon of milk. You have a little cheese ball, and then the rest of it is what? It's whey. It's liquid whey. I didn't know how valuable that is. I was literally sitting on a gold mine. I didn't know what to do with it. I could have called up all these protein companies and said, guys, I have whey. But, like, let's talk.

16:39Neal Freyman:You would have been like, no way. Yeah, that's what they would have said. So I maybe, you know, that's a side hustle that's coming down the pipeline. All right. We're going to take a quick break and come back with Toby's trends right after this.

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17:44Neal Freyman:That's why Aflac pays claims fast, accurately, and fairly. Their plans can help employees focus on getting better and getting back to work. To learn more, just head to aflac.com slash morningbrewdaily. That's A-F-L-A-C dot com slash morningbrewdaily. toby how are your investments looking these days great because all my investments are of the emotional variety well for those of you who are actually serious about investing there's public.com with public you can build a multi-asset portfolio of stocks bonds options crypto and more you can now also create ai agents that can monitor the market manage your cash and execute your trades just enter a prompt approve the workflow and put your agent to work head to public.com slash morningbrew.

18:30That's public.com slash morningbrew. Paid for by public investing, full disclosure in podcast description.

18:35Neal Freyman:An all-you-can-eat buffet is about as Vegas as it gets. Buttery lobster, juicy steak, all for one set price. A concept as alluring as it is, slightly sickening. But the quintessential Vegas staple is dying, a trend I want to talk about on today's edition of Toby's Trends. Bloomberg's Gabriel Bumgarner and Kate Crater eulogized the closing of another strip stalwart as MGM's famous Grand Buffet shut down for good at the end of May. That brought the number of all-you-can-eat buffets remaining to a paltry half dozen down from a heyday where there are more than 10 times that amount around the strip, according to the report.

19:10Neal Freyman:Buffets were always loss leaders, acting as a deep-sea angler fish for casinos, luring in unsuspecting gamblers with the prospect of cheap unlimited food. But Americans are increasingly fending off the temptation. GLP-1 drugs are making indulgent overeating a thing of the past, while the average Joe is a lot more health-conscious than before. For casinos, the economics stopped making sense, too. As buffets shutter, food halls have taken their place thanks to a more viable business model. Packing an old buffet space with trendy dining concepts still attracts customers while actually turning a profit at the same time.

19:44Neal Freyman:Neil, sad to see buffets waning in popularity because it means fewer places to chat and cut, too. This isn't the Vegas of old. So traditionally, here was the breakdown of how a resort and casino would make money. 75 % came from gambling. 25 % came from other entertainment. Then the 2000s happened and that ratio completely flipped. It was 75 % money coming from entertainment and dining and 25 % coming from gambling. So when that economics changed, no longer was it viable for a resort or casino to have a buffet as a lost leader. And that's what these were, and that's why we're seeing basically the death of them from over 100 to now six.