Tag Archives: unemployment

more on the hollowing out of the middle class

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This article from the Federal Reserve Bank of San Francisco talks about how the “wage premium” (how much educated workers make compared to less educated ones) seems to have stopped growing recently, although it is still large.

Recent Flattening in the Higher Education Wage Premium: Polarization, Skill Downgrading, or Both?

Wage gaps between workers with a college or graduate degree and those with only a high school degree rose rapidly in the United States during the 1980s. Since then, the rate of growth in these wage gaps has progressively slowed, and though the gaps remain large, they were essentially unchanged between 2010 and 2015. I assess this flattening over time in higher education wage premiums with reference to two related explanations for changing U.S. employment patterns: (i) a shift away from middle-skilled occupations driven largely by technological change (“polarization”); and (ii) a general weakening in the demand for advanced cognitive skills (“skill downgrading”). Analyses of wage and employment data from the U.S. Current Population Survey suggest that both factors have contributed to the flattening of higher education wage premiums.

technological unemployment

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This New York Times Magazine article about an American returning home after living abroad is mostly fluff, but it did contain these few interesting paragraphs on technological unemployment.

One day, I drove down Highway 101 to Silicon Valley to meet Reid Hoffman, a partner at the venture-capital firm Greylock and the chairman of LinkedIn, the professional-social-networking company, which was then in the process of being sold to Microsoft for $26.2 billion. Hoffman founded LinkedIn the same year I left for Beijing; now he was a billionaire. He is politically active, having supported and advised Obama and raised money for and donated money to Hillary Clinton. I mentioned how the election had become a referendum of sorts on globalization and trade, yet there had been little discussion about the next big earthquake — artificial intelligence, or the approaching world of self-driving cars, smartphones that can diagnose a melanoma and much more. Globalization may have ravaged blue-collar America, but artificial intelligence could cut through the white-collar professions in much the same way.

Hoffman said the reactions to artificial intelligence range from utopian to dystopian. The utopians predict huge productivity gains and rapid advances in medicine, genetic sequencing, fighting climate change and other areas. The dystopians predict a “Robocalypse” in which machines supplant people and, possibly, threaten humanity itself. “My point of view,” he said, “is that it is a massive transformation and does really impact the future of humanity, but that we can steer it more toward utopia rather than dystopia with intelligence and diligence.”

Either way, another major economic shift is coming, perhaps sooner than people realize. Hoffman said that many of the jobs in today’s economy will change fundamentally during the next 20 years. On the same day I met with Hoffman, Uber announced a pilot program to test self-driving vehicles in Pittsburgh. It also bought a company developing self-driving trucks. “We have to make sure that we don’t have a massive imbalance of society by which you have a small number of people that own the robots and everyone else is scrambling,” he said.

If the current political upheaval in the U.S. and elsewhere is caused by the onset of technological unemployment, we could truly be in trouble, because not only is it going to get worse, it is being completely misdiagnosed. When an illness is misdiagnosed, it can be treated in ineffective or even completely counterproductive ways. If underemployment caused by technological progress is the root of our current problems, the solutions have to lie in providing people with the skills they need to work with the new technology, helping people to build an ownership stake in the technology, lowering barriers to startups and innovators, and providing a safety net for those still left behind through no fault of their own. Instead, we are talking about subsidizing outdated technologies and industries, blaming mythical internal and external enemies for our problems, and removing the limited safety net we have fought so hard to build up until now.

work sharing

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Work sharing – it’s an idea to look into before the robots take over most of the work.

Work-sharing for a sustainable economy

Achieving low unemployment in an environment of weak growth is a major policy challenge; a more egalitarian distribution of hours worked could be the key to solving it. Whether work-sharing actually increases employment, however, has been debated controversially. In this article we present stylized facts on the distribution of hours worked and discuss the role of work-sharing for a sustainable economy. Building on recent developments in labor market theory we review the determinants of working long hours and its effect on well-being. Finally, we survey work-sharing reforms in the past. While there seems to be a consensus that work-sharing in the Great Depression in the U.S. and in the Great Recession in Europe was successful in reducing employment losses, perceptions of the work-sharing reforms implemented between the 1980s and early 2000s are more ambivalent. However, even the most critical evaluations of these reforms provide no credible evidence of negative employment effects; instead, the overall success of the policy seems to depend on the economic and institutional setting, as well as the specific details of its implementation.