Monday, December 29, 2014

[NJFAC] McKinsey: Automation, jobs, and the future of work

Interview| McKinsey Global Institute

Automation, jobs, and the future of work December 2014

A group of economists, tech entrepreneurs, and academics discuss whether technological advances will automate tasks more quickly than the United States can create jobs.

The topic of job displacement has, throughout US history, ignited frustration over technological advances and their tendency to make traditional jobs obsolete; artisans protested textile mills in the early 19th century, for example. In recent years, start-ups and the high-tech industry have become the focus of this discussion. A recent Pew Research Center study found that technology experts are almost evenly split on whether robots and artificial intelligence will displace a significant number of jobs over the next decade, so there is plenty of room for debate.
.....

Matt Slaughter:....It's quite clear, in the US in recent years, that we're not creating enough good jobs. People care a lot about their W-2s—what incomes are they earning? If you segment this by educational attainment, 96.2 percent of the US workforce since 2000 is in an educational cohort whose total money earnings, inflation adjusted, have been falling, not rising.

That includes even people with four-year-college degrees and nonprofessional advanced degrees. The only ones that have been rising are the PhDs, on average, and then the professional degrees: the doctors, the lawyers, and the MBAs. So that's a little sobering if you think about whether we are going to create good jobs. And a big open question that we'll probably talk about—and our panelists already rightly pointed to—is public policies.

Laura Tyson: I am with Matt on this. We live in a market economy. Supply and demand ultimately determine the level of employment. So a number of jobs will be created, but the quality of jobs is a huge question, I think. What's happening with the technology, which is skill biased and labor saving, is that it's eliminating middle-income jobs but is complementary to high skills. The jobs are high-income jobs because some smart people have to work with the technology. But there's a very large number of people who are being pushed down into lower-income jobs.

The second thing that's really important—it's been with us for a long time—is the growing gap between productivity and wages. And you can see this in the gap between productivity, a measure of the bounty of brilliant machines, and how it's being distributed in terms of wages.

If we had an inflation-adjusted, productivity-adjusted minimum wage today, it would be something like $25 [an hour]. We would not be arguing about $10. Public policy is, if anything, moving backward. It's certainly not moving forward at the level of the race. So the policy makers lose the race, and a lot of displaced workers, a lot of American families, lose the race. And that is my concern.

We're talking about machines—machines displacing people, machines changing the ways in which people work. Who owns the machines? Who should own the machines? Perhaps what we need to think about is the way in which the workers who are working with the machines are part owners of the machines.

....

Job quality and fiscal policy

Martin Baily: I was struck recently by learning that in one of our largest banks, the turnover rate for bank tellers is 50 percent a year. So, being a bank teller now is no longer a sort of skilled job; it's no longer really a well-paid job. We've had this change in technology, obviously. We've put a lot of the intelligence into the IT systems, so we don't need such skilled bank tellers. But if you ever go inside a bank, you sort of long for the days when the bank teller was more skilled.

The banks obviously have decided, as have Walmart and many, many other companies, that it's more cost effective to use workers that don't have much training, that probably don't have a lot of education—although I think training is more important—but instead to build productivity into the production system. They're very good at that. But it does create a huge number of not-very-good jobs, together with a set of jobs for the conceptualizers, the people that can take advantage of the technology, that have high incomes.

So this has obviously created a problem of inequality in our society. But also we're seeing that people who cannot get or don't have the gumption to get—you can go both ways on this—a good job are actually deciding not to work at all. So they're ending up unemployed. They're ending up on disability. They're ending up leaving the labor force.

.....

Watch the extended version of this roundtable discussion at Silicon Valley's Churchill Club on YouTube.

National Jobs for All Coalition
http://www.njfac.org/

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Thursday, December 18, 2014

[NJFAC] safety net helps people to take a job

A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia. Neil Irwin, NY Times, Dec 18, 2014

It is a simple idea supported by both economic theory and most people's intuition: If welfare benefits are generous and taxes high, fewer people will work. Why bother being industrious, after all, if you can get a check from the government for sitting around — and if your choice to work means that much of your income will end up in the tax collectors' coffers?

Here's the rub, though: The idea may be backward. Some of the highest employment rates in the advanced world are in places with the highest taxes and most generous welfare systems, namely Scandinavian countries. The United States and many other nations with relatively low taxes and a smaller social safety net actually have substantially lower rates of employment.

More People Work in Countries With High Taxes and Generous Welfare

Contrary to what theory might predict, the countries with the highest rates of participation in the labor force tend to have higher taxes and more extensive social welfare spending.

30%

85%

Effective tax rate

Employment rate

Denmark

Germany

Japan

U.K.

United States

Sweden

Norway

In Denmark, someone who enters the labor force at an average salary loses 86 percent of earnings to a combination of taxes and lost eligibility for welfare benefits; that number is only 37 percent in the United States. Yet the percentage of Danes between the ages of 20 and 59 with a job is 10 percentage points higher than in the United States.

In short, more people may work when countries offer public services that directly make working easier, such as subsidized care for children and the old; generous sick leave policies; and cheap and accessible transportation. If the goal is to get more people working, what's important about a social welfare plan may be more about what the money is spent on than how much is spent.

That is the argument that Henrik Jacobsen Kleven, a professor at the London School of Economics, offers to explain the exceptional rates of participation in the work force among citizens of Sweden, Norway and his native Denmark.....

National Jobs for All Coalition

http://www.njfac.org/

Tuesday, December 16, 2014

[NJFAC] The top .1% and the disappearance of good jobs, Lazonick

"The Top .1% and the Disappearing Middle Class" William LAZONICK

ABSTRACT

The ongoing explosion of the incomes of the richest households and the erosion of

middle-class employment opportunities for most of the rest have become

integrally related in the now-normal operation of the U.S. economy.

Since the beginning of the1980s, employment relations in U.S. industrial corporations have undergone three major

structural changes–summarized as "rationalization," "marketization," and "globalization"–

that have permanently eliminated middle-class jobs in the United States. From the

early 1980s, rationalization, characterized by plant closings, terminated the jobs of high-

school educated blue-collar workers, most of them well-paid union members.

From the early 1990s, marketization, characterized by the end of a career with one company as

an employment norm, placed the job security of middle-aged white-collar workers, many

of them college educated, in jeopardy.

From the early 2000s, globalization, characterized by the movement of employment offshore to
lower-wage nations, left all members of the U.S. labor force, whatever their educational credentials and work

experience, vulnerable to displacement. Initially, these structural changes in employment

could be justified as business responses to changes in technologies, markets, and

competition. Once U.S. corporations transformed their employment relations, however,

they often pursued rationalization, marketization, and globalization to cut current costs

rather than to reposition themselves to produce competitive products. Defining

superior corporate performance as ever-higher quarterly earnings per share, companies turned to

massive stock repurchases to "manage" their own corporations' stock prices. Trillions of

dollars that could have been spent on innovation and job creation in the U.S. economy

over the past three decades have instead been used to buy back stock for the purpose

of manipulating stock prices. Legitimizing this financialized mode of corporate resource

allocation has been the ideology, itself a product of the 1980s and 1990s, that a

business corporation should be run to "maximize shareholder value."

Through their stock options and stock awards, corporate executives who make these

resource-allocation decisions are themselves prime beneficiaries of the focus on rising stock

prices as the sole measure of corporate performance. While rationalization,

marketization, and globalization undermined stable and remunerative employment

structures, the "financialization" of the U.S. corporation entailed the distribution of

corporate cash to shareholders through stock repurchases, often in addition to

generous cash dividends, and, incentivizing these distributions, the stock-based

remuneration of top corporate executives.

In this essay, I review evidence on the fundamental structural changes

related to rationalization, marketization, and globalization that, since the early

1980s, have eroded U.S. middle-class employment opportunities. Then,

I analyze how, in many different ways and in many different industries, this financialized mode of

corporate resource allocation has undermined the prosperity of the U.S. economy.

I go on to show how justified by the ideology that companies should be run

to "maximize shareholder value", this financialized behavior boosts the remuneration of top corporate

executives, providing a major explanation for the increasing concentration of income

among the top 0.1% of U.S. households that is, through the very way it is achieved,

based on the systemic destruction of middle-class employment opportunities

available to Americans.

National Jobs for All Coalition
http://www.njfac.org/

Wednesday, December 10, 2014

[NJFAC] ILO: Global Wage Report

Global Wage Report 2014/15

Global wage growth stagnates, lags behind pre-crisis rates

ILO warns of stalled wages in many countries and points to the labour market as a driver of inequality.

• Annual average global real wage growth
• Annual real wage growth by region
• Trends in household income by source in selected countries
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National Jobs for All Coalition
http://www.njfac.org/

Wednesday, December 3, 2014

[NJFAC] The Answer to the Unemployment Problem Is More Jobs

The Answer to the Unemployment Problem Is More Jobs

December 2, 2014 by L. Randall Wray

Dean Baker, everyone's favorite progressive economist (mine, too), has an interesting take on our unemployment problem.

Give more paid vacations.

The idea is that if all the employed work less, employers will need to hire the unemployed to produce what the already employed won't be producing while sunning themselves on Florida's beaches.

Look, I'm all for shorter work weeks. It is ridiculous that labor's push somehow got stuck a century ago at the 40 hour work week in the USA. Employed Americans work more hours per year than just about any other workforce on the planet.

But, as Joan Robinson once declared, the only thing worse than working as a wage slave is to be unemployed. Just ask the Italians, who now have the highest unemployment rate since they started keeping records. Thanks to the EMU and German fiscal rectitude!

I see shorter work days and more paid vacations as a progressive goal to humanize the work place. More time to enjoy one's family, recreation, and the arts. More time for self-improvement and community involvement. More time for our wage slaves to enjoy the life of leisure long pursued by the leisure classes.

However, last on my list of arguments for a shorter work week would be the claim that it will create more jobs for the unemployed.

"Job sharing" as a cure for employment makes as much sense as "sandwich sharing" as a cure for the problem of hunger.

As my colleague Pavlina Tcherneva points out, for every social problem except unemployment, progressives advocate a direct solution.

How do you solve the problem of lack of access to healthcare? The progressive advocates single payer.

(Not, of course, Obamacare, which is just a scheme to turn more of your income over to Wall Street's insurance industry.)

Hunger? Food stamps.

Homelessness? Public housing.

Old age poverty? Social Security.

But Unemployment?

More vacations. Pay the employed not to work.

Unemployment compensation. Pay the unemployed not to work.

Or, more ludicrously, BIG (basic income guarantee). Pay everyone not to work.

What is missing? Jobs. The unemployed want jobs. But progressives will not give them jobs.

Progressives offer hand-outs to the unemployed. Or paid vacations to the employed. Or BIG to everyone!

But no jobs for the unemployed.

Why not? Progressives offer up a variety of excuses. The most common argument against creating jobs for everyone who wants to work is that this is not politically feasible in the USA.

Why? Oh, it would cost too much. Estimates put the cost of a job guarantee with a living wage at 1% to 3% of GDP. Progressives argue you'd never get that much spending through Congress.

Of course, the federal government alone already spends about 3.4% of GDP on anti-poverty programs—mostly to deal with poverty that is in large measure caused by unemployment, involuntary part-time unemployment, and poverty-level wages paid by the nation's undertakers like Wal-Mart.

Why? Because we are too afraid to push for jobs-for-all.

Instead, our progressives dismiss job creation and push instead for the supposedly more politically palatable paid vacations, unemployment compensation, and BIG.

Call me crazy, but I think that Americans are far more likely to line up behind paying people to work, than behind a scheme to pay people for more vacations.

Especially if a job at a living wage would eliminate the need for most social spending plus huge subsidies and tax breaks already paid to businesses–trying to coax them to create a job or two.

In one stroke, a job guarantee at a living wage not only eliminates the need for most anti-poverty spending, but it also ensures private sector jobs will pay decent wages. And it eliminates the myriad of public policies that impoverish our local governments as they give tax breaks and subsidies trying to bribe corporations to relocate their factories and warehouses.....

Do read the rest at http://neweconomicperspectives.org/2014/12/answer-unemployment-problem-jobs.html

National Jobs for All Coalition
http://www.njfac.org/