Posts Tagged ‘unemployment’

automation

Jason Furman (pdf), Chairman of the U.S. Council of Economic Advisors, gave a speech a couple of weeks highlighting the potential for automation to displace many of today’s workers, even as he insists we need more investment in artificial intelligence.

What they did on the Council is take the numbers produced by Carl Benedikt Frey and Michael A. Osborne, who argue that 47 percent of U.S. jobs are at risk of being replaced by automation (a study I discussed here) and then rank them by wages. What they found is that

83 percent of jobs making less than $20 per hour would come under pressure from automation, as compared to 31 percent of jobs making between $20 and $40 per hour and 4 percent of jobs making above $40 per hour

In other words, automation—which, of course, is deployed by private employers to increase profits—threatens to destroy a massive number of jobs currently done by the American working-class. Displaced workers will be jettisoned from the labor force and join the Reserve Army of the Unemployed and Underemployed.

It is true, over the long run (as long as capitalism continues to grow), new jobs will be created, and some of the displaced workers (and their children) will be forced to have the freedom to take them. But only some of them. In the short run (and, remember, the long run is merely made up of a series of short-runs), as Furman argues, “the process of turnover. . .could lead to sustained periods of time with a large fraction of people not working.”

Within the existing economic institutions, automated technologies are therefore likely to decrease the labor force participation rate, expand the ranks of the unemployed and underemployed, and increase already-high levels of inequality (as workers’ wages continue to stagnate and technology-induced profits soar).

To be clear, that’s not an argument against artificial intelligence and automation. Under other circumstances we might welcome them. It is a caution about the effects of deploying new technologies within the current economy—in which workers and their wages are mostly dependent on private employers, who hire them if and only if it is profitable.

“Is this time different?” Not really, outside of the mythical long-run, full-employment equilibrium offered by mainstream economists. Now as in the past, existing workers—on farms and in factories and offices, especially those who make the average wage or less—are forced to endure the consequences of the decisions their employers take to adopt new technologies.

As even Furman admits,

I see little reason to believe that the economic impact of AI will be very different from previous technological advances. But unlike many of the optimists, I do not find that similarity fully comforting, as technological advances in recent decades have brought tremendous benefits but have also contributed to increasing inequality and falling labor force participation.

unemployment

It’s all going according to plan, at least as mainstream economists and politicians see things. Private enterprises, both large and small, on Main Street and Wall Street, were given every condition to lead the economic recovery from the spectacular crash of 2007-08.*

And, according to today’s job report, it worked: the official unemployment fell in May to 4.7 percent, the lowest it’s been since November 2007. That’s basically the full-employment target they’ve been aiming at since the recovery began.

But from the perspective of people who actually work for a living, the situation doesn’t appear as rosy. They’ve been the victims of the plan. They know the only reason the official unemployment rate has dropped is because many workers have dropped out of the labor force (technically, the civilian labor force participation rate decreased by 0.2 percentage point to 62.6 percent). That still left 7.4 million workers who wanted a job but couldn’t find one. In addition, the number of persons employed part time for economic reasons (often referred to as involuntary part-time workers) increased by 468,000 to 6.4 million, and another 1.7 million people remained marginally attached to the labor force (meaning they were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months).

The result was that workers (production and nonsupervisory employees) have seen their incomes barely budge: their hourly wages only increased by 3 cents (to $21.49), while their weekly earnings only rose by 1 dollar (to $722.06). In comparison to a year ago, both hourly wages and weekly earnings have increased by a meager 2.4 percent.

As I explained a month ago, that’s exactly how the reserve army works: even as the official unemployment rate falls, workers’ wages continue to stagnate and their employers’ profits continue to grow.

Exactly, it would seem, according to plan.

 

*A recovery from the crash that the same private sector created, lest we forget.

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Sure, there are lots of gangs. And, it’s true, most homicides in Chicago, where a person is shot every 2 and a half minutes and murdered every 14 hours, are from gunshots.

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But, in the City of Neighborhoods, not everyone is affected equally by gangs and guns. In fact, as the New York Times explains,

Whether exacerbated by gangs or guns. . .Chicago’s killings are happening on familiar turf: Its poor, extremely segregated neighborhoods on the South and West Sides.

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Those segregated neighborhoods also happen to be where rates of unemployment and poverty are highest.

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The more or less inevitable result of creating and perpetuating an urban economy characterized by high rates of unemployment and poverty, in which racial and ethnic minorities are forced to endure much higher rates of unemployment and poverty and are then segregated into a few neighborhoods, is the fact that “the South and West Sides are on par with the world’s most dangerous countries, like Brazil and Venezuela, and have been for many years.”

Thus far in 2016, 1530 Chicagoans have been shot, of whom 1299 have been wounded and 231 have been killed.

And, while on the surface they’ve been assaulted by gangs and guns, too many Chicagoans have actually been wounded or killed by a City of Unequally Unemployed and Impoverished Segregated Neighborhoods.

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Over the course of the next month, millions of high-school and college students will be graduating. And, to judge by the circumstances of other young workers these days, the world that awaits them is pretty dismal.

It’s not their fault. They may be gifted and full of energy but the economic stars are aligned against them. Capitalism is failing them.

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Consider high-school graduates. According to the Economic Policy Institute, the official unemployment rate is 17.9 percent (compared to an overall rate of 5 percent)—and the underemployment rate (which combines official unemployment with workers who would like a full-time job but can only find part-time work and those who are so discouraged they’ve given up even looking for work) is an extraordinary 33.7 percent.

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Even college graduates, whose official unemployment rate is much lower (at 5.6 percent), face a very high underemployment rate (of 12.6 percent). That’s 1 in 8. And that doesn’t even take into consideration college graduates who are forced to have the freedom to take  jobs that don’t even require a college degree (e.g., the young college graduate working as a data-entry clerk).

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And there’s the issue of wages if and when they find a job. The real hourly wages for high-school graduates—both young and overall—are no higher today (at $10.66 and $17.11, respectively) than they were at the beginning of 2000 (when they earned $10.86 and $17.01).

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Again, college graduates are better off than workers with a high-school degree. But their wages, too, have been stagnant for the past decade and a half. Young college graduates today can expect to earn, on average, about $18.53 an hour today compared to $18.39 in early 2000; while all workers with a bachelor’s degree receive $31.40 an hour today, which is only slightly higher than in 2000 (when it was $29.39).

The usual argument one hears is that young people should be encouraged to go to college, after which they’ll face lower unemployment and receive higher wages.

That’s fine. I’m all in favor of increasing the chances and lowering the barriers for young people to study in the nation’s colleges and universities. But for young people, no matter how much education they’ve managed to obtain, current economic arrangements are failing them.

The members of the Class of 2016, no matter how gifted, have every right to be worried about what’s next.

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More than 7 years into the current recovery and all the talk is about the number of jobs created, the falling unemployment rate, and the prospect that workers’ wages are set to finally increase on a sustained basis. Problem solved!

But what about the 1 in 6 American workers who were let go during the Great Recession, victims of the 40 million layoffs and other involuntary discharges during the official downturn that began in December 2007 and ended in June 2009? Not to mention the fact that nearly 14 million people are still searching for a job or stuck in part-time jobs because they can’t find full-time work.

As the Wall Street Journal reports,

Even for the millions of Americans back at work, the effects of losing a job will linger. . .They will earn less for years to come. They will be less likely to own a home. Many will struggle with psychological problems. Their children will perform worse in school and may earn less in their own jobs. . .

Only about one in four displaced workers gets back to pre-layoff earning levels after five years. . .A pay gap persists, even decades later, between workers who experienced a period of unemployment and similar workers who avoided a layoff. Estimates vary, but by one analysis, people who lost a job during recessions made 15% to 20% less than their nondisplaced peers after 10 to 20 years.

And that’s just the tip of the iceberg. Workers who lost their incomes or received lower incomes if and when they found a new job have found it difficult to save and make purchases (and, in many cases, had to dip into what savings they had), own a home, send their children to college, and pay for healthcare.

Losing a job, of course, has more than just financial consequences for workers and their families.

Unemployment often is an isolating experience. A layoff can strip people of their identity as workers in a chosen field and their workplace-based social network of co-workers and other contacts. Researchers have linked job loss to stress, depression and feelings of distrust, anxiety and shame.

Alarming trends that emerged after the end of the 1990s economic boom may have been amplified by the latest recession. The death rate for middle-aged whites has been rising as a result of suicides, substance abuse and liver diseases, all potentially products of economic distress, according to research by economists Anne Case and Angus Deaton.

Data spanning the recession years show a link between high unemployment and increased abuse of painkillers and hallucinogens. The U.S. suicide rate climbed 24% between 1999 and 2014, a rise that accelerated after 2006, according to the Centers for Disease Control and Prevention. One study of Pennsylvania men who lost long-held jobs during the early 1980s found a spike in mortality following a layoff, with middle-aged men set to lose a year to 18 months off their lifespans.

Researchers have found that the children of people who lose their jobs perform worse on school tests and are more likely to repeat a grade. A father’s layoff is linked with a substantially higher likelihood of anxiety and depression in his children. In one study, the sons of men who were displaced from their jobs earned salaries that were 9% lower compared with otherwise similar children whose fathers had stayed employed.

And the list goes on.

What no one in charge seems to want to talk about is the fact that the economic trauma of the Second Great Depression “has left financial and psychic scars on many Americans, and that those marks are likely to endure for decades”—thus scarring not just millions of individuals and their families, but all of American society.

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I haven’t been to Josh Kline’s new exhibition, “Unemployment,” and I probably won’t make it in time. But I’d certainly like to have had the opportunity to see his artistic representations of various dimensions of the current economic crises.

Here are excerpts from the press release (pdf) for the installation at 47 Canal gallery:

Fast forward ten or twenty years from our present–half a generation. Another American presidential election is scheduled for Fall 2031. Baggy skater pants are back in style in the suburbs. And increasingly intelligent software has turned out the lights on a hundred million jobs. Most of the middle class will never work again. Considered too old, too expensive, too obsolete, and too set in their ways for the faster-paced time in which they find themselves, the majority of people in middle age—born in the 1970s and ‘80s–have no future prospects for professional employment. Lawyer, accountant, banker, administrator, manager, secretary— these now expendable careers have been starved to near-death, following professions like taxi driver, truck driver, train conductor, and factory worker into automated oblivion. What is to be done with the hundreds of millions of people who will never “earn” another paycheck? What is to be done with you?

And what will you do? Will you prowl the streets scavenging pennies and nickels from discarded plastic and glass? Will you Airbnb your body out to strangers in order to make rent? Your mind has left the real economy, but your body still needs to eat food and spend its days somewhere. In a sharing economy, people subscribe instead of owning, so Suburbia’s growing homeless population can’t sleep in their cars anymore.

Income inequality scales exponentially. And unemployment escalates up the asymptote along with it. The money version of Moore’s Law. 21st Century economic crises come equipped standard with a jobless recovery and more effective, efficient automation. Every recession from here on out will close with an ever more brutally competitive round of musical chairs around a diminishing number of lower and lower-paid employment possibilities. If you’re left standing at the end without a job, it’s your own fault, right?

Surprise—this is your going away party! We bought you this personal-sized little cake in gratitude for your years/life of hard work and service. Your brain is no longer required here…

Sure, you’re 55, but you can retrain… And start over with an unpaid internship. It’ll be fine. XOXO KIT.

Capitalism doesn’t care about you. Economic systems don’t have feelings. In a society designed around planned obsolescence, the inevitable fate of goods and services and the people who provide them is to become waste. The same economic alchemy that transmutes a human being into a product—into “human capital”—also turns them into sentient garbage. The other side of consumption’s cheap coin is disposal. Desired, acquired, used, used up, discarded, forgotten—this is the lifecycle of expendable labor inside a runaway free market.

The first step towards a cure is diagnosing the disease. You are not your job. You are not your career. You are a human being.

Good for Manhola Dargis [ht: bn]. She certainly does a much job reviewing La Loi du Marché (bizarrely rendered into the English-language version as The Measure of a Man) than Jordan Hoffman.

I especially appreciated her conclusion:

It’s too bad that the movie’s blunt original title — “La Loi du Marché,” or “Market Law” — was traded in for something prettier and blander. “The Measure of a Man” suggests stirring possibilities (“Of all things the measure is man,” as the philosopher once put it), but it doesn’t convey the ordinary cold brutality of what it means to be defined by the unpaid and the radically underpaid hour. Mr. Brizé, who wrote the script with Olivier Gorce, doesn’t break ground here. Yet, with Mr. Lindon’s help and in several extraordinary scenes in the market’s back office — a white hell in which people are pushed to sell out one another — Mr. Brizé transforms one individual’s story into a social tragedy.

That final comment on the movie is actually a perfect characterization of capitalism: it turns individual stories (whether of an unemployed worker or capitalists who make rational decisions not to reinvest the surplus they appropriate) into social tragedies.

That unemployed worker not only loses the ability to sell their ability to labor, in order to receive a wage that allows them to purchase the commodities they need to survive; their situation also imperils their psychological and physical health as all as that of their family, not to mention the economic and social health of the community in which they live. All are placed on a shakier footing because one worker who loses their job is often accompanied by many others in a similar situation within capitalism—whether because enterprises reorganize, industries collapse, or entire economies enter into recessions and depressions.

The same is true of capitalists: they often make individually rational decisions not to invest (because, for example, future expected profits are low, since wages might be rising or other businesses are slowing down). But, when they do, the workers they let go and the contractors from whom they were making purchases now can’t make their own purchases from still others and so on, thus multiplying the effects of the original decision. That’s how individually rational decisions can become social disasters.

In both cases, under capitalism, one individual’s story is transformed into a social tragedy.