Tag Archives: employment

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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At last economists see the robot revolution. Here’s why they worry.

Summary:  When I first warned about the “robot revolution” (the 3rd industrial revolution) 3 years ago, I was one of a minority. Experts assured us it would produce quick benefits without much disruption (unlike the previous 2). Time has brought new evidence, and now concern has replaced confidence. Today we review the problem. The next few posts will consider solutions. {1st of 2 posts today.}

“An increase in the productivity of labour means nothing more than that the same capital creates the same value with less labour, or that less labour creates the same product with more capital.”

— Karl Marx’s “A Contribution to the Critique of Political Economy” (1857/58).

Robot Evolution

Matthew Yglesias gave a strong rebuttal to people blaming automation for the slow growth in jobs and wages since the recession ended. But it’s happening nonetheless, slowly but accelerating. People tend to underestimate short-term change, and over estimate it over the long term. But now people are noticing the drumbeat of announcements, as automation affects more jobs of all kinds. Even economists are doubting their easy confidence that the future must be like the past.

Previous posts list scores of examples. Every month brings more, such as …”The computer will see you now. A virtual shrink may sometimes be better than the real thing.” “Here come the autonomous robot security guards.”  Robots help deliver meals for patients.  “Eerily lifelike androids join staff at Tokyo tech museum.Journalists reporting the end of journalism as a profession,  “Watch out, coders — a robot may take your job, too.

The problem is structural on three levels, and just beginning. First there is the shift of rewards from labor to capital (those who own the machine), as we see in the workers’ falling share of GDP, and the rise in corporate profits as a percent of GDP.

The second structure factor: technology changes the distribution of income in many fields. We’re shifting to a winner-take-all economy, as explained in “Welcome To Extremistan! Please Check Your Career At The Door.” Excerpt:

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A graph showing the end of America as we know it.

Summary: This is third in a series showing that we’re losing America. This post examines rising inequality of income, one of the major forces reshaping our society and politics. It’s not a class war if we don’t fight back.  {2nd of 2 posts today.}

The one graph that ties together the strands making a New America.
Click to enlarge.

The Great Decoupoling

Andrew McAfee, 12 Dec 2012 — Click to enlarge.

This one powerful but dense graph shows the transformation of what we know of as America — born in the fires of the New Deal, WWII, and the civil rights revolution — into the America of the Gilded Age. The top 2 lines (blue and grey) show America’s increasing economic strength: rising labor productivity and GDP. The bottom two show what we get from that (private sector jobs and median household income).

Here you see the slowly widening break in the early 1980s — the Reagan years, an inflection in so many American political and economic trends — as the 1% siphoned off an increasing fraction of America’s income. That growing gap gives them ever more power, allowing them to restructure America’s institutions to better serve them.

Labor unions were crushed. Workers increasingly became contingent, disposable — either “independent contractors” (often de facto employees without the protections of formal employment), or temps, or just pawns to be fired as needed to boost profits. Open borders brought in more workers to drive down wages (e.g., H-1B visas for skilled workers). Enforcement of labor regulations were gutted, allowing growing exploitation of workers, such as illegally treated cheerleaders in professional sports, plus dubiously legal “managers” (no overtime), unpaid interns, and not-independent independent contractors.

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The jobs report shows the beating heart of the economy. See the good news, & the bad.

Summary: Today we examine the very beating heart of the US economy, where all the arteries converge — the jobs report. The picture it shows is clear, although most commentary obscures this beneath analysts’ hopes and fears. Also, the data warns that the US economy has changed in an important but ominous way.

“Unless you expect the unexpected you will never find truth, for it is hard to discover and hard to attain.”
— Heraclitus, the pre-Socratic “Weeping Philosopher” of Ionia

The bottom line

Here’s one version of the bottom line (at the end is a more accurate version) of the numbers in the January employment report: job growth continues at the same rate as during the past ten months. Not slowing, as some feared. No breakout, as some hoped.

Employment-January

The following graphs show the numbers on on a Year-over-Year basis, smoothing the lines but losing resolution of recent change. The numbers are too noisy and too revised to see the pattern otherwise.

Is this rate fast or slow? The monthly numbers don’t say, especially since population growth means that the same number of new jobs represents slower growth over time. Let’s look at job growth as a percent change. We see a slow — very slow — acceleration, perhaps even the start of a break-out: 2.3% YoY  (2.1% YoY using the Household survey data, a second survey confirming the results). That’s fast, the fastest since May 2000 — at the peak of the tech bubble.

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Uber gives Americans a float to hold in the rapids of the New American economy

This post has been moved to Wolf Street: Howling about Business and Finance.

See the Billionaire’s Dream: Uber’s New American Economy.  Who gets the crumbs in the ironically named “Sharing Economy”?

If you have never visited Wolf Street, it’s worth a look.

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The hidden message in the jobs report: rising inequality now a structural feature of America.

Summary: Journalists often report news as a horse race. For example, did a Dem or GOP win the election?  This obscures important trends showing the changing nature of America. So it is with the December jobs report. Looking below the headlines shows that years of conservatives’ work has produced a new America, one with increasing and structural inequality. Unlike the post-WWII era, economic growth does not decrease income inequality (although it increases during recessions). Read the numbers and weep, or do something about it.

Economy

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The December jobs report show that years of well-funded, carefully planned effort by the 1% have produced a rich harvest for the 1%. Public policy has shifted from fostering growth to re-distribution — from the bottom 80% to the top 1%.  A few pictures tell the story, showing how economic growth no longer provides much benefit to workers. We get more jobs, often at low wages with few or no benefits — but little or no growth after inflation.  First, let’s look at the top line: job growth has increased slightly during the past few quarters.

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BLS: monthly job growth

Here’s another perspective, showing the growth rate. Since the population grows, the same number of new jobs is slowing percentage growth. The growth rate has accelerated, but only slightly.

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For Japan there is no road but to an economic recovery

Summary: the most contrarian thing you’ll read today.

Japan was a big story in 2014. The hopes for its rise — quickly crushed — created ripples around the world. Today’s post features an article by an expert asking if a new phase in its recovery story will unfold in 2015. A recovery in Japan would give the world economy another locomotive. The data looks provocative and the reasoning seems profound. (This is the 2nd of today’s two posts.)

“If something cannot go on forever, it will stop.”
— Herbert Stein’s Law (US economist, 1916-1999)

Japan: setting sun

A setting or rising sun?

Keiki Kaifuku, Kono Michi Shika Nai
“Economic Recovery,
There Is No Road But This”
—  LDP Campaign Slogan, December 2014

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By Peter Karmin of Fort Sheridan Advisors

From the Drobny Global Monitor, 11 December 2014

Posted with the generous permission of the author and Drobny Global Advisors.

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For years – if not decades – Japan’s shrinking demographics have been a primary cause for that country’s lackluster economic growth. However, Japan is now reaching a point in its cycle where the population shortage — combined with a scarcity in natural resources and the effects of “Abenomics” – will cause stagflation rather than deflation. This is a structural rather than cyclical change resulting from a shortage in labor and natural resources. The former is a result of declining population/workforce along with stringent immigration laws and the latter is a result of the closing of nuclear power plants following the 2011 Tohoku earthquake and tsunami.

During the past few years, Japan’s unemployment rate has gradually dropped and is now at 3.5% which is the lowest since 1997.

Japan's unemployment rate

Drobny Global Advisors, 11 December 2014

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Additional signs of improvement within the labor sector are seen in other surveys. For example, the “Jobs-To-Applicants Ratio” is now at a level (1.1 job openings/applicants) not seen since June 1992 when 10-year Japanese Government Bonds (JGBs) yielded 5% (we have only had to move the decimal over to the left one place during the past 22 years):

Japan: job to applicants ratio

Drobny Global Advisors, 11 December 2014

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Recent Bank of Japan Tankan Surveys show that both the manufacturing and non-manufacturing sectors are finding a shortage of available workers {DI: diffusion index}:

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