Tag Archives: labour market

Not average at all

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Tyler Cowen has followed up the best-selling [amazon_link id=”0525952713″ target=”_blank” ]The Great Stagnation[/amazon_link] with another profoundly interesting book on the impact of new technology on the economy and beyond. [amazon_link id=”0525953736″ target=”_blank” ]Average is Over: Powering America Beyond the Age of the Great Stagnation[/amazon_link] picks up the theme of the disruption technological change and the consequent restructuring of business and focuses on the effects on individual jobs and what people might be able to do to safeguard their livelihood.

[amazon_image id=”0525953736″ link=”true” target=”_blank” size=”medium” ]Average Is Over: Powering America Beyond the Age of the Great Stagnation[/amazon_image]

The bottom line is that you need to think about which of your skills can easily be done – better, cheaper – by a computer, and work hard at developing other skills. The general message is relatively optimistic, with the book concluding that the combination of machine plus human power being much more productive than either alone; one of the examples of how and why this is so is ‘freestyle chess’. So a computer able to do fast routine work plus a human who has either advanced cognitive skills or non-cognitive skills that computers can’t attain could prove a winning team. The spread of computers through the economy would in that case prove to be another instance, seen many times in economic history, of investment in capital ultimately increasing the productivity and living standards of the people working with that capital.

However, the more specific message of the book is rather sober: Cowen doubts that all that many people in America at least have the focus and capacity for work and concentration to turn themselves into complements for robots rather than being substituted by them. And so far there is certainly plenty of evidence that routine work in many sectors of the economy, in the middle-skilled, middle-income bracket, is being away by computerisation, either directly through automation or indirectly through offshoring. About 60% of the jobs lost during the US recession have been in mid-wage occupations. Wages for the median male worker declined by about 28% between 1969 and 2009, this with no nuclear war, no asteroid striking earth, or other disaster. Nor is this disappearing middle of the income distribution just a US phenomenon: last week’s report on UK incomes from the Resolution Foundation pointed to similar evidence. Cowen writes: “The obvious and direct beneficiaries [of ever-more powerful computers] will be the humans who are adept at working with computers. … That means humans with strong math and analytic skills, humans who are comfortable working with computers because they understand their operation.” He argues that the scope of the phenomenon in the wider economy will only grow, pointing to driverless cars and taxi driver jobs, for example. Or think of those dreadful machines that are replacing supermarket cashiers.

A section of the book uses chess as an illustration of the trends – what computers can do, and can’t, and what human skills are substitutes and complements for computer skills. In short, computers do not have intuition, and cannot actually move chess pieces on a board. Nor are people interested in watching computers play chess, nor even human-computer teams – they want to watch other people play, and thanks to the internet chess has become a mass spectator, global sport.

There is a very interesting section on ethics – I wished it had been longer. Driverless cars will be more efficient. When the investment in the infrastructure is made, they will economise on drivers, be able to use fuel more efficiently, observe speed limits, probably be much, much safer. But how will they respond to moral dilemmas? If the choice is running over a baby carriage on a crossing by swerving into a group of five pensioners, what will have been coded into their programmes? Another section of the book predicts that the detailed tracking of measurements will transform all kinds of services, such as medical care. Patients will have increasingly detailed metrics on individual doctors’ performances; doctors will have detailed measures of how patients behave – do they take the full course of medicine? Do they make time-wasting visits? Do they smoke? It will be hard for people to make the judgements weighing up the things that can be measured easily (like death or recovery rates) and those that can’t, such as a caring personality, or a willingness to treat the most serious diseases. Steadily, without discussion, a moral framework is becoming encoded into the machines around us, and by the habits of use that are developing.

I’m not sure I share the book’s view about exactly what kinds of jobs will be left to humans. Cowen argues that these will be marketing jobs, work synthesising lots of areas of expertise to help people make complicated judgements, and coaching jobs for those lucky individuals who can develop their complementary talents, whether that’s being a top doctor, a top tennis player or a top executive. A more optimistic perspective would see opportunities for the growth of fulfilling creative work, such as acting or gardening or creating beautiful clothes; let the robots do the dull, repetitive jobs. Whether that is possible depends of course on whether the productivity gains from computerisation can be shared, and whether income can be distributed from the owners of the machines to the wider society. Clearly, that has not happened during the past generation.

All capitalist societies have faced this issue, however. How can people who are less productive (because there is less capital linked to their job, whether that’s machine-embedded capital or human capital) not be left so far behind that it becomes socially unsustainable. In past centuries that involved, for example, the spread of public schooling to primary and then secondary and tertiary levels, the growth of unions campaigning effectively for labour’s share of profits, redistribution through progressive taxation paying for public services available to all, and so on. I’d have liked more in Average is Over about how social and political institutions might respond to the challenge of the robots, more political economy. Maybe that will be his next book. Meanwhile, there is a clear message here for every reader: if you want to win the race against the machines, you’d better start running.

Here’s Andrew Keen discussing the book with Tyler. I discussed it with him on the FT’s Alphaville podcast.

Intellectual fuel for modern feminists

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There is one welcome side-effect of the unspeakable online threats made to Caroline Criado-Perez over her successful campaign to get Jane Austen on the next £10 note. It is the realisation that feminists, male and female, still have a lot of work to do.

Over at the Teen Economists blog today Viva Avasthi has reviewed Virginia Woolf’s [amazon_link id=”0141183535″ target=”_blank” ]A Room of One’s Own[/amazon_link], still a timely essay. The classic feminist text that opened my eyes in the 1970s was Simone de Beauvoir’s [amazon_link id=”009974421X” target=”_blank” ]The Second Sex[/amazon_link].

Recently Sheryl Sandberg’s [amazon_link id=”0753541629″ target=”_blank” ]Lean In: Women, work and the will to lead[/amazon_link] has gained a lot of attention. It’s quite good but puts all the onus for improving women’s economic standing on their individual actions; it omits discussion of the institutional barriers women face to progress at work and in society.

Another fairly recent book, startling in its findings, is [amazon_link id=”069108940X” target=”_blank” ]Women Don’t Ask[/amazon_link] by Linda Babcock and Sara Laschever. It reports research showing that part of the reason women’s pay is lower than that of comparable men is that, indeed, individual women need to ask for promotions and raises. The trouble is that when they do, they are disliked – it’s unfeminine, aggressive to put yourself forward, and male colleagues and bosses find other ways to punish women who do ask.

[amazon_image id=”069108940X” link=”true” target=”_blank” size=”medium” ]Women Don’t Ask: Negotiation and the Gender Divide[/amazon_image]

Other books include Arlie Hochschild’s [amazon_link id=”0143120336″ target=”_blank” ]The Second Shift [/amazon_link]on the burden of unpaid domestic work, especially childcare, on working women; and Susan Faludi’s [amazon_link id=”009922271X” target=”_blank” ]Backlash: The Undeclared War Against Women[/amazon_link] – old now but the backlash seems fiercer still now; and of course other classics of the 70s and earlier such as [amazon_link id=”0007205015″ target=”_blank” ]The Female Eunuch[/amazon_link], [amazon_link id=”1860492827″ target=”_blank” ]The Women’s Room[/amazon_link], [amazon_link id=”0860680290″ target=”_blank” ]Sexual Politics[/amazon_link] etc.

There is of course also a large scholarly literature in economics on gender discrimination such as Claudia Goldin’s research, Heather Joshi‘s, Betsey Stevenson’s, and much more. Enough to know that it’s time to act again.

Machines and foreigners

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I’ve been reading in the area of overlap between labour market analysis, theory of the firm and trade theory. Well, to be strictly accurate, at the edges of those three areas of economics closest to each other, for their isn’t all that much overlap. David Autor comes closest in his recent work on inequality, technology and globalization. Richard Baldwin and others have come at it from the other side with their work on trade in tasks, bringing trade theory closer to theories of production. There’s more on the overlap between technology and the labour market of course. Standout books for me are Claudia Goldin and Ian Katz, [amazon_link id=”0674035305″ target=”_blank” ]The Race Between Education and Technology[/amazon_link], and Frank Levy and Richard Murnane, [amazon_link id=”0691124027″ target=”_blank” ]The New Division of Labour[/amazon_link].

[amazon_image id=”0674035305″ link=”true” target=”_blank” size=”medium” ]Race between Education and Technology[/amazon_image]

In addition there has been the whole recent ‘the robots are eating our jobs‘ riff – but I’m more convinced than ever that this is over-simplified. For one thing, you just can’t think properly about the robots without adding offshoring and trade into the mix. Just as a shift in the ease of trade is similar to an advance in technology in its economic effects, a big increase in the potential for using foreign workers for some functions is similar to using more technology.

I’ll be writing something up eventually and will post it when I do.

Rebooting feminism?

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It’s the 50th anniversary of the publication of Betty Friedan’s [amazon_link id=”0141192054″ target=”_blank” ]The Feminine Mystique[/amazon_link], which has led to some interesting reflections on the achievements or otherwise of feminism.Here’s The New York Times view, here is Salon, and here is the Guardian book club discussion.

[amazon_image id=”0141192054″ link=”true” target=”_blank” size=”medium” ]The Feminine Mystique (Penguin Modern Classics)[/amazon_image]

My goodness, what a timely anniversary reminder that there’s a long way to go still. Yesterday over breakfast I stumbled on this extraordinary ad for Microsoft software:

Women too stupid for computers, or just too busy doing the housework?

Today I read Maureen Dowd’s bitter review of the new book by Sheryl Sandberg of Facebook, [amazon_link id=”0753541629″ target=”_blank” ]Lean In: Women, Work and the Will to Lead[/amazon_link], apparently advising women on how to have it all, version 2.0 (version 1.0 being of course Helen Gurley Brown’s [amazon_link id=”0283989866″ target=”_blank” ]Having It All[/amazon_link]). And also a report in the Observer of the past progress of women in public life in the UK going into retreat.

[amazon_image id=”0753541629″ link=”true” target=”_blank” size=”medium” ]Lean In: Women, Work, and the Will to Lead[/amazon_image]

It makes me think that perhaps the gains made by the feminist movement of the late 1970s and early 1980s were one-off, that they helped one or two cohorts of women only. The economic evidence that the labour market is stacked against women is pretty strong – there is a large earnings penalty for having children, and then some. One of the most depressing books on the subject is Linda Babcock and Sara Laschever’s [amazon_link id=”069108940X” target=”_blank” ]Women Don’t Ask: Negotiation and the Gender Divide[/amazon_link] – the good news is that men do ask for more pay and women don’t, so a woman who does ask will earn more. The bad news is that her male colleagues will think her a ball-breaker for doing so.

I hope younger women will re-read Betty Friedan’s book, and some of the other classics – Germaine Greer’s [amazon_link id=”0007205015″ target=”_blank” ]The Female Eunuch[/amazon_link], Kate Millett’s [amazon_link id=”067170740X” target=”_blank” ]Sexual Politics[/amazon_link], Simone de Beauvoir’s [amazon_link id=”009974421X” target=”_blank” ]The Second Sex. [/amazon_link] And I hope women of all ages will roll up their sleeves, and reboot the struggle – when the washing up is done and the man has finished with the computer, of course (*irony*).

Digital jobs – or not?

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As always, John Naughton’s weekend column was very interesting – this week’s theme was Digital capitalism produces few winners. It contrasts the profit of the digital titans – Apple, Amazon, Google – with the relatively few jobs and poor working conditions they offer. Amazon in the UK (where the digital companies are already in the public stocks over their tax practices) was the subject of an eye-opening FT feature recently, Amazon unpacked.

John Naughton’s column starts: “Need a crash course in digital capitalism? Easy: you just need to understand four concepts – margins, volume, inequality and employment. And if you need more detail, just add the following adjectives: thin, vast, huge and poor.” This is in the same vein as Brynjolfsson and McAfee’s [amazon_link id=”0984725113″ target=”_blank” ]Race Against the Machine[/amazon_link] which argues that the new technologies are economising on human labour, and Paul Krugman’s recent Rise of the robots column, noting that manufacturers are investing in capital-intensive facilities, so productivity is high and the need for labour low.

[amazon_image id=”0984725113″ link=”true” target=”_blank” size=”medium” ]Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy[/amazon_image]

I would sound some notes of caution about this ‘the robots are eating all the jobs’ trope. One, this is the stage of the business cycle when jobs gloom is at its most intense – remember the New York Times special book, [amazon_link id=”0812928504″ target=”_blank” ]The Downsizing of America[/amazon_link], published in 1992 just ahead of the long upturn and employment boom? Two, the only way to assess the impact of new technologies is to look at aggregate data, not just a few firms – the distribution of income data suggest there is indeed something in the story about capital intensity and productivity, but the US employment ratio has been rising gently, albeit well below pre-crisis levels still. Three, there is a question about how informative existing data are – Mike Mandel’s work on the data-driven economy is suggestive of significant gaps in our knowledge.

[amazon_image id=”0812928504″ link=”true” target=”_blank” size=”medium” ]The Downsizing of America[/amazon_image]

Finally, the most productive sectors of the economy are always making jobs disappear, and there is a period of uncomfortable adjustment, including in the wage distribution, until jobs reappear in less productive sectors of the economy. Nobody has yet convinced me there’s anything different about the digital economy in this regard, although Krugman’s second ‘robots’ column on oligopoly power, Robots and Robber Barons, certainly flags up a serious issue. For me, the best book on the impact of digital on jobs remains Levy and Murnane’s [amazon_link id=”0691124027″ target=”_blank” ]The New Division of Labour: How Computers Are Creating the Next Job Market[/amazon_link], although it’s a few years old now.

[amazon_image id=”0691124027″ link=”true” target=”_blank” size=”medium” ]The New Division of Labor: How Computers Are Creating the Next Job Market[/amazon_image]