Tag Archives: employment

The vital things to know about the latest employment report

Summary: The March employment report is important, confirming the slowing of the US economy. This post skips our usual numbers blizzard, focusing instead on the vital numbers, and debunking both the hype and hysteria about this most important of the economic statistics. {1st of 2 posts today.}

Economy

Contents

  1. Summary of this important report.
  2. Has Obama’s recovery helped the middle class?
  3. The bottom line.
  4. Does this signal a recession coming soon?
  5. For More Information.

 

(1)  Summary of this, the most important economic number

The March employment report was one of the worst in the past 3 years. See the Highlights for the pictures. Nonfarm payroll employment increased by 126,000 in March and 197,000 per month over the past 3 months — compared to 269,000 over the prior 12 months. This slowing is consistent with that of the other economics indicators in the past month.

Keep a sense of proportion about these numbers. There are 140 million jobs in America, done by 147 million employed workers. The monthly changes are small and so difficult to measure accurately. Watch the patterns instead.

Employment trend as of March 2015

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How Robots & Algorithms Are Taking Over

Summary: Today we have another essay about the 3rd industrial revolution now under way (aka the robot revolution), reviewing another new book preparing us for what is to come. We’ve had 50 years of warnings, all ignored. We’ll have to move soon to avoid severe social turmoil. Let’s not repeat our ugly 19th C history. {1st of 2 posts today.}

“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come — namely, technological
unemployment. This means unemployment due to our discovery of means of economising the useof labour outrunning the pace at which we can find new uses for labour. ”

— John Maynard Keynes, “Economic Possibilities for our Grandchildren“, The Nation and Athenœum, 11 and 18 October 1930.

Cover of <i>Galaxie</i>, 1959

Cover of Galaxie, 1959. CCI/Art Archive.

Excerpt from
How Robots & Algorithms
Are Taking Over

By Sue Halpern.
London Review of Books, 5 March 2015

Halpern reviews: Nicholas Carr’s The Glass Cage: Automation and Us.

Here is what that future — which is to say now — looks like: banking, logistics, surgery, and medical recordkeeping are just a few of the occupations that have already been given over to machines. Manufacturing, which has long been hospitable to mechanization and automation, is becoming more so as the cost of industrial robots drops, especially in relation to the cost of human labor.

… Meanwhile, algorithms are writing most corporate reports, analyzing intelligence data for the NSA and CIA, reading mammograms, grading tests, and sniffing out plagiarism. Computers fly planes — Nicholas Carr points out that the average airline pilot is now at the helm of an airplane for about 3 minutes per flight — and they compose music and pick which pop songs should be recorded based on which chord progressions and riffs were hits in the past. Computers pursue drug development — a robot in the UK named Eve may have just found a new compound to treat malaria — and fill pharmacy vials.

Xerox uses computers — not people — to select which applicants to hire for its call centers. The retail giant Amazon “employs” 15,000 warehouse robots to pull items off the shelf and pack boxes. The self-driving car is being road-tested. A number of hotels are staffed by robotic desk clerks and cleaned by robotic chambermaids. Airports are instituting robotic valet parking. Cynthia Breazeal, the director of MIT’s personal robots group … $25 million in venture capital funding, to bring Jibo, “the world’s first social robot,” to market.

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A warning about the robot revolution from a great economist.

Summary:  Our series about experts has discussed our reliance on bad or biased experts. Today we see the opposite: how we ignore insightful exports, people who could help us see and prepare for the future. An economist and Nobel Laureate warned us of what’s happening today. We didn’t listen then but can still learn from him. Also, let’s learn to listen better to our top experts; it might be an essential skill for our survival in the 21st century.  {1st of 2 posts today.}

Automation robot

Introduction

Sixty years ago science fiction author James Blish described a future in which semi-intelligent machines caused massive unemployment. Of course we did nothing to prepare. Thirty years ago a great economist wrote a paper clearly describing the 3rd industrial revolution that’s now begun (even today it’s one of the clearer statements of the situation). It was part of a major report by the National Academy of Engineering, much of which also accurately described these trends. We have done nothing to prepare, not even to study the problem on a large scale, because the majority of economists had a religious-like faith that future industrial revolutions must run like the first two — so we could go blindly into the future.

“National perspective: the definition of problems”

By Wassily Leontief, Nobel Laureate in Economics.
A chapter in Long-Term Impact of Technology on Employment and Unemployment.
National Academy of Engineering (1983). Red emphasis & headings added.

The great Industrial Revolution triggered by the invention of the steam engine has by now run its course; the age that we are about to enter will be dominated by the sign of the electronic chip. The new wave of tech­nological innovation will carry us forward at least as fast and as far as the last. However, to make full use of these opportunities, our eco­nomic, social, and even cultural institutions will probably have to undergo a change as radical as that experienced during the tran­sition from the preindustrial society to the industrial society in which we live today.

The introduction of successive generations of more and more complex machinery made possible by the discovery of new sources and forms of mechanical energy over the last 200 years not only led to an unprecedented rise in the output of various goods and services, but at the same time freed working men and women from the toil and trouble associated with physical exertion. The role of labor as the dominant factor of production was not reduced but enhanced. The control and guidance of increasingly powerful and intri­cate machinery required that each worker exercise mental capabilities of progressively higher and higher order. The competitive market mechanism translated this steadily increasing demand for labor into higher and higher real wage rates.

As the earning power of an average work­ing family increased, it naturally chose to allocate some part of those earnings to acquiring more leisure time. One might speak of this progress as an increase in voluntary technological unemployment. One hundred years ago, the number of hours worked in the average week in the United States was over 70; by the beginning of World War II, hours per week sank to 42.

Computers and robots replace humans in the exercise of mental functions in the same way as mechanical power replaced them in performance of physical tasks. As time goes on, more and more complex mental func­tions will be performed by machines. Not unlike large bulldozers assigned to earth-moving jobs that could not possibly have been carried out even by the strongest laborers or draft animals, powerful computers are now performing mental operations that could not possibly be accomplished by human minds.

Any worker who now performs his task by following specific instructions can, in princi­ple, be replaced by a machine. That means that the role of humans as the most important fac­tor of production is bound to diminish — in the same way that the role of horses in agricul­tural production was first diminished and then eliminated by the introduction of tractors.

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The robots are coming, bringing hope of a better future.

Summary:  Slowly the outlines of the 3rd industrial revolution becomes clear, and with it the only path to a better future for humanity. Today we have an excerpt from a brilliant article about this by British journalist and novelist John Lanchester.

That means the role of humans as the most important factor of production is bound to diminish in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors. The general theoretical proposition that the worker who loses his job in one industry will necessarily be able to find employment, possibly after appropriate retraining, in some other industry is as invalid as would be the assertion that horses who lost their jobs in transportation and agriculture could necessarily have been put to another economically productive use.

— Wassily Leontief ( Nobel laureate in economics), The Future Impact of Automation on Workers (1986).

A woman in the robot office

Excerpt from “The Robots Are Coming

John Lanchester
London Review of Books, 5 March 2015

Lanchester reviews these books:

We are, Brynjolfsson and McAfee argue, on the verge of a new industrial revolution, one which will have as much impact on the world as the first one. Whole categories of work will be transformed by the power of computing, and in particular by the impact of robots.

… We are used to the thought that the kind of work done by assembly-line workers in a factory will be automated. We’re less used to the thought that the kinds of work done by clerks, or lawyers, or financial analysts, or journalists, or librarians, can be automated. The fact is that it can be, and will be, and in many cases already is. Tyler Cowen’s Average Is Over points towards a future in which all the rewards are likely to be captured by people at the top of the income distribution, especially those who become most adept at working with smart machines.

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Highlights of the jobs report, the good news & the bad.

Summary:  Yesterday we looked at leading indicators for the US economy. Today we look at one of the best coincident indicators: jobs. Today we’ll do it differently, seeking answers to the hot questions in the blizzard of numbers provided by the BLS. We’ll examine the good news, and the bad.  Also see the additional info in the comments. {1st of 2 posts today.}

Economy

Contents

  1. About the collapse of the oil industry.
  2. Has Obama’s recovery helped the middle class?
  3. The bottom line.
  4. Bad news about wage growth.
  5. Making sense of this numbers blizzard.
  6. About ZH’s accusations of fraud.
  7. For More Information.

(1) About the collapse of the oil industry.

The resource sector lost 9,000 jobs, a dot among America’s 148 million workers (one thousand of those were in oil & gas extraction; 7 thousand were in “support activities”). Weekly wages of their non-supervisory workers continue to slowly drop, down 3% to $1,230.

YoY the number of unemployed in the sector dropped 1.4 million, taking the sector’s unemployment rate from 7.0 to 5.7.  The oil bust is too small to have more than a regional impact.  See the BLS Highlights for more info about the growth in jobs by sector.

Feburary jobs by sector

(2) Has Obama’s recovery helped the middle class?

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Education is not a solution to automation.

Summary: We’re on course to repeat the mistakes of the first 2 industrial revolutions in the 3rd. The wonders of increased productivity benefit the 1%, while the middle class seeks easy but chimerical ways to preserve their way of life. Anything but the work and risk of collective political action. Today we examine the favorite recommended cure to automation: more education. It works as well as frogs climbing over each other to escape a pot.  {1st of 2 posts today.}

Frog Pile

Without growth, education doesn’t help the group. Just a lucky few.

More education is the most common response to the job losses and wage stagnation caused by automation. People, young and old, frantically train and retrain themselves for jobs in the ever-shrinking pool of jobs supporting a middle class lifestyle. Only lately has the futility of this become obvious, as experience shows its flaws.

Nick Bunker (Washington Center for Equitable Growth) gives a summary of the fallacies: “Is higher education the answer to reducing income inequality?” — The money paragraph, undercutting the key assumption of more education as a solution:

Intuitively, then, increasing the supply of educated workers should reduce inequality as it would increase wages among a broader supply of more educated workers. But that assumes the demand for educated workers will continue to rise. Problem is, recent research finds that the demand for skilled labor appears to be on the decline.

See this article for more about this, and links to research. It’s true even for advanced STEM degrees. That’s the bad news. Now for the worse news.

Education puts workers on a new kind of boom-bust cycle.

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Automation hits the professions. Most remain delusionally confident, so far.

Summary: This chapter about the new wave of automation examines its effects on professionals. They’ve complacently smiled as previous waves trashed the lives of blue collar workers, seeing that as a just and proper fate for proles. Now it’s their turn. But it need not work out so painfully. There is a better path. But it’s difficult for us to see.  {1st of 2 posts today.}

A Better World

Pilots show what lies ahead for many of us.

Carr argues that as professional jobs grow increasingly automated, “more and more, we’re all kind of turning into variations on computer operators.” He uses pilots as a prime example of what can happen when a professional role is transformed into that of a button pusher.  Autopilot has increased aviation safety, but pilots typically spend under five minutes manually controlling the plane during a flight.
Interview with Nicholas Carr, author of The Glass Cage: Automation and Us.

Commercial pilots were an enviable lot in the post-WWII era, with travel, status, security, and high pay. Now they’ve been crushed by mergers of their employers (less bargaining power) and increased tech (fewer jobs per plane with less value-added). Ahead lies still more automation and a massive rise in foreign competition — doing to them what it did to American merchantmen (now existing only in small numbers as a government-protected species.

See The Truth About the Profession, What Can New Pilots Make? Near Minimum Wage. There’s a Pilot Shortage: Salaries Start at $21,000. Note the economics, something still not understood by most economists. Corporations run wages down to the point where there is a shortage of workers willing to train themselves for those jobs. Profits are maximized at this magic point of a slight shortage, where increasing wages would supply but reduce profits.

The Third Industrial Revolution begins, but remains mysterious.

The articles that describe the emerging industrial revolution mix fact and fancy, as does this in the NYT.

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