low skilled workers

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pages: 197 words: 49,240

Melting Pot or Civil War?: A Son of Immigrants Makes the Case Against Open Borders by Reihan Salam

Affordable Care Act / Obamacare, Bonfire of the Vanities, charter city, delayed gratification, Donald Trump, Edward Glaeser, ghettoisation, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, industrial robot, interchangeable parts, job automation, low skilled workers, low-wage service sector, mass immigration, megacity, new economy, obamacare, open borders, race to the bottom, self-driving car, Silicon Valley, special economic zone, two tier labour market, upwardly mobile, urban decay, working poor

The number of truly nonsubstitutable low-skill jobs is almost certainly smaller than Bean et al. anticipate. Perhaps I haven’t convinced you that janitors and home health aides will one day be middle-class professionals who find themselves augmented by a slew of sophisticated technologies. Fair enough. There really are reasons to believe some jobs aren’t going away: this is particularly true in sectors that are stringently regulated, such as medical care, where the doctors’ lobby can be expected to fight business models that might reduce the pay or prestige of physicians, or where there is intense cultural resistance to automation, such as child care. But even if we accept that there are millions of low-skill jobs that will need to be filled in the decades to come, why would we assume that only low-skill workers would be willing to take them on?

In practice, though, offshoring enables large U.S. employers to substitute low-skill workers abroad for low-skill workers at home. This is in stark contrast to the first decades of the twentieth century, when the rise of American industry was fueled by low-skill immigrant labor. But now, it’s possible to contract out the most labor-intensive parts of production to firms and workers based in countries where low-skill labor is cheap and labor standards are lax, or to adopt capital-intensive business models that use low-skill labor sparingly, if at all. The result is that tradable sector employment in the United States is increasingly skewed toward high-skill workers, who work in tandem with low-skill labor overseas. Meanwhile, low-skill workers in the United States typically find themselves employed by smaller, lower-productivity firms that pay lower wages, with business models that likely wouldn’t survive years of serious, sustained wage gains.

While low-skill immigration has greatly enriched immigrant workers themselves and the affluent professionals who rely on them most, this compositional effect has pushed up the poverty rate and kept large swaths of our economy stuck in a low-wage, low-productivity rut. By limiting low-skill immigration, at least for a time, while welcoming high-skill immigration, we can change the dynamic. At the margin, doing so would ease wage pressures on established low-skill workers and make high-skill labor more abundant. Affluent professionals would face more competition, and they would surely resent it. Low-skill workers might face challenges, too, as rising wages would send employers scrambling to boost productivity. In time, though, a more selective, skills-based immigration system would yield a more egalitarian economy, in which machines do the dirty work and workers enjoy middle-class stability. And a more egalitarian economy would help heal our country’s ethnic divides.


pages: 482 words: 117,962

Exceptional People: How Migration Shaped Our World and Will Define Our Future by Ian Goldin, Geoffrey Cameron, Meera Balarajan

Admiral Zheng, agricultural Revolution, barriers to entry, Berlin Wall, Branko Milanovic, British Empire, conceptual framework, creative destruction, demographic transition, Deng Xiaoping, endogenous growth, failed state, Fall of the Berlin Wall, Gini coefficient, global pandemic, global supply chain, guest worker program, illegal immigration, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), job automation, Joseph Schumpeter, knowledge economy, labor-force participation, labour mobility, Lao Tzu, life extension, longitudinal study, low skilled workers, low-wage service sector, Malacca Straits, mass immigration, microcredit, Nelson Mandela, Network effects, new economy, New Urbanism, old age dependency ratio, open borders, out of africa, price mechanism, purchasing power parity, Richard Florida, selection bias, Silicon Valley, Silicon Valley startup, Skype, spice trade, trade route, transaction costs, transatlantic slave trade, women in the workforce, working-age population

About 80 percent of these migrants are employed on fruit, vegetable, and tobacco farms in Ontario, where the average stay is four months.37 Farmers have to offer at least 240 hours of work over six weeks and provide free health insurance, housing and meals or cooking facilities, and a fair wage. Canada's seasonal worker scheme has been held up as a model for other countries, despite criticisms from organized labor and human rights groups for the restrictions it places on migrants.38 The implementation of programs designed to attract temporary low-skill workers has been slow in many developed countries because of the expectation that migrants arriving through other channels will take on less desirable jobs. For instance, in North America and France, many low-skill jobs are done by migrants who have arrived through refugee resettlement or family migration channels.39 In Europe, high-income countries currently meet their demands for low-skill labor through visa-free migration from Eastern Europe. As a result, many European countries have been hesitant to introduce low-skilled migration programs.40 Furthermore, in the post-2008 recession, countries that use temporary migration programs—like Spain and Italy—have curtailed them and encouraged visa-holders to return home.

As such, the extended nature of many high-skill migration programs distinguishes them from low-skill programs, which explicitly aim to prevent any adjustment to permanent status. Low-Skilled Migration As the workforces of developed countries have become more highly educated, the unmet demands of agricultural, manufacturing, and service sectors have led states to open migration channels for foreign low-skilled workers. Recruiting low-skilled workers on short-term or seasonal contracts carries the risk of unintentionally generating a stream of permanent migrants (such as that which resulted from post-WWII “temporary” guest-worker programs in Europe).25 Managing temporary programs, therefore, involves extensive state intervention, cooperation with employers, and the use of incentives and penalties to induce the return of low-skilled migrants.

There is general agreement that the world is about to enter a new stage in international labour migration, with more labour migration sources and destinations and migrants employed in a wider range of industries and occupations.32 New temporary worker programs involve stringent admission procedures, employer incentives and sanctions, and high levels of government regulation. Entry is usually contingent on a job offer, and there are limits on access to public services.33 The number of temporary low-skill workers admitted into OECD countries rose every year between 2000 and 2008.34 In 2005-2006, Australia, Canada, the United States, and New Zealand accepted 1.24 million temporary migrant workers.35 The 2008-2009 recession undercut the demand for low-skill workers and prompted discussion of new protectionist measures and limits on migration in many countries, including the United States, Italy, the United Kingdom, and Spain. Seasonal workers on farms constitute the largest category of temporary workers in OECD countries.36 Under the Commonwealth Caribbean and Mexican Seasonal Agricultural Workers Program, Canadian farmers hire foreign workers for up to eight months a year.


pages: 399 words: 116,828

When Work Disappears: The World of the New Urban Poor by William Julius Wilson

affirmative action, business cycle, citizen journalism, collective bargaining, conceptual framework, declining real wages, deindustrialization, deliberate practice, desegregation, Donald Trump, edge city, ending welfare as we know it, fixed income, full employment, George Gilder, ghettoisation, glass ceiling, Gunnar Myrdal, income inequality, informal economy, jobless men, labor-force participation, longitudinal study, low skilled workers, low-wage service sector, manufacturing employment, mass immigration, new economy, New Urbanism, pink-collar, race to the bottom, RAND corporation, school choice, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, upwardly mobile, urban decay, urban renewal, War on Poverty, working poor, working-age population, Works Progress Administration

People were poor, but they were still working. Ghetto neighborhoods were as highly segregated as they are now, but people were working. The disappearance of work in many inner-city neighborhoods is in part related to the nationwide decline in the fortunes of low-skilled workers. Fundamental structural changes in the new global economy, including changes in the distribution of jobs and in the level of education required to obtain employment, resulted in the simultaneous occurrence of increasing joblessness and declining real wages for low-skilled workers. The decline of the mass production system, the decreasing availability of lower-skilled blue-collar jobs, and the growing importance of training and education in the higher-growth industries adversely affected the employment rates and earnings of low-skilled black workers, many of whom are concentrated in inner-city ghettos.

As much of the foregoing economic analysis suggests, however, the central problem facing inner-city workers is not improving the flow of information about the availability of jobs, or getting to where the jobs are, or becoming job-ready. The central problem is that the demand for labor has shifted away from low-skilled workers because of structural changes in the economy. During certain periods, this problem can be offset to some extent by appropriate macroeconomic levers that can act to enhance economic growth and reduce unemployment, including fiscal policies that regulate government spending and taxation and monetary policies that influence interest rates and control the money supply. But given the fundamental structural decline in the demand for low-skilled workers, such policies will have their greatest impact in the higher-wage sectors of the economy. Many low-wage workers, especially those in high-jobless inner-city neighborhoods who are not in or have dropped out of the labor force and who also face the problem of negative employer attitudes, will not experience any improvement in their job prospects because of fiscal or monetary policies.

Many low-wage workers, especially those in high-jobless inner-city neighborhoods who are not in or have dropped out of the labor force and who also face the problem of negative employer attitudes, will not experience any improvement in their job prospects because of fiscal or monetary policies. Despite some claims that low-skilled workers fail to take advantage of labor-market opportunities, available evidence strongly suggests not only that the jobs for such workers carry lower real wages and fewer benefits than did comparable jobs in the early 1970s, but that it is harder for certain low-skilled workers, especially low-skilled males who are not being absorbed into the expanding service sector (see Chapter 2), to find employment today. As the economists Sheldon Danziger and Peter Gottschalk put it: In our view, the problem is not that more people have chosen not to work, but rather that demand by employers for less-skilled workers, even those who are willing to work at low wages, has declined.


pages: 294 words: 96,661

The Fourth Age: Smart Robots, Conscious Computers, and the Future of Humanity by Byron Reese

agricultural Revolution, AI winter, artificial general intelligence, basic income, Buckminster Fuller, business cycle, business process, Claude Shannon: information theory, clean water, cognitive bias, computer age, crowdsourcing, dark matter, Elon Musk, Eratosthenes, estate planning, financial independence, first square of the chessboard, first square of the chessboard / second half of the chessboard, full employment, Hans Rosling, income inequality, invention of agriculture, invention of movable type, invention of the printing press, invention of writing, Isaac Newton, Islamic Golden Age, James Hargreaves, job automation, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, lateral thinking, life extension, Louis Pasteur, low skilled workers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Mary Lou Jepsen, Moravec's paradox, On the Revolutions of the Heavenly Spheres, pattern recognition, profit motive, Ray Kurzweil, recommendation engine, Rodney Brooks, Sam Altman, self-driving car, Silicon Valley, Skype, spinning jenny, Stephen Hawking, Steve Wozniak, Steven Pinker, strong AI, technological singularity, telepresence, telepresence robot, The Future of Employment, the scientific method, Turing machine, Turing test, universal basic income, Von Neumann architecture, Wall-E, Watson beat the top human players on Jeopardy!, women in the workforce, working poor, Works Progress Administration, Y Combinator

Sure, you may open a factory to make order-taking robot kiosks for fast-food restaurants and create a few new high-wage jobs, but that factory can manufacture many thousands of those robots, destroying untold numbers of order-taking jobs. If technology is destroying vast numbers of low-skilled jobs but is creating only a few new high-skill jobs, we will be left with a shortage of low-skill jobs and a large number of permanently unemployed low-skilled workers. Hence, we are in a permanent Great Depression. There are jobs that computers won’t be doing, or at least won’t for centuries. Priest, plumber, and policeman come to mind. There are real limits to what the machines can do. However, those limits are well above the requirements of many, many existing jobs. Once you accept the idea that automation will do more and more low-skill jobs, you cannot escape the fact that this will result in too many low-skilled workers and too few low-skill jobs. What do we say to this line of narrative? Let’s explore the five assumptions behind it.

That’s why by 2024, the US Bureau of Labor Statistics projects a 29 percent employment growth for interpreters and translators. ASSUMPTION 4: Low-skilled workers will be the first to go. ASSUMPTION 5: There won’t be enough jobs for these workers in the future. The assumptions that low-skilled workers will be the first to go and that there won’t be enough jobs for them undoubtedly have some truth to them, but they require some qualification. Generally speaking, when scoring jobs for how likely they are to be replaced by automation, the lower the wage a job pays, the higher the chance it will be automated. The inference usually drawn from this phenomenon is that a low-wage job is a low-skill job. This is not always the case. From a robot’s point of view, which of these jobs requires more skill: a waiter or a highly trained radiologist who interprets CT scans?

It was Karl Marx who said that “the production of too many useful things results in too many useless people.” This would prove him correct in the extreme. Possibility two involves unemployable people as well. The central idea behind possibility two is that there will be a substantial number of low-skilled workers who will not be able to compete with machines. In this view, the hierarchy of economic value in the future goes from skilled humans on top, then robots, then low-skilled workers. In this scenario, there are a great many low-skill jobs that robots will soon be able to do. For each job replaced, the number of unemployed unskilled workers will increase and the number of unskilled jobs will decrease. So the world will have ever more unskilled workers competing for ever fewer unskilled jobs. There are those who believe that we are already seeing this happen.


Social Capital and Civil Society by Francis Fukuyama

Berlin Wall, blue-collar work, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, George Akerlof, German hyperinflation, Jane Jacobs, Joseph Schumpeter, Kevin Kelly, labor-force participation, low skilled workers, p-value, Pareto efficiency, postindustrial economy, principal–agent problem, RAND corporation, Silicon Valley, The Death and Life of Great American Cities, transaction costs, World Values Survey

The disappearance of high-wage low-skill jobs in sectors like automobiles, steel, meatpacking, and the like is a universal problem for all industrialized countries. This job loss is what accounts for continuing high rates of unemployment in Europe and for falling real working-class wages in the United 25 This speech was reprinted as “Welfare Reform and Character Development,” City Journal 5, no. 1 (Winter 1995): 56-69. [FUKUYAMA] Social Capital 479 States. It is a problem that is bound to become more severe as the Third World develops and more low-skill workers enter the global labor market. It is, as the account of the Great Disruption above indicates, also one of the sources of family breakdown and the various pathologies accompanying the shift in gender roles. Those low-skill workers most severely affected are males rather than females.

There are currently some forty federal and countless state worker retraining programs, the first of which consume some $25 billion of the federal budget every year, and they are as a group generally recognized to be abysmal failures. 26 26 For an overview of vocational and job-training programs, see Derek Bok, T h e State of the Nation: Government and the Quest for a Better Society (Cambridge, Mass.: Harvard University Press, 1997). 480 Tanner Lectures on Human Values The American system of vocational education is very weak compared to that of central Europe; for the most part, low-skill workers are simply left to fend for themselves in acquiring the skills needed to remain employed. Adding urgency to the worker retraining issue is the shifting age composition of all OECD countries. Owing to steady drops in fertility almost all OECD countries will be losing population at a dramatic rate by the middle of the twenty-first century. Using the low-growth fertility assumptions of the U.N.

Management through a hierarchy usually entails the creation of a system of formal rules and standard operating procedures -the essence of Weberian bureaucracy. Formal rules become problematic when decisions have to be made on the basis of information that is complex or hard to measure and evaluate. In labor markets, advertising and listings of formal job requirements are used to match supply and demand for simple, low-skill jobs; 14 informal networks take over when universities or 13 Ludwig Von Mises, Socialism: A n Economic and Sociological Analysis (Indianapolis, Ind.: Liberty Classics, 1981); Friedrich A. Hayek, “The Use of Knowledge in Society,” American Economic Review 35 (1945): 519-30. 14 See, for example, Kenneth J. Arrow, “Classificatory Notes on the Production of Transmission of Technological Knowledge,” American Economic Review 59 (1969): 29-33.


pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

active measures, affirmative action, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, disruptive innovation, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, manufacturing employment, market bubble, market design, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shared worldview, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, winner-take-all economy, working poor, zero-sum game

The numbers of high-skill, high-wage workers could dramatically increase by outsmarting workers from other nations, leading domestic and foreign companies to expand their high-value, knowledge-intensive activities in America, given the superior productivity that smarter employees can create. As a consequence, there was no need to unduly mourn the loss of low-skill manufacturing jobs to Asia, South America, or Eastern Europe despite the short-term problems it caused for displaced workers. Better-quality jobs were being created to replace them, although there was bound to be a period of adjustment as workers retrained for more skilled positions. The idea of a magnet economy recognized a global auction for jobs, but this was limited to low-skill jobs auctioned on price, resulting in manufacturing jobs migrating to low-wage economies in Asia, South America, or Eastern Europe. There was little understanding that price competition could ultimately reduce the bargaining power of America’s professional and managerial workers.

Nation-states were seen as largely powerless to protect domestic markets from international competition. Routine 20 The Global Auction production could be fulfilled in low-wage countries for a fraction of the cost of operating plants in North America or Western Europe. Gone were the days when national champions, such as Ford in America, ICI in Britain, and Siemens in Germany, offered high wages to low-skill workers as they did after World War II. These companies had little choice other than to exploit the global market for labor if they were to remain competitive. Accordingly, there are no American, British, or German jobs, only American, British, or German workers who must confront the ultimate judgment of the global market. Although this presented a challenge to workers in affluent economies, the global job market also offered an unprecedented opportunity for America to become a magnet economy, attracting a disproportionate share of the global supply of high-skill, high-wage jobs.18 If there was a global job market, the numbers of managers, designers, engineers, lawyers, and consultants in the American workforce could be rapidly expanded because they could be employed to service the global economy rather than be restricted to the requirements of the domestic economy.

It was judged that Taylor’s principles were an abuse of the welfare of workers, and the principles were banned on all government-funded work until 1949. Yet it was the rise of mass assembly-line production associated with the name of Henry Ford that ensured Taylor his place in economic history. Ford drew on a range of innovations that were prevalent at the time, although he denied that scientific management had influenced the creation of the moving assembly line that employed mass ranks of low-skill workers responsible for carrying out the same monotonous tasks. Craft skills were broken down into their most rudimentary form, reduced to a series of simple repetitive operations of the order of punching a hole in metal plates thousands of times a day without moving from the machine. In the case of General Motors’ Vega, two young women jumped on and off the assembly line and slid grilles behind the headlights; this was one of the more active roles available.


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, cleantech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, too big to fail, trade liberalization, union organizing, urban decay, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

What is new is the acceleration of this trend and the increasing vulnerability of many high-skill occupations and nonroutine low-skill jobs. Clearly this has yet to massively affect the high-educated, since investment in education still commands high returns, but dispersion in wages and job opportunities is increasing among the well-educated, and it is certainly not inconceivable that substitution effects will in the future come to dominate complementarity effects for a majority. This points to a less radical, but nevertheless transformative, techo-optimist scenario. Yet in assessing the consequences of such a shift we cannot extrapolate from what has happened to the minority of low-skilled workers in the past. Losers in the labor market are not automatically protected by democracy, but it makes a huge difference if they are in a majority or in a minority.

The government would not want that, of course, but the alternative of reducing training intensity runs up against the interests of two very different constituencies. First, and most obvious, export-oriented firms will be opposed because they would face an increase in labor costs and will have to scale back their operations. Second, the relative supply of low-skilled workers will rise, which will cause a corresponding decline in their relative wages. Although this will be somewhat compensated for by a higher real exchange rate and cheaper imports, the compensation is less than one hundred percent, and much less in large countries. From this it follows that low-skilled workers will block lower funding for training if they are represented by a party in government. Insofar as PR electoral systems—which all export-oriented countries in Europe adopted in the early twentieth century—produce more center-left governments, it would be hard for such governments to agree to a balanced trade international rule.

The critics of capitalism are right that footloose capital constrains what states can do; it is just that advanced capitalism is not footloose.13 Thus we find the idea thoroughly unpersuasive that advanced capitalism has suborned the autonomy of democracy through globalization, and is responsible for austerity, poverty, and cutbacks in redistribution and the welfare state. One can of course find examples of governments giving tax concessions to companies that promise to retain jobs instead of moving them to low-wage countries. Such pressures and temptations arise naturally as part of Vernon’s (1966) product life-cycle as production becomes more routinized and can be performed by robots or low-skilled workers abroad. But we think it is far more remarkable that governments in ACDs routinely shun such temptations. At the height of deindustrialization in the 1980s governments across ACDs engaged in policies that accelerated the decline of sunset industries by cutting back subsidies, privatizing unproductive public enterprises, and removing barriers to competition from low-wage countries while betting on new high value-added industries moving in to take advantage of an abundance of high-skilled labor (and the associated institutional supports).


pages: 436 words: 98,538

The Upside of Inequality by Edward Conard

affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, assortative mating, bank run, Berlin Wall, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Climatic Research Unit, cloud computing, corporate governance, creative destruction, Credit Default Swap, crony capitalism, disruptive innovation, diversified portfolio, Donald Trump, en.wikipedia.org, Erik Brynjolfsson, Fall of the Berlin Wall, full employment, future of work, Gini coefficient, illegal immigration, immigration reform, income inequality, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invisible hand, Isaac Newton, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, Kodak vs Instagram, labor-force participation, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, meta analysis, meta-analysis, new economy, offshore financial centre, paradox of thrift, Paul Samuelson, pushing on a string, quantitative easing, randomized controlled trial, risk-adjusted returns, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, selection bias, Silicon Valley, Simon Kuznets, Snapchat, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, total factor productivity, twin studies, Tyler Cowen: Great Stagnation, University of East Anglia, upwardly mobile, War on Poverty, winner-take-all economy, women in the workforce, working poor, working-age population, zero-sum game

Do they realize that apartheid South Africa raised the minimum wage to prevent black South Africans from competing with lesser-skilled white South Africans for jobs?52 One can’t help but fear that the $15 hourly minimum wage in Seattle, for example, a thriving city with a low share of Hispanic immigrants, isn’t intended to do the same thing—eliminate low-skilled jobs and motivate low-skilled workers to settle elsewhere. Perhaps a high national minimum wage would discourage low-skilled workers from immigrating to America by limiting their opportunities for employment, but it would be detrimental to the low-skilled workers who have already settled here. Meanwhile, advocates of the poor would insist on raising government benefits to meet the material needs of unemployed workers not of their own making. Rather than attracting hard-working immigrants with jobs, we would attract those seeking government benefits.

They have also ignored compositional shifts in the workforce to higher-skilled workers.46 Credible empirical studies of minimum-wage employment that take these factors into account show that if employers are forced by law to pay higher wages, they simply hire employees with higher productivity who are worthy of higher wages.47 These studies show “higher minimum wage drawing those enrolled in school and working part-time into full-time work, while pushing those working full-time and not enrolled in school out of jobs into ‘idleness’ (neither working nor employed),” and “substitution from low-skilled adults to possibly higher-skilled teenage students (in food-service occupations).”48 This harms, rather than helps, the low-skilled workers it seeks to help. A 2014 study published by the National Bureau of Economic Research tracked—for the first time—the employment and earning histories of individuals most affected by increases in the minimum wage and found that increases in the minimum wage over the last ten years reduced employment among low-skilled workers 6 to 9 percentage points.49 Similarly, the Congressional Budget Office estimates that 500,000 workers will lose their jobs if the federal government increases the minimum wage from $7.25 an hour to $10.10 an hour, and cautions that the loss among the lowest-skilled workers—namely, African American workers between the ages of twenty and twenty-four, where unemployment rates are twice as high as their white counterparts—will be three times greater than adults generally.50 In other words, if higher-skilled workers replace lower-skilled workers, the job loss among lower-skilled workers could be substantially greater than 500,000.

It’s true that if low-skilled immigrants contributed proportionally to constrained resources, an influx would not reduce wages. But surely they do not contribute proportionally to these resources. At the same time, information technology opens a window of attractive investment opportunities that competes with displaced workers for the attention of properly trained talent and the economy’s willingness and capacity to take risk. Successful IT start-ups like Google and Facebook tend not to employ low-skilled workers directly. Instead, attractive investment opportunities raise the pay of properly trained talent and successful risk-takers, and their increased demand employs lesser-skilled workers in other lines of works—waiters and landscapers, for example. But an influx of low-skilled immigration spreads a given increase in the demand of properly trained talent and successful risk-takers over a greater number of lesser-skilled workers who compete with one another to satisfy that demand.


pages: 165 words: 45,129

The Economics of Inequality by Thomas Piketty, Arthur Goldhammer

"Robert Solow", affirmative action, basic income, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, conceptual framework, deindustrialization, endogenous growth, Gini coefficient, income inequality, low skilled workers, means of production, moral hazard, Pareto efficiency, purchasing power parity, Simon Kuznets, The Bell Curve by Richard Herrnstein and Charles Murray, very high income, working-age population

Again, empirical studies confirm the existence of such substitutability: demand for low-skilled labor decreases relative to demand for skilled labor when its relative cost rises, and vice versa. All available econometric studies show that the elasticities in question are systematically higher than the elasticity of capital/labor substitution (Krussel et al., 1996; Hamermesh, 1986) (compare Chapter 2), and these findings are confirmed by historical work on major structural shifts in employment in various countries and periods. It is easier to replace low-skilled workers with machinery or skilled workers than to do without skilled workers. However, the superiority of fiscal transfers and allocation by price is no more readily accepted in regard to wage redistribution than in regard to capital/labor redistribution. The left remains skeptical about reducing employer-paid social charges on low-wage workers. The idea that the payment of unequal wages—possibly quite unequal wages—to different categories of workers might play a useful allocative role is hard to accept, as is the idea that wages should therefore be allowed to adjust freely, while using taxes and transfers to correct the resulting unjust distribution of income.

The government might reach such a decision because it believes that this is the only way to preserve the incentives needed to encourage the manager to acquire the necessary skills. If a union disagrees because it thinks that the employee should earn €1,525 a month and the manager only €3,810, then the only way to proceed is to attempt to forcibly impose a new wage schedule on employers. Of course, it would be better to increase the manager’s tax by €760 a month and use the proceeds to make a fiscal transfer of €760 to the low-skilled worker. That way, the firm would not have to pay more to its workers and less to its managers, which would inevitably lead to hiring fewer workers and more managers and thus to an increase in unemployment. But unions do not have the power to levy taxes and make transfers. Historically, the role of unions has been to intervene in conflicts of this type: when the state fails to play the redistributive role that the unions believe it should play, they step in and use the resources at their disposal: direct redistribution through struggle in the workplace.

If there is substantial elasticity of substitution between different types of labor (defined in the same way we defined elasticity of capital/labor substitution in Chapter 2), however, fiscal redistribution is strictly superior: it allows increasing the income of relatively unskilled workers by the same proportion as direct redistribution but without increasing the cost of low-skilled labor to the firm and thus without decreasing the number of low-skilled jobs. Once again, the superiority of fiscal redistribution comes from the fact that, unlike direct redistribution, it severs the connection between the price paid by the firm and the price received by the worker. This argument is quite general and does not apply only to redistribution between workers of different skill levels. For example, a system of family allocations financed by a deduction from workers’ paychecks would make it possible to redistribute wages to workers with children without increasing their cost to firms, in contrast to a direct distribution asking employers to pay a higher wage to workers with children than to those without.


Work in the Future The Automation Revolution-Palgrave MacMillan (2019) by Robert Skidelsky Nan Craig

3D printing, Airbnb, algorithmic trading, Amazon Web Services, anti-work, artificial general intelligence, autonomous vehicles, basic income, business cycle, cloud computing, collective bargaining, correlation does not imply causation, creative destruction, data is the new oil, David Graeber, David Ricardo: comparative advantage, deindustrialization, deskilling, disintermediation, Donald Trump, Erik Brynjolfsson, feminist movement, Frederick Winslow Taylor, future of work, gig economy, global supply chain, income inequality, informal economy, Internet of things, Jarndyce and Jarndyce, Jarndyce and Jarndyce, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, knowledge economy, Loebner Prize, low skilled workers, Lyft, Mark Zuckerberg, means of production, moral panic, Network effects, new economy, off grid, pattern recognition, post-work, Ronald Coase, Second Machine Age, self-driving car, sharing economy, Steve Jobs, strong AI, technoutopianism, The Chicago School, The Future of Employment, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, Turing test, Uber for X, uber lyft, universal basic income, wealth creators, working poor

Previously, the focus for many had been on why the so-called ‘skill-premium’ was rising; why, for large parts of the twentieth century, the wages of high-­skilled workers were rising relative to the wages of low-skilled workers, even though the supply of the former was rising as well. (Typically, the premium was measured by comparing the wage of college graduates to those with only a high school education.) There was a popular explanation of this: technological change was ‘skill-biased’ and, for various reasons, new technologies raised the demand for high-skilled workers relative to lowskilled workers, pushing up their wages and that skill-premium. But the trouble was that this story could not explain the hollowing-out of the labour market. There, the interesting fact was not so much that high-­ skilled workers were increasingly being paid more relative to low-skilled workers, but that those middling-skilled workers were enjoying neither the same wage nor job growth as the low-skilled or high-skilled at either end.

Few of today’s jobs existed in 1750 at the dawn of the Industrial Revolution. And job titles like robot engineer, database administrator, and computer support specialists, didn’t even exist in occupational classification as late as the 1970s. And while today’s tech industries don’t employ as many people directly as the smokestack industries of the twentieth century did, they support the incomes of many low-skilled service jobs, as high-income earners, whose skills are complemented by computers, demand many services, like those of janitors, gardeners, hairdressers, fitness trainers, and so on. Second, even if many jobs are becoming automatable, that doesn’t necessarily mean that they must be automated anytime soon. Decisions to automate depend on many factors beyond technology itself. Regulation, consumer preferences, and the relative costs between capital and labour, among many other variables, shape decisions to automate.

What was so compelling about the ALM hypothesis, from an economic point of view, was that it could explain the hollowing-out of the labour market that was taking place—unlike the theory of skill-biased technological change. When, following the thesis, economists took jobs from across the labour market and broke them down into all the tasks that made them up, it transpired that many high-skilled and low-skilled jobs required ‘non-routine’ tasks—that was why they were hard to automate, and why they saw great employment growth. But, critically, those middling-skilled jobs were disproportionately composed of ‘routine’ tasks—that was why, in contrast, they could be automated with relative ease, and why their employment share fell. For a while, this was the dominant way that economists thought about how technological change affected the labour market—there was a realm of ‘non-routine’ tasks at either end of the labour market, out of reach of machines, and left exclusively for human beings to do.


pages: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population

I sketch out an alternative globalization, which will work better both for the rich countries and the poor and especially for workers in both—but not necessarily for the large multinationals who’ve taken over the globalization agenda. The Pain of Globalization Globalization has affected both jobs and wages. It’s simplest to see its effects on low-skilled workers. When an advanced country like the US imports low-skilled, labor-intensive goods, the demand for low-skilled labor in the US falls, simply because we produce less of those goods here. If there is to be full employment, wages for low-skilled workers—adjusted for inflation—have to fall.4 And if wages don’t fall enough, unemployment increases. It’s really that simple. Anybody who believes in the law of supply and demand should understand why globalization (in the absence of government programs to ameliorate its effects) hurts low-skilled workers. The same goes for labor more generally: the US imports labor-intensive goods, and thus trade liberalization (opening up US markets to foreign goods by reducing tariffs or other trade barriers) reduces the overall demand for labor, and thereby also reduces (real) wages in equilibrium.

., 109 corporate tax cuts and, 269n44 and intergenerational justice, 204 long-term, 106 weakening by monopoly power, 63 “invisible hand,” 76 iPhone, 139 IPR, See intellectual property rights Ireland, 108 IRS (Internal Revenue Service), 217 Italy, 133 IT sector, 54; See also hi-tech companies Jackson, Andrew, 101, 241 Janus v. AFSCME, 292n60 Jim Crow laws, 241, 271n3 job destruction, 83, 117 jobs; See also labor force participation ensuring full employment, 193–94 fiscal policy to ensure creation of, 194–96 with good working conditions, 192–97 guaranteed, 196–97 improving quality of, 197 low-skilled workers and, See low-skilled workers and new technologies, 118–23 reducing exploitation, 197 restoring work–life balance, 197 right to, 196–97 Jobs, Steve, 65, 117, 139 Johnson, Lyndon B., 13, 40, 210 joint ventures, with China, 95–96 judges, reducing tenure of, 166, 167 judiciary, 165–67; See also Supreme Court Juliana v. US, 343n50 Jungle, The (Sinclair), 144 Justinian Code, 352n21 Kagan, Elena, 333n35 Kennedy, John F., 28, 33 Keynes, John Maynard, 148 Keynesian economics, xv, 141–42 King, Martin Luther, Jr., 176, 180 knowledge and growth, 183–86 and productivity, xxiv as public good, 141 Trump’s disdain for, xvii and wealth of nations, 9 knowledge-based economy, 237 knowledge gap, 96, 98 knowledge institutions, undermining of, 233–34 Koch brothers, 20, 43, 279n40 Krueger, Alan, 42 Kurz, Mordecai, 54 Kuznets, Simon, 258n9 Kuznets’s Law, 258n9 labeling of food, 88 labor contracts, 73 labor force participation, 42, 181–83, 193 labor income, 51, 54 labor markets, atomistic, 64–66 Land O’Lakes, 352n23 learning society, creating, 183–86 Lee Se-dol, 315n1 legal system, bypassing by arbitration panels, 56–57 lending, 110–11; See also credit Levin, Carl, 311n6 liberalization of markets, See market liberalization life, quality of, 209–21; See also standards of living life expectancy, 14, 41 Lighthizer, Robert, xvi living standards, See standards of living loans, See credit lobbyists, 85, 102, 107, 206, 220 local market power, 61 location-based policies, 187–88 long-term investors, 106 long-term savers, 106 long-term unemployment, insurance for, 189 loopholes, in 2017 tax bill, xvii–xix, 85, 194, 206, 237 low-income trap, 44 low-skilled workers automation and, 118, 119, 122 competitive labor markets and, 198 globalization and, 21, 82, 86 job polarization and, 119 social justice and, 198 trade agreements and, 80 Luther, Martin, 10 machines, as workers, 119 MacLean, Nancy, 160 macroeconomic factors, 89, 190 macro economy, 194 Madoff, Bernie, 145, 311n4 majority rights, voting reform and, 161 Malthus, Thomas Robert, 9 Manchester, England, 188 mandatory voting, 172 manufacturing, tariffs and, 91 March on Washington for Jobs and Freedom (1963), 176 market concentration, 55–57, 108 market economy, 30 market failures, 209–10, 214–16 market forces, as impersonal, 51 market fundamentalism, 150, 239 market liberalization, xiii, 4, 21–22 marketplace of ideas, 75–76 market power, 47–78 and AI, 123–35 antitrust laws to curb, 68–76 and Big Data, 128 creating wealth vs. taking wealth, 49–50 diminishing share of labor and capital, 52–54 and division of national income pie, 51–52 of employers over workers, 64–67 implicit rules of economic game, 62 increase in, 54–62 as inimical to growth, 62–64, 183 and innovation, 57–60, 63–64 and intellectual property rights, 74–75 and labor markets, 64–67 in marketplace of ideas, 75–76 and mergers, 72–73, 108 need to constrain excesses of, 70–72 and political divide, 234 and private investment in research, 184 reasons for increases in, 61 and rents, 54 and technology, 73–74, 122 and wage suppression, 65–66 markets as basis for economy, xii–xiii excessive faith in, 154 failure to achieve full employment, 193–94 failure to address work–life balance, 192 failure to create prosperity, xxii–xxiv failure to provide public goods, 140–41 government’s role in managing, 180 limits of, 24 as means rather than ends, 24 need to restructure, 244 markups, 55, 62 Marshall, John, 241 mass incarceration, See incarceration MasterCard, 60 materialism, 30 media and marketplace of ideas, 75–76 and myth of American Dream, 225 and society’s checks and balances, 11 Trump’s attacks on, 15 Medicare, 13, 142, 168, 210 men, in labor force, 38, 42 mercantilism, 8, 240 Mercer, Robert, 132 merchant fees, 60, 70 mergers banks’ profits from, 107–8 and market power, 72–73 in media outlets, 75 preemptive, 60–61, 70, 73 vertical, 325n17 Merkel, Angela, 268n42 “Mickey Mouse” provision, 74 Microsoft, 58, 75, 325n17 middle-class societies, 13 migrant labor, 163 minimum wage, 86, 87, 199, 274n21 MIT (Massachusetts Institute of Technology), 16 moats, 48, 57–58, 62–63; See also barriers to entry/competition mobility, place-based policies and, 188 monetary policy, 83, 121 money in politics, 167–70; See also campaign spending agenda for reducing power of, 171–74 campaign spending, 171–73 as cause of current problems, 239 Citizens United case, 166, 169–70, 172 curbing influence of, 176–78 disclosure laws, 171 revolving doors and, 173–74 technology and, 132, 246 voting reform and, 162–63 money laundering, 168, 169 monopoly defined, 55 and income inequities, 198 and intellectual property rights, 74–75 natural, 61, 134 and net neutrality, 148 perfect competition vs., 56 and rents, 52 tech companies and Big Data, 131 monopsony, 64, 198 moral sentiments, 229 moral turpitude, 7, 30, 103, 240 mortgage risk, 107 mortgage system, 216–18 movements, need for new, 174–76 multilateral trade deficit, 90–91 multinational corporations, tax avoidance by, 85, 99, 108 multinational development banks, 106 Murdoch, Robert, 133, 177 Musk, Elon, 266n33 Muslim travel ban, 165 Myriad, 126–27 myths, failings masked by, 224–26 National Defense Education Act, 210 National Federation of Independent Business v.

The idea that our trade negotiators got snookered is laughable: we got almost everything we wanted in late-twentieth-century trade negotiations.2 Over the opposition of those from developing countries, we secured strong intellectual property protections—which protected the intellectual property of the advanced countries, but not that of developing countries. We’ve succeeded in forcing countries to open up their markets to our financial firms—and even to accept those highly risky derivatives and other financial products that played a central role in our own financial collapse. It’s true that American workers have been disadvantaged—low-skilled workers in particular have seen their wages reduced, in part because of globalization. But that is partly because American negotiators got what they asked for: the problem was with how we managed globalization and with what we wanted—trade agreements simply advanced corporate interests at the expense of workers in both developed and developing countries. We as a country didn’t do what we should have to help workers whom globalization was hurting.


pages: 403 words: 87,035

The New Geography of Jobs by Enrico Moretti

assortative mating, Bill Gates: Altair 8800, business climate, call centre, cleantech, cloud computing, corporate raider, creative destruction, desegregation, Edward Glaeser, financial innovation, global village, hiring and firing, income inequality, industrial cluster, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, knowledge economy, labor-force participation, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, medical residency, Menlo Park, new economy, peer-to-peer lending, Peter Thiel, Productivity paradox, Richard Florida, Sand Hill Road, Silicon Valley, Skype, special economic zone, Startup school, Steve Jobs, Steve Wozniak, thinkpad, Tyler Cowen: Great Stagnation, Wall-E, Y Combinator, zero-sum game

Much of the current debate on inequality in the United States focuses on the class divide between the America of the privileged—those with a good education and solid professional jobs—and the America of the underprivileged—those with low levels of schooling who often live from paycheck to paycheck with no job security. This view reflects the intuitive notion that technological change and globalization benefit one group and hurt the other, but it misses the important point that the two groups are affected differently in different places. Technological change and globalization result in more employment opportunities for a low-skilled worker in a high-tech hub but fewer opportunities for a similar worker in a hollowed-out manufacturing town. What divides America today is not just socioeconomic status but also geography. The Unequal Distribution of Death America’s Great Divergence is caused by economic forces. But it is having profound effects outside the economic realm. The labor market differences between the three Americas have become so large that they are now generating a growing divide in many other aspects of our private and public life.

Reducing Unemployment with Relocation Vouchers The relative lack of mobility of less educated Americans has large economic costs. We have seen that the changes in the global and national economy are causing an increase in inequality among workers with different skill levels, with the less skilled being hit the hardest. Differences in geographical mobility, coupled with increasing polarization among American cities, only exacerbate the problem. Thus, some of the earning inequality between highly skilled and low-skilled workers reflects mobility differences: if the less educated people were more able and willing to move to cities with better job opportunities, the gap between college graduates and high school graduates would shrink. By being less mobile, less educated workers are also significantly more likely to be unemployed. Figure 10 shows the difference in unemployment rates for different educational groups over the past twenty years.

There are three reasons for this. First, high-skilled immigrants do not compete directly with low-skilled Americans. In fact, the two complement each other, which means that an increase in the former group is likely to raise the productivity of the latter group. Second, firms are apt to respond to an inflow of highly skilled immigrants by investing more, and this new investment may further raise the productivity of low-skilled workers. Third, skilled immigrants generate important spillovers at the local level, since an increase in the number of highly educated individuals in a city tends to strengthen the local economy, thus generating local jobs and raising natives’ wages. In principle, it is possible that the effect is positive even for skilled Americans. Obviously, highly skilled immigrants compete with their American counterparts, and this would tend to depress Americans’ wages.


pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game

What we care about is not wage rates per se, but our actual standard of living, and there is no question that war and restrictive immigration policies lower our standard of living. World War II not only destroyed an incalculable amount of wealth, both at home and abroad, but it also robbed countless individuals of their lives. Immigration, meanwhile, not only allows foreigners to share in the American Dream, which is something we should value for its own sake, but may also fuel economic growth.16 Low-skilled workers tend to bid down wages for low-skilled work, which sounds bad until you remember that this lowers the cost of the products we all buy. And high-skilled workers bring us all the benefits of their ability, which includes starting new businesses (see the careers of Andrew Carnegie, PayPal’s Elon Musk, Intel’s Andy Grove, and Google’s Sergey Brin, among many others). But we should not paint a one-sided picture.

When it comes to the minimum wage, size matters: a 16 percent increase is very different from the 30 and even 100 percent increases being proposed today.21 More important, though, is that these studies only show us what happens over the short run. Over the long run, minimum wage hikes can also lead companies to save money by replacing employees with technology, or by reducing employee perks and benefits. In other cases, higher labor costs may lead some companies not to expand, while other companies may never get started. Either way, fewer jobs for low-skilled workers.22 The point isn’t to criticize the Card and Krueger study in particular. It’s that it’s wrong to take a single empirical study as gospel, and to extrapolate its results without great care. (Writing in 1998, Krugman found it “remarkable” that “this rather iffy result [from Card and Krueger] has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda. . . .

[L]ook at the way those industries are portrayed in pop culture. Show me a plumber, and I’ll show you a 300-pound guy with a giant butt crack and a tool belt. He’s a punch line.”37 But it’s the plumber who gets the last laugh: the fact is that with only a couple years of training, a junior plumber can earn between $40,000 and $50,000 a year, and an experienced plumber can earn upward of $70,000.38 Even the low-skilled service-sector jobs at places such as McDonald’s and Walmart have been unfairly maligned as “dead-end jobs.” A low-skilled, low-paying job is not a limit on opportunity—it’s a stepping-stone to greater opportunity. Or it is if you choose to make it one. Most employers today are desperate, not just for great employees, but even for good employees—competent workers who show up on time and stay until the job is done.


pages: 72 words: 21,361

Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy by Erik Brynjolfsson

"Robert Solow", Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, business cycle, business process, call centre, combinatorial explosion, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, easy for humans, difficult for computers, Erik Brynjolfsson, factory automation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, hiring and firing, income inequality, intangible asset, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, Kickstarter, knowledge worker, Loebner Prize, low skilled workers, minimum wage unemployment, patent troll, pattern recognition, Paul Samuelson, Ray Kurzweil, rising living standards, Robert Gordon, self-driving car, shareholder value, Skype, too big to fail, Turing test, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, wealth creators, winner-take-all economy, zero-sum game

Finally, when technology leads to relatively sudden shifts in income between groups, it may also dampen overall economic growth and potentially precipitate the kind of collapse in aggregate demand reflected in the current slump. Consider each of the three sets of winners and losers discussed earlier. When SBTC increases the incomes of high-skill workers and decreases the incomes and employment of low-skill workers, the net effect may be a fall in overall demand. High-skill workers, given extra income, may choose to increase their leisure and savings rather than work extra hours. Meanwhile, low-skill workers lose their jobs, go on disability, or otherwise drop out of the labor force. Both groups work less than before, so overall output falls.5 One can tell a similar story for how super-wealthy superstars, given additional wealth, choose to save most of it while their less-than-stellar competitors have to cut back consumption.

Ever-falling wages for significant shares of the workforce is not exactly an appealing solution to the threat of technological employment. Aside from the damage it does to the living standards of the affected workers, lower pay only postpones the day of reckoning. Moore’s Law is not a one-time blip but an accelerating exponential trend. The threat of technological unemployment is real. To understand this threat, we'll define three overlapping sets of winners and losers that technical change creates: (1) high-skilled vs. low-skilled workers, (2) superstars vs. everyone else, and (3) capital vs. labor. Each set has well-documented facts and compelling links to digital technology. What’s more, these sets are not mutually exclusive. In fact, the winners in one set are more likely to be winners in the other two sets as well, which concentrates the consequences. In each case, economic theory is clear. Even when technological progress increases productivity and overall wealth, it can also affect the division of rewards, potentially making some people worse off than they were before the innovation.

In a growing economy, the gains to the winners may be larger than the losses of those who are hurt, but this is a small consolation to those who come out on the short end of the bargain. Ultimately, the effects of technology are an empirical question—one that is best settled by looking at the data. For all three sets of winners and losers, the news is troubling. Let’s look at each in turn. 1. High-Skilled vs. Low-Skilled Workers We’ll start with skill-biased technical change, which is perhaps the most carefully studied of the three phenomena. This is technical change that increases the relative demand for high-skill labor while reducing or eliminating the demand for low-skill labor. A lot of factory automation falls into this category, as routine drudgery is turned over to machines while more complex programming, management, and marketing decisions remain the purview of humans.


pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

"Robert Solow", 3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, Kickstarter, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

Advancing Old Globalization in this world leads the rich nation to produce more of the goods that use lots of high-skill labor and advanced technology, and the poor nation to produce less of them. This naturally drives up the reward to technology and high-skill labor in the developed nation. Likewise, free trade pushes the developing nation to make more of the goods that involve a lot of low-skill labor, and this is good for low-skill workers in developing nations. The resulting intensification of low-skill-intensive exports, however, tends to be bad for low-skill workers in rich nations. This was basically the story of globalization in the 1980s. High-skill workers in rich nations won, while low-skill workers in rich nations lost. In both cases, the “mechanism of action” was trade—either higher exports or higher imports. The second unbundling (also known as the New Globalization) adds a new twist to the story. Before thinking through what happens when some of the rich nation’s know-how flows to the poor nation, it is imperative to understand one fact—namely, that knowledge is not like labor or most other factors of production.

Note that this part of the New Globalization’s impact is due to international knowledge flows as well as the trade flows thus generated; this is thus one of things that is really new about the New Globalization. When it comes to the impact that shows up in the developed nation, the vector of transmission is heightened import competition as before. That is, the GVC-fueled rise in the output of low-skill-intensive goods tends to lead to more imports by the developed nations. This plainly harms low-skill workers in the rich nation. Again, this is something that has happened in most advanced nations. There is, however, a more nuanced result from this sort of shift. Brilliant research by Branko Milanovic in his 2016 book Global Inequality: A New Approach for the Age of Globalization shows what this “new winners and losers” means from a planetary perspective. His numbers look at all humans, one by one, and ignore their nationality.

More Polarized Workforce Improved information technology changed the way productions tasks are organized into occupations. Specifically, it meant a regrouping of many low-skill tasks into occupations that tended to require higher skills. Although such automation tends to eliminate some jobs, the workers that stay on tend to be more productive and they tend to need more skills. Thus this aspect of advancing information technology tends to be good for G7 factory workers with advanced skills and bad for low-skill workers whose job is now done by a machine. By contrast, better communications technology allowed more stages to be moved offshore. The stages that were offshored tended to be related to simple fabrication and assembly steps that made heavy use of factory workers. Such workers were hardly members of “the one percent,” in the United States, Europe, and Japan, but they were in the middle-income range for blue-collar workers.


pages: 441 words: 136,954

That Used to Be Us by Thomas L. Friedman, Michael Mandelbaum

addicted to oil, Affordable Care Act / Obamacare, Albert Einstein, Amazon Web Services, American Society of Civil Engineers: Report Card, Andy Kessler, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business process, call centre, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, Climatic Research Unit, cloud computing, collective bargaining, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, delayed gratification, energy security, Fall of the Berlin Wall, fear of failure, full employment, Google Earth, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), job automation, Kenneth Rogoff, knowledge economy, Lean Startup, low skilled workers, Mark Zuckerberg, market design, mass immigration, more computing power than Apollo, Network effects, obamacare, oil shock, pension reform, Report Card for America’s Infrastructure, rising living standards, Ronald Reagan, Rosa Parks, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, the scientific method, Thomas L Friedman, too big to fail, University of East Anglia, WikiLeaks

Moreover, in parallel with the end of the Cold War, technology was flattening the global economic playing field, reducing the advantages of the people in developed countries such as the United States, while empowering those in the developing ones. The pace of global change accelerated to a speed faster than any we had seen before. It took us Americans some time to appreciate that while many of our new competitors were low-wage, low-skilled workers, for the first time a growing number, particularly those in Asia, were low-wage, high-skilled workers. We knew all about cheap labor, but we had never had to deal with cheap genius—at scale. Our historical reference point had always been Europe. The failure to understand that we were living in a new world and to adapt to it was a colossal and costly American mistake. To be sure, the two decades following the Cold War were an extraordinarily productive period for some Americans and some sectors of the American economy.

Every day the world’s citizens, governments, businesses, terrorists—and now mountaintops—are being woven together into an ever tightening web, giving more and more people in more and more places access to cheap tools of connectivity, creativity, and collaboration. The second story tells us that all this connectivity is enabling a whole new category of workers to join the global marketplace. In the process it is exposing Americans to competition from a category of workers we have not seen before on a large scale: the low-wage, high-skilled worker. We have gotten used to low-wage, low-skilled workers in large numbers. But the low-wage, high-skilled worker is a whole new species, to which we will have to adapt. The third story tells us that these technologies are now empowering individuals to level hierarchies—from Arab tyrannies, to mainstream-media companies, to traditional retail outlets, to the United States of America itself. As a result, many of the structural advantages that America had in the Cold War decades are being erased.

The first are “creative creators,” people who do their nonroutine work in a distinctively nonroutine way—the best lawyers, the best accountants, the best doctors, the best entertainers, the best writers, the best professors, and the best scientists. Second are “routine creators,” who do their nonroutine work in a routine way—average lawyers, average accountants, average radiologists, average professors, and average scientists. The third are what we would call “creative servers,” nonroutine low-skilled workers who do their jobs in inspired ways—whether it is the baker who comes up with a special cake recipe and design or the nurse with extraordinary interpersonal bedside skills in a nursing home or the wine steward who dazzles you with his expertise on Australian cabernets. And the fourth are “routine servers,” who do routine serving work in a routine way, offering nothing extra. Attention: Just because you are doing a “nonroutine” job—as, say, a doctor, lawyer, journalist, accountant, teacher, or professor—doesn’t mean that you are safe.


pages: 196 words: 53,627

Let Them In: The Case for Open Borders by Jason L. Riley

affirmative action, business cycle, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, desegregation, guest worker program, hiring and firing, illegal immigration, immigration reform, income inequality, labor-force participation, longitudinal study, low skilled workers, mass immigration, open borders, RAND corporation, Ronald Reagan, school choice, Silicon Valley, trade liberalization, War on Poverty, working poor, working-age population, zero-sum game

The reality is that the amnesty provisions in ICRA weren’t destined to bring us any closer to stopping illegal immigration than were employer sanctions. Illegal immigration to the United States is a function, first and foremost, of too many foreigners chasing too few visas. Some 400,000 people enter the country illegally each year—a direct consequence of the fact that our current policy is to make available just five thousand visas annually for low-skilled workers. If we want to reduce the number of illegal entries, the most sensible course is to provide more legal ways for people to come. This could be done through some sort of guest-worker program or by lifting the quota on green cards or both. The means matter less than the end, which should be to give U.S. businesses legal access to foreign workers going forward. ICRA did not do that, which is why it didn’t solve the problem.

Yet over the next sixty-nine years of relatively smaller immigrant flows, the average unemployment rate was 7.38 percent. Like Peri, Vedder concluded that the reason immigration doesn’t cause unemployment is because immigrants help enlarge America’s economic pie. “Immigrants expand total output and the demand for labor, offsetting the negative effects that a greater labor supply might have,” he writes. “They fill vital niches at the ends of the skill spectrum, doing low-skilled jobs that native Americans rebuff (at prevailing wages) as well as sophisticated high-skill jobs.” Among high-skilled immigrant workers, these dots are perhaps easier to connect. Think of a silicon chip manufacturer in the United States that hires a bright immigrant engineer from China to redesign its products with the goal of making them more cost-efficient and marketable. If the hire is a success, the firm winds up making more chips, which requires more employees.

If Ford and General Motors didn’t have competition from Toyota and Honda, cars would be more expensive and fewer people could afford them. Closing off the U.S. economy to foreign labor likewise would have negative consequences, primarily because the country would have less human capital overall. What’s more, we’d be a poorer society because we’d be using the human capital we did have less efficiently. Low-skilled immigrants fill millions of jobs in agriculture, construction, hotels, health care, light manufacturing, and retail. These are big and important sectors of the U.S. economy, and businesses depend on immigrant labor to stay competitive. Again, the issue isn’t so much the viability of removing foreign labor from the U.S. economy. We’d manage. The issue is whether America would be better off with an immigration policy that incentivizes natives to take jobs below their skill level.


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

"Robert Solow", affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, business cycle, buy and hold, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, Malacca Straits, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

For example, the shift toward computers in nearly every industry favors workers who either have computer skills or are smart enough to learn them on the job. Technology makes smart workers more productive while making low-skilled workers redundant. ATMs replaced bank tellers; self-serve pumps replaced gas station attendants; automated assembly lines replaced workers doing mindless, repetitive tasks. Indeed, the assembly line at General Motors encapsulates the major trend in the American economy. Computers and sophisticated robots now assemble the major components of a car—which creates high-paying jobs for people who write software and design robots while reducing the demand for workers with no specialized skills other than a willingness to do an honest day’s work. Meanwhile, international trade puts low-skilled workers in greater competition with other low-skilled workers around the globe. In the long run, international trade is a powerful force for good; in the short run, it has victims.

Primarily because 35 percent of the population is illiterate (down from almost 50 percent in the early 1990s).2 Or individuals may suffer from conditions that render their human capital less useful. A high proportion of America’s homeless population suffers from substance abuse, disability, or mental illness. A healthy economy matters, too. It was easier to find a job in 2001 than it was in 1975 or 1932. A rising tide does indeed lift all boats; economic growth is a very good thing for poor people. Period. But even at high tide, low-skilled workers are clinging to driftwood while their better-skilled peers are having cocktails on their yachts. A robust economy does not transform valet parking attendants into college professors. Investments in human capital do that. Macroeconomic factors control the tides; human capital determines the quality of the boat. Conversely, a bad economy is usually most devastating for workers at the shallow end of the labor pool.

The motivation for this development harks back to a concept from Chapter 1: opportunity cost. Highly skilled individuals can do all kinds of productive things with their time. Thus, it is fabulously expensive to hire an engineer to bag groceries. (How much would you have to be paid to pass out towels at the Four Seasons?) There are far fewer domestic servants in the United States than in India, even though the United States is a richer country. India is awash with low-skilled workers who have few other employment options; America is not, making domestic labor relatively expensive (as anyone with a nanny can attest). Who can afford a butler who would otherwise earn $50 an hour writing computer code? When we cannot automate menial tasks, we may relegate them to students and young people as a means for them to acquire human capital. I caddied for more than a decade (most famously for George W.


pages: 389 words: 87,758

No Ordinary Disruption: The Four Global Forces Breaking All the Trends by Richard Dobbs, James Manyika

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, additive manufacturing, Airbnb, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, autonomous vehicles, Bakken shale, barriers to entry, business cycle, business intelligence, Carmen Reinhart, central bank independence, cloud computing, corporate governance, creative destruction, crowdsourcing, demographic dividend, deskilling, disintermediation, disruptive innovation, distributed generation, Erik Brynjolfsson, financial innovation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Gini coefficient, global supply chain, global village, hydraulic fracturing, illegal immigration, income inequality, index fund, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, job automation, Just-in-time delivery, Kenneth Rogoff, Kickstarter, knowledge worker, labor-force participation, low skilled workers, Lyft, M-Pesa, mass immigration, megacity, mobile money, Mohammed Bouazizi, Network effects, new economy, New Urbanism, oil shale / tar sands, oil shock, old age dependency ratio, openstreetmap, peer-to-peer lending, pension reform, private sector deleveraging, purchasing power parity, quantitative easing, recommendation engine, Report Card for America’s Infrastructure, RFID, ride hailing / ride sharing, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Snapchat, sovereign wealth fund, spinning jenny, stem cell, Steve Jobs, supply-chain management, TaskRabbit, The Great Moderation, trade route, transaction costs, Travis Kalanick, uber lyft, urban sprawl, Watson beat the top human players on Jeopardy!, working-age population, Zipcar

Increasingly, work is not a place people go to at the same time and place every day; it is something they do under an expanding array of new arrangements. SHIFTING GOALPOSTS AND SKILL GAPS EVERYWHERE The story of skill gaps is no longer a new one, but over the next decade, it will become a familiar one. Around the world, a shortage of approximately 40 million high-skilled workers and 45 million medium-skill workers may emerge, by 2020, alongside a surplus of 95 million low-skilled workers. If the previous era was defined by millions of workers in China joining the global labor force, the next era will see skill gaps emerge even in China—as its number of young workers shrinks by nearly 50 percent between today and 2030 and the country falls short of high-skilled workers by 23 million.4 “Skills security” also seems to be eroding. Continually and rapidly shifting job requirements are a feature of today’s labor market, thanks to the influence of technological change.

In addition to sizing the pools of appropriately skilled workers, it is necessary to assess the quality of local educational systems and the market dynamics that determine wage differentials. This analysis will become increasingly granular, down to knowing the number of college graduates and workers with specific training in cities around the world. Your business can gain an advantage by using this data to create maps of global skills supply, which will inform decisions about where to invest. The world is likely to have too few high-skill workers and not enough jobs for low-skill workers 1 Twenty-five countries from the analyzed set of seventy countries, with 2010 GDP per capita greater than US$20,000 at 2005 purchasing power parity (PPP) levels. 2 Eleven countries from the analyzed set of seventy countries, from South Asia and sub-Saharan Africa, with 2010 GDP per capita less than $3,000 at 2005 PPP. 3 Low-skill defined for advanced economies as no post-secondary education; for developing economies, low skill is primary education or less.

In a world with increasing skill shortages, the focus will need to shift to using technology to make the most of the skills that workers have and to improve their productivity. For instance, retailers that invested in bar-coding devices made their staff at checkout counters more efficient. Manufacturers that adopted computerized numerical control lathes for turning and milling eliminated the need for manual measurement and readjustment. Smart technology devices used by low-skill workers can equip them to perform higher-skill jobs. For example, as part of a financial inclusion program, introduction of technology allowed twenty thousand less-skilled workers in southern India to work as rural banking agents, processing payments with smart cards, cell phones, and kiosks. Using technology to improve the productivity of professional and managerial work has traditionally not received as much attention as it has for more labor-intensive occupations.


pages: 219 words: 62,816

"They Take Our Jobs!": And 20 Other Myths About Immigration by Aviva Chomsky

affirmative action, Bernie Sanders, British Empire, call centre, colonial exploitation, colonial rule, deindustrialization, Donald Trump, European colonialism, full employment, guest worker program, illegal immigration, immigration reform, informal economy, invisible hand, longitudinal study, low skilled workers, mass immigration, mass incarceration, new economy, out of africa, postindustrial economy, race to the bottom, Ronald Reagan, Rosa Parks, structural adjustment programs, The Chicago School, thinkpad, trickle-down economics, union organizing, War on Poverty, Washington Consensus, women in the workforce

CONTENTS A Note on Terminology Introduction, 2018 Introduction, 2007 PART ONE · IMMIGRANTS AND THE ECONOMY Myth 1. Immigrants take American jobs Myth 2. Immigrants compete with low-skilled workers and drive down wages Myth 3. Unions oppose immigration because it harms the working class Myth 4. Immigrants don’t pay taxes Myth 5. Immigrants are a drain on the economy Myth 6. Immigrants send most of what they earn out of the country in the form of remittances PART TWO · IMMIGRANTS AND THE LAW Myth 7. The rules apply to everyone, so new immigrants need to follow them just as immigrants in the past did Myth 8. The country is being overrun by illegal immigrants Myth 9. The United States has a generous refugee policy PART THREE · IMMIGRATION AND RACE Myth 10. The United States is a melting pot that has always welcomed immigrants from all over the world Myth 11.

The Depression of the 1930s, with its devastating rates of unemployment, occurred when hardly any immigrants were coming into the country. The deportation of thousands of people of Mexican origin from the Southwest during the decade did little to affect employment rates in that region (unless you count those employed to carry out the deportations). Unemployment during the Depression, like unemployment today, simply had very little to do with immigration. MYTH 2 IMMIGRANTS COMPETE WITH LOW-SKILLED WORKERS AND DRIVE DOWN WAGES Wages in the United States have indeed been falling with respect to prices, and with respect to profits, since the 1960s. In 2006, wages and salaries made up a smaller proportion of the country’s gross national product than at any time since the government started collecting those statistics in the 1940s, while corporate profits rose to record highs.1 The gradual gains made by the working class during the first half of the twentieth century were being chipped away in the second half—just as immigration rates began to rise again.

This contradiction continues to characterize U.S. law and society: many people who are physically present here are still excluded from the rights and privileges of citizenship. Keeping some people outside of the bounds of equality and citizenship served employers’ need for cheap labor in the past, and continues to do so today. So let’s return to the original question: do immigrants compete with low-skilled workers for low-paying jobs? Yes. But the reason that this competition exists is because too many people are deprived of rights. The proposals for immigration reform that are circulating today do nothing to expand the rights of those currently excluded—in fact they do just the opposite. Further restrictions on immigration will not lower the numbers of immigrants—as long as the demand for labor is there, history has shown that immigrants will keep coming.


pages: 229 words: 61,482

The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want by Diane Mulcahy

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, basic income, Clayton Christensen, cognitive bias, collective bargaining, creative destruction, David Brooks, deliberate practice, diversification, diversified portfolio, fear of failure, financial independence, future of work, gig economy, helicopter parent, Home mortgage interest deduction, housing crisis, job satisfaction, Kickstarter, loss aversion, low skilled workers, Lyft, mass immigration, mental accounting, minimum wage unemployment, mortgage tax deduction, negative equity, passive income, Paul Graham, remote working, risk tolerance, Robert Shiller, Robert Shiller, Silicon Valley, Snapchat, TaskRabbit, Uber and Lyft, uber lyft, universal basic income, wage slave, Y Combinator, Zipcar

The fate of retail and service workers and others in low-skill jobs changes marginally in the Gig Economy, but they continue to be the worst off. These workers are already in mostly poorly paid, insecure, part-time jobs with limited to no benefits, and no control over their schedule. Their wages are stagnating or declining, and their jobs are the most at risk of being automated. Zeynep Ton, an adjunct associate professor at MIT’s Sloan School of Management, refers to these as “bad jobs.”13 These bad jobs won’t go away in the Gig Economy; they are the persistent bane of our economy and our society. The Gig Economy is not a silver bullet. It won’t eliminate bad jobs and poorly paid workers, but what it can do is offer some positive change for these low-skill workers. In the Gig Economy, these workers have the chance to gain more control and have more flexibility and autonomy in their working lives.

Similarly, the economic plight of an on-demand worker for a company like TaskRabbit or Postmates is not materially different from that of a low-wage hourly worker in a fast food restaurant or retail store. They both have low wages and no benefits, but workers who wouldn’t dream of applying for a job in a fast food restaurant are willing to work on platforms like TaskRabbit or Postmates partly because they can do so when and how much they wish. The Gig Economy gives low-skill workers the chance to move from bad jobs to better work. It’s not a big change, but it’s a change in the right direction. Is the Gig Economy Really New? If we step back and consider the Gig Economy and its place in the history of work, we realize that it’s not really new. There have always been contractor and consulting gigs, as well as part-time jobs. What is new is the spread of the Gig Economy into middle class and white-collar jobs, and into the business model of highly valued, highly visible technology startups.


pages: 312 words: 91,835

Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic

"Robert Solow", Asian financial crisis, assortative mating, Berlin Wall, bitcoin, Black Swan, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial exploitation, colonial rule, David Ricardo: comparative advantage, deglobalization, demographic transition, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, invisible hand, labor-force participation, liberal capitalism, low skilled workers, Martin Wolf, means of production, mittelstand, moral hazard, Nash equilibrium, offshore financial centre, oil shock, open borders, Paul Samuelson, place-making, plutocrats, Plutocrats, post scarcity, post-industrial society, profit motive, purchasing power parity, Ralph Nader, Second Machine Age, seigniorage, Silicon Valley, Simon Kuznets, special economic zone, stakhanovite, trade route, transfer pricing, very high income, Vilfredo Pareto, Washington Consensus, women in the workforce

Malign and benign forces that reduce inequality Type of society Malign forces Benign forces Societies with stagnant mean income Idiosyncratic events Wars (through destruction) Civil conflict (state breakdown) Epidemics Societies with a rising mean income Wars (through destruction and higher taxation) Social pressure through politics (socialism, trade unions) Civil conflict (state breakdown) Widespread education Aging population (demand for social protection) Technological change that favors low-skilled workers When it comes to malign forces, however, there is more similarity between preindustrial and modern societies because war and civil conflict play a role in both stagnant and expanding economies. The effect of wars on inequality in preindustrial societies probably varied depending on whether they were wars of conquest, like the ones prosecuted by the Roman Empire at its peak, which led to increased inequality through the creation of servile labor, or wars that resulted in state collapse and thus reduced inequality.

(Data on wage distributions in socialist economies are plentiful, and a number of studies have documented the wage compression.)44 The education premium was also reduced. Since most of the countries that became socialist were less developed than Western Europe and the United States, one might expect the skill premium to have been high (say, similar to what it was in Latin America). But nationalization of enterprises changed that: wages of low-skilled workers were relatively high and wages of high-skilled workers relatively low. Massive increase in schooling on the supply side, however, would have produced some reduction in the high-skill wage premium even if these were market economies. Nationalization of the means of production had two other effects on income distribution. It abolished income from property, income that is always heavily skewed toward the rich, and it almost eliminated the entrepreneurial return, since private entrepreneurship was banned or pushed to the margins.

The peak of inequality came in 1867, at a Gini value of almost 60 (that is, 10 points higher than at the same time in the United States), according to the social tables from which we calculate income distribution.25 Note that inequality in the United Kingdom has declined from being drastically higher than in the United States (and higher than in today’s Brazil) to being lower than in the United States. As argued many years ago by Lindert and Williamson (1985), by Polak and Williamson (1993), and more recently by Williamson in his book Trade and Poverty (2011), US inequality continued to increase after British inequality peaked because the arrival of new immigrants in the 1910s kept wages for low-skill jobs relatively low and caused overall US wage distribution to widen, or stretch out. This is the wage-stretching explanation for increased inequality, as contrasted with what van Zanden (1995) called the classical explanation, which sees an increasing share of capital in functional income distribution gradually leading to greater interpersonal inequality. We shall also find the echoes of these two different explanations in the recent increase in inequality in the United States: most of the increase until about the year 2000 was due to wage-stretching, but since 2000, it may have been driven in addition by a rise in the share of income coming from capital.


pages: 555 words: 80,635

Open: The Progressive Case for Free Trade, Immigration, and Global Capital by Kimberly Clausing

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active measures, Affordable Care Act / Obamacare, agricultural Revolution, battle of ideas, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, corporate social responsibility, creative destruction, currency manipulation / currency intervention, David Ricardo: comparative advantage, Donald Trump, floating exchange rates, full employment, gig economy, global supply chain, global value chain, guest worker program, illegal immigration, immigration reform, income inequality, index fund, investor state dispute settlement, knowledge worker, labor-force participation, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, meta analysis, meta-analysis, offshore financial centre, open economy, Paul Samuelson, profit motive, purchasing power parity, race to the bottom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transfer pricing, uber lyft, winner-take-all economy, working-age population, zero-sum game

Since the United States is well endowed with land that is ideal for many types of agricultural production, with a large capital stock that includes expensive, highly-mechanized farm equipment, and with technological knowledge about agricultural techniques, seeds, and fertilizers, it is unsurprising that we export many agricultural products.1 Likewise, since the United States is well endowed with technologically sophisticated engineers, scientists, and computer scientists, and spends large amounts on research and development to enhance what those workers can do, it also exports goods that reflect these advantages, such as medical equipment and software. At the same time, the United States has fewer low-skill workers relative to other countries, and goods like textiles, shoes, steel, and many manufactured goods may be produced abroad at lower cost. This reduces demand for domestic workers in these industries, and lowers their wages. Since low-skilled workers are more likely to be in import industries and high-skill workers are more likely to be in export industries, trade may systematically worsen the income distribution.2 International trade may also play a role, indirectly, in the rise of the top 1 percent share of the income distribution.

Chapter 4 tackles the important distributional consequences of trade, showing that international trade generates both winners and losers. Without strong accompanying policies, we have no way to be sure that large segments of society are not harmed by trade. In the United States, international trade is more likely to reward capitalists and high-income, high-skill workers, while reducing wages and opportunities for low-income, low-skill workers. Chapter 4 also tackles other sources of workers’ woes, and most importantly, the effects of rapid technological change, including automation and the rapid spread of computers and the Internet. These technological forces have been more important than international trade in terms of harmful effects on low- and middle-income workers. Mechanization and computerization have replaced labor in many jobs, and the same technological changes have created outsized profits for those at the top of society.

The losers from these global trends are not happy, and they have responded by voting for those that promise populist interventions, such as erecting trade barriers, imposing penalties on firms that send jobs offshore, and renegotiating, or exiting, prior trade agreements. Yet the populists proposing to turn back the clock on globalization do not suggest turning back the clock on technological innovation. Surely, if we all threw away our computers, or even banned computing, that would be a quick way to increase demand for low-skilled workers and return to the economy of yore. Suddenly, there would be an enormous demand for labor to do the myriad tasks that computers used to do for us. That argument is silly, of course. First, delaying technological progress, let alone reversing it, is very difficult to do. (Though not impossible. Periods of war produce technological setbacks by destroying capital and reducing nonmilitary investment.)


pages: 112 words: 30,160

The Gated City (Kindle Single) by Ryan Avent

big-box store, carbon footprint, deindustrialization, edge city, Edward Glaeser, income inequality, industrial cluster, labor-force participation, low skilled workers, manufacturing employment, offshore financial centre, profit maximization, rent-seeking, Silicon Valley, Thorstein Veblen, transit-oriented development, Tyler Cowen: Great Stagnation, Veblen good, white picket fence, zero-sum game

For much of last century, skilled manufacturing and semi-skilled office labor were in high demand among US firms. But as technology improved, automation eliminated many of these positions -- robots now build the cars and computers manage the books. Technology allowed a relocation of other jobs to places with lower labor costs. A huge mass of middle-skilled workers suddenly found itself competing with low-skilled workers, in America and abroad, for low-skill jobs. At the same time, technology increased the return to high-skill positions. The Internet now allows a skilled designer to serve customers around the world, substantially increasing his potential returns. Economists Lawrence Katz and Claudia Goldin further argue that America's educational system has not been very successful at increasing educational attainment. While the demand for skills rose, the supply of highly educated Americans lagged, leading to tight labor markets and high wages for the most educated, and a glutted market plagued by stagnant wages for the rest


pages: 382 words: 100,127

The Road to Somewhere: The Populist Revolt and the Future of Politics by David Goodhart

Affordable Care Act / Obamacare, agricultural Revolution, assortative mating, Big bang: deregulation of the City of London, borderless world, Boris Johnson, Branko Milanovic, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, central bank independence, centre right, coherent worldview, corporate governance, credit crunch, deglobalization, deindustrialization, Donald Trump, Downton Abbey, Edward Glaeser, en.wikipedia.org, Etonian, European colonialism, eurozone crisis, falling living standards, first-past-the-post, gender pay gap, gig economy, glass ceiling, global supply chain, global village, illegal immigration, income inequality, informal economy, job satisfaction, knowledge economy, labour market flexibility, low skilled workers, market friction, mass immigration, mittelstand, Neil Kinnock, New Urbanism, non-tariff barriers, North Sea oil, obamacare, old-boy network, open borders, Peter Singer: altruism, post-industrial society, post-materialism, postnationalism / post nation state, race to the bottom, Richard Florida, Ronald Reagan, selection bias, shareholder value, Skype, Sloane Ranger, stem cell, Thomas L Friedman, transaction costs, trickle-down economics, ultimatum game, upwardly mobile, wages for housework, white flight, women in the workforce, working poor, working-age population, World Values Survey

At the bottom end the displacement story is even clearer (and that is without even considering illegal immigration in the capital). Around 20 per cent of low-skill jobs are taken by people born abroad, and according to Ian Gordon of the LSE, wages in the bottom 20 per cent may have been depressed by at least 15 per cent in periods of peak inflow.57 Until the big immigration surge starting in the late 1990s there were fewer people in London employed at the very bottom end of the labour market than elsewhere in the country, and they were better paid. Mass immigration has expanded the numbers at the bottom and increased the pay gap. Why would you employ a local school-leaver for a low-skill service sector job when you can hire a better motivated graduate with modest wage expectations from eastern or southern Europe? This is not just about coffee shops.

This was not just a passing fad, more than a decade later in 2006 in Gordon Brown’s penultimate budget speech he actually predicted there would be just 600,000 low-skill jobs by 2020. This was an extraordinary piece of wrong-headed conventional wisdom. The demand for low-skilled, and mainly low paid, jobs has in fact been increasing in recent decades, stimulated by a host of factors: Britain’s flexible labour market, privatisation, the contracting out of so many jobs by big companies, the disappearance of a high wage floor in some sectors once sustained by unions and wages councils, the introduction of a more comprehensive tax credit income supplement system in 1999, the high demand for part-time work from working mothers, and, since 2004, the inflow of large numbers of eastern Europeans with a generally high work ethic and low wage expectations. Estimates of the number of low-skill jobs, depending on the definition of low skill, range from 8 million to 13 million (25 per cent to 40 per cent of all jobs)—including, among others, retail, cleaning, hospitality, care, driving/delivery jobs, assembly line work and routine clerical and call centre work.

Notwithstanding all these depressing statistics about ‘bad jobs’ it is also worth noting that 71 per cent of workers think they have a good job, according to that 2015 British Social Attitudes survey.46 And Andrew Oswald of Warwick University has found no correlation at all between levels of education and job satisfaction.47 Quite a few people in low-skill jobs have high satisfaction and some people with advanced degrees who are paid £200,000 have low satisfaction. The disappearing middle income/middle status jobs must also be kept in perspective. Even allowing for 40 per cent of high-skill jobs and 30 per cent of low-skill jobs that still leaves 30 per cent for middling ones, and although the ‘hollowing out’ of skill levels is well established there seems to have been much less hollowing out of incomes, with no significant reduction in the number of people in the middle income deciles.


pages: 419 words: 109,241

A World Without Work: Technology, Automation, and How We Should Respond by Daniel Susskind

3D printing, agricultural Revolution, AI winter, Airbnb, Albert Einstein, algorithmic trading, artificial general intelligence, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, blue-collar work, British Empire, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computer age, computer vision, computerized trading, creative destruction, David Graeber, David Ricardo: comparative advantage, demographic transition, deskilling, disruptive innovation, Donald Trump, Douglas Hofstadter, drone strike, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, future of work, gig economy, Gini coefficient, Google Glasses, Gödel, Escher, Bach, income inequality, income per capita, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Hargreaves, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joi Ito, Joseph Schumpeter, Kenneth Arrow, Khan Academy, Kickstarter, low skilled workers, lump of labour, Marc Andreessen, Mark Zuckerberg, means of production, Metcalfe’s law, natural language processing, Network effects, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, pink-collar, precariat, purchasing power parity, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Gordon, Sam Altman, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, social intelligence, software is eating the world, sovereign wealth fund, spinning jenny, Stephen Hawking, Steve Jobs, strong AI, telemarketer, The Future of Employment, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, Travis Kalanick, Turing test, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, Watson beat the top human players on Jeopardy!, We are the 99%, wealth creators, working poor, working-age population, Y Combinator

As we saw in the previous chapter, when the Industrial Revolution got under way in Britain, new machines were introduced to the workplace, new production processes were set up, and so new tasks had to be done. But it turned out that those without the skills of the day were often best placed to perform these tasks. Technology, rather than being skill-biased, was “unskill-biased” instead.11 A popular picture of the Industrial Revolution depicts a wave of machines displacing swaths of low-skilled workers from their roles—people who made their living spinning thread and wefting cloth with bare hands and basic tools finding themselves without work. But this is not what happened. It was the high-skilled workers of the time who were under threat. Ned Ludd, the apocryphal leader of the Luddite uprising against automation, was a skilled worker of his age, not an unskilled one. If he actually existed, he would have been a professional of sorts—perhaps even a card-carrying member of the Worshipful Company of Clothworkers, a prestigious club for people of his trade.

Personal care aides (83.7 percent), registered nurses (89.9 percent), home health aides (88.6 percent), food preparation and services (53.8 percent), retail salespersons (48.2 percent). Again, see the US Bureau of Labor Statistics “Household Data.” 27.  Enrico Moretti, The New Geography of Jobs (New York: First Mariner Books, 2013), p. 17. 28.  Ibid., p. 23. 29.  Ibid., pp. 82–5. 30.  Ibid., p. 89. 31.  Emily Badger and Quoctrung Bui, “What If Cities Are No Longer the Land of Opportunity for Low-Skilled Workers?,” New York Times, 11 January 2019. 32.  Moretti, New Geography of Jobs. 33.  Eurostat (2019) data, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Young_people_-_social_inclusion#Living_with_parents (accessed April 2019). 34.  Moretti, New Geography of Jobs, p. 157. 35.  Louis Uchitelle, “Unemployment Is Low, but That’s Only Part of the Story,” New York Times, 11 July 2019. 36.  

See, for instance, Maarten Goos, Alan Manning, and Anna Salomons, “Explaining Job Polarization: Routine-Biased Technological Change and Offshoring,” American Economic Review 104, no. 8 (2014): 2509–26; David Autor, “The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings,” Center for American Progress (April 2010); David Autor and David Dorn, “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market,” American Economic Review 103, no. 5 (2013): 1553–97; and Maarten Goos and Alan Manning, “Lousy and Lovely Jobs: The Rising Polarization of Work in Britain,” Review of Economics and Statistics 89, no. 1 (2007): 119–33. 19.  For the 0.01 percent statistic, see Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States,” published online at https://eml.berkeley.edu/~saez/ (2016).


pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

"Robert Solow", 23andMe, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, cognitive bias, computer age, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial innovation, full employment, fundamental attribution error, future of work, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, job automation, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

In the workplace, so the story runs, computers are particularly good at replacing routine tasks: switchboards in telephone exchanges, repetitive tasks on production lines, giving out money at a bank. And in the last years computers have gotten even smarter: issuing boarding passes, checking you out at supermarkets, and answering routine questions over the phone. As these computers have gotten cheaper and cheaper, it’s become more and more worthwhile for firms to replace low-skilled workers with computers. Demand for those workers has fallen and so, therefore, have their wages. More recently, Erik Brynjolfsson and Andrew McAfee (2014) have warned that, because of the speed with which information technology improves, computers may start replacing humans much faster than we are used to. This “race against the machine” or “rise of the robots” could be expected to make poorer workers redundant, to the benefit of rich capitalists.

In the United States, the gap in income between skilled and unskilled workers, which initially gave rise to explanations based on skills-biased technical change, stopped diverging in about 2000. Since then, the big rises have accrued mostly to the top 1 percent. See figure 6.3. Figure 6.3. Income shares of the top 1 percent in English-speaking countries. Source: Alvaredo et al. 2013. It’s easy to imagine how low-skilled workers in developed countries might lose out if they don’t have the skills to work with computers, or if their jobs are threatened by lower-paid workers in other countries. But the way these changes would benefit only the very rich is less clear. Some of the very rich have gotten richer because of technology or because they employ cheap foreign labor. But certainly not all. For every Silicon Valley mogul or quantitative hedge fund owner, there are a lot of senior managers of what we’d think of as normal businesses among the new elite.

This put pressure on lower-skilled workers making the same kinds of goods in developed countries, and many lost their jobs or saw their pay stagnate. This is a staggeringly good outcome for people in poorer countries, as Milanović’s (2005) research shows: the last two decades have seen a huge and long-overdue rise in prosperity of the developing world. But the working classes in the developed world have, it is argued, borne most of the costs. Immigration can play a similar role, increasing competition for low-skilled jobs (especially between new and recent immigrants). The third explanation for today’s inequality, focused on wealth inequality, is more basic: it is the idea that capital tends to accumulate unless some countervailing force prevents it. Piketty’s now famous r > g inequality (explained in box 6.2) implies that if returns on capital (r) exceed the growth of the economy as a whole (g), then the slice of the economic pie owned by the rich will generally grow.


pages: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

"Robert Solow", 3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, basic income, Bernie Sanders, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, charter city, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fear of failure, financial innovation, George Akerlof, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, labor-force participation, land reform, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, Network effects, new economy, New Urbanism, non-tariff barriers, obamacare, offshore financial centre, open economy, Paul Samuelson, place-making, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Ronald Reagan, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

This is how California, at least temporarily, gave up on such delicacies as asparagus, fresh strawberries, lettuce, celery, and pickling cucumbers. A third, closely related point is that employers may want to reorganize production to make effective use of the new workers, which can create new roles for the native low-skilled population. In the Danish case we discussed above, Danish low-skilled workers eventually benefited from the influx of migrants, in part because it enabled them to change their occupations.31 Where there were more migrants around, more native low-skilled workers upgraded from manual to nonmanual jobs and changed employers. While doing so, they also shifted to jobs with more complex tasks and that required more communication and technical content; this is consistent with the fact that the immigrants hardly spoke Danish when they first arrived and could not be rivals for these jobs.

So when there are more migrants, the price of those services tends to go down, which helps the native workers and frees them to take on other jobs.32 Highly skilled women, in particular, are more likely to be able to go out to work when there are many migrants around.33 The entry of highly skilled women to the labor market in turn boosts demand for low-skilled labor (childcare, catering, cleaning) at home or in the firms they manage or run. The effects of migrants will also crucially depend on who the migrants are. If the most enterprising move, they may start businesses that create jobs for the natives. If they are the least qualified, they might have to join the undifferentiated mass that native low-skilled workers will have to compete against. Who migrates typically depends on the barriers migrants have to overcome. When President Trump compared the migrants from “shithole countries” to the good ones coming from Norway, he most probably did not know that a long time ago Norwegian immigrants were part of the “huddled masses” Emma Lazarus talked about.34 There is actually a case study of Norwegian migrants to the United States during the age of mass migration, in the late nineteenth and early twentieth centuries.35 At the time, there was nothing to stop migration, other than the price of passage.

The decline started in 1990 and accelerated in the mid-2000s.71 Furthermore, there is a striking change in the pattern of internal migration.72 Until the mid-1980s, rich states in the US had much faster population-growth rates. Sometime after 1990, this relation disappeared; on average, rich states no longer attract more people. High-skilled workers continue to move from poor states to rich states, but now low-skilled workers, to the extent they still move, seem to be moving in the opposite direction. These two trends mean that since the 1990s, the US labor market has become increasingly segregated by skill level. The coasts attract more and more educated workers, while the less well educated seem to concentrate inland, particularly in the old industrial cities in the east like Detroit, Cleveland, and Pittsburgh.


pages: 437 words: 115,594

The Great Surge: The Ascent of the Developing World by Steven Radelet

"Robert Solow", Admiral Zheng, agricultural Revolution, Asian financial crisis, bank run, Berlin Wall, Branko Milanovic, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, clean water, colonial rule, creative destruction, demographic dividend, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, Erik Brynjolfsson, European colonialism, F. W. de Klerk, failed state, Francis Fukuyama: the end of history, Gini coefficient, global pandemic, global supply chain, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, land reform, low skilled workers, M-Pesa, megacity, Mikhail Gorbachev, Nelson Mandela, off grid, oil shock, out of africa, purchasing power parity, race to the bottom, randomized controlled trial, Robert Gordon, Second Machine Age, secular stagnation, Simon Kuznets, South China Sea, special economic zone, standardized shipping container, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, women in the workforce, working poor

James Watt’s invention of the steam engine in the 1770s ignited a surge of new innovations and technologies, including the transformation from hand to machine production, the introduction of mechanized cotton spinning (and with it the mass production of textiles), Jethro Tull’s (earlier) development of the horse-drawn seed drill (which helped increase food and agricultural production), the shift in energy sources from wood and charcoal to much cheaper coal, and the large-scale production of chemicals and iron. The beginnings of modern manufacturing and industrialization helped create millions of jobs for poor, low-skilled workers. While the wages they earned seem paltry by today’s standards, they were better than the low and highly volatile farm income that most left behind. As manufacturing grew more sophisticated and workers learned more specialized skills, which took several decades, wages began to grow. By the middle of the nineteenth century, incomes were rising faster than at any previous time in world history.

Nonfarm rural incomes also played a role, with people finding employment in small businesses making farm tools, building furniture, processing food, and selling goods in small retail shops. In the 1980s, Indonesia began to promote urban-based, labor-intensive manufacturing of shoes, textiles, garments, toys, jewelry, and many other goods for the export market. These enterprises created millions of jobs for low-skilled workers—many of them poor or near poor. All along, Indonesia complemented these strategies with efforts to invest in basic education, make primary health care available, and introduce one of the first (and largest) profitable microfinance programs in the world. The combination of sound macroeconomic management, political stability, and sensible economic policies promoted growth and helped create new economic opportunities for the poor.

It depends a lot on the policies and strategies that countries pursue. Growth tends to help the poor most when economic activity is based in areas that provide the greatest job opportunities for unskilled workers, such as agriculture, manufacturing of simple consumer goods, and basic services. It is weakest where income is already highly unequal, or when growth is concentrated in natural resources or activities that use fewer low-skilled workers. But the cases in which the poor do not benefit from growth are the exception, not the rule. In most instances, as one well-known research paper by World Bank economists David Dollar and Aart Kraay was entitled, growth is good for the poor.20 INCOME INEQUALITY: KEEPING UP WITH THE JONESES, THE CHANGS, THE GARCIAS, AND THE SISAYS We have seen that average incomes are rising in the majority of developing countries.


pages: 187 words: 55,801

The New Division of Labor: How Computers Are Creating the Next Job Market by Frank Levy, Richard J. Murnane

Atul Gawande, business cycle, call centre, computer age, Computer Numeric Control, correlation does not imply causation, David Ricardo: comparative advantage, deskilling, Frank Levy and Richard Murnane: The New Division of Labor, Gunnar Myrdal, hypertext link, index card, information asymmetry, job automation, knowledge economy, knowledge worker, low skilled workers, low-wage service sector, pattern recognition, profit motive, Robert Shiller, Robert Shiller, Ronald Reagan, speech recognition, talking drums, telemarketer, The Wealth of Nations by Adam Smith, working poor

We need only go back to 1929 when life expectancy was twenty years less than it is today to illustrate the point. But getting to the long run can be messy since economic growth in the short run usually creates losers as well as winners.8 During the industrial revolution, the short-run impact of growth was almost the opposite of what we see today. Technology favored not highskilled workers but low-skilled workers as machines combined with unskilled labor to make products ranging from textiles to bicycles to guns. It was higher-skilled workers—weavers, clock makers, and other craftsmen—whom the technology displaced. In some later periods, technology distributed its benefits more evenly. When John Kennedy was president, he could say “a rising tide lifts all the boats”9 and be substantially correct. Kennedy governed in a lucky economic time when technology and trade did not strongly favor one skill group over another, and when economic growth raised incomes for most workers, even in the short run.

But these head-to-head comparisons tell us little since food preparation and serving workers are counted under one occupational title while jobs requiring significant education tend to be divided into many occupations (e.g., electrical engineering is one of sixteen major engineering occupations classified in BLS statistics). 44 CHAPTER 3 The shift that Jeremy Rifkin feared, a “deskilled” occupational structure, requires that the total number of low-skilled jobs ( janitors plus security guards plus food preparation and service workers, etc.) increases more than the total number of higher-skilled jobs (lawyers plus doctors plus electrical engineers plus mechanical engineers, and so on). These totals are the kind of occupational categories displayed in figure 3.2, where the food preparation and service workers are included in Service Occupations. Once we move from individual job titles to occupational categories, the evidence of deskilling disappears.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Apple's ubiquitous i-gadgets consist of components made in multiple countries and assembled in China, with the supply chain being managed in the US by Apple, which earns around 30–50 percent of the final price. The process favors skilled labor, reducing the share of revenue accruing to low-skilled workers. Similar complex and fragmented production processes apply to the products that constitute around 85 percent of global GDP. This approach has created a rising wage premium for skilled labor and a growing number of poorly paid, insecure, low-skilled jobs. The process is exacerbated in developed economies by the shift from manufacturing to service industries, which are currently more difficult to relocate or automate. This has driven large declines in better paid manufacturing and mid-level professional or service jobs.

It also entrenches financialization, as access to debt for housing, cars, or education becomes central. It enhances the power of the financial sector and financiers, who can command higher incomes, further increasing their wealth. Healthcare, education, and childcare are essential to increased participation in and the quality of the workforce. In developed countries, higher skill levels are needed to escape low-skilled jobs and falling real wages. Occupations requiring a university education currently offer salaries two to three times higher than those requiring lesser qualifications. While manufactured products such as cars and electronics have decreased in price, healthcare, education, and childcare costs have risen more than general price levels and incomes. The eponymous Baumol's cost disease (or the Baumol effect) identifies that increases in the cost of labor-intensive services reflect intrinsically lower rates of productivity improvement than industrial processes such as manufacturing.

When working, they cannot change jobs, as employers can levy a punitive fee. China frequently uses workers from home on foreign projects, to take advantage of lower costs and avoid the employment conditions of the host country. Conflicts, sometimes violent, with the local workforce are common. Workers, irrespective of profession and skill, now face what John Maynard Keynes termed technological unemployment. The process was championed as reducing low-skilled monotonous jobs and increasing employment mobility, as well as providing greater employment and lifestyle choices. Economists lauded the new knowledge/bioengineered/clean and green (delete as required) economy. The displaced workers would become highly educated and skilled, finding new, intellectually challenging and highly paid jobs. The more cautious argued that it was a case of TINA—there is no alternative.


pages: 271 words: 77,448

Humans Are Underrated: What High Achievers Know That Brilliant Machines Never Will by Geoff Colvin

Ada Lovelace, autonomous vehicles, Baxter: Rethink Robotics, Black Swan, call centre, capital asset pricing model, commoditize, computer age, corporate governance, creative destruction, deskilling, en.wikipedia.org, Freestyle chess, future of work, Google Glasses, Grace Hopper, industrial cluster, industrial robot, interchangeable parts, job automation, knowledge worker, low skilled workers, Marc Andreessen, meta analysis, meta-analysis, Narrative Science, new economy, rising living standards, self-driving car, sentiment analysis, Silicon Valley, Skype, social intelligence, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, theory of mind, Tim Cook: Apple, transaction costs

The researchers show what every young job seeker of recent years already knows, that “in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers”—thus the widely noted upsurge in file clerks and receptionists with bachelor’s degrees, for example. The next step: “This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force altogether.” That finding not only makes intuitive sense, it also helps explain America’s unusually low overall employment rate and the stagnation of wages. FROM KNOWLEDGE WORKERS TO RELATIONSHIP WORKERS It sounds as if smart, highly educated people will be scorned in the coming economy—but that is not necessarily the case.

But then the third major turning point arrived, starting in the 1980s. Information technology had developed to a point where it could take over many medium-skilled jobs—bookkeeping, back-office jobs, repetitive factory work. The number of jobs in those categories diminished, and wages stagnated for the shrinking group of workers who still did them. Yet the trend was limited. At both ends of the skill spectrum, people in high-skill jobs and low-skill service jobs did much better. The number of jobs in those categories increased, and pay went up. Economists called it the polarization of the labor market, and they observed it in the United States and many other developed countries. At the top end of the market, infotech still wasn’t good enough to take over the problem-solving, judging, and coordinating tasks of high-skill workers like managers, lawyers, consultants, and financiers; in fact, it made those workers more productive by giving them more information at lower cost.

It’s therefore striking that even Goldin and Katz believe that this hundred-year recipe for better living standards may not work anymore. “College is no longer the automatic ticket to success,” they have asserted, remarkably. “We saw that over the course of the twentieth century new technologies rewarded general skills, such as those concerning math, science, knowledge of grammar, and ability to read and interpret blueprints,” they say. Now, they say, that’s about to change because there’s ever more low-cost competition for high-skill jobs. The competition can come from humans in developing economies, and, in addition, “skills for which a computer program can substitute are also in danger.” So what’s the way forward in this new world? “Skills for non-routine employments and jobs with in-person skills are less susceptible” to low-cost competition, they point out. Employers are expressing “increased demand for those who provide skilled in-person services. . . .


pages: 338 words: 92,465

Reskilling America: Learning to Labor in the Twenty-First Century by Katherine S. Newman, Hella Winston

active measures, blue-collar work, business cycle, collective bargaining, Computer Numeric Control, deindustrialization, desegregation, factory automation, interchangeable parts, invisible hand, job-hopping, knowledge economy, longitudinal study, low skilled workers, performance metric, reshoring, Ronald Reagan, Silicon Valley, social intelligence, two tier labour market, union organizing, upwardly mobile, War on Poverty, Wolfgang Streeck, working poor

They will lead the way in overall job growth—accounting for nearly half of all new jobs—in places like Augusta (Georgia), Salt Lake City, Knoxville, and Vallejo (California).22 Among the states projecting the highest percentage of middle-skill jobs in 2018 are Indiana (54 percent), Arkansas (52 percent), Kentucky (52 percent), West Virginia (52 percent), South Carolina (51 percent), Mississippi (51 percent), and Pennsylvania (51 percent).23 In every one of these states but one—Washington—there are more jobs available than there are middle-skill workers to fill them.24 Seven of the top ten US employers see middle-skill jobs as the most difficult to fill.25 To be sure, this “skills mismatch”—in which we have fewer workers than we need in fields that are growing and a glut of people in occupations that are stagnating—is not unique to middle-skill workers. Some states—most notably southern and traditional Rust Belt states—have substantially more low-skill workers than low-skill jobs, while others—particularly those in the Northeast—have more high-skill workers than high-skill jobs. And then there are those states, like California, that have both more low- and high-skill workers than the market demands.26 Workers qualified for middle-skill jobs will find thousands of them on offer in American firms, but many job hunters will seek their fortunes in foreign subsidiaries.

This model, which is still common today throughout the state, requires kids to take academic classes at their local high school for half the day and then get on a bus to a “voc” school to attend technical classes, ultimately graduating from their local high school with a certificate of completion (or in some cases, such as cosmetology, a state license). According to Adams, starting in the ’60s, the school was for many years geared mainly toward providing low-skill training for minimum-wage jobs to “disaffected” or learning-disabled students. It offered subjects like upholstery—there were a couple of major clothing manufacturers in the area, all of whom left about forty years ago—low-level food occupations (e.g., line and short-order cook), and trained young men to run gas stations. Courses in mechanical electrical repair, says Adams, started attracting a “slightly different” disaffected student—one who didn’t fit the mold of the standard comprehensive high school—and the school’s menu evolved even more throughout the 1980s.

At Piedmont Technical College’s Center for Advanced Manufacturing in Laurens, South Carolina, fifteen young men (no women) are working in small groups, building model conveyor belts using a combination of sensors (inductive and optical) and a software program. Most of them are in a two-year AA program, working toward a degree in mechatronics, which one of them describes as “the study of factory automation.” Some of the students in the class came to Piedmont Technical College (PTC) right out of high school, while others took a less direct route: They held low-wage fast-food jobs or low-skill factory jobs. PTC’s promotional materials emphasize that its graduates will be “career ready” the day they graduate and will earn 30 percent more than high-school graduates (they also note that some graduates start out earning more than $50,000 a year). They may do even better if they find their way to four-year institutions and obtain more advanced degrees, something that is facilitated (rather than impeded) by completing an AA degree.


pages: 209 words: 89,619

The Precariat: The New Dangerous Class by Guy Standing

8-hour work day, banking crisis, barriers to entry, basic income, Bertrand Russell: In Praise of Idleness, call centre, Cass Sunstein, centre right, collective bargaining, corporate governance, crony capitalism, deindustrialization, deskilling, fear of failure, full employment, hiring and firing, Honoré de Balzac, housing crisis, illegal immigration, immigration reform, income inequality, labour market flexibility, labour mobility, land reform, libertarian paternalism, low skilled workers, lump of labour, marginal employment, Mark Zuckerberg, mass immigration, means of production, mini-job, moral hazard, Naomi Klein, nudge unit, old age dependency ratio, Panopticon Jeremy Bentham, pensions crisis, placebo effect, post-industrial society, precariat, presumed consent, quantitative easing, remote working, rent-seeking, Richard Thaler, rising living standards, Ronald Coase, Ronald Reagan, science of happiness, shareholder value, Silicon Valley, The Market for Lemons, The Nature of the Firm, The Spirit Level, Tobin tax, transaction costs, universal basic income, unpaid internship, winner-take-all economy, working poor, working-age population, young professional

Arendt, H. ([1951] 1986), The Origins of Totalitarianism, London: André Deutsch. Asthana, A. and Slater, C. (2009), ‘Most Parents Can’t Find Enough Time to Play with Their Children’, Observer, 2 August, p. 17. Atkins, R. (2009), ‘Europe Reaps the Rewards of State-Sponsored Short-Time Jobs’, Financial Times, 29 October, p. 6. Autor, D. and Houseman, S. (2010), ‘Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers: Evidence from “Work First”’, American Economic Journal: Applied Economics, 3(2): 96–128. Bamford, J. (2009), The Shadow Factory: The Ultra-Secret NSA from 9/11 to the Eavesdropping on America, New York: Doubleday. Bennett, C. (2010), ‘Do We Really Need Advice on How to Deal with Boomerang Kids?’ Observer, 3 January, p. 25. Bentham, J. ([1787] 1995), Panopticon; or The Inspection-House, reprinted in M.

Commodification of education The commodification of education also makes for disappointment and anger. The drive by the education system to improve ‘human capital’ has not produced better job prospects. An education sold as an investment good that has no economic return for most buyers is, quite simply, a fraud. To give one example, 40 per cent of Spanish university students a year after graduating find themselves in low-skilled jobs that do not require their qualifications. This can only produce a pandemic of status frustration. At present, the average lifetime monetary gain from going to a college or university is substantial – £200,000 for men in the United Kingdom (Browne, 2010). Imposing high fees may thus seem fair. But fees risk marginalising university subjects that offer no financial return and ignore the fact that the return is a mean average.

For decades, tensions between French citizens and North African migrants were muted. As most of the migrants were young and employed, they were net contributors to the social security system, while French citizens were net beneficiaries. But the state was building a precariat. Migrants’ wages are lower than those of French workers and they are more vulnerable to unemployment, partly because they are in low-skilled jobs, such as construction, and more affected by economic fluctuations, partly because of discrimination. Unemployed Maghrebians often do not have the contribution record needed to claim unemployment benefit and are obliged to rely on the means-tested RMI (Revenu minimum d’insertion). However, to be eligible for the RMI, housing benefit and health protection, non-French nationals must possess a residence permit and must have lived in France for five years.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, business cycle, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

The reigning version of the theory, called the “factor endowments” theory and first articulated by Eli Heckscher and Bertil Ohlin in the early twentieth century, predicted precisely the kinds of changes in relative wages that were taking place in the United States. According to the theory, the country would be exporting goods that were intensive in skilled labor and importing goods that were intensive in unskilled labor. Greater openness to international trade was good news for American skilled workers, who could now access larger markets, but bad news for low-skilled workers, who had to put up with greater competition. As UCLA economist Edward Leamer put it in the early 1990s, “Our low-skill workers face a sea of low-paid, low-skilled workers around the world.”17 As a consequence, the gap between the wages of the two types of workers would increase. In fact, the theory had an even stronger implication. Unskilled workers would lose out not just in relative but also in absolute terms. Increased openness would reduce their living standards.§ Discussion might have rested there, but economists noticed other developments that seemed incompatible with the factor endowments theory.

The Gini coefficient, a widely used measure of inequality that varies from 0 (no inequality) to 1 (maximum inequality, with all income going to a single household), rose from 0.40 in 1973 to 0.48 in 2012—a 20 percent increase.15 The country’s richest 10 percent raised their share of national income from 32 to 48 percent over the same period.16 What caused this dramatic change? One factor behind the rise in inequality was an increase in the “skill premium,” the gap between what high- and low-skilled workers earn. When economists first homed in on this gap beginning in the late 1980s, there was a plausible explanation at hand: globalization. The US economy had become much more exposed to international trade in recent years. Other advanced economies in Europe and Japan had largely caught up with the United States in productivity and now offered stiff competition. And there were many newly rising exporters in East Asia—South Korea, Taiwan, China—where wages were a fraction of the US level.


pages: 397 words: 121,211

Coming Apart: The State of White America, 1960-2010 by Charles Murray

affirmative action, assortative mating, blue-collar work, Community Supported Agriculture, corporate governance, David Brooks, en.wikipedia.org, feminist movement, George Gilder, Haight Ashbury, happiness index / gross national happiness, helicopter parent, illegal immigration, income inequality, job satisfaction, labor-force participation, longitudinal study, low skilled workers, Menlo Park, new economy, Ralph Nader, Richard Florida, Silicon Valley, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, Unsafe at Any Speed, War on Poverty, working-age population, young professional

The percentage of hardworking Belmont men began to slack off in the 2000s, drifting down to 40 percent by 2008. But that still left a gap between the work effort of prime-age Belmont men and Fishtown men that was more than twice the gap that had separated them in 1960. “It’s the Labor Market’s Fault” A natural explanation for the numbers I have presented is that the labor market got worse for low-skill workers from 1960 to 2008. More Fishtown men worked short hours because they couldn’t get work for as many hours as they wanted; more of them were unemployed because it was harder for them to get jobs; more of them left the labor market because they were discouraged by the difficulty of finding jobs. “Jobs didn’t pay a living wage.” In one respect, the labor market did indeed get worse for Fishtown men: pay.

Some have been in the military, where they have received technical training. But completed college educations are rare in Fishtown—only 8 percent of the adults had college degrees in 2000. Fishtown has many highly skilled blue-collar workers, such as electricians, plumbers, machinists, and tool and die makers, but also many people in midskill occupations—drywall installers or heavy-equipment operators, for example. Low-skill jobs are also heavily represented among the breadwinners in Fishtown—assembly-line workers, construction laborers, security guards, delivery truck drivers, or people who work on loading docks. Most families in Fishtown have incomes somewhere in the bottom half of the national income distribution—the median family income in 2000 was only $41,900—and almost all the people who are below the poverty line live in a place like Fishtown.

But these trends don’t explain why Fishtown men in the 2000s worked fewer hours, found it harder to get jobs than other Americans did, and more often dropped out of the labor market than they had in the 1960s. On the contrary: Insofar as men need to work to survive—an important proviso—falling hourly income does not discourage work. Put yourself in the place of a Fishtown man who is at the bottom of the labor market, qualified only for low-skill jobs. You may wish you could make as much as your grandfather made working on a General Motors assembly line in the 1970s. You may be depressed because you’ve been trying to find a job and failed. But if a job driving a delivery truck, or being a carpenter’s helper, or working on a cleaning crew for an office building opens up, why would a bad labor market for blue-collar jobs keep you from taking it?


pages: 411 words: 95,852

Britain Etc by Mark Easton

agricultural Revolution, Albert Einstein, Boris Johnson, British Empire, credit crunch, financial independence, garden city movement, global village, Howard Rheingold, income inequality, intangible asset, James Watt: steam engine, knowledge economy, knowledge worker, low skilled workers, mass immigration, moral panic, Ronald Reagan, science of happiness, sexual politics, Silicon Valley, Simon Kuznets, Slavoj Žižek, social software

Business services, financial services, computer services, communications, media – these are the areas where developed countries may be able to maintain a competitive advantage. Knowledge is providing the new jobs too. Go back to the early 1980s and almost half of UK jobs were unskilled or low-skilled jobs. Now it is about a quarter. People working in the knowledge industries accounted for a third of jobs in the early 1980s. Now it is closer to half. Knowledge services now account for more than two thirds of what Britain sells to the world. With low-skilled jobs disappearing and knowledge jobs expanding, it is obvious that the UK needs to invest in knowledge, to educate and train its workforce. Britain has a higher proportion of NEETs – young people not in education, employment or training – than any other OECD country except Greece, Italy, Mexico and Turkey.

The truth was that immigration controls were irrelevant to the million Eastern Europeans who had settled in Britain – all the Polish plumbers and Latvian labourers were free to come and go as citizens of the European Union. Nevertheless, anxiety driven by EU arrivals, about which the major parties could do nothing, prompted promises to crack down on non-EU immigration, about which a good deal had already been done – it had been the case for a number of years that no unskilled or low-skilled workers could legally come to Britain from beyond the EU, and there was little evidence that significant numbers of illegal migrants were still sneaking into the UK. The only way left to allay the public’s concerns, therefore, was to limit the arrival of those non-EU migrant groups that included people the country arguably needed and wanted – high-skilled workers and fee-paying students. An attitudes survey conducted in 2011 for the Migration Observatory at Oxford University found close to two thirds of British people wanted to restrict low-skilled immigration in the UK, but less than a third were concerned about students or high-skilled workers coming.


pages: 626 words: 167,836

The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

"Robert Solow", 3D printing, autonomous vehicles, basic income, Bernie Sanders, Branko Milanovic, British Empire, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, collective bargaining, computer age, computer vision, Corn Laws, creative destruction, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, desegregation, deskilling, Donald Trump, easy for humans, difficult for computers, Edward Glaeser, Elon Musk, Erik Brynjolfsson, everywhere but in the productivity statistics, factory automation, falling living standards, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, game design, Gini coefficient, Hyperloop, income inequality, income per capita, industrial cluster, industrial robot, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of movable type, invention of the steam engine, invention of the wheel, Isaac Newton, James Hargreaves, James Watt: steam engine, job automation, job satisfaction, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, labor-force participation, labour mobility, Loebner Prize, low skilled workers, Malcom McLean invented shipping containers, manufacturing employment, mass immigration, means of production, Menlo Park, minimum wage unemployment, natural language processing, new economy, New Urbanism, Norbert Wiener, oil shock, On the Economy of Machinery and Manufactures, Pareto efficiency, pattern recognition, pink-collar, Productivity paradox, profit maximization, Renaissance Technologies, rent-seeking, rising living standards, Robert Gordon, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, social intelligence, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade route, Triangle Shirtwaist Factory, Turing test, union organizing, universal basic income, washing machines reduced drudgery, wealth creators, women in the workforce, working poor, zero-sum game

As the factory replaced the domestic system, few had the means to acquire costly human capital to become managers, accountants, clerks, mechanical engineers, and so on. Instead, they were left competing for low-skilled production jobs that were simple enough to be performed by children. But if workers are able to shift into less hazardous, more enjoyable, and better-paying jobs, any distress will be short-lived. In the twentieth century, the abundance of semiskilled jobs in America’s offices and factories, brought by the Second Industrial Revolution, provided the best reassurance for those who feared unemployment. Some Americans, it is true, failed to climb the economic ladder. As noted, older workers with highly specialized skills living in isolated areas often struggled to adjust and could be forced to shift into low-skilled jobs at lower wages and reduce their standards of living, at least temporarily. But while mechanization made a few workers worse off individually in the short run, the expectation that they would benefit in the medium term seemed justifiable to the vast majority of ordinary people.

That is not really surprising. Technological change inevitably interacts with different labor market institutions in different countries, and the relative strength of German trade unions is likely to go some way toward explaining these differences, as the authors argue. The general pattern across the industrial world, it seems, is that robots have not significantly reduced total employment, only low-skilled workers’ employment share. Automation, in other words, has caused employment opportunities for non-college-educated workers to dry up (G. Graetz and G. Michaels, forthcoming, “Robots at Work,” Review of Economics and Statistics). 36. D. H. Autor and A. Salomons, forthcoming, “Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share,” Brookings Papers on Economic Activity. 37.

In the postwar era, workmen on the assembly lines who experienced displacement could still find work in other routine jobs requiring similar skills. But since the computer revolution, unemployed Americans who used to work in a routine occupation have become much less likely to find new employment in routine jobs.29 Fewer job options, especially for non-college-educated production workers, has led to cascading competition for low-skilled jobs. To be sure, as the jobs of machine operators dried up, new highly skilled jobs were created, as computer programmers were needed to design numerically controlled machine tools. In 1985, when the first wave of automation swept through America’s car factories, the Wall Street Journal published a story about Lawrence Maczuga, a thirty-seven-year-old machine operator at Ford Motor Company’s transmission plant in Livonia, Michigan.


pages: 828 words: 232,188

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama

Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, Atahualpa, banking crisis, barriers to entry, Berlin Wall, blood diamonds, British Empire, centre right, clean water, collapse of Lehman Brothers, colonial rule, conceptual framework, crony capitalism, deindustrialization, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edward Snowden, Erik Brynjolfsson, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gini coefficient, Hernando de Soto, Home mortgage interest deduction, income inequality, information asymmetry, invention of the printing press, iterative process, Kickstarter, knowledge worker, labour management system, land reform, land tenure, life extension, low skilled workers, manufacturing employment, means of production, Menlo Park, Mohammed Bouazizi, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, open economy, out of africa, Peace of Westphalia, Port of Oakland, post-industrial society, post-materialism, price discrimination, quantitative easing, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, Scientific racism, Scramble for Africa, Second Machine Age, Silicon Valley, special economic zone, stem cell, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, too big to fail, trade route, transaction costs, Tyler Cowen: Great Stagnation, Vilfredo Pareto, women in the workforce, World Values Survey, zero-sum game

Marx’s original definition of “bourgeoisie” referred to ownership of the means of production. One of the characteristics of the modern world is that this form of property has become vastly democratized through stock ownership and pension plans. Even if one does not possess large amounts of capital, working in a managerial capacity or profession often grants one a very different kind of social status and outlook from a wage earner or low-skilled worker. A strong middle class with some assets and education is more likely to believe in the need for both property rights and democratic accountability. One wants to protect the value of one’s property from rapacious and/or incompetent governments, and is more likely to have time to participate in politics (or to demand the right to participate) because higher income provides a better margin for family survival.

In addition, politicians across the world saw cheap, subsidized credit as an acceptable substitute for outright income redistribution, leading to government-backed housing booms. The financial crisis of 2008–2009 was one consequence of this trend.11 There are a number of sources of this growing inequality, only some of which are subject to control through public policies. One villain most commonly cited is globalization—the fact that lower transportation and communications costs have effectively added hundreds of millions of low-skill workers to the global labor market, driving down wages for comparable skills in developed countries. With rising labor costs in China and other emerging-market countries, a certain amount of manufacturing has started to return to the United States and other developed countries. But this has happened in part only because labor costs as a proportion of total manufacturing costs have gotten much smaller due to increases in automation.

This points to the much more important long-term factor of technological advance, which in a sense is the underlying facilitator of globalization. There has been a constant substitution of technology for human labor over the decades, which in the nineteenth and early twentieth centuries brought huge benefits not just to elites but also to the broad mass of people in industrializing countries. The major technological innovations of this period created large numbers of jobs for low-skill workers in a succession of industries—coal and steel, chemicals, manufacturing, and construction. The Luddites, who opposed technological change, proved very wrong, insofar as new, higher-paying opportunities for work opened up to replace the ones they lost. Henry Ford’s invention of the assembly line for producing automobiles in his Highland Park, Michigan, facility actually lowered the average skill levels required to build an automobile, breaking apart the complex operations of the earlier carriage craft industry into simple, repeatable steps that a person with a fifth-grade education could accomplish.


pages: 421 words: 110,272

Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Kenneth Arrow, labor-force participation, low skilled workers, Martin Wolf, Mikhail Gorbachev, obamacare, pensions crisis, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, universal basic income, working-age population, zero-sum game

As world trade has expanded, America, like China, has exported more, creating new jobs—for example, in the manufacture for export of motor vehicles and semiconductors. Studies by the economist Robert Feenstra and his collaborators have estimated that exports brought two to three million new jobs, similar to the number of jobs lost. But in parts of the country with higher concentrations of low-skilled workers, there was no positive offset to the loss of manufacturing jobs.12 The traditional escape route for displaced workers has been to move from cities without jobs to cities that have them, but this route has been limited in recent years by the high costs of living in successful cities. These high costs can be inflated by land-use or other policies imposed by those who live there to protect themselves and keep newcomers out.

As a result, during the period when the labor market returns to a college degree rose, and more high-paying professional positions opened to women, we began to see more couples in which both partners had high, professional earnings. A bachelor’s degree or beyond was a ticket not just to a high-paying job but also to a marriage with two high salaries. The worlds of the more and less educated have split apart, a divergence that we will see over and over in this book.6 At work, companies are today more likely to be segregated by education, and as we shall see later, firms are outsourcing many low-skill jobs that used to be done in-house, where people with different levels of education worked together and were part of the same company. The more and less educated are now more segregated in where they live, the successful in places where house prices are high and to which the less successful do not have access. Greater geographical segregation has widened the gap in the quality of schools attended by the children of the more and less educated.

., 271n11, 279n12 Lienesch, Rachel, 265n8, 279n28 life expectancy, 21–22, 23, 44, 100, 134, 135, 140, 159, 180, 195; of African Americans, 27; decline in the twenty first century, 32–33, 114, 186; Europe and, 145, 260, 277n18; inequality and, 134, 140; Russia and, 107; in the twentieth century, 2, 21, 23, 41; United States healthcare system and, 114, 135, 186, 193–94 Lincoln, Abraham, 104 Lind, Michael, 284n51, 290n29 Lindner, Attila, 288n27 Lindsey, Brink, 255–56, 288n38, 290n27, 290n28 Lin Zexu, 109 Lipton, David, 263 living standards, 7, 11, 12, 19, 21, 149, 150, 151, 156, 173, 179, 181, 195; African American, 137; working class, lowering, 183, 212 Lleras-Muney, Adriana, 263 lobbying, 157, 209–11, 239, 241, 242, 255, 257; Google (Alphabet) and, 228; healthcare, 250; market power protected by, 232; taxation and, 232; in United States, 234 Lockheed Martin, 242 Logan, Trevon, 263 loneliness, 95, 98 Losing Ground (Murray), 70 Lowery, Wesley, 267n2 low mobility, 141 low-skill jobs, 52; concentrations of, 220 Luck, Phillip, 285n11 lung cancer, 23, 26, 29 Luthra, Shefali, 283n32 Lynch, Peter, 231 Ma, Hong, 285n12 Machin, Stephen, 278n6 Macy, Beth, 118, 274n13, 274n21 Maine, 33, 51, 86, 137 mainline churches, 177 malingerers, 92, 93 malpractice insurance, 198 mammograms, 196 Manning, Becky, 37, 49 manual work, 68, 84, 87, 91, 155 manufacturing, 4, 62, 162, 222; African American job loss in, 67–69; of cars, 221; China and, 219–20; jobs, 146, 161–62, 165, 214, 224, 243; rise of, 164; working class life and, 164, 219 Mare, Robert D., 280n4 Marino, Tom, 125 market barriers, 233.


pages: 319 words: 90,965

The End of College: Creating the Future of Learning and the University of Everywhere by Kevin Carey

Albert Einstein, barriers to entry, Bayesian statistics, Berlin Wall, business cycle, business intelligence, carbon-based life, Claude Shannon: information theory, complexity theory, David Heinemeier Hansson, declining real wages, deliberate practice, discrete time, disruptive innovation, double helix, Douglas Engelbart, Douglas Engelbart, Downton Abbey, Drosophila, Firefox, Frank Gehry, Google X / Alphabet X, informal economy, invention of the printing press, inventory management, John Markoff, Khan Academy, Kickstarter, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, natural language processing, Network effects, open borders, pattern recognition, Peter Thiel, pez dispenser, ride hailing / ride sharing, Ronald Reagan, Ruby on Rails, Sand Hill Road, self-driving car, Silicon Valley, Silicon Valley startup, social web, South of Market, San Francisco, speech recognition, Steve Jobs, technoutopianism, transcontinental railway, uber lyft, Vannevar Bush

In addition, college degrees signal that people have successfully navigated a defined and lengthy organizational process by signing up for the right courses, attending (presumably) many of the classes, figuring out what it takes to pass the classes’ final exams, and showing up for the finals—“faithfulness, docility, and memory,” in Hutchins’s phrase. The value of this information in the labor market has increased markedly. The difference between the average wage for people with a bachelor’s degree and people with only a high school diploma doubled between 1977 and 2005, even as the supply of diploma bearers increased substantially. This occurred in part because of skill-biased technology change and the decline in real wages for low-skill workers. College credentials have also been locked in place as a required part of many large professions. Teachers, for example: There are 3.7 million elementary, middle, and high school teachers in America. Almost every one of them has a bachelor’s degree, and nearly half have a master’s degree. This did not happen because tens of thousands of school principals individually decided that it was impossible for someone to succeed in the classroom without first spending four years in a hybrid university.

Employers were also faced with another version of a familiar problem: how to sort through a lot of information with limited resources and limited time. Brassiere inventory management is a snap compared to figuring out human beings. As information technology destroyed jobs that involved simple and repetitive tasks, like painting car parts or shelving paper files, and globalization moved other low-skill jobs overseas, the American jobs that remained fell into several large categories. Some required creativity, judgment, and pattern recognition. Others involved interacting with other people by providing services of different kinds. It’s hard to tell if someone you don’t know personally will be good at either of those kinds of jobs. Living anonymously in large communities is a peculiar modern condition.


pages: 370 words: 107,983

Rage Inside the Machine: The Prejudice of Algorithms, and How to Stop the Internet Making Bigots of Us All by Robert Elliott Smith

Ada Lovelace, affirmative action, AI winter, Alfred Russel Wallace, Amazon Mechanical Turk, animal electricity, autonomous vehicles, Black Swan, British Empire, cellular automata, citizen journalism, Claude Shannon: information theory, combinatorial explosion, corporate personhood, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, desegregation, discovery of DNA, Douglas Hofstadter, Elon Musk, Fellow of the Royal Society, feminist movement, Filter Bubble, Flash crash, Gerolamo Cardano, gig economy, Gödel, Escher, Bach, invention of the wheel, invisible hand, Jacquard loom, Jacques de Vaucanson, John Harrison: Longitude, John von Neumann, Kenneth Arrow, low skilled workers, Mark Zuckerberg, mass immigration, meta analysis, meta-analysis, mutually assured destruction, natural language processing, new economy, On the Economy of Machinery and Manufactures, p-value, pattern recognition, Paul Samuelson, performance metric, Pierre-Simon Laplace, precariat, profit maximization, profit motive, Silicon Valley, social intelligence, statistical model, Stephen Hawking, stochastic process, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Malthus, traveling salesman, Turing machine, Turing test, twin studies, Vilfredo Pareto, Von Neumann architecture, women in the workforce

These fundamentals of yarn work are all bits of arcana now, because variations on the Jacquard loom were adopted internationally, eliminating these last few skilled weaving jobs. The elimination of essentially all high-skilled textile jobs by the eighteenth century meant massive job displacement, a devaluation of weaving skills and the degradation of working conditions for the remaining low-skilled workers who were retained to operate the machines. Similar effects were seen in other newly mechanized industries, leading to the destruction of the once powerful guilds. People soon realized that the craft skills they nurtured were no longer valuable in the nineteenth-century economy. As the skill requirement dropped and wages fell in newly mechanized factories, women and children became the preferred workforce, as they could be paid less than men (who were often fired when they reached adulthood and then supported by their factory-bound families).

That’s because the distributed ‘factory model’, whereby workers are rebranded as self-employed contractors (Deliveroo riders are called cycling micro-businesses), offers a way to further reduce labour costs: paying per job rather than per hour, eliminating the need for overtime, holiday pay, sick pay, parental leave or pensions. And in each of these jobs, the erosion of workers’ rights has started to become a serious social concern, resulting in the unreliable availability of work, depressed wages as low-skilled workers are interchangeable, dangerous working conditions, and denial of basic human comforts in the workplace. In the case of food-delivery service Deliveroo, the Guardian reported in 2017 that the company is now investing in ‘dark kitchens’,7 which take the form of windowless metal boxes not dissimilar to shipping containers kitted out with industrial kitchen equipment, where chefs frantically prepare meals to feed the increasing demand for takeaway food.


pages: 188 words: 40,950

The Case for Universal Basic Income by Louise Haagh

back-to-the-land, basic income, battle of ideas, Bertrand Russell: In Praise of Idleness, bitcoin, blockchain, cryptocurrency, delayed gratification, Diane Coyle, full employment, future of work, housing crisis, income inequality, job-hopping, land reform, low skilled workers, Mark Zuckerberg, mini-job, moral hazard, new economy, offshore financial centre, precariat, race to the bottom, rent control, road to serfdom, Silicon Valley, Skype, smart contracts, trickle-down economics, universal basic income

It is this institutional trend which basic income contests. The 2008 financial crisis was the long-term fall-out of the abandonment of planned development in all its forms. At stake is a new form of global governing and adjusting through the labour market. The exclusionary effects of unplanned competition are diverse, ranging from the mass pool of graduates chasing fewer high-skill jobs,49 to low-skill workers competing for unstable contracts.50 Leading employers confirm zero-hours flexibility is a key way for private companies to manage global crises.51 Along with a rise in involuntary part-time or fixed-time work,52 trend-setting institutions, including large public and private service companies, have switched a growing slice of workers into non-standard employment, such as in Germany ‘mini-jobs’, or in the UK so-called ‘zero-hours contracts’.53,54 In the public sector, ‘spot purchasing’ practices linked with the drive to expand markets within the state are cited as the main reason behind the high concentration of zero-hours contracts in care services in the UK,55 a trend also growing in Europe.

The IMF has conceded states put too much trust in the market: corporations have reneged on the public’s trust by not diverting resources into productive investment.11 Extraordinarily, here the IMF is admitting that the economic theory behind regulatory policies of the last four decades, which gave corporations more power to structure employment and set wages, was simply wrong.12 Hierarchical political and economic systems are to blame.13 Yet, the loss of public power is not only fiscal but institutional and structural. The consultancy firm McKinsey projects that to avoid ‘long-term and permanent joblessness’ and ‘older workers … drop[ping] out’, ‘job creation for low-skill workers in advanced economies would need to be at least five times higher’.14 Yet, states cannot afford, and neither ought they, to target future education and training investments at simply sustaining lowquality employment by ‘following the market’. This would only draw states further into the toxic relation with citizens exemplified by sanctions policies. Blanket tax breaks for training do not automatically trickle down to upgrading production structures or improve labour relations.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

The authors also found that industries and countries with faster growth rates in ICT also experienced an increase in demand for collegeeducated workers relative to workers with intermediate levels of education and that the falling quality-adjusted prices for ICT had a significant impact in causing this shift. The researchers concluded that both ICT and research and development (R&D) had raised the relative demand for college-educated workers and that, consistent with the ICT-based polarization hypothesis, this increase had come mainly from the reduction in the relative demand for middle-skilled workers rather than low-skilled workers (Michaels et al, 2010). ---------------------------------------------------------------------------------------*(As per the Occupational Information Network (ONET) database, non-routine or abstract tasks are those that involve critical thinking, judgment/ decision making, complex problem solving, interacting with computers and thinking creatively. Routine task measures are by arm-hand steadiness, manual dexterity, finger dexterity, operation monitoring, and estimating the quantifiable characteristics of products, events, or information.

While researchers and economists from MIT, notably Daron Acemoglu, established the correlation between skill acquisition and technological change, others, notably David Autor, were able to show that improvements in technology were leading to the creation of a polarized labor market, where growth was seen in jobs sectors that required high skills. Autor also found that an increasing demand was seen in jobs that involved “cognitive flexibility,” while at the same time, the demand for low-skill jobs requiring “non-routine manual tasks” also grew, creating a dip in the demand for jobs that involved tasks attributed to medium skill sets. However, more recent research from Beardy et al., 2013, has shown that there is also a reversal in the demand for jobs requiring cognitive flexibility, owing to the advancement in ICT. As technology continues to replace labor it also contributes to enlarging the inequality gap.

Furthermore, they provided evidence to support the fact that demand for labor input of routine cognitive and manual tasks in the US economy had declined, while the demand for labor input of non-routine analytic and interactive tasks had risen. By distinguishing and measuring the relative demand and supply mechanisms for tasks, the routinization hypothesis went on to prove that the effect of these demands on the labor market had led to the creation of a “polarized” work environment in which expansion was seen in the demand of high-skill and low-skills jobs, but coupled with a fall in the demand for routine or “middle-skilled” ** jobs, and that job polarization was leading to a shrinking concentration of employment in occupations in the middle of the skill distribution. The polarization effect also had an impact on the polarization of wage growth, with a relative growth in upper-tail and lower-tail earnings, relative to median or middle earnings.


pages: 492 words: 70,082

Immigration worldwide: policies, practices, and trends by Uma Anand Segal, Doreen Elliott, Nazneen S. Mayadas

affirmative action, Asian financial crisis, Berlin Wall, borderless world, British Empire, Celtic Tiger, centre right, conceptual framework, credit crunch, demographic transition, deskilling, en.wikipedia.org, European colonialism, Fall of the Berlin Wall, financial independence, full employment, global village, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, informal economy, knowledge economy, labor-force participation, labour mobility, longitudinal study, low skilled workers, mass immigration, minimum wage unemployment, moral panic, Nelson Mandela, New Urbanism, open borders, phenotype, South China Sea, structural adjustment programs, trade route, transaction costs, upwardly mobile, urban planning, women in the workforce

Some countries accept considerable numbers of immigrants from abroad, including the United States, Canada, Australia, New Zealand and Singapore (Table 22-1). These highly developed Western and Asian countries utilize immigration policy as a tool to resolve the shortage of low-skilled workers and certain highly skilled workers, notably in information technology (IT), health, and education (Constant and Zimmermann 2005). Asian countries in general are not so open to immigration; in 2008 the net immigration rates for Japan and South Korea were zero, and for Taiwan 0.04% (Table 22-1). However, the shortage of low-skilled workers since the late 1980s has forced the governments of these Asian countries to liberalize their immigration policy, at least for temporary immigrants. Although Korea and Taiwan have shortages of certain highly skilled workers, especially in science and technology, thus far they have depended on the return of their own scientists, engineers, and managers who went to the United States, Canada, and other advanced countries for graduate studies and later on remained in those countries and became permanent residents.

Contributing factors include difficulties in obtaining recognition for both academic qualifications and vocational credentials and experience; a lack of knowledge of the local labor market; and above all a poor knowledge of the English language (Kempton, 2002, p. 6). Asylum seekers and refugees (the former disbarred from the labor market for the first 12 months of any claim) suffer particularly acute levels of unemployment and inactivity (Bloch, 2004). There is also evidence of exploitation, particularly among low-skilled workers, brutally evidenced by two tragic events: the death of 58 people in the back of a truck en route to the UK in 2000 and, in 2004, the drowning of 22 Chinese cockle pickers at Morecambe Bay in northwest England. Public and political pressure after this latter tragedy led to the enactment of limited legislation regulating the behavior of employers in particularly vulnerable sectors. This should be set against two facts: first, downward mobility of the middle and higher skilled adult first generation generally recedes over time.

However, there are likely to be negative as well as positive effects, particularly for those at the bottom of the labor market and for previous waves of immigrants (for a full discussion see Sumption and Somerville, 2009b). In short, little account has been taken of distributional impacts. Migration’s positive wage and employment effects depend at least in part on the substitutability of migrant workers; new migrants likely have small adverse impacts on low-skilled workers who came in previous waves of immigration. Further, some estimates suggest that migrants are a drain on social benefits, despite the fact that noncitizens are limited from accessing many such benefits in the UK. A major House of Lords report found that immigration had neutral or no overall benefits, and called for a cap on the number of immigrants coming to the country (House of Lords, 2008).


pages: 307 words: 88,180

AI Superpowers: China, Silicon Valley, and the New World Order by Kai-Fu Lee

AI winter, Airbnb, Albert Einstein, algorithmic trading, artificial general intelligence, autonomous vehicles, barriers to entry, basic income, business cycle, cloud computing, commoditize, computer vision, corporate social responsibility, creative destruction, crony capitalism, Deng Xiaoping, deskilling, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, full employment, future of work, gig economy, Google Chrome, happiness index / gross national happiness, if you build it, they will come, ImageNet competition, income inequality, informal economy, Internet of things, invention of the telegraph, Jeff Bezos, job automation, John Markoff, Kickstarter, knowledge worker, Lean Startup, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, Menlo Park, minimum viable product, natural language processing, new economy, pattern recognition, pirate software, profit maximization, QR code, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, risk tolerance, Robert Mercer, Rodney Brooks, Rubik’s Cube, Sam Altman, Second Machine Age, self-driving car, sentiment analysis, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, special economic zone, speech recognition, Stephen Hawking, Steve Jobs, strong AI, The Future of Employment, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, urban planning, Y Combinator

These factories took tasks that once required high-skilled workers (for example, handcrafting textiles) and broke the work down into far simpler tasks that could be done by low-skilled workers (operating a steam-driven power loom). In the process, these technologies greatly increased the amount of these goods produced and drove down prices. In terms of employment, early GPTs enabled process innovations like the assembly line, which gave thousands—and eventually hundreds of millions—of former farmers a productive role in the new industrial economy. Yes, they displaced a relatively small number of skilled craftspeople (some of whom would become Luddites), but they empowered much larger numbers of low-skilled workers to take on repetitive, machine-enabled jobs that increased their productivity. Both the economic pie and overall standards of living grew.

It will perform many kinds of physical and intellectual tasks with a speed and power that far outstrip any human, dramatically increasing productivity in everything from transportation to manufacturing to medicine. Unlike the GPTs of the first and second Industrial Revolutions, AI will not facilitate the deskilling of economic production. It won’t take advanced tasks done by a small number of people and break them down further for a larger number of low-skill workers to do. Instead, it will simply take over the execution of tasks that meet two criteria: they can be optimized using data, and they do not require social interaction. (I will be going into greater detail about exactly which jobs AI can and cannot replace.) Yes, there will be some new jobs created along the way—robot repairing and AI data scientists, for example. But the main thrust of AI’s employment impact is not one of job creation through deskilling but of job replacement through increasingly intelligent machines.


pages: 374 words: 114,660

The Great Escape: Health, Wealth, and the Origins of Inequality by Angus Deaton

"Robert Solow", Admiral Zheng, agricultural Revolution, Branko Milanovic, BRICs, British Empire, call centre, clean water, colonial exploitation, Columbian Exchange, creative destruction, declining real wages, Downton Abbey, end world poverty, financial innovation, germ theory of disease, Gini coefficient, illegal immigration, income inequality, invention of agriculture, invisible hand, John Snow's cholera map, knowledge economy, Louis Pasteur, low skilled workers, new economy, purchasing power parity, randomized controlled trial, rent-seeking, rising living standards, Ronald Reagan, Simon Kuznets, Steve Jobs, Steven Pinker, structural adjustment programs, The Spirit Level, too big to fail, trade route, very high income, War on Poverty

While Figure 3 does not show any decline of family incomes in the bottom 20 percent, the picture is different for the lowest wages, which have indeed been declining in real terms. Family incomes have kept up only because more women have been participating in the labor force, so that more families now have more than one earner. What then has been keeping wages down? Globalization is a part of the story; the manufacture of many goods that used to be made in the United States by low-skilled workers has moved to poorer countries, and many companies have sent offshore jobs that used to be done domestically, including “back-office” work (like claims processing) and customer call centers. Legal and illegal immigration has also been blamed for downward pressure on low-skill wages, though such claims remain controversial, and some credible studies show that the effect is small. The rising cost of medical care has also been important; most employees receive health insurance as part of their overall compensation, and most research shows that increases in premiums ultimately come out of wages.16 Indeed, average wages have tended to do badly when health-care costs are rising most rapidly and to do better when health-care costs are rising more slowly.17 The share of GDP going to health care, only 5 percent in 1960, was 8 percent in the mid-1970s but had risen to nearly 18 percent by 2009.

The rising cost of medical care has also been important; most employees receive health insurance as part of their overall compensation, and most research shows that increases in premiums ultimately come out of wages.16 Indeed, average wages have tended to do badly when health-care costs are rising most rapidly and to do better when health-care costs are rising more slowly.17 The share of GDP going to health care, only 5 percent in 1960, was 8 percent in the mid-1970s but had risen to nearly 18 percent by 2009. Even among low-skill jobs, how people have fared depends on just what kind of skill they have. The worst situation is to have been a clerk in a mechanical office job that can be (and has been) performed by a computer, or has been outsourced to lower-cost workers in poorer (though not the world’s poorest) countries. Even so, among the occupations with some of the lowest average wages, both wages and employment have been rising.

., Handbook of health economics, Volume 1, Part A, Elsevier, 645–706. 17. Emanuel and Fuchs, “Who really pays for health care?” 18. Robert Frank, 2007, Richistan: A journey through the American wealth boom and the lives of the new rich, Crown. 19. David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, 2006, “The polarization of the U.S. labor market,” American Economic Review 96(2): 189–94, and David Autor and David Dorn, “The growth of low-skill service jobs and the polarization of the US labor market,” American Economic Review, forthcoming, available at http://economics.mit.edu/files/1474. 20. David Card and Alan B. Krueger, 1994, “Minimum wages and employment: A case study of the fast food industry in New Jersey and Pennsylvania,” American Economic Review 84(4): 772–93, and David Card and Alan B. Krueger, 1995, Myth and measurement: The new economics of the minimum wage, Princeton University Press. 21.


Making Globalization Work by Joseph E. Stiglitz

affirmative action, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, Berlin Wall, business process, capital controls, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Gini coefficient, global reserve currency, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, trickle-down economics, union organizing, Washington Consensus, zero-sum game

The response from the Clinton administration was that America didn’t want those low-wage, low-skill jobs, and that the market would create better-paid, higher-skill jobs. And during the first few years of NAFTA unemployment in the United States actually declined, from 6.8 percent, at the beginning of NAFTA, down to a low of 3.8 percent. Just as the United States and European countries made the transition from agriculture to manufacturing more than a hundred years ago, more recently they have made the move from manufacturing to services. The share of manufacturing in employment and output has fallen not just in the United States but also in Europe and Japan (to 20 percent).3 As America and Europe lost jobs in manufacturing, they gained jobs in the service sector, a sector that includes not only low-skill jobs flipping hamburgers but high-paid jobs in the financial services sector.

It even happens in developed countries, though there, if monetary and fiscal policies are working well, jobs should be created in tandem with jobs that are lost. But too often, that does not happen. Unemployment in Europe has remained stubbornly high. People who lose their jobs do not automatically get new jobs. Especially when the unemployment rate is high, there may be an extended period of unemployment as workers search for a new employer. Middle-aged workers often fail to find any job at all—they simply retire earlier. Low-skilled workers are particularly likely to suffer. That is why people in the advanced industrial countries worry about losing manufacturing jobs to China or service sector jobs (like back offices of financial companies) to India. When the result of rapid trade liberalization is that unemployment goes up, then the promised benefits of liberalization are likely not to be realized.11 When workers move from low-productivity, protected jobs into unemployment, it is poverty, not growth, that is likely to increase.12 Even if they do not actually lose their jobs, unskilled workers in advanced industrial countries see their wages decrease.


pages: 850 words: 254,117

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low cost carrier, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, road to serfdom, Ronald Reagan, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Vanguard fund, War on Poverty

A majority of professional economists surveyed in Britain, Germany, Canada, Switzerland, and the United States agreed that minimum wage laws increase unemployment among low-skilled workers. Economists in France and Austria did not. However, the majority among Canadian economists was 85 percent and among American economists was 90 percent.{352} Dozens of studies of the effects of minimum wages in the United States and dozens more studies of the effects of minimum wages in various countries in Europe, Latin America, the Caribbean, Indonesia, Canada, Australia, and New Zealand were reviewed in 2006 by two economists at the National Bureau of Economic Research. They concluded that, despite the various approaches and methods used in these studies, this literature as a whole was one “largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers.”{353} Those officially responsible for administering minimum wage laws, such as the U.

“Labour costs are more than three-and-a-half times higher than in the most productive areas of China and a good 75% higher than in Malaysia or Poland,” according to The Economist.{364} With such artificially high costs of South African labor, it pays employers to use more capital, but this is not greater efficiency for the economy as a whole, which is worse off for having so many people unemployed, which is to say, with so many resources idled instead of being allocated. South Africa is not unique. A National Bureau of Economic Research study, comparing the employment of low-skilled workers in Europe and the United States found that, since the 1970s, such workers have been disproportionately displaced by machinery in European countries where there are higher minimum wages and more benefits mandated to be paid for by employers. The study pointed out that it was since the 1970s that European labor markets moved toward more control by governments and labor unions, while in the United States the influence of government and labor unions on labor markets became less.{365} The net result has been that, despite more technological change in the United States, the substitution of capital for labor in low-skilled occupations has been greater in Europe.

Sometimes the work of low-skilled labor is not displaced by capital but simply dispensed with, as the study noted: It is close to impossible to find a parking attendant in Paris, Frankfurt or Milan, while in New York City they are common. When you arrive even in an average Hotel in an American city you are received by a platoon of bag carriers, door openers etc. In a similar hotel in Europe you often have to carry your bags on your own. These are not simply trivial traveler’s pointers, but indicate a deeper and widespread phenomenon: low skilled jobs have been substituted away for machines in Europe, or eliminated, much more than in the US, while technological progress at the “top” i.e. at the high-tech sector, is faster in the US than in Europe.{366} Just as a price set by government below the free market level tends to cause quality deterioration in the product that is being sold, because a shortage means that buyers will be forced to accept things of lower quality than they would have otherwise, so a price set above the free market level tends to cause a rise in average quality, as the surplus allows the buyers to cherry-pick and purchase only the better quality items.


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, price stability, profit maximization, race to the bottom, regulatory arbitrage, savings glut, Silicon Valley, special drawing rights, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

In reality, trade became (and remained) free only where it posed little challenge to domestic institutions, distributional preferences, or values. Much of the trade in manufactures carried out among advanced countries at similar levels of income raised few of the questions of distributional justice we confronted earlier. Other kinds of trade—in agriculture, say, or with developing countries—were different because they pitted domestic groups starkly against each other. They threatened farming groups, garment producers, or low-skilled workers with sharp income losses. So these types of trade were heavily circumscribed. Under the GATT priorities rested solidly in the domestic policy agenda, and this produced both its success and its endless departures from the logic of free trade. The WTO Regime: Striving for Deep Integration The creation of the World Trade Organization (WTO) in 1995, after nearly eight years of negotiations and as the culmination of the so-called “Uruguay Round” (the last under the GATT), ushered quite a different understanding.

A more detailed look at trends in distribution and in trade exposes some puzzles. By some measures, wage inequality in the United States has stopped growing (or has even come down since the late 1990s), despite the rapid pace of outsourcing.18 Much of China’s exports are in technologically sophisticated and skill-intensive sectors such as computers, where they do not pose a particular threat to the wages of low-skill workers. Then there are ways in which China’s exports may have improved matters by reducing poor households’ cost of living: China tends to exports goods that make up a large share of what poor households consume.19 For these reasons, many economists continue to think that globalization accounts for just a small part—10 or 15 percent at most—of the rise in U.S. inequality since the 1970s.20 Even if the economywide consequences are small, however, they provide small comfort to the individual worker who gets displaced by imports and has to take on another job at a substantial pay cut.

He knew that South Africa was under-performing relative to other nations and to its own potential. South Africa in 2005 looked of course very different from Mauritius in 1960. A middle-income country with a fairly diversified economy, it was highly integrated with world markets and had a sophisticated financial sector. But the central challenge South Africa confronted was the same: where would the jobs needed to employ the large surplus of low-skilled workers come from? South Africa had undergone a remarkable political and economic transformation since its democratic transition in 1994. Following the end of white minority rule, it had managed to avoid a descent into acrimonious recrimination, endless redistribution, and populism that would have decimated the economy and turned the country into a sham democracy. The African National Congress government had managed to create a stable, peaceful, and racially balanced political regime with an exemplary record of civil liberties and political freedoms.


pages: 307 words: 96,543

Tightrope: Americans Reaching for Hope by Nicholas D. Kristof, Sheryl Wudunn

Affordable Care Act / Obamacare, basic income, Bernie Sanders, carried interest, correlation does not imply causation, creative destruction, David Brooks, Donald Trump, dumpster diving, Edward Glaeser, Elon Musk, epigenetics, full employment, Home mortgage interest deduction, housing crisis, impulse control, income inequality, Jeff Bezos, job automation, jobless men, knowledge economy, labor-force participation, low skilled workers, mandatory minimum, Martin Wolf, mass incarceration, Mikhail Gorbachev, offshore financial centre, randomized controlled trial, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Shai Danziger, single-payer health, Steven Pinker, The Spirit Level, universal basic income, upwardly mobile, Vanguard fund, War on Poverty, working poor

Many Americans came to celebrate wealth as a prime metric of success and became more judgmental of those who lost jobs, went bankrupt, used drugs or otherwise stumbled; the acme of this changing ethos was the election in 2016 of a billionaire president who was best known for ostentatious living and for his reality TV refrain: “You’re fired!” * * * — THE CAUSES OF ECONOMIC DISTRESS included automation and globalization, which affected workers in many countries, and real wages for low-skilled workers fell not only in the United States but also in Britain and Germany. So as part of our journey to understand what went so badly wrong, we wanted to see if workers battered by these global forces had suffered as severely across the border in Canada. As it happened, a sociologist named Victor Tan Chen had explored precisely that question after the Great Recession of 2008–09. Chen, a professor at Virginia Commonwealth University, spent weeks talking to autoworkers laid off by General Motors and Ford in Detroit and also in Windsor, Ontario, its sister city just across the border.

Why did neither Eathan nor Ginnetta have a job at a time of a booming economy when Help Wanted signs were everywhere? Eathan is smart and has a much-valued skill as a construction worker, while Ginnetta is pleasant and diligent and struck us as dependable. Eathan, like some others in Yamhill, blamed immigrants from Mexico. “I do resent them for the fact that it makes it harder for me to get a job,” he told us. It’s true that in places like Yamhill, immigrants may have taken some jobs from low-skilled workers. Several employers made the point to us that they would be crazy to hire a white high-school dropout who was often high on meth, wasn’t terribly interested in difficult outdoor work and would not show up reliably. One employer told us that he had tried to hire local people but ended up with an all-Mexican work crew because the immigrants are approximately twice as productive as local white residents.


pages: 334 words: 98,950

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang

affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, falling living standards, Fellow of the Royal Society, financial deregulation, fixed income, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

After all, a backyard auto repair shop is exactly how the famous Korean car maker, Hyundai, started in the 1940s. Needless to say, investment in capability-building requires short-term sacrifices. But that is not a reason not to do it, contrary to what free-trade economists say. In fact, we often see individuals making short-term sacrifices for a long-term increase in their capacities, and heartily approve of them. Suppose a low-skilled worker quits his low-paying job and attends a training course to acquire new skills. If someone were to say the worker is making a big mistake because he is now not able to earn even the low wage he used to earn, most of us would criticize that person for being short-sighted; an increase in a person’s future earning power justifies such short-term sacrifice. Likewise, countries need to make short-term sacrifices if they are to build up their long-term productive capabilities.

They are usually fixed in their physical qualities and there are few ‘general use’machines or workers with a ‘general skill’ that can be used across industries. Blast furnaces from a bankrupt steel mill cannot be re-moulded into a machine making computers; steel workers do not have the right skills for the computer industry.Unless they are retrained, the steel workers will remain unemployed. At best, they will end up working in low-skill jobs, where their existing skills are totally wasted. This point is poignantly made by the British hit comedy film of 1997, The Full Monty, where six unemployed steel workers from Sheffield struggle to rebuild their lives as male strippers. There are clearly winners and losers involved in changing trade patterns, whether it is due to trade liberalization or to the rise of new, more productive foreign producers.


pages: 347 words: 99,317

Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity by Ha-Joon Chang

affirmative action, Albert Einstein, banking crisis, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, falling living standards, Fellow of the Royal Society, financial deregulation, fixed income, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

After all, a backyard auto repair shop is exactly how the famous Korean car maker, Hyundai, started in the 1940s. Needless to say, investment in capability-building requires short-term sacrifices. But that is not a reason not to do it, contrary to what free-trade economists say. In fact, we often see individuals making short-term sacrifices for a long-term increase in their capacities, and heartily approve of them. Suppose a low-skilled worker quits his low-paying job and attends a training course to acquire new skills. If someone were to say the worker is making a big mistake because he is now not able to earn even the low wage he used to earn, most of us would criticize that person for being short-sighted; an increase in a person’s future earning power justifies such short-term sacrifice. Likewise, countries need to make short-term sacrifices if they are to build up their long-term productive capabilities.

They are usually fixed in their physical qualities and there are few ‘general use’ machines or workers with a ‘general skill’ that can be used across industries. Blast furnaces from a bankrupt steel mill cannot be re-moulded into a machine making computers; steel workers do not have the right skills for the computer industry. Unless they are retrained, the steel workers will remain unemployed. At best, they will end up working in low-skill jobs, where their existing skills are totally wasted. This point is poignantly made by the British hit comedy film of 1997, The Full Monty, where six unemployed steel workers from Sheffield struggle to rebuild their lives as male strippers. There are clearly winners and losers involved in changing trade patterns, whether it is due to trade liberalization or to the rise of new, more productive foreign producers.


pages: 401 words: 112,784

Hard Times: The Divisive Toll of the Economic Slump by Tom Clark, Anthony Heath

Affordable Care Act / Obamacare, British Empire, business cycle, Carmen Reinhart, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, deindustrialization, Etonian, eurozone crisis, falling living standards, full employment, Gini coefficient, hedonic treadmill, hiring and firing, income inequality, interest rate swap, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, low skilled workers, MITM: man-in-the-middle, mortgage debt, new economy, Northern Rock, obamacare, oil shock, plutocrats, Plutocrats, price stability, quantitative easing, Right to Buy, Ronald Reagan, science of happiness, statistical model, The Wealth of Nations by Adam Smith, unconventional monetary instruments, War on Poverty, We are the 99%, women in the workforce, working poor

This thought strengthens the case for not relying on state benefits to do all of the sheltering, but also to look towards regulating, rewarding or otherwise nudging employers to do more for their staff on security, as well as pay. I have heard clever and well-meaning economists half-joke that the minimum wage is ‘a means-tested benefit, arbitrarily targeted on hourly wages rather than overall income, and arbitrarily funded through a ring-fenced tax on the employers who keep low-skilled workers off the dole’. There is an economistic way of looking at the world that sees things in that light. This is a vantage point from which it always looks tidier to shelter the vulnerable by raising income support than by telling employers what to do. That is not, however, the way that voters concerned about exploitation by unscrupulous employers see things, and anyone who is actually concerned about getting resources to those lashed by hard times must respect this reality.

Bureau of Labor Statistics figures for May 1993 and May 2013, reported in Ian Brinkley, Flexibility or Insecurity? Exploring the rise in zero hours contracts, Work Foundation, London, 2013, at: www.theworkfoundation.com/DownloadPublication/Rep­ort/339_Flexibility%20or%20Insecu­rity%20-%20final.pdf 49. David H. Autor and Susan N. Houseman, ‘Do temporary-help jobs improve labor market outcomes for low-skilled workers? Evidence from “Work First”’, American Economic Journal: Applied Economics, 2:3 (2010), pp. 96–128. 50. On the basis of a survey of around 1,000 employers, the Chartered Institute of Personnel and Development estimates that around 1 million British workers could be on zero-hour contracts. See ‘Zero hours contracts more widespread than thought – but only minority of zero hours workers want to work more hours’, CIPD press release, 5 August 2013, at: www.cipd.co.uk/pressoffice/press-releases/zero-hours-contracts-more-widespread-thought–050813.aspx On the basis of a less representative survey of its own members, the trade union Unite estimates that around 20% of workers were on zero-hour style arrangements, which produces a whole-workforce figure of 5.5 million.

Top Incomes over the Twentieth Century: A global perspective, Oxford University Press, Oxford and New York, 2010. Autor, David. The Polarization of Job Opportunities in the US Labor Market, Center for American Progress/Hamilton Project, Washington, DC, 2010, available at: www.brookings.edu/∼/media/research/files/papers/2010/4/jobs%20autor/04_jobs_autor.pdf Autor, David H. and Susan N. Houseman. ‘Do temporary-help jobs improve labor market outcomes for low-skilled workers? Evidence from “Work First”’, American Economic Journal: Applied Economics, 2:3 (2010), pp. 96–128. Beckett, Francis. Clem Attlee, Politico's Publishing, London, 2000. Bell, D.N.F and D.G. Blanchflower. ‘UK unemployment in the Great Recession’, National Institute Economic Review, 214 (2010), pp. R3–R25. Bell, David N.F. and David G. Blanchflower. ‘Underemployment in the UK revisited’, National Institute Economic Review, 224 (2013), pp.


pages: 667 words: 149,811

Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, autonomous vehicles, basic income, Bernie Sanders, Cass Sunstein, collective bargaining, corporate governance, David Brooks, desegregation, Detroit bankruptcy, Donald Trump, Double Irish / Dutch Sandwich, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, guest worker program, Gunnar Myrdal, housing crisis, income inequality, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta analysis, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, payday loans, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, single-payer health, speech recognition, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, working poor, young professional, zero-sum game

Three-Year Impacts from the WorkAdvance Demonstration (New York: MDRC, September 2017), 1, 15, https://www.mdrc.org/sites/default/files/WorkAdvance_3-Year_Brief.pdf. 59. Anne Roder and Mark Elliott, Nine Year Gains: Project QUEST’s Continuing Impact (New York: Economic Mobility Corporation, April 2019), 1–4, https://economicmobilitycorp.org/wp-content/uploads/2019/04/NineYearGains_web.pdf. 60. Chris Tomlinson, “San Antonio Program Moves Low-Skilled Workers into Middle Class,” Houston Chronicle, April 17, 2019, https://www.houstonchronicle.com/business/columnists/tomlinson/article/San-Antonio-program-moves-low-skilled-workers-13772983.php. 61. That translates to about a $5,000 annual boost. Roder and Elliott, Nine Year Gains. 62. Nelson D. Schwartz, “Job Training Can Change Lives. See How San Antonio Does It,” New York Times, August 19, 2019, https://www.nytimes.com/2019/08/19/business/economy/worker-training-project.html. 63.

Participants had 14 percent higher earnings (about $1,930) after three years.58 One standout is Project QUEST (Quality Employment through Skills Training), based in San Antonio, Texas. The program provides participants, overwhelmingly women of color, with comprehensive support and resources to earn community college degrees in high-demand areas like health care and IT.59 QUEST arose in response to a loss of good-quality low-skill manufacturing jobs in the San Antonio region. The nonprofit organization works with employers to determine fields and credentials that will be valuable, and provides tuition subsidies and a host of critical support services to low-income job seekers while they participate in two-year associate’s degrees or one-year certificate programs at area community colleges to earn those credentials. As CEO David Zammiello explains, many participants have “fragile life circumstances, whether it’s . . . home insecurities, food insecurities, so funding alone will not cure that particular issue.”60 Staff at QUEST provide intensive counseling, connections to assistance with childcare and transportation, and help in remedial education, fine-tuning a résumé, navigating the job search, and practicing for interviews.


Once the American Dream: Inner-Ring Suburbs of the Metropolitan United States by Bernadette Hanlon

big-box store, correlation coefficient, deindustrialization, desegregation, edge city, feminist movement, housing crisis, illegal immigration, informal economy, longitudinal study, low skilled workers, low-wage service sector, manufacturing employment, McMansion, New Urbanism, Silicon Valley, statistical model, The Chicago School, transit-oriented development, urban sprawl, white flight, working-age population, zero-sum game

Maryland recently passed living-wage legislation that sets wages at a level higher than the Fixing Inner-Ring Suburbs / 149 federal minimum-wage standard. This legislation currently applies to those businesses that receive government contracts. This is typically the case with many living-wage ordinances. Baltimore City, one of the first U.S. cities to pass a living-wage law, successfully pushed for legislation that ensures higher wages for low-skilled workers involved in city contracts. State and local governments are stepping in when the federal government has not. Expanding the living wage to move beyond just businesses that receive city or state contracts is important. A living wage for the workforce of older inner-ring suburbs would help lift poorly paid workers out of poverty. In 2007, the City Council of Los Angeles extended its living-wage laws to include those workers employed in hotels along Century Boulevard, a large thoroughfare near Los Angeles International Airport.

Forces shaping inner-ring suburbs Four primary forces include housing market dynamics, the new suburban demographic, labor-market restructuring, and metropolitan fragmentation. Policy for inner-ring suburbs No national policy exists, and growth management is insufficient. Regional coalitions are evolving. More federal and state funding is needed for fiscally stressed inner-ring suburbs. Other issues to consider are affordable housing and a living wage for low-skilled workers. Suburban poverty rose in U.S. metropolitan areas from 1980 to 2000. Some regional variation is apparent. Poverty, whether among inner-ring or outer suburbs, was most extreme in the South and the West. The number of cases of extreme suburban poverty increased, and, with the exception of the South, this increase was larger among inner-ring suburbs than outer suburbs. Extreme cases of increased poverty among inner-ring suburbs Conclusion / 153 occurred in such metropolitan areas as St.


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More: The 10,000-Year Rise of the World Economy by Philip Coggan

"Robert Solow", accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Andrei Shleifer, anti-communist, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Berlin Wall, Bob Noyce, Branko Milanovic, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, credit crunch, Credit Default Swap, crony capitalism, currency peg, debt deflation, Deng Xiaoping, discovery of the americas, Donald Trump, Erik Brynjolfsson, European colonialism, eurozone crisis, falling living standards, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, Frederick Winslow Taylor, full employment, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, global supply chain, global value chain, Gordon Gekko, greed is good, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, TaskRabbit, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, Yom Kippur War, zero-sum game

And that figure is after taxes and transfers; without the help of benefits, the bottom 90% of Americans would have seen a decline in real income.44 There are a number of potential explanations for this shift, one of which relates to globalisation and, especially, the entry of China into the world economy. Adding so many workers to the global labour supply may have driven down the wages of unskilled workers in particular. However, many economists point to the influence of new technology, which they dub skill-biased technological change (SBTC). Workers who can handle new technology are more valuable than those who cannot, while low-skilled workers may be replaced by robots or computer programmes. But a problem with this theory is that the widespread use of computers really occurred in the 1990s, while the sudden jump in inequality occurred in the 1980s. Similarly, the gap between the earnings of college graduates and others did not widen significantly in the 1990s, but did in the 1980s.45 A related argument is that there has been a war for talent.

There is plenty of incentive for young people to take further education. Those workers who only completed high school earned just three-fifths of the hourly wages of those who graduated from college and less than half the rate earned by postgraduates.10 Some of this education is supplied privately. But governments have seen it as in the country’s interests to expand education, especially as low-skilled jobs are being automated or shifted to low-wage centres in Asia. Health As late as 1820, life expectancy at birth was only around 29 worldwide, and 36 in Europe. By 1913, it had edged up to 34 worldwide but was in the mid-40s in Europe and America. By 1970, the global average was 60, and Europeans could expect to live into their seventies.11 By 2015, the global average was 71.4 years, more than double that of a century earlier.12 This is an immense, and oft-overlooked, achievement.

However, immigrants are not just workers, they are also consumers; as well as increasing the supply of labour, they increase the demand for goods. This “lump of labour” fallacy is hard to kill (see Chapter 9). As noted earlier in the book, the real culprit could be found elsewhere. A study by the IMF found that the reason for around half the decline in labour’s share of GDP was the impact of technology, as employers were able to automate low-skilled jobs. Another quarter of the shift was down to globalisation; companies in the developed world were shifting jobs to low-wage countries in the rest of the world.39 The sluggish overall level of growth that followed the financial crisis led some economists to rethink their previous models. Larry Summers, who was Treasury secretary under Bill Clinton and director of the National Economic Council under Barack Obama, argued that longer-term forces were at work.


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The Rise of the Network Society by Manuel Castells

"Robert Solow", Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, capital controls, complexity theory, computer age, computerized trading, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, John Markoff, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Robert Gordon, Robert Metcalfe, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, zero-sum game

The study forecast that in the short term unskilled jobs would be displaced, although enhanced productivity would probably result in greater job creation in the long term.84 In the United States, Flynn analyzed 200 case studies of the employment impacts of process innovations between 1940 and 1982.85 He concluded that, while process innovations in manufacturing eliminated high-skill jobs and helped to create low-skill jobs, the opposite was true for information processing in offices, where technological innovation suppressed low-skill jobs and created high-skill ones. Thus, according to Flynn, the effects of process innovation were variable, depending upon specific situations of industries and firms. At the industry level, again in the US, the analysis by Levy and co-workers of five industries showed different effects of technological innovation: in iron mining, coal mining, and aluminium, technological change increased output and resulted in higher employment levels; in steel and automobiles, on the other hand, growth of demand did not match reduction of labor per unit of output and job losses resulted.86 Also in the United States, the analysis by Miller in the 1980s of the available evidence on the impact of industrial robotics concluded that most of the displaced workers would be reabsorbed into the labor force.87 In the UK, the study by Daniel on the employment impacts of technology in factories and offices concluded that there would be a negligible effect.

It is much more convincing, we argue, that better education and more training could, in the longer run, contribute to higher productivity and economic growth rates.136 In the same sense, David Howell has shown for the US that while there has been an increasing demand for higher skills, this is not the cause of the substantial decline in average wages for American workers between 1973 and 1990 (a fall from a weekly wage of $327 to $265 in 1990, measured in 1982 dollars). Nor is the skill mix the source of increasing income inequality. In his study with Wolff, Howell shows that while the share of low-skilled workers in the US decreased across industries, the share of low-wage workers increased in these same industries. Several studies also suggest that higher skills are in demand, although not in shortage, but higher skills do not necessarily translate into higher wages.137 Thus, in the US, while decline in real wages was more pronounced for the lowest-educated, salaries for the college-educated also stagnated between 1987 and 1993.138 The direct consequence of economic restructuring in the United State s is that in the 1980s and the first half of the 1990s family income plummeted.

These are, on the one hand, the growing flexibility of labor, that is the reduction of the proportion of the labor force with long-term employment and a predictable career path, as new generations, the majority of whom are hired for their flexibility, replace an old labor force entitled to job security in large-scale firms. Business consultants and service entrepreneurs have replaced automobile workers and insurance underwriters. On the other hand, there has been a parallel growth of highly educated occupations and low-skill jobs, with very different bargaining power in the labor market. Exaggerating the terminology to capture the imagination of the reader, I labeled these two types of workers “self-programmable labor” and “generic labor”. Indeed, there has been a tendency to increase the decision-making autonomy of educated knowledge workers who have become the most valuable assets for their companies. They are often referred to as “talent”.


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The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, obamacare, offshore financial centre, oil shock, plutocrats, Plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Ronald Reagan, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

I observe the division of the American economy into two separate groups in a different way than the typical division of urban and rural, but very much in the spirit of Lewis’s model. I distinguish workers by the skills and occupations of the two sectors. The first sector consists of skilled workers and managers who have college degrees and command good and even very high salaries in our technological economy. I call this the FTE sector to highlight the roles of finance, technology, and electronics in this part of the economy. The other group consists of low-skilled workers who are suffering some of the ills of globalization. I call this the low-wage sector to highlight the role of politics and technology in reducing the demand for semi-skilled workers. The wages in the two sectors then can be seen in figures 2 and 3. Figure 2 shows the stagnation of average wages for the last generation. The workers with stagnant wages are the analogue of Lewis’s subsistence sector, although these workers earn well above what we think of as the earnings of actual subsistence farmers.

Atkinson, Anthony B. 2015. Inequality: What Can Be Done? Cambridge, MA: Harvard University Press. Authers, John. 2015. “Infrastructure: Bridging the Gap.” Financial Times, November 9. Autor, David H. 2015. “Why Are There Still So Many Jobs? The History and Future of Workplace Automation.” Journal of Economic Perspectives 29 (3) (Summer): 3–30. Autor, David H., and David Dorn. 2013. “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market.” American Economic Review 103 (5) (August): 1553–1597. Autor, David H., David Dorn, and Gordon H. Hanson. 2013. “The China Syndrome: Local Labor Market Effects of Import Competition in the United States.” American Economic Review 103 (6): 2121–2168. Autor, David H., Frank Levy, and Richard J. Murnane. 2003. “The Skill Content of Recent Technological Change: An Empirical Exploration.”


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23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

"Robert Solow", affirmative action, Asian financial crisis, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, borderless world, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, deskilling, ending welfare as we know it, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, full employment, German hyperinflation, Gini coefficient, hiring and firing, Hyman Minsky, income inequality, income per capita, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, microcredit, Myron Scholes, North Sea oil, offshore financial centre, old-boy network, post-industrial society, price stability, profit maximization, profit motive, purchasing power parity, rent control, shareholder value, short selling, Skype, structural adjustment programs, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, Toyota Production System, trade liberalization, trickle-down economics, women in the workforce, working poor, zero-sum game

When you think about it, there is no reason why all Swedish bus drivers, or for that matter the bulk of the workforce in Sweden (and that of any other rich country), could not be replaced by some Indians, Chinese or Ghanaians. Most of these foreigners would be happy with a fraction of the wage rates that Swedish workers get paid, while all of them would be able to perform the job at least equally well, or even better. And we are not simply talking about low-skill workers such as cleaners or street-sweepers. There are huge numbers of engineers, bankers and computer programmers waiting out there in Shanghai, Nairobi or Quito, who can easily replace their counterparts in Stockholm, Linköping and Malmö. However, these workers cannot enter the Swedish labour market because they cannot freely migrate to Sweden due to immigration control. As a result, Swedish workers can command fifty times the wages of Indian workers, despite the fact that many of them do not have productivity rates that are higher than those of Indian workers.

Of course, the knowledge stock that the humanity collectively commands today is much bigger than in the past, but that does not mean that everyone, or even the majority of the people, has to be better educated than in the past. If anything, the amount of productivity-related knowledge that an average worker needs to possess has fallen for many jobs, especially in rich countries. This may sound absurd, but let me explain. To begin with, with the continuous rise in manufacturing productivity, a greater proportion of the workforce in rich countries now works in low-skilled service jobs that do not require much education – stacking shelves in supermarkets, frying burgers in fast food restaurants and cleaning offices (see Things 3 and 9). Insofar as the proportion of people in such professions increases, we may actually do with an increasingly less, not more, educated labour force, if we are only interested in the productivity effects of education. Moreover, with economic development, a higher proportion of knowledge becomes embodied in machines.


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The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All by Martin Sandbu

"Robert Solow", Airbnb, autonomous vehicles, balance sheet recession, bank run, banking crisis, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, centre right, collective bargaining, debt deflation, deindustrialization, deskilling, Diane Coyle, Donald Trump, Edward Glaeser, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, future of work, gig economy, Gini coefficient, hiring and firing, income inequality, income per capita, industrial robot, intangible asset, job automation, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Martin Wolf, meta analysis, meta-analysis, mini-job, mortgage debt, new economy, offshore financial centre, oil shock, open economy, pattern recognition, pink-collar, precariat, quantitative easing, race to the bottom, Richard Florida, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, social intelligence, TaskRabbit, total factor productivity, universal basic income, very high income, winner-take-all economy, working poor

,” Conversable Economist (blog), 26 January 2018, https://conversableeconomist.blogspot.com/2018/01/why-has-us-regional-convergence-declined.html; Martin Sandbu, “The Economic Problem Tearing Countries Apart,” Financial Times, 30 November 2018, https://www.ft.com/content/ab2f8a30-f47c-11e8-ae55-df4bf40f9d0d. 3. Giannone, “Skilled-Biased Technical Change”; David Autor, “Work of the Past, Work of the Future,” American Economic Association Papers and Proceedings 109 (May 2019): 1–32, https://doi.org/10.1257/pandp.20191110; Emily Badger and Quoctrung Bui, “What If Cities Are No Longer the Land of Opportunity for Low-Skilled Workers?,” New York Times, 11 January 2019, https://www.nytimes.com/2019/01/11/upshot/big-cities-low-skilled-workers-wages.html. 4. Joan Rosés and Nikolaus Wolf, “The Return of Regional Inequality: Europe from 1900 to Today,” VoxEU, 14 March 2018, https://voxeu.org/article/return-regional-inequality-europe-1900-today. 5. Andrés Rodríguez-Pose, “The Revenge of the Places That Don’t Matter,” VoxEU, 6 February 2018, https://voxeu.org/article/revenge-places-dont-matter. 6.


The Ages of Globalization by Jeffrey D. Sachs

Admiral Zheng, British Empire, Cape to Cairo, colonial rule, Columbian Exchange, Commentariolus, coronavirus, COVID-19, Covid-19, cuban missile crisis, decarbonisation, demographic transition, Deng Xiaoping, domestication of the camel, Donald Trump, en.wikipedia.org, endogenous growth, European colonialism, global supply chain, greed is good, income per capita, invention of agriculture, invention of gunpowder, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John von Neumann, joint-stock company, Louis Pasteur, low skilled workers, mass immigration, Nikolai Kondratiev, out of africa, packet switching, Pax Mongolica, precision agriculture, profit maximization, profit motive, purchasing power parity, South China Sea, spinning jenny, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, Turing machine, Turing test, urban planning, Watson beat the top human players on Jeopardy!, wikimedia commons

In recent decades, lower-skilled workers displaced by machines have seen their earnings stagnate or decline, while higher-skilled workers have been made more productive by those same machines and have seen their earnings rise. These trends have been a key reason for the rising inequality of income in many countries, notably including the United States. Yet the ultimate effect of this tendency depends on two additional factors. To the extent that low-skilled workers can gain higher skills through increased education and training, the proportion of the workforce suffering from stagnant or declining earnings can be reduced. And even when market wages are pushed down, governments can compensate for those adverse market forces through increased taxation of those with high and rising incomes and increased transfers to those with low and falling incomes, so that all segments of society share in the gains from technological advance.

How to cultivate peace in the twenty-first century is one of the core questions of the next and final chapter. Some Lessons from the Digital Age The very success of economic growth in the Digital Age has laid several traps for an unwary world. The world economy is producing vast wealth, but failing in three other dimensions of sustainable development. Inequalities are soaring, in part because of the differential effects of digital technologies on high-skilled and low-skilled workers. Environmental degradation is rampant, a reflection of a global economy that has reached nearly $100 trillion in annual output without taking care to ensure that the impacts on the planet are kept to a safe and sustainable level. And the risk of conflict is rising, especially given the rapid shifts in geopolitics, and the anxieties that are being created in the US, China, and elsewhere. All is not lost—not by a longshot.


pages: 543 words: 153,550

Model Thinker: What You Need to Know to Make Data Work for You by Scott E. Page

"Robert Solow", Airbnb, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Alvin Roth, assortative mating, Bernie Madoff, bitcoin, Black Swan, blockchain, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Checklist Manifesto, computer age, corporate governance, correlation does not imply causation, cuban missile crisis, deliberate practice, discrete time, distributed ledger, en.wikipedia.org, Estimating the Reproducibility of Psychological Science, Everything should be made as simple as possible, experimental economics, first-price auction, Flash crash, Geoffrey West, Santa Fe Institute, germ theory of disease, Gini coefficient, High speed trading, impulse control, income inequality, Isaac Newton, John von Neumann, Kenneth Rogoff, knowledge economy, knowledge worker, Long Term Capital Management, loss aversion, low skilled workers, Mark Zuckerberg, market design, meta analysis, meta-analysis, money market fund, Nash equilibrium, natural language processing, Network effects, p-value, Pareto efficiency, pattern recognition, Paul Erdős, Paul Samuelson, phenotype, pre–internet, prisoner's dilemma, race to the bottom, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, school choice, sealed-bid auction, second-price auction, selection bias, six sigma, social graph, spectrum auction, statistical model, Stephen Hawking, Supply of New York City Cabdrivers, The Bell Curve by Richard Herrnstein and Charles Murray, The Great Moderation, The Rise and Fall of American Growth, the rule of 72, the scientific method, The Spirit Level, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, urban sprawl, value at risk, web application, winner-take-all economy, zero-sum game

Technology and Human Capital Model Growth Model Output depends on physical capital (K), educated labor (S), and uneducated labor (U) as follows: Output = AKαSβ Uγ The parameters A, α, β, and γ capture the technology and the relative value of the three types of labor. The relative market wage for high- and low-skilled workers is:7 Cause of inequality: Technological changes that favor educated workers increase β and decrease γ. These changes, along with increases in the supply of low-skilled workers, increase inequality. The next model, the positive feedback model, can explain the increased variation within professions. It focuses on the tail of the distribution and, in particular, on entrepreneurs. In 2011, entrepreneurs made up 70% of the 400 wealthiest individuals in the United States.8 The model assumes that technologies—the internet and smartphones in particular—have made us more connected and more influenced by the choices of others.9 A person buying wireless stereo speakers can read reviews online and select “the best” from among a dozen choices.

During the 1950s, the rise in manufacturing increased demand for uneducated workers. At the same time, increased college enrollments due in part to the GI Bill increased the supply of educated workers. In the 1980s, decreased incentives to attend college slowed the growth in the number of college graduates, and a subsequent inflow of immigrants with low education levels increased the supply of low-skilled workers. At the same time, technological changes—the rise of automated manufacturing and the transition to a more digital economy—increased the relative value of educated workers, and their rising wages reflected this value. Time series data on average incomes by education level fit this model reasonably well. For this reason, many economists rely on the model to guide policy. The model advocates increasing access to education, as that will depress the wages of educated workers and reduce inequality.


pages: 344 words: 94,332

The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton, Andrew Scott

3D printing, Airbnb, assortative mating, carbon footprint, Clayton Christensen, collapse of Lehman Brothers, creative destruction, crowdsourcing, delayed gratification, disruptive innovation, diversification, Downton Abbey, Erik Brynjolfsson, falling living standards, financial independence, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, gender pay gap, gig economy, Google Glasses, indoor plumbing, information retrieval, intangible asset, Isaac Newton, job satisfaction, longitudinal study, low skilled workers, Lyft, Nelson Mandela, Network effects, New Economic Geography, old age dependency ratio, pattern recognition, pension reform, Peter Thiel, Ray Kurzweil, Richard Florida, Richard Thaler, Second Machine Age, sharing economy, side project, Silicon Valley, smart cities, Stanford marshmallow experiment, Stephen Hawking, Steve Jobs, The Future of Employment, uber lyft, women in the workforce, young professional

While technology has acted as a substitute for medium-skill jobs, it has served as a complement for skilled workers. Software and computers are complementary to skilled and educated workers. So while they have replaced medium-skill work, they have boosted the productivity and therefore the income of highly skilled workers. As the income of these skilled workers has increased, so they have increased their demand for the services produced by low-skilled workers. The net effect of these substitution, complementarity and demand effects has been the hollowing out of the labour market. That described the first half of the chessboard. We are now entering the second half where computational power increases dramatically, so the concern is that the hollow gets wider and wider. So far technology has replaced simple routine tasks, and limits to computational power have restricted the loss of jobs.

If she manages to save 14 per cent of her salary, then the analysis in Figure 2.7 suggests that if she wants to retire on 50 per cent of her final salary, she will have to work until the age of 80. With this sixty years of work in mind, is a scenario based on the 4.0 portfolio model (education/work/portfolio/retirement) viable? Jane will be entering the job market around 2019. Over the following decades, numerous high-skill and low-skill routine jobs will continually disappear. As a consequence, Jane will have to devote considerable amounts of time to developing new skills and foresight about market developments. She can preserve her productive assets by on-the-job coaching and training and by taking time out to retrain. If she wants to develop new portable skills on the job, she will have to find a company that supports her to do this.


pages: 393 words: 91,257

The Coming of Neo-Feudalism: A Warning to the Global Middle Class by Joel Kotkin

Admiral Zheng, Andy Kessler, autonomous vehicles, basic income, Bernie Sanders, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, clean water, creative destruction, deindustrialization, demographic transition, don't be evil, Donald Trump, edge city, Elon Musk, European colonialism, financial independence, Francis Fukuyama: the end of history, gig economy, Gini coefficient, Google bus, guest worker program, Hans Rosling, housing crisis, income inequality, informal economy, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, life extension, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, megacity, Nate Silver, new economy, New Urbanism, Occupy movement, Parag Khanna, Peter Thiel, plutocrats, Plutocrats, post-industrial society, post-work, postindustrial economy, postnationalism / post nation state, precariat, profit motive, RAND corporation, Ray Kurzweil, rent control, Richard Florida, road to serfdom, Robert Gordon, Sam Altman, Satyajit Das, sharing economy, Silicon Valley, smart cities, Steve Jobs, Stewart Brand, superstar cities, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, Thomas L Friedman, too big to fail, trade route, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, unpaid internship, upwardly mobile, We are the 99%, Wolfgang Streeck, women in the workforce, working-age population, Y Combinator

Renn, “The Lifeblood of Cities,” City Journal, January 9, 2018, https://www.city-journal.org/html/lifeblood-cities-15639.html; Harrison Jacobs, “Incredible Maps Show How Working-Class Neighborhoods Are Disappearing From American Cities,” Business Insider, September 30, 2014, http://www.businessinsider.com/working-class-neighborhoods-are-disappearing-from-american-cities-2014-9. 5 Emily Badger and Quoctrung Bai, “What if Cities Are No Longer the Land of Opportunity for Low-Skilled Workers?” New York Times, January 11, 2019, https://www.nytimes.com/2019/01/11/upshot/big-cities-low-skilled-workers-wages.html. 6 Gabriela Inchauste, Living and Leaving: Housing, Mobility, and Welfare in the European Union, World Bank Report on the European Union, World Bank Group, 2018, http://pubdocs.worldbank.org/en/507021541611553122/Living-Leaving-web.pdf; William A. Galston, “Why Cities Boom While Towns Struggle,” Wall Street Journal, March 13, 2018, https://www.wsj.com/articles/why-cities-boom-while-towns-struggle-1520983492?


pages: 116 words: 31,356

Platform Capitalism by Nick Srnicek

3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative economy, collective bargaining, deindustrialization, deskilling, disintermediation, future of work, gig economy, Infrastructure as a Service, Internet of things, Jean Tirole, Jeff Bezos, knowledge economy, knowledge worker, liquidity trap, low skilled workers, Lyft, Mark Zuckerberg, means of production, mittelstand, multi-sided market, natural language processing, Network effects, new economy, Oculus Rift, offshore financial centre, pattern recognition, platform as a service, quantitative easing, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, software as a service, TaskRabbit, the built environment, total factor productivity, two-sided market, Uber and Lyft, Uber for X, uber lyft, unconventional monetary instruments, unorthodox policies, Zipcar

For instance, content moderation for Google and Facebook is typically done in the Philippines, where an estimated 100,000 workers search through the content on social media and in cloud storage.90 And Amazon has a notoriously low-paid workforce of warehouse workers who are subject to incredibly comprehensive systems of surveillance and control. These firms simply continue the secular trend of outsourcing low-skill workers while retaining a core of well-paid high-skill labourers. On a broader scale, all of the post-2008 net employment gains in America have come from workers in non-traditional employment, such as contractors and on-call workers. This process of outsourcing and building lean business models gets taken to an extreme in firms like Uber, which rely on a virtually asset-less form to generate profits.


pages: 267 words: 79,905

Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage by Ruth Fincher, Peter Saunders

barriers to entry, ending welfare as we know it, financial independence, full employment, Gini coefficient, income inequality, income per capita, labour market flexibility, labour mobility, longitudinal study, low skilled workers, low-wage service sector, marginal employment, minimum wage unemployment, New Urbanism, open economy, pink-collar, positional goods, purchasing power parity, shareholder value, spread of share-ownership, The Bell Curve by Richard Herrnstein and Charles Murray, urban planning, urban renewal, very high income, women in the workforce, working poor, working-age population

There has been an 122 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 122 INEQUALITY AND THE FUTURES OF OUR CHILDREN expansion in both higher paid jobs and lower paid jobs. The crucial question is who gets them. Gregory argues that individuals who would normally be employed in the middle of the earnings distribution are taking the lower paid jobs. This has ominous implications for the low-skilled workers who would normally have access to these jobs. ‘When there are insufficient jobs in aggregate this serves to bump the least skilled off the earnings ladder’ (Gregory 1996). This is a very different situation from the one described by Erikson and Goldthorpe (1992) when unemployment rates were negligible, there was contraction in the lower skilled jobs, and rapid expansion at the top. To repeat their conclusion, in such a world, even a highly stratified society will show high rates of mobility.

Our own analysis of ABS training data (the 1993 Survey of Training and Education) for those occupations likely to proliferate in an enlarged low-wage sector indicates that low-paid workers are only about half as likely to get access to training as are better paid workers. As Table 7.5 shows, this analysis takes account of the other key workplace factors likely to influence training, especially business size. For many of the other issues around low-paid jobs, Australian data are difficult to come by. Labour mobility figures in Australia show very little upward occupational mobility for low-skilled workers (ABS 1998, pp. 16–17) and research by Burgess and Campbell (1998) shows that the large growth in casual jobs during the 1990s did not provide a foothold into secure employment for most workers. From this we can infer that earnings mobility at the bottom of the labour market is quite limited. Further insights into the nature of low-paid jobs are provided by comparing key characteristics of low- and high-wage firms.


pages: 352 words: 104,411

Rush Hour: How 500 Million Commuters Survive the Daily Journey to Work by Iain Gately

Albert Einstein, autonomous vehicles, Beeching cuts, blue-collar work, Boris Johnson, British Empire, business intelligence, business process, business process outsourcing, call centre, car-free, Cesare Marchetti: Marchetti’s constant, Clapham omnibus, cognitive dissonance, congestion charging, connected car, corporate raider, DARPA: Urban Challenge, Dean Kamen, decarbonisation, Deng Xiaoping, Detroit bankruptcy, don't be evil, Elon Musk, extreme commuting, global pandemic, Google bus, Henri Poincaré, Hyperloop, Jeff Bezos, lateral thinking, low skilled workers, Marchetti’s constant, postnationalism / post nation state, Ralph Waldo Emerson, remote working, self-driving car, Silicon Valley, stakhanovite, Steve Jobs, telepresence, Tesla Model S, urban planning, éminence grise

Beyond these limits productivity seemed to fall by 2.5 to 3 per cent for each extra ten minutes spent in transit. Official disapproval and the general absence of facilities notwithstanding, commuting crept into the Soviet Union in the last decade of its ‘great stagnation’ (1964–85). The Stakhanovites of freedom of movement appeared in the main in small cities. They were categorized as ‘young, low-skilled workers, occupying positions requiring low qualifications and yielding low wages’, and served as cannon fodder during the USSR’s last, futile attempt to win the Cold War through communist economics. Their mobility was permitted by the state because it was cheaper than having to build new tower blocks in the cities, and ‘substituting migration with commuting’ became official policy. It was also a partial solution to food shortages.

CHAPTER VII Two Wheels Good 149 ‘a completely Italian product, such as we have not seen since the Roman chariot’, quoted in ‘Viva Vespa’, by Janice Kirkpatrick, Design Week, 22 August 1996. 151 ‘ill-repaired bomb site manned by semi-starved workers’, Correlli Barnett, The Lost Victory: British Dreams, British Realities 1945–1950, London, Macmillan, 1995, p. 392. 154 ‘It is smooth like the enamel of an automobile’, Lewis H. Siegelbaum, Cars for Comrades: The Life of the Soviet Automobile, Ithaca, New York, Cornell University Press, 2008, p. 135. 155 ‘a commission of specialists evaluated the car’, Tracy Nichols Busch, A Class on Wheels: Avtodor and the ‘automobilization’ of the Soviet Union, 1927–1935, Washington, Georgetown University, 2003. 159 ‘young, low-skilled workers, occupying positions requiring low qualifications’, quoted in ‘Suburbanisation, employment change and commuting in the Tallinn Metropolitan Area’ (2005), Institute of Geography, University of Tartu: http://epc2006.princeton.edu/papers/60516. 163 For Japan and the Honda Super Cub, see Jeffrey W. Alexander, Japan’s Motorcycle Wars: An Industry History, Vancouver, UBC Press, 2008. 164 For Thai government survey of commuting, see R.


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

"Robert Solow", affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, high net worth, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, Plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Silicon Valley, single-payer health, special economic zone, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

In China’s case the upward swing was made stronger than usual by the fact that the structural transition also implied a systemic change, from rural-based socialism to urban capitalism. Thus both transitions pushed inequality up. What were the main drivers of this rise? Wage inequality has obviously risen as the economy has moved toward capitalism, and the wages of more efficient or more-skilled workers have gone up much more than the wages of low-skilled workers (at least until recently; see Luo and Zhu 2008, 15–17; Zhuang and Li 2016, 7). In one of the very rare papers that uses microdata from the usually inaccessible large survey conducted by the National Bureau of Statistics, Ding, Fu, and He (2018) show that urban wage inequality increased between 1986 and 2009 within both state-owned and privately owned urban companies. Wage inequality in private companies in China has always been greater than in SOEs (a standard result that goes back to the studies of European inequality in the 1970s), and the gap between the two sectors shows a further increase from approximately 2004 until 2009, when the series ends.

In an interesting exercise comparing Chinese and American inequality, Xie and Zhou (2014) show that 22 percent of Chinese inequality is due to these two structural features (urban versus rural, and provincial gaps), whose importance in the United States is a mere 2 percent. The explosion of growth in China has also been a prime driver of the explosion of inequality. It is thus the case that no matter how we slice the pie, that is, whether we look at inequality between regions, or between cities and villages, or between urban and rural workers, or between the private and the state sector, or between high- and low-skilled workers, or between men and women, inequality has increased for every such partition. It would be, I think, impossible to find any partition where inequality had not risen to a level higher than what it was before the reforms. The most interesting, and for our purposes the most important, recent development is the increase in the share of income from privately owned capital, which seems to be as concentrated in China as in the advanced market economies.


pages: 877 words: 182,093

Wealth, Poverty and Politics by Thomas Sowell

affirmative action, Albert Einstein, British Empire, Capital in the Twenty-First Century by Thomas Piketty, colonial exploitation, colonial rule, correlation does not imply causation, Deng Xiaoping, desegregation, European colonialism, full employment, Gunnar Myrdal, income inequality, income per capita, invention of the sewing machine, invisible hand, low skilled workers, mass immigration, means of production, minimum wage unemployment, New Urbanism, profit motive, rent control, Scramble for Africa, Simon Kuznets, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, transatlantic slave trade, transcontinental railway, trickle-down economics, very high income, War on Poverty

b A century earlier, economist Alfred Marshall warned against “the harm to strength of character and to family life that comes from ill-considered aid to the thriftless”— a warning that proved to be prophetic. Alfred Marshall, Principles of Economics, fifth edition, Vol. I (London: Macmillan and Co., Ltd., 1907), p. 44. c One of these complications is that surveying employers before and after a minimum wage increase has the fatal weakness of survey research in general— namely, that you can only survey survivors. Reduced employment of low-skilled workers in the wake of a minimum wage increase can take many forms. If all the businesses employing low-skilled workers were identical, then unemployment resulting from a minimum wage increase might be expected to be found in all the firms surveyed. But a more common circumstance is one in which some firms in an industry are quite profitable, others are less profitable and still others are struggling to stay in business. In these circumstances, an increase in the minimum wage can increase the number of struggling firms that go out of business and reduce the number of new firms that enter the industry to replace them, now that there are higher labor costs.

Another complication is that people working for minimum wages are a small fraction of the people working, so that what happens to the employment of minimum wage workers can be lost in statistics about the total employment in an industry, due to all sorts of other fluctuations in the employment of a larger number of other workers. But if, instead of surveying surviving firms after a minimum wage increase, data are collected on unemployment rates among particular groups of inexperienced and low-skilled workers, such as black teenagers, a more accurate picture of the effects of minimum wages on unemployment can be obtained. d About ten percent of the black population in America had been free before the Civil War, and these “free persons of color” had a head start that made their descendants so much more experienced and more educated that they remained the elite of the black population on into the middle of the twentieth century.


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, corporate governance, cosmological principle, crony capitalism, dark matter, declining real wages, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, Plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

Greatly increased concentration of property in the hands of the most affluent Americans and a massive rise in earnings disparities among workers both contributed to this development: the wealth share of the richest 1 percent of households more than doubled from about 14 percent in 1774 to 32 percent in 1860, whereas the Gini coefficients of earnings soared from 0.39 to 0.47.33 As I show in more detail in chapter 6, the Civil War leveled fortunes in the South but further boosted inequality in the North, two countervailing regional trends that left national metrics largely unchanged. Disequalization subsequently continued up to the early twentieth century: the top 1 percent income share almost doubled from approximately 10 percent in 1870 to about 18 percent in 1913, and skill premiums increased. Urbanization, industrialization, and massive immigration by low-skilled workers were responsible for this trend. A whole series of indices for top wealth shares likewise shows a sustained rise from 1640 to 1890 or even 1930. By one measure, between 1810 and 1910, the share of all assets held by the richest 1 percent of U.S. households almost doubled, from 25 percent to 46 percent. Wealth concentration was most pronounced at the very top: whereas in 1790 the largest reported fortune in the country had equaled 25,000 times the average annual working wage, in 1912 John D.

Stiglitz 2013: 359–361, on the prospects of putting his numerous proposals into practice, offers no substantive suggestions. Milanovic 2016: 112–117 voices healthy skepticism regarding the potential of various equalizing forces (political change, education, and an abatement of globalization pressures), placing hope on the slow dissipation of rents over time and the emergence of future technologies that might increase the relative productivity of low-skilled workers. He is particularly pessimistic about the short-term prospects of economic equalization in the United States, where all indicators point to a continuing rise in inequality in the near future (181–190, esp. 190). 13 Atkinson 2014a and 2015. In addition to Atkinson 2015: 237–238, I quote mostly from the summary version (2014a). For the question “Can it be done?” see 241–299. Gini reduction: 294, with 19 fig. 1.2, 22 fig. 1.3 (and cf. also 299 for a probable reduction of about 4 points).

“Capital taxation in the twenty-first century.” American Economic Review 105: 38–42. Autor, David H. 2014. “Skills, education, and the rise of earnings inequality among the ‘other 99 percent.’” Science 344: 843–850. Autor, David H. 2015. “Why are there still so many jobs? The history and future of workplace automation.” Journal of Economic Perspectives 29: 3–30. Autor, David, and Dorn, David. 2013. “The growth of low-skill service jobs and the polarization of the U.S. labor market.” American Economic Review 103: 1553–1597. Autor, David, Levy, Frank, and Murnane, Richard J. 2003. “The skill content of recent technological change: an empirical exploration.” Quarterly Journal of Economics 116: 1279–1333. Autor, David, Manning, Alan, and Smith, Christopher. 2010. “The contribution of the minimum wage to U.S. wage inequality over three decades: a reassessment.”


pages: 126 words: 37,081

Men Without Work by Nicholas Eberstadt

business cycle, Carmen Reinhart, centre right, deindustrialization, financial innovation, full employment, illegal immigration, jobless men, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labor-force participation, low skilled workers, mass immigration, moral hazard, post-work, Ronald Reagan, secular stagnation, Simon Kuznets, The Rise and Fall of American Growth, War on Poverty, women in the workforce, working-age population

The CEA report offered a careful presentation of the demand-side explanation, focusing particularly on the evidence for decreasing demand for less-skilled labor in postwar America: If less-educated men were simply choosing to work less . . . this should raise the relative wages of the less-educated men who choose to continue participating in the workforce. Yet, in recent decades the opposite has happened: less-educated Americans have actually suffered a reduction in their wages relative to other groups. A number of studies have identified declining labor market opportunities for low-skilled workers and related stagnant real wage growth as the most likely explanation for the decline of prime-age male labor force participation, at least for the period in the mid-to late 1970s and 1980s. . . . More recently, economists have suggested that a relative decline in labor demand for occupations that are middle-skilled or middle-paying may have begun contributing to the decline in participation in the 1990s . . .


pages: 441 words: 113,244

Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity From Politicians by Joe Quirk, Patri Friedman

3D printing, access to a mobile phone, addicted to oil, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, barriers to entry, Branko Milanovic, British Empire, Buckminster Fuller, Burning Man, business climate, business cycle, business process, California gold rush, Celtic Tiger, Charles Lindbergh, clean water, Colonization of Mars, Dean Kamen, Deng Xiaoping, drone strike, Elon Musk, en.wikipedia.org, failed state, financial intermediation, Gini coefficient, happiness index / gross national happiness, income inequality, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, joint-stock limited liability company, Kickstarter, low skilled workers, Machinery of Freedom by David Friedman, Mark Zuckerberg, megacity, minimum wage unemployment, Network effects, new economy, obamacare, offshore financial centre, open borders, paypal mafia, peak oil, Peter H. Diamandis: Planetary Resources, Peter Thiel, price stability, profit motive, Ronald Coase, Ronald Reagan, Shenzhen was a fishing village, Silicon Valley, special economic zone, standardized shipping container, stem cell, trade route, UNCLOS, UNCLOS, undersea cable, young professional

The stories of East Germany versus West Germany, Hong Kong versus mainland China, Singapore versus Malaysia, Zimbabwe versus Botswana, Brazil versus Bolivia, Greece versus Albania, and the United States versus Mexico all attest to the power of formal rules. Arnold Kling and Nick Schulz claim in their book Invisible Wealth: The Hidden Story of How Markets Work that crossing the border from Latin America into the United States “appears to make the productivity of a low-skilled worker ten to twenty times higher, based on the wage differential.” Education entrepreneur and seastead humanitarian Michael Strong asks us to “[i]magine if you could walk across an invisible line and raise your income tenfold.” Dr. Francis Fukuyama writes in his magnum opus The Origins of Political Order: From Prehuman Times to the French Revolution, “Poor countries are poor not because they lack resources, but because they lack effective political institutions.”

“Between 1946 and the beginning of the Korean War”: Ralph Hassig and Kongdan Oh, The Hidden People of North Korea: Everyday Life in the Hermit Kingdom (Lanham, MD: Rowman & Littlefield, 2009), 161. average South Korean earns eighteen times as much . . . lives an average of ten years longer: S. Rogers, A. Sedghi, and M. McCormick, “South v. North Korea: How Do the Two Countries Compare? Visualised,” Datablog (blog), Guardian (UK), April 8, 2013, www.theguardian.com/world/datablog/2013/apr/08/south-korea-v-north-korea-compared. “low-skilled worker ten to twenty times higher”: Arnold Kling and Nick Schulz, Invisible Wealth: The Hidden Story of How Markets Work (New York: Encounter Books, 2011), 136. “Poor countries are poor . . . because they lack effective political institutions”: Francis Fukuyama, The Origins of Political Order: From Prehuman Times to the French Revolution (New York: Farrar, Straus and Giroux, 2011), 14. See also Dani Rodrik, Arvind Subramanian, and Francesco Trebbi, “Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development,” Journal of Economic Growth 9, no. 2 (June 2004): 131–65, www.sss.ias.edu/files/pdfs/Rodrik/Research/institutions-rule.pdf.


pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

"Robert Solow", Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low skilled workers, M-Pesa, market bubble, means of production, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

The pattern that has emerged in mature countries in the 2000s is not that of simple opposition between, on the one hand, high-skilled and well-paid and, on the other, low-skilled and badly paid workers. As financialization has advanced, the result has been to weaken the position of the middle of the income range. The upper and lower deciles of the income distribution, at least in the US, have done relatively better than the middle deciles. It appears that remuneration has behaved better among highly skilled and low-skilled workers, than among workers with moderate skills.28 The factors contributing to these trends are very complex and there is no easy way to connect them purely to technical change, such as the introduction of new technology.29 The broader aspects of the balance between capital and labour at the workplace must also be taken into account, as should the political and institutional framework of income distribution in the years of financialization.

Katz, The Race Between Education and Technology, Cambridge, MA: Belknap Press of Harvard University Press, 2008. 28 This is often called ‘polarization’; see David Autor, Lawrence Katz, and Melissa Kearney, ‘The Polarization of the US Labor Market’, American Economic Review 96:2, 2006; and Daron Acemoglu and David Autor, ‘What Does Human Capital Do? A Review of Goldin and Katz’s The Race Between Education and Technology’, NBER Working Paper No. 17820, February 2012. 29 This is what Autor and Dorn attempt to do by claiming that computers have destroyed jobs of middle skill and pushed workers toward lower-paid jobs; David Autor and David Dorn, ‘The Growth of Low Skill Service Jobs and the Polarization of the US Labor Market’, Cambridge, MA: MIT Department of Economics, 2012. However, the impact of computers on skills (and productivity) is far from clear, as was argued in the previous section. 30 For a succinct presentation of the rise and content of neoliberalism as ideology and framework for economic policy, see Andrew Glyn, Capitalism Unleashed, Oxford: Oxford University Press, 2006.

., ‘Money and Exchange’, Capital and Class 30:3, 2006, pp. 7–35. Arthur, Christopher J., ‘Money and the form of value’, in The Constitution of Capital, ed. Riccardo Bellofiore and Nicola Taylor, New York: Palgrave Macmillan, 2004. Atkinson, Anthony, Thomas Piketty, and Emmanuel Saez, ‘Top Incomes in the Long Run of History’, Journal of Economic Literature 49:1, 2011, pp. 3–71. Autor, David, and David Dorn, ‘The Growth of Low Skill Service Jobs and the Polarization of the US Labor Market’, Cambridge, MA: MIT Department of Economics, 2012. Autor, David, Lawrence Katz, and Melissa Kearney, ‘The Polarization of the US Labor Market’, American Economic Review 96:2, 2006, pp. 189–94. Autor, David, Frank Levy, and Richard Murnane, ‘The Skill Content of Recent Technological Innovation: An Empirical Investigation’, Quarterly Journal of Economics, 118:4, 2003, pp. 1279–333.


pages: 518 words: 147,036

The Fissured Workplace by David Weil

accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, business cycle, business process, buy and hold, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, ultimatum game, union organizing, women in the workforce, yield management

Washington, DC: Brookings Institution. Ehrenberg, Ronald, and Paul Schumann. 1982. Longer Hours or More Jobs? An Investigation of Amending Hours Legislation to Create Employment. Ithaca, NY: ILR Press. Ehrenreich, Barbara. 2008. Nickel and Dimed: On (Not) Getting by in America. New York: Holt. Erickcek, George, Susan Houseman, and Arne Kalleberg. 2003. “The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools.” In Low Wage America: How Employers Are Reshaping Opportunity in the Workplace, edited by Eileen Appelbaum, Annette Bernhardt, and Richard Murnane. New York: Russell Sage Foundation, 368–406. Erickson, Chris, and Daniel Mitchell. 2007. “Monopsony as a Metaphor for the Emerging Post-union Labor Market.” International Labor Review 146, nos. 3–4: 163–187.

The gains from trade between the two countries are still positive for the second country, but diminished from the period prior to the first country “catching up” to the second.28 Studies of the impact of offshoring on manufacturing jobs a decade ago found evidence of positive associations between rising import shares and decreasing employment, but that overall effect was relatively small. Skill-biased technologic change, where new technologies lead to displacement of low-skilled jobs by those demanding higher skills, represented a far larger factor in explaining employment declines.29 Estimates of service offshoring similarly indicate that the effects have so far been small when compared to the overall size of the labor market. But for those service activities that are vulnerable to outsourcing because they require provision of what the economist Alan Blinder calls “impersonally delivered services,” the opportunities for future movement are significant, spanning skill levels from low-skill work like scanning books and newspapers to high-skill work such as architecture and financial analysis, and sectors from parts of health care to financial services.30 Even fervent adherents of the classic gains from trade view accept that there may be deleterious distributional impacts from offshoring: the economy can benefit overall, even though certain groups are adversely affected (sometimes severely) by it in the form of lost jobs and earnings.


pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

agricultural Revolution, air freight, back-to-the-land, British Empire, business process, carbon footprint, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, Edward Glaeser, energy security, failed state, Gini coefficient, global pandemic, Haber-Bosch Process, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, low skilled workers, mass immigration, microcredit, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population

Developed countries are happy to accept highly skilled migrants—doctors, nurses, computer engineers—from anywhere at any time, and, indeed, they compete aggressively for them, attracting the few doctors and nurses from the poorest countries. The developed countries, meanwhile, are deeply conflicted internally about absorbing large numbers of low-skilled workers. The economics of such in-migration are more favorable than the politics. In economic terms, such in-migration of low-skilled workers tends to be a win for the source country, the host country, and the migrant. A low-skilled immigrant arriving in a rich country experiences an immediate jump in income that can be a factor of ten or more. The migrant’s employment tends to be in areas that are largely complementary with the host-country labor force, for example, in low-cost labor-intensive services (personal services, delivery boys, busboys, child care) that offer significant benefits for the host population.


pages: 420 words: 126,194

The Strange Death of Europe: Immigration, Identity, Islam by Douglas Murray

anti-communist, Ayatollah Khomeini, Berlin Wall, borderless world, Boris Johnson, British Empire, centre right, cognitive dissonance, deindustrialization, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, glass ceiling, high net worth, illegal immigration, low skilled workers, Mark Zuckerberg, mass immigration, open borders, post-industrial society, white flight

During Britain’s EU debate one millionaire pro-EU entrepreneur insisted that migration into Britain was necessary because he didn’t want his daughter to become a ‘potato picker’.12 Aside from the racial insinuation that we are above such roles whereas others are eminently suited to them, we should ask ourselves why our young people are (if they are) ‘above’ such tasks. It is also necessary to ask ourselves whether we are entirely happy with this pay-off. There are many young people across Europe who are unemployed. Many do not have the skills necessary for high-end employment. So why import people to do low-skilled work when so many low-skilled workers already exist in Europe? Sometimes mass immigration is advocated because of the advantage it gives in supporting pensioners, sometimes because of the advantage it allegedly gives in stopping young people from doing jobs they don’t want. But in both cases it is an argument that if allowed to run will only encourage a greater and greater problem with every year that passes, as more ageing people need support and as fewer young people have any chance of getting into work.

In 2016 it transpired that as much as 80 per cent of the Swedish police force were considering quitting because of the dangers that their jobs now entailed in dealing with the increasingly lawless, migrant-dominated areas of their country. As with every other country, these migrants had been portrayed by the Swedish government and media as consisting almost entirely of doctors and academics. In reality a huge number of low-skilled people who did not speak the language had been imported into a country with very little need for low-skilled workers. And while the government reluctantly tightened up its border procedures, political and community leaders continued to insist that there should be no borders and that immigration could be limitless. Archbishop Jackelén insisted that Jesus would not approve of government restrictions on immigration. In the summer of 2016, whilst in Sweden, I went to a regional conference of the Sweden Democrats Party, held in Västerås, in the centre of the country.


The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics by Rod Hill, Anthony Myatt

American ideology, Andrei Shleifer, Asian financial crisis, bank run, barriers to entry, Bernie Madoff, business cycle, cognitive dissonance, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, different worldview, endogenous growth, equal pay for equal work, Eugene Fama: efficient market hypothesis, experimental economics, failed state, financial innovation, full employment, gender pay gap, Gini coefficient, Gunnar Myrdal, happiness index / gross national happiness, Home mortgage interest deduction, Howard Zinn, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, liberal capitalism, low skilled workers, market bubble, market clearing, market fundamentalism, Martin Wolf, medical malpractice, minimum wage unemployment, moral hazard, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, positional goods, prediction markets, price discrimination, principal–agent problem, profit maximization, profit motive, publication bias, purchasing power parity, race to the bottom, Ralph Nader, random walk, rent control, rent-seeking, Richard Thaler, Ronald Reagan, shareholder value, The Myth of the Rational Market, the payments system, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, union organizing, working-age population, World Values Survey, Yogi Berra

Question for your professor: In this course, are we going to decide which models to use by the relative accuracy of their predictions? 2.2 Predictive power isn’t all it is cracked up to be Nearly all textbooks claim widespread agreement among economists about non-normative economic questions. Many cite a 1992 survey for support. For example, Parkin and Bade (2006: 14) claim that ‘at least 7 out of every 10 econ­ omists broadly agree’ that: a minimum wage increases unemployment among young workers and low-skilled workers. Mankiw et al. (2002: 32) claim that this proposition was endorsed by 79 per cent of economists – a number they call ‘an overwhelming majority’. Let’s consider this purported consensus. There have been three surveys published, the results of which are contained in Table 2.3. 32 Generally agreed Agreed with provisos Disagreed 1979* 1992† 2003‡ 68 22 10 56.5 22.4 20.5 45.6 27.9 26.5 Note: * Kearl et al. 1979; † Alston et al. 1992; ‡ Fuller and Geide-Stevenson 2003 From Table 2.3 we see that to get 79 per cent agreeing with the minimum wage proposition on the 1992 survey, one must add the ‘generally agree’ category to the ‘agree with provisos’ category.

In brief, the empirical studies conflict to such an extent that we used it as a case study to illustrate the limitations of hypothesis testing and predictive power as criteria for model selection. The consensus concerning the effects of minimum wages has broken down – though this is not generally reported in the textbooks. What we have yet to explain is why moderate increases in the minimum wage might not reduce employment of low-wage, low-skilled workers. There are several possible explanations, all of which depend on ‘frictions’ – imperfect information or mobility costs. One category of explanation is the ‘efficiency wage’ thesis. If work effort is hard to monitor, workers may shirk. Wage increases make the job more ­desirable and provide an incentive not to get caught shirking (which might result in getting fired). As a result, workers shirk less and productivity increases.


pages: 402 words: 126,835

The Job: The Future of Work in the Modern Era by Ellen Ruppel Shell

3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, Amazon Mechanical Turk, basic income, Baxter: Rethink Robotics, big-box store, blue-collar work, Buckminster Fuller, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer vision, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, deskilling, disruptive innovation, Donald Trump, Downton Abbey, Elon Musk, Erik Brynjolfsson, factory automation, follow your passion, Frederick Winslow Taylor, future of work, game design, glass ceiling, hiring and firing, immigration reform, income inequality, industrial robot, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, low skilled workers, Lyft, manufacturing employment, Marc Andreessen, Mark Zuckerberg, means of production, move fast and break things, move fast and break things, new economy, Norbert Wiener, obamacare, offshore financial centre, Paul Samuelson, precariat, Ralph Waldo Emerson, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, Steve Jobs, The Chicago School, Thomas L Friedman, Thorstein Veblen, Tim Cook: Apple, Uber and Lyft, uber lyft, universal basic income, urban renewal, white picket fence, working poor, Y Combinator, young professional, zero-sum game

Things that are or seem less scarce in relation to their demand, like wood pulp and saltwater and writers, are far less so. So why, throughout the first nine decades of the twentieth century, did the rise in average educational attainment coincide with a dramatic reduction in income inequality? The quick answer is that while the rich often got richer, so did many other people. This was due in part to the rise of labor unions that fought hard to ensure that even low-skilled workers earned a living wage. But it was also due to the more subtle and perhaps counterintuitive factor we’ve already touched upon: the relative decline in the market value of education as more people acquire it. Roughly put, technology brought an increased demand for educated workers, but that demand was consistently outpaced by the number of people prepared to meet it. As a consequence, wages for white- and blue-collar workers rose nearly in tandem.

What was in relatively short supply were employees willing to take on low-paid jobs requiring only the most basic skills—reading, writing, and math on a junior high school level. The problem was not that workers lacked skills but rather that employers could not find enough workers with even the most basic skills willing to take their low-paid jobs. Osterman and Weaver do not discuss the reasons for this difficulty in attracting low-skilled workers, and it remains something of a mystery. But I believe I found at least part of the answer in Brodhead, Kentucky, a small town at the head of the Dix River about an hour’s drive from Lexington. I went there to visit Bobby and Tammy Renner and their four grown children, one of whom, Robert, we’ll meet later on, in chapter 10. When we met, Bobby and Tammy were both forty-nine years old and juggled tough jobs—Tammy as a health care aide at a rehabilitation facility for mentally challenged adults, and Bobby as a laborer at AGC Flat Glass in Richmond.


pages: 158 words: 45,927

Brexit: What the Hell Happens Now?: The Facts About Britain's Bitter Divorce From Europe 2016 by Ian Dunt

Boris Johnson, Doha Development Round, Donald Trump, energy security, low skilled workers, non-tariff barriers, open borders, Silicon Valley, UNCLOS, UNCLOS

Britain would still struggle to retain single market membership, but would probably have extensive access to it. Ministers would be able to tell the British public that they had taken back control of the border. It is unlikely hardline Brexiters would be satisfied with this arrangement, however. They would prefer a sector-by-sector work permit system. High-income, high-skill workers would be allowed into the UK. Low-income, low-skill workers wouldn’t. Free movement for bankers, passport control for plumbers. This option would also allow the government to create exemptions for low-pay industries which struggle to find British workers, such as fruit picking, which could be granted seasonal permits. This deal is unlikely to appeal to Europe. EU leaders might accept it at a stretch, but with significantly reduced access to the single market, if any.


pages: 172 words: 48,747

The View From Flyover Country: Dispatches From the Forgotten America by Sarah Kendzior

"side hustle", Affordable Care Act / Obamacare, American ideology, barriers to entry, clean water, corporate personhood, crowdsourcing, David Brooks, David Graeber, Donald Trump, Edward Snowden, George Santayana, glass ceiling, income inequality, low skilled workers, Lyft, Marshall McLuhan, Mohammed Bouazizi, new economy, obamacare, Occupy movement, payday loans, pink-collar, post-work, publish or perish, Richard Florida, ride hailing / ride sharing, Silicon Valley, the medium is the message, trickle-down economics, Uber and Lyft, uber lyft, unpaid internship, Upton Sinclair, urban decay, War on Poverty, WikiLeaks, women in the workforce

“They’re marginal malls because they’re in marginal areas, in many cases,” says retail analyst Kenneth Dalto, noting how demographic shifts have drained the revenue base. The fall of the mall is a problem for the consumer: with local businesses decimated and chain stores departed, those without Internet access and credit cards can struggle to procure goods. But the fall of the mall is a bigger problem for low-skill workers. Materialism may remain rampant, but now its spaces are secret. Retail work has been replaced with jobs in online shopping warehouses where “pickers” labor unseen in brutal conditions. “We are machines, we are robots, we plug our scanner in, we’re holding it, but we might as well be plugging it into ourselves. We don’t think for ourselves, maybe they don’t trust us to think for ourselves as human beings, I don’t know,” says Adam Littler, who worked undercover at an Amazon warehouse to witness conditions firsthand.


pages: 585 words: 165,304

Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing

Robert Blauner, Alienation and Freedom (Chicago: University of Chicago Press, 1973). 25Sabel (1981), pp. 64-67. 26See, for example, the findings of Robert Blauner in “Work Satisfaction and Industrial Trends,” in Walter Galenson and Seymour Martin Lipset, eds., Labor and Trade Unionism (New York: Wiley, 1960). One study that surveyed the views of workers in four countries found that skilled workers were concerned with having jobs that were intrinsically interesting or fulfilling, while unskilled workers were more interested in income. Many new entrants and low-skill workers, moreover, believed that having a factory job in the first place conferred significant social status. William H. Form, “Auto Workers and Their Machines: A Study of Work, Factory, and Job Satisfaction in Four Countries,” Social Forces 52 (1973): 1-15. 27On the Hawthorne experiments, see Hirszowicz (1982), pp. 52-54. 28See Elton Mayo, The Human Problems of an Industrial Civilization (New York: Macmillan, 1933), and The Social Problems of an Industrialized Civilization (London: Routledge and Kegan Paul, 1962). 29Ian Jamieson, “Some Observations on Socio-Cultural Explanations of Economic Behavior,” Sociological Review 26 (1978): 777-805.

Americans have seen a familiar story play itself out over the past decades, as a small family business with strong internal bonds is bought out by a larger company. Unsmiling new managers with reputations for ruthlessness are brought in; long-time employees are fired or fear for their jobs, and the former atmosphere of trust gives way to one of suspicion. The strong traditional communities of the midwestern rust belt were devastated over the past generation by chronic unemployment and out-migration to the West or South in search of jobs. Loss of low-skill jobs in manufacturing and meatpacking contributed significantly to the descent of part of the postwar urban black population into its current underclass hell of drugs, violence, and poverty. The negative consequences of capitalism for community life are only part of the story, however, and in many ways not the most important one. Capitalism has been uprooting Americans for most of their national history; in many ways, the social changes brought about by industrialization between the years 1850 and 1895 were greater than those that have occurred since 1950.11 One of the conclusions implicit in this book is that there are many more degrees of freedom in how capitalist societies can be organized than is often realized.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, business cycle, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, crony capitalism, deindustrialization, Doha Development Round, Donald Trump, Edward Snowden, future of work, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, invisible hand, knowledge economy, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, Silicon Valley, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

Immigration and the Changing Face of Rural America (New Haven, CT: Yale University Press, 2009). 22. Robert Shapiro, “Race, Ethnicity, and the Job Market,” Journal of Democracy, no. 53, Summer 2019. 23. Patricia Cohen, “Is Immigration at Its Limit? Not for Employers,” New York Times, August 22, 2019. 24. Matthew Yglesias, “DREAM On: America Needs Much Bigger, Bolder Immigration Reform—for Low-Skilled Workers, Not Just Supergeniuses—to Boost the Economy,” Slate, June 20, 2012. 25. “The Impact of Illegal Immigration on the Wages and Employment Opportunities of Black Workers: A Briefing Before the United States Commission on Civil Rights” (Washington, DC: U.S. Commission on Civil Rights, August 2010). 26. National Academies of Sciences, Engineering, and Medicine, The Economic and Fiscal Consequences of Immigration (Washington, DC: National Academies Press, 2017). 27.


Not Working by Blanchflower, David G.

active measures, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, bank run, banking crisis, basic income, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, Boris Johnson, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clapham omnibus, collective bargaining, correlation does not imply causation, credit crunch, declining real wages, deindustrialization, Donald Trump, estate planning, Fall of the Berlin Wall, full employment, George Akerlof, gig economy, Gini coefficient, Growth in a Time of Debt, illegal immigration, income inequality, indoor plumbing, inflation targeting, job satisfaction, John Bercow, Kenneth Rogoff, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, mass incarceration, meta analysis, meta-analysis, moral hazard, Nate Silver, negative equity, new economy, Northern Rock, obamacare, oil shock, open borders, Own Your Own Home, p-value, Panamax, pension reform, plutocrats, Plutocrats, post-materialism, price stability, prisoner's dilemma, quantitative easing, rent control, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, selection bias, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Thorstein Veblen, trade liberalization, universal basic income, University of East Anglia, urban planning, working poor, working-age population, yield curve

The long-term unemployed “have largely given up hope,” argues Layard (1986, 96). 11) As unemployment rates increase, crime rates tend to rise, especially the property crime rate.43 Thornberry and Christensen (1984) find evidence that a cycle develops whereby involvement in crime reduces subsequent employment prospects, which then raises the likelihood of participating in crime. Increases in youth unemployment cause increases in burglaries, thefts, and drug offenses.44 Declines in unemployment rates reduce the crime rate, which seems to be highly responsive to employment opportunities for low-skilled men.45 Wage rises significantly lower the crime rate. Higher wages for low-skilled workers reduce both property and violent crime, as well as crime among adolescents.46 The impact of wages on crime is substantial; one study estimates that a 10 percent increase in wages for non-college-educated men results in approximately a 10 to 20 percent reduction in crime rates. Hansen and Machin (2002) find a statistically significant negative relationship between the number of offenses reported by the police over a two-year period for property and vehicle crime and the proportion of workers paid beneath the minimum before the introduction of the minimum wage.

A recent major study by the National Academies of Sciences, Engineering, and Medicine (2017) found that when measured over a period of more than ten years, the impact of immigration on the wages of natives overall is very small. Prior immigrants—who are often the closest substitutes for new immigrants—are most likely to experience wage impacts, followed by native-born high school dropouts, who share job qualifications similar to those of the large share of low-skilled workers among immigrants to the United States. The study concluded that the literature on employment impacts finds little evidence that immigration significantly affects the overall employment levels of native-born workers. However, they noted, recent research shows that immigration reduces the number of hours worked by native teens (but not their employment rate). Moreover, as with wage impacts, there is some evidence that recent immigrants reduce the employment rate of prior immigrants, suggesting a higher degree of substitutability between new and prior immigrants than between new immigrants and natives.


pages: 475 words: 134,707

The Hype Machine: How Social Media Disrupts Our Elections, Our Economy, and Our Health--And How We Must Adapt by Sinan Aral

Airbnb, Albert Einstein, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, Bernie Sanders, bitcoin, carbon footprint, Cass Sunstein, computer vision, coronavirus, correlation does not imply causation, COVID-19, Covid-19, crowdsourcing, cryptocurrency, death of newspapers, disintermediation, Donald Trump, Drosophila, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental subject, facts on the ground, Filter Bubble, global pandemic, hive mind, illegal immigration, income inequality, Kickstarter, knowledge worker, longitudinal study, low skilled workers, Lyft, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, meta analysis, meta-analysis, Metcalfe’s law, mobile money, move fast and break things, move fast and break things, multi-sided market, Nate Silver, natural language processing, Network effects, performance metric, phenotype, recommendation engine, Robert Bork, Robert Shiller, Robert Shiller, Second Machine Age, sentiment analysis, shareholder value, skunkworks, Snapchat, social graph, social intelligence, social software, social web, statistical model, stem cell, Stephen Hawking, Steve Jobs, Telecommunications Act of 1996, The Chicago School, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, Uber and Lyft, uber lyft, WikiLeaks, Yogi Berra

*2 It’s important to note that, in his study of Facebook, Luis Armona found that wage increases caused by Facebook were larger for female students and students from lower-middle-class families, suggesting the potential for the Hype Machine to reduce gender and income disparities. However, Armona’s sample was limited to 760 selective four-year universities, the graduates of which are likely drawn from the high end of the skills distribution. Low-skilled workers studied by Caldwell, Harmon, and Hargittai were mostly excluded from Armona’s analysis as a consequence of his sample. It has become appallingly obvious that our technology has exceeded our humanity. —ALBERT EINSTEIN Today we’re at a crossroads of privacy and security, free speech and hate speech, truth and falsity, democracy and authoritarianism, inclusion and polarization.

Evangelical Christians overwhelmingly vote Republican, while African-Americans overwhelming vote Democratic. Second, the American electorate has been economically polarized over the last decade. Median household income increased 17 percent in Democratic districts, typically in cities and suburbs, with higher levels of education and greater availability of professional jobs; meanwhile it fell 3 percent in less-educated, working-class, rural Republican districts with agricultural and low-skilled manufacturing jobs that are more vulnerable to overseas competition. Third, the partisan polarization of cable news media has likely reinforced political identities and increased affective polarization between the parties. That said, partisans also select into right- or left-leaning media audiences, making it difficult to determine whether the news media causes polarization or if an already-polarized public simply chooses which polarized media to watch.


pages: 261 words: 57,595

China's Future by David Shambaugh

Berlin Wall, capital controls, demographic dividend, demographic transition, Deng Xiaoping, facts on the ground, financial intermediation, financial repression, Gini coefficient, high net worth, Kickstarter, knowledge economy, low skilled workers, market bubble, megacity, Mikhail Gorbachev, New Urbanism, offshore financial centre, open economy, Pearl River Delta, rent-seeking, secular stagnation, short selling, South China Sea, special drawing rights, too big to fail, urban planning, Washington Consensus, working-age population, young professional

A related concept is the “Lewis Turning Point,” named after the economist W. Arthur Lewis, who found that there is a point in the development process where cheap and excess rural labor is negated by wage increases as the supply of “surplus” labor is exhausted.11 At this point in the developmental process the comparative advantage of countries like China begins to erode—thus causing a fundamental shift in the structure of the labor market (especially for low-skilled workers)—and forces them into the Middle Income Trap. Thus the “trap” (precisely what China faces now) is that the economy needs to transition up the productivity ladder by producing more knowledge-intensive goods, investing in innovation, and retraining workers from production to service and other value-added industries. In addition, to facilitate these transitions, governments must have a more modern financial system, a more open political system, and make more efficient use of factor endowments (land, labor, and capital).


pages: 239 words: 62,005

Don't Burn This Book: Thinking for Yourself in an Age of Unreason by Dave Rubin

Affordable Care Act / Obamacare, battle of ideas, Bernie Sanders, Burning Man, butterfly effect, centre right, cognitive dissonance, Columbine, Donald Trump, failed state, gender pay gap, illegal immigration, immigration reform, job automation, low skilled workers, mutually assured destruction, obamacare, Peter Thiel, pre–internet, Ronald Reagan, Saturday Night Live, school choice, Silicon Valley, Steven Pinker, Tim Cook: Apple, unpaid internship, War on Poverty, women in the workforce, zero-sum game

Of course, the ultimate irony of the $15 minimum-wage crew is that nobody is stopping any company from paying it right now. Instead, Nike moves factories to China for cheap labor and the CEO of Walmart, Doug McMillon, calls for $15 minimum wage even though he doesn’t institute it at his own company. (A brilliant move, by the way, because if it was ever passed, the higher wages would crush small businesses—including Walmart’s competition.) Artificially enforcing higher wages for low-skilled workers always ends badly because it ushers in automation, which replaces people with computers. Just look at McDonald’s, where many cashiers have now been replaced by iPads. They’ve gone from low wage to no wage, which neatly takes me on to Social Security . . . Yes, some type of safety net is good for those who need it most, but it should be a short-term gap. Not a long-term lifestyle. Surely it would be better if our social programs operated on a limited amount of decreasing payments over a set time.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

For instance, in innovation, we can do this both by the kind of basic and applied research that the government funds and by forcing firms to pay for their full environmental damage. That will provide them with incentives to save on resources, diverting their attention away from replacing workers. Rather than across-the-board low interest rates (as now), which encourage the replacement even of low-skilled workers by machines, we could use investment tax credits to encourage investment; but the credits would be given only for investments that save resources and preserve jobs, not for investments that destroy resources and jobs. Throughout this book, I’ve emphasized that what matters is not just growth, but what kind of growth (or, as it’s sometimes put, the quality of growth). Growth in which most individuals are worse-off, where the quality of our environment suffers, where people endure anxiety and alienation, is not the kind of growth that we should be seeking.

It used to be part of the conventional wisdom that a small part (at most a fifth) of the increase in inequality was due to globalization. (For instance, Florence Jaumotte and Irina Tytell, “How Has the Globalization of Labor Affected the Labor Share in Advanced Countries?,” IMF Working Paper, 2007, argues that technological change was more important than globalization, especially on the wages of low skilled workers.) But more recently, Paul Krugman has argued that the impact of globalization may be larger than was previously thought. “Trade and Inequality, Revisited,” Vox, June 15, 2007; see also his paper “Trade and Wages, Reconsidered,” Brookings Panel on Economic Activity, Spring 2008. Part of the difficulty is that globalization is intertwined with the changing productivity within the United States, the weakening of unions, and a host of other economic and societal changes.


pages: 976 words: 235,576

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

"Robert Solow", 8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, carried interest, collateralized debt obligation, collective bargaining, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, full employment, future of work, gender pay gap, George Akerlof, Gini coefficient, glass ceiling, helicopter parent, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, Paul Samuelson, payday loans, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Steve Jobs, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, Winter of Discontent, women in the workforce, working poor, young professional, zero-sum game

,” Cornell Journal of Law and Public Policy 26, no. 1 (2016); Jesse Rothstein, “Is the EITC as Good as an NIT? Conditional Cash Transfers and Incidence,” American Economic Journal: Economic Policy 2 (2010): 177–79; David Lee and Emmanuel Saez, “Optimal Minimum Wage Policy in Competitive Labor Markets,” Journal of Public Economics 96 (2012): 739 (“With a binding minimum wage . . . an EITC expansion would increase after-tax incomes of low-skilled workers dollar for dollar.”). support middle-class jobs and wages: “Sens. Warner, Casey, and Stabenow Introduce Proposal to Encourage Employers to Provide Job Training That Moves Workers up the Economic Ladder,” Mark R. Warner, U.S. Senator from the Commonwealth of Virginia, October 31, 2017, www.warner.senate.gov/public/index.cfm/pressreleases?ID=F440D3FD-3C49-4111-8C7C-61CA0B0C3D05. roughly $150 billion per year: See Neera Tanden et al., “Toward a Marshall Plan for America,” Center for American Progress, May 16, 2017, www.americanprogress.org/issues/economy/reports/2017/05/16/432499/toward-marshall-plan-america.

Super-skills (and hence also the educations and degrees that provide and mark skill) become increasingly essential not just to securing high incomes and high status but also to avoiding low incomes and low status. Frenzied competition now dominates the top jobs. And the broader labor market, once characterized by a continuum of job types with a center of gravity composed by a large mass of mid-skill, middle-class jobs, has lost that center. Middle-class jobs have been displaced by low-skill jobs at the bottom and high-skill jobs at the top. At the same time, the divergence between both the productivity and the pay of the top jobs and of all the others has increased tremendously—hence the struggle to get and stay on top. The new work order reflects a deep economic and social logic rather than just a passing adjustment in commercial habits and office customs or a mischief born of political miscalculation and elite greed.

Over roughly the past half century, the principal financial technologies and the skill profiles of finance-sector workers have both changed dramatically: an industry that was once dominated by technologies that favored mid-skilled, middle-class workers is now dominated by technologies that favor super-skilled, superordinate workers. A large mass of mid-skilled jobs has been eliminated and replaced by relatively fewer jobs, with super-skilled elite professionals, in glossy jobs, dominating the industry and deprofessionalized, low-skilled support staff, in gloomy jobs, playing only subsidiary roles. The labor market for finance workers has become polarized. Home mortgage lending illustrates the transformation. Mortgages channel capital into the housing market by allowing people to borrow money in order to own and live in dwellings that they will eventually pay for out of future earnings. Mortgage lenders must decide how much to lend to which borrowers.


pages: 267 words: 71,123

End This Depression Now! by Paul Krugman

airline deregulation, Asian financial crisis, asset-backed security, bank run, banking crisis, Bretton Woods, business cycle, capital asset pricing model, Carmen Reinhart, centre right, correlation does not imply causation, credit crunch, Credit Default Swap, currency manipulation / currency intervention, debt deflation, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, full employment, German hyperinflation, Gordon Gekko, Hyman Minsky, income inequality, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Rogoff, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low skilled workers, Mark Zuckerberg, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, Paul Samuelson, price stability, quantitative easing, rent-seeking, Robert Gordon, Ronald Reagan, Upton Sinclair, We are the 99%, working poor, Works Progress Administration

One is the corrosive effect of long-term unemployment: if workers who have been jobless for extended periods come to be seen as unemployable, that’s a long-term reduction in the economy’s effective workforce, and hence in its productive capacity. The plight of college graduates forced to take jobs that don’t use their skills is somewhat similar: as time goes by, they may find themselves demoted, at least in the eyes of potential employers, to the status of low-skilled workers, which will mean that their education goes to waste. A second way in which the slump undermines our future is through low business investment. Businesses aren’t spending much on expanding their capacity; in fact, manufacturing capacity has fallen about 5 percent since the start of the Great Recession, as companies have scrapped older capacity and not installed new capacity to replace it.


pages: 288 words: 64,771

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

"Robert Solow", Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, Plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Ronald Reagan, Silicon Valley, Silicon Valley ideology, smart cities, software patent, too big to fail, total factor productivity, trade liberalization, transaction costs, tulip mania, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

Skill-biased technological change, for instance, means that information technology serves as a valuable complement for skilled “knowledge workers” while substituting for less-skilled manual and clerical workers. The slowdown in the growth of workers’ average years of schooling completed means that the relative supply of skilled workers lags behind relative demand. Mass immigration expands the ranks of low-skill workers even as demand for them has flagged. People increasingly marry within their social class, reducing the marital pathway to social mobility. The factors contributing to outsized gains at the very top are similarly diverse. They include the rise of “winner-take-all” markets produced by information technology’s network effects as well as globalization’s expansion of relevant market size; a huge run-up in stock prices; continuing growth in the size of big corporations (which has helped to fuel rising CEO pay); and a big drop in the top income tax rate (which has facilitated the use of high compensation as a strategy for attracting top managers, professionals, and executives).


pages: 232 words: 71,024

The Decline and Fall of IBM: End of an American Icon? by Robert X. Cringely

AltaVista, Bernie Madoff, business cycle, business process, cloud computing, commoditize, compound rate of return, corporate raider, full employment, if you build it, they will come, immigration reform, interchangeable parts, invention of the telephone, Khan Academy, knowledge worker, low skilled workers, Paul Graham, platform as a service, race to the bottom, remote working, Robert Metcalfe, Robert X Cringely, shareholder value, Silicon Valley, six sigma, software as a service, Steve Jobs, Toyota Production System, Watson beat the top human players on Jeopardy!, web application

Another PM found a virtualized product schedule slipping so altered the Gantt chart to make it appear that things were OK and on schedule. Just before the delivery date someone noticed that there was no testing! Snapshots of the Gantt chart were found showing original dates and that a test section did exist earlier. Minimal testing was squeezed in, and to the horror of the PM, one client could see and access the data of another. PMHell / August 11, 2013 / 2:43 pm Indian engineer: Too many low-skilled workers here Regarding your comment on emerging markets, I am a high performer (1-rater as they call it in IBM) for the last 3 years in IBM India. Some points that I have noticed over the last 8 years of my career at IBM India : 1) No smart engineer in India wants to work for IBM. It has a reputation of workplace with a lazy, flexible work environment that is often abused by employees.. WFH does not stand for Work from Home, though it is famously called “Work for Home” here.


pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, George Santayana, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Future of Employment, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

To disprove this fallacy, we can turn to a study by the Center for Immigration Studies – a think tank that opposes immigration – which found that immigration has virtually no effect on wages.37 Other research even shows that new arrivals lead to an uptick in the earnings of the domestic workforce.38 Hardworking immigrants boost productivity, which brings paycheck payoffs to everybody. And that’s not all. In an analysis of the period between 1990 and 2000, researchers at the World Bank found that emigration out of a country had a negative effect on wages in Europe.39 Low-skilled workers got the shortest end of the stick. Over these same years, immigrants were more productive and better educated than typically assumed, even serving to motivate less skilled natives to measure up. All too often, moreover, the alternative to hiring immigrants is to outsource work to other countries. And that, ironically, does force wages down.40 (3) They’re too lazy to work. It is true that in the Land of Plenty we pay people more to put up their feet than they might earn working outside our gates, but there’s no evidence that immigrants are more likely to apply for assistance than native citizens.


pages: 247 words: 68,918

The End of the Free Market: Who Wins the War Between States and Corporations? by Ian Bremmer

affirmative action, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, centre right, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, cuban missile crisis, Deng Xiaoping, diversified portfolio, Doha Development Round, Exxon Valdez, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, shareholder value, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, trade route, tulip mania, uranium enrichment, Washington Consensus, Yom Kippur War, zero-sum game

The federation’s largest corporate groups and financial institutions, whether owned by shareholders or directly by the state, are dominated by either the UAE’s federal government or a member of one of the seven ruling families. Despite a heavily hyped embrace of foreign investment and free-market capitalism, the UAE remains a typical Persian Gulf monarchy. Emirati nationals, who represent just 20 percent of a population of about 5 million people made up largely of low-skilled workers from developing countries in South and Southeast Asia, accept heavily subsidized goods and services in return for political loyalty. Dubai’s colorful ruler, Sheikh Mohammed bin Rashid al-Maktoum, has taken a corporatist approach to managing his emirate. He’s the hands-on proprietor of most Dubai-based large corporations and investment institutions and manages its internal affairs with no federal supervision.


pages: 242 words: 71,943

Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity by Charles L. Marohn, Jr.

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, A Pattern Language, American Society of Civil Engineers: Report Card, bank run, big-box store, Black Swan, Bretton Woods, British Empire, business cycle, call centre, cognitive dissonance, complexity theory, corporate governance, Detroit bankruptcy, Donald Trump, en.wikipedia.org, facts on the ground, Ferguson, Missouri, global reserve currency, housing crisis, index fund, Jane Jacobs, Jeff Bezos, low skilled workers, mass immigration, mortgage debt, Network effects, new economy, New Urbanism, paradox of thrift, Paul Samuelson, pensions crisis, Ponzi scheme, quantitative easing, reserve currency, the built environment, The Death and Life of Great American Cities, trickle-down economics, Upton Sinclair, urban planning, urban renewal, walkable city, white flight, women in the workforce, yield curve, zero-sum game

For families already financially stretched, in neighborhoods prevented from changing or evolving to a higher state of intensity, where is that time and money going to come from? The resources aren’t there, and so homes begin to fail, dragging down entire neighborhoods. There is also a sad irony to much of the maintenance of modern development. Traditional building materials require a base level of ongoing maintenance, tasks perfectly suited for the low-skilled worker willing to learn a trade. Modern maintenance-free materials don’t have these ongoing costs, which seems like a good thing, until they fail. That’s when they impose a huge replacement cost. As Steve Mouzon points out in The Original Green, maintenance-free simply means not able to be maintained. There is no patching or hacking maintenance-free systems; they either work or they fail. When so-called “no maintenance” materials fail, they fail catastrophically so you have to replace every bit of the materials, not just the damaged piece.3 As mentioned in Chapter 2, auto-oriented places have different failure mechanisms than traditional neighborhoods.


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

"Robert Solow", airline deregulation, airport security, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Benoit Mandelbrot, Bretton Woods, business cycle, central bank independence, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, energy security, equity premium, fiat currency, financial deregulation, financial innovation, fixed income, Flash crash, forward guidance, full employment, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, Kenneth Rogoff, Kickstarter, Kitchen Debate, laissez-faire capitalism, Long Term Capital Management, low skilled workers, market bubble, market clearing, Martin Wolf, money market fund, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon shock, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, plutocrats, Plutocrats, popular capitalism, price stability, RAND corporation, rent-seeking, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, Saturday Night Live, savings glut, secular stagnation, short selling, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

“We have reached a point at which more of the same will only result in more of the same frustration, more of the same explosive violence, and more of the same fear,” Nixon argued in one April speech, hewing closely to Greenspan’s thesis that government aid and ghetto violence were caught in a vicious cycle.53 Nixon would then lay out Greenspan’s program of stimulating inner-city businesses with tax breaks—there would be credits to build housing, train low-skilled workers, and encourage businesses to locate in poor urban districts. This new program for black capitalism would replace the handout culture of government programs, fostering a sense of ownership and pride, and removing the frustrations that bred violence. Nixon’s embrace of Greenspan’s ideas about black capitalism signaled that the fight with the Dakota wolves had been forgiven. Taking this cue, Greenspan’s ally, Pat Buchanan, resumed his efforts to expand Greenspan’s influence.

It was simply that, for an inflation-targeting central bank, worrying about bubbles was a secondary priority.38 Greenspan’s diagnosis of the productivity acceleration represented a clear triumph. But his policy response to that acceleration was a mixed blessing. By using the space created by productivity-driven disinflation, Greenspan presided over a glorious period of growth, high-tech investment, and job creation that boosted living standards among low-skilled workers; in the era of globalization, the late 1990s stand out as one of the few periods in which inequality retreated. But by allowing this bonanza, Greenspan also signaled an unwillingness to confront bubbles, with consequences that ultimately proved more serious than he imagined. • • • On October 30, 1996, Alan arranged a surprise dinner for Andrea. They had been together—at first loosely, then tightly—for a dozen years, and Alan gathered a few friends at Galileo, an upscale Italian restaurant in Washington.

Indeed, this stealthy tax on draftees was three times higher than the rate paid by equivalent civilians; servicemen were, in effect, bearing a heavy load so that everyone else could have an army on the cheap—it was a scandalously regressive income transfer. Building on this first argument, the economists asserted that because the true costs of military labor were obscured, military planners overused manpower and distorted the national labor market. A large supply of cheap draftees dulled the Pentagon’s incentive to free up workers from low-skilled jobs that could be mechanized. The national economy was paying a price because manpower was being wasted. One day the army wheeled out General William Westmoreland, the famously hard-nosed former commander in Vietnam, to testify in the draft’s favor. Seeking to silence the economists’ jabber about hidden taxes and labor-market distortions, Westmoreland harrumphed that he did not want to command an army of mercenaries.


Cultural Backlash: Trump, Brexit, and Authoritarian Populism by Pippa Norris, Ronald Inglehart

affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Berlin Wall, Bernie Sanders, Boris Johnson, Cass Sunstein, centre right, cognitive dissonance, conceptual framework, declining real wages, desegregation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, feminist movement, first-past-the-post, illegal immigration, immigration reform, income inequality, job automation, knowledge economy, labor-force participation, land reform, liberal world order, longitudinal study, low skilled workers, mass immigration, meta analysis, meta-analysis, obamacare, open borders, open economy, post-industrial society, post-materialism, precariat, purchasing power parity, rising living standards, Ronald Reagan, sexual politics, Silicon Valley, statistical model, stem cell, War on Poverty, white flight, winner-take-all economy, women in the workforce, working-age population, World Values Survey, zero-sum game

There is little doubt that xenophobia, racist resentment, and Islamophobia are closely linked with voting for parties with anti-­ immigrant platforms.1 Our theory cultural tipping points predicts that threat perceptions and feelings of insecurity among the losers from long-­ term cultural change will lead to latent authoritarian predispositions.2 But debate continues about why immigration is perceived as a threat.3 Are anti-­immigrant sentiments mainly driven by fear of competition from low-­skilled workers?4 Or are concerns about the erosion of European cultural norms, the decline of Christianity, and threats to white predominance more important?5 Or are anti-­immigrant sentiments more closely interlinked with the threat of terrorism?6 And are all immigrants seen to be equally threatening, or are fears most intense concerning those of different racial and ethnic backgrounds? 175 176 Immigration Part III analyzes our core hypotheses, using individual-­level survey evidence from the pooled European Social Survey.

On the one hand, the middle-class professionals, managers, and executives in the service sector, typically university educated, affluent, and mobile, seem to have benefitted from EU membership through the lower costs of imported goods, and the broader access to trade and investment opportunities, while taking advantage of opportunities for international travel and broader educational and professional possibilities within a borderless Europe.39 By contrast, however, those with low-­ paid, low-­skill jobs, without college degrees, found themselves competing with migrant workers from Poland, Bulgaria, and the Czech Republic, while competing with companies employing cheaper labor in China and India. Economic globalization has been blamed for a trade ‘shock’ hitting the profitability of manufacturing, jobs, and the domestic costs of labor.40 These developments have been linked with the growing proportion of low-­wage, unskilled immigrant workers, drawn from within and outside the EU, and outsourcing as companies moved jobs abroad.


pages: 325 words: 73,035

Who's Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life by Richard Florida

active measures, assortative mating, barriers to entry, big-box store, blue-collar work, borderless world, BRICs, business climate, Celebration, Florida, correlation coefficient, creative destruction, dark matter, David Brooks, David Ricardo: comparative advantage, deindustrialization, demographic transition, edge city, Edward Glaeser, epigenetics, extreme commuting, Geoffrey West, Santa Fe Institute, happiness index / gross national happiness, high net worth, income inequality, industrial cluster, invention of the telegraph, Jane Jacobs, job satisfaction, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, megacity, new economy, New Urbanism, Peter Calthorpe, place-making, post-work, Richard Florida, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, Seaside, Florida, Silicon Valley, Silicon Valley startup, superstar cities, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, World Values Survey, young professional

India’s growing economic spikes—city-regions such as Bangalore, Hyderabad, Mumbai, and parts of New Delhi—are also pulling away from the rest of that crowded country. As Stanford University’s Rafiq Dossani has noted, India’s technology and business services—industries that are quickly growing—lack the broad employment base enjoyed by China’s manufacturing industry.21 Until India figures out how to provide jobs to its low-skill workers, globalization will only deepen the country’s internal economic, political, and social divisions. The backlash to the spiky world extends beyond emerging economies. In 2005 France and the Netherlands rejected the European Union constitution, fueled by concerns among lower-skilled suburban and rural workers who understandably fear globalization and integration. They may live in the advanced world, but they are also being left behind.


pages: 255 words: 75,172

Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, battle of ideas, big-box store, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, immigration reform, income inequality, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Plutocrats, Powell Memorandum, profit motive, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional

These groupings also provide an easy way to analyze the demographics of the jobholders. The problem lies in the fact that these terms have long transcended the academy and are tossed around casually to describe not only the jobs but the workers themselves. From the pages of the New York Times to the screeching talking heads on Fox News, it’s common to refer to people in many jobs as “unskilled” or “low-skilled” workers. This language is used by conservatives and progressives alike, and I used it myself until I heard a speech given by Barbara Ehrenreich at a conference on inequality sponsored by my organization, Demos. Ehrenreich referred to her time working in low-paid jobs for her best-selling book Nickel and Dimed. She worked as a maid, at Walmart, and as a nursing home assistant. Reflecting on the stress and hard work required to do these jobs, she said she learned that “there is no such thing as unskilled labor.”40 When we categorize work—work that often entails fast thinking, stamina, focus, and often demanding and repeated physical feats—as needing no or little skill, we are stripping these workers of human dignity and rationalizing the proliferation of poverty jobs.


pages: 336 words: 83,903

The Refusal of Work: The Theory and Practice of Resistance to Work by David Frayne

anti-work, basic income, Bertrand Russell: In Praise of Idleness, call centre, clockwatching, David Graeber, deindustrialization, deskilling, future of work, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, knowledge economy, knowledge worker, low skilled workers, McJob, means of production, moral panic, new economy, post-work, profit motive, Silicon Valley, Silicon Valley ideology, Skype, unpaid internship, working poor, young professional

The work ethic, along with cuts to arts budgets (and unemployment benefits, which bohemians have historically used as a sort of unofficial arts budget) have also made it less feasible for cultural creators to wing it for a few years in order to hone their craft and perhaps find a way to make a living from it. As they leave the bosom of the university, many students are also realising that graduates are no longer free from the kinds of risks and uncertainties previously thought to be the preserve of low-paid, low-skilled workers (Brown et al., 2011). This climate of uncertainty puts a strong premium on the ability of students to take an active approach to their employability and think in practical, instrumental ways about how to secure their futures. Furthermore, the student debt caused by rising tuition fees and the abolition of student grants may be tying young people to a need to earn, long before they have had a chance to reflect on the trade-off between the benefits of a good income and the sacrifices of work.


pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

Admiral Zheng, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low skilled workers, market clearing, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, women in the workforce, working-age population, Y2K, Yom Kippur War

Yet, while the UK happily welcomed with open arms workers from the first tranche of EU Accession States in 2004 (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia), workers from the second tranche in 2007 (Bulgaria and Romania) were treated less favourably as a result of new Home Office regulations. According to the EU, ‘at the heart of the new regulations is the restriction of low-skilled [Bulgarian and Romanian] workers to existing quota schemes in the agricultural and food processing sectors’.11 In effect, this means that any increase in the numbers of low-skilled Bulgarians and Romanians coming into the UK will have to be offset by a reduction in the numbers of non-EU low-skilled workers. In a sly announcement on 8 April 2009, the UK government declared, first, that ‘Strict working restrictions for Eastern Europeans will not be scrapped’ and, second, that ‘the Government is delivering on its promise to be tougher on European criminals and remove those that cause harm to our communities. From today the deportation referral threshold for European criminals will be cut from twenty-four months imprisonment to twelve months for drugs, violent and sexual offences.


pages: 287 words: 82,576

The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen

affirmative action, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, assortative mating, Bernie Sanders, Black Swan, business climate, business cycle, circulation of elites, clean water, David Graeber, declining real wages, deindustrialization, desegregation, Donald Trump, drone strike, East Village, Elon Musk, Ferguson, Missouri, Francis Fukuyama: the end of history, gig economy, Google Glasses, Hyman Minsky, Hyperloop, income inequality, intangible asset, Internet of things, inventory management, knowledge worker, labor-force participation, low skilled workers, Marc Andreessen, Mark Zuckerberg, medical residency, meta analysis, meta-analysis, obamacare, offshore financial centre, Paul Samuelson, Peter Thiel, purchasing power parity, Richard Florida, security theater, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, South China Sea, Steven Pinker, Stuxnet, The Great Moderation, The Rise and Fall of American Growth, total factor productivity, Tyler Cowen: Great Stagnation, upwardly mobile, Vilfredo Pareto, working-age population, World Values Survey

But today, high rents, resulting both from talent clusters as we might find in Manhattan or the Bay area and from restrictive building codes, make it harder to move into major cities as a path for upward mobility. Obviously, it’s no longer that easy to pick up your bags and move into an affordable place in Greenwich Village or, for that matter, Harlem, but even as you work your way out—to Jersey City, or easy-commute towns like Maplewood, New Jersey—you see the cost of renting or buying skyrocketing. For a low-skilled worker, the higher wages in those cities do not always make up for the much higher rental costs. And the reason is that those cities are so, so expensive, at least in the parts where most productive workers are willing to live.32 Compare today to the 1950s. At that time, a typical apartment in New York City rented for about $60 a month, or, adjusting for inflation, about $530 a month. Today you can’t find a broom closet in the East Village for that amount.


pages: 348 words: 99,383

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope by John A. Allison

Affordable Care Act / Obamacare, American ideology, bank run, banking crisis, Bernie Madoff, business cycle, clean water, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, fiat currency, financial innovation, Fractional reserve banking, full employment, high net worth, housing crisis, invisible hand, life extension, low skilled workers, market bubble, market clearing, minimum wage unemployment, money market fund, moral hazard, negative equity, obamacare, Paul Samuelson, price mechanism, price stability, profit maximization, quantitative easing, race to the bottom, reserve currency, risk/return, Robert Shiller, Robert Shiller, The Bell Curve by Richard Herrnstein and Charles Murray, too big to fail, transaction costs, yield curve, zero-sum game

Also, these former construction workers are accustomed to being paid a healthy wage rate because of their construction skills, but the new manufacturing plants cannot afford to pay that high a wage because the workers, even after being retrained, still have a great deal to learn. Unemployment insurance provides an incentive for workers not to take a lower-paying job. Also, the minimum wage law keeps small businesses from hiring low-skilled workers at a wage rate that would allow their businesses to be profitable, so entry-level workers cannot gain the skills to become more productive and thereby paid at a higher level. The ripple effect continues. Manufacturing is a primary industry. The manufacturing workers, if they had jobs, would be able to buy more food, clothes, and other things, creating other jobs in other industries. (By the way, this is not an argument for manufacturing vs. service jobs; it is just easier to understand the manufacturing example.)


pages: 353 words: 91,520

Most Likely to Succeed: Preparing Our Kids for the Innovation Era by Tony Wagner, Ted Dintersmith

affirmative action, Airbnb, Albert Einstein, Bernie Sanders, Clayton Christensen, creative destruction, David Brooks, en.wikipedia.org, Frederick Winslow Taylor, future of work, immigration reform, income inequality, index card, Jeff Bezos, jimmy wales, Joi Ito, Khan Academy, Kickstarter, knowledge economy, knowledge worker, low skilled workers, Lyft, Mark Zuckerberg, means of production, new economy, pattern recognition, Paul Graham, Peter Thiel, Ponzi scheme, pre–internet, school choice, Silicon Valley, Skype, Steven Pinker, TaskRabbit, the scientific method, uber lyft, unpaid internship, Y Combinator

It was a wake-up call for Ted—no routine job is safe in the twenty-first century. * * * Technology is turning our economy upside down. The bulky organizational pyramids of the last century are being replaced by millions of tiny inverted pyramids—small, agile organizations consisting almost entirely of innovative, creative employees. These agile organizations draw on employees and outsourced partners spread around the globe. Some of these organizations hire a few low-skilled workers; many hire none. With the proliferation of these companies, career options for creative problem-solvers will become ever more abundant, while options for hoop-jumpers will be dismal. * * * Ted is on the board of a fast-growing start-up called Xamarin, which makes software for creating mobile applications. Its employees live in twelve different countries, and are all adept at collaborating virtually.


pages: 346 words: 90,371

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

"Robert Solow", agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land reform, land tenure, land value tax, Landlord’s Game, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Second Machine Age, secular stagnation, shareholder value, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

Changes in the distribution of income are attributed to changes in technology and to investments in human and physical capital, which have the effect of increasing the skills and productivity of certain individuals. Inequalities are explained because people with skills in high demand in sectors such as IT and finance have seen their earnings rise, reflecting their superior productivity, while low skilled workers have fallen behind. Under marginal productivity theory the solution to inequality is to increase education and job training opportunities for workers in order to increase skills and productivity across the population. This ‘supply-side’ approach has dominated economic policy making in recent decades, despite the marginal productivity theory being subject to a number of theoretical and empirical flaws.


pages: 255 words: 92,719

All Day Long: A Portrait of Britain at Work by Joanna Biggs

Anton Chekhov, bank run, banking crisis, call centre, Chelsea Manning, credit crunch, David Graeber, Desert Island Discs, Downton Abbey, Erik Brynjolfsson, financial independence, future of work, G4S, glass ceiling, industrial robot, job automation, land reform, low skilled workers, mittelstand, Northern Rock, payday loans, Right to Buy, Second Machine Age, six sigma, Steve Jobs, trickle-down economics, unpaid internship, wages for housework, Wall-E

I had a rough spell of it recently with an interaction with my manager but I’m hopefully getting beyond that because that really did have a negative effect on me, to the point where I was contemplating not coming back in. I was really close to saying: “Sod it. It’s not worth it. I’d rather have something minimum wage and not deal with that.” But I came back and I’m still here.’ Unqualified or low-skilled workers used to be valued for the things they did – work that may have exacted a physical toll, but might leave them enough mental space for the life they wanted to live outside of it. Now they are valued for emotional resilience, and the shortfall is left to Seroxat and Heineken. Would T be happy to think that his identity came from what he does all day? ‘I really hope not. I could not say enough how I hope not.


Industry 4.0: The Industrial Internet of Things by Alasdair Gilchrist

3D printing, additive manufacturing, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, business intelligence, business process, chief data officer, cloud computing, connected car, cyber-physical system, deindustrialization, DevOps, digital twin, fault tolerance, global value chain, Google Glasses, hiring and firing, industrial robot, inflight wifi, Infrastructure as a Service, Internet of things, inventory management, job automation, low cost airline, low skilled workers, microservices, millennium bug, pattern recognition, peer-to-peer, platform as a service, pre–internet, race to the bottom, RFID, Skype, smart cities, smart grid, smart meter, smart transportation, software as a service, stealth mode startup, supply-chain management, trade route, undersea cable, web application, WebRTC, Y2K

Furthermore, it was an efficient way to boost productivity and efficiency while reducing costs and boosting bonuses. Unsurprisingly, trade unions and those whose jobs and livelihoods were at risk strenuously objected to this strategy, pointing out it wasn’t just them that were at risk. Although it might have been attractive for CEOs at the time to reduce the payload and the operational expense and offload low-skilled workers, while investing in skilled IT generalists who could perform a variety of task, the premise was flawed. 243 244 Chapter 15 | Getting From Here to There: A Roadmap Paul Krugman, back in 1996, imagined a scenario where: “Information technology would end up reducing, not increasing, the demand for highly educated workers, because a lot of what highly educated workers do could actually be replaced by sophisticated information processing —indeed, replaced more easily than a lot of manual labor.”


pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, plutocrats, Plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Sam Peltzman, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

Over the past few decades, even investment in aspects of our common life once considered crucial for advancement of the economy—research universities, for example, and infrastructure—have been allowed to go begging. Fears about the slowing of the economy in general are met with calls for the education of the workforce, as though that, rather than increasing consumer demand, will guarantee that every individual somehow has a high-paying job. In fact, automation has caused the hollowing out of the wage structure; the highest-paid people continue to be highly paid, while middle- and low-skilled workers conduct a race to the bottom for lower-skilled jobs. Without some degree of redistribution and the provision of more public goods “such as food, housing, education and health care that are necessary for a modern life to go well,” there is no guarantee that economic output will have any relationship to well-being.72 The path of the Patient Protection and Affordable Care Act (ACA, 2010) provides a good illustration of the problems caused by divergent partisan ideologies and powerful framing narratives.


pages: 323 words: 90,868

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century by Ryan Avent

"Robert Solow", 3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, disruptive innovation, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, post-work, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, uber lyft, very high income, working-age population

It can, in fact, lead to slower long-run economic growth. Yet when labour is extraordinarily abundant, and when workers have no choice but to seek jobs to provide for themselves and their families, the downward pressure on pay can become intense. Cheap labour can facilitate employment growth in a few different ways. Low wages can encourage people to use more of some kinds of manual or service labour. As pay for low-skill workers stagnates, for example, more households might find it attractive to hire a house-cleaning service or a landscaping firm, to get nails done at a salon rather than at home, or to retain the services of a personal trainer. The more labour is available at very low pay, the more extensive this low-pay service economy can become. In fact, we have a very good idea what mass employment in low-skill service work looks like, thanks to examples in poorer economies, where crowds of attendants work at dubious productivity levels in hotels and restaurants, and in the eighteenth and nineteenth century, when domestic payrolls, Downton Abbey-style, absorbed large numbers of workers.


pages: 377 words: 97,144

Singularity Rising: Surviving and Thriving in a Smarter, Richer, and More Dangerous World by James D. Miller

23andMe, affirmative action, Albert Einstein, artificial general intelligence, Asperger Syndrome, barriers to entry, brain emulation, cloud computing, cognitive bias, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping, en.wikipedia.org, feminist movement, Flynn Effect, friendly AI, hive mind, impulse control, indoor plumbing, invention of agriculture, Isaac Newton, John von Neumann, knowledge worker, Long Term Capital Management, low skilled workers, Netflix Prize, neurotypical, Norman Macrae, pattern recognition, Peter Thiel, phenotype, placebo effect, prisoner's dilemma, profit maximization, Ray Kurzweil, recommendation engine, reversible computing, Richard Feynman, Rodney Brooks, Silicon Valley, Singularitarianism, Skype, statistical model, Stephen Hawking, Steve Jobs, supervolcano, technological singularity, The Coming Technological Singularity, the scientific method, Thomas Malthus, transaction costs, Turing test, twin studies, Vernor Vinge, Von Neumann architecture

Even workers in professions where being smarter didn’t raise their wages would receive higher salaries because of the drugs. By increasing the wages of knowledge workers, these drugs would boost the amount these laborers paid for services performed by relatively unskilled laborers. They would spend more in restaurants, hire additional domestic servants, and consequently raise the salaries of the unskilled. Cognition enhancers would also allow some low-skilled workers who hadn’t been smart enough to become highly skilled professionals to find better jobs, which would benefit both them and those who remained in low-skill occupations (who would then face less competition). Cheap cognitive-enhancing drugs would reduce chronic unemployment. Even at a wage of zero, many adults are unemployable—so low-skilled they can’t contribute anything to a company, while their very presence at a job site costs a business something because they take up space and can cause accidents.


pages: 261 words: 103,244

Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

"Robert Solow", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bernie Madoff, British Empire, buy and hold, central bank independence, collective bargaining, commodity trading advisor, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, information asymmetry, Jean Tirole, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge worker, law of one price, light touch regulation, Long Term Capital Management, low skilled workers, mandatory minimum, market bubble, market clearing, market fundamentalism, means of production, minimum wage unemployment, moral hazard, new economy, obamacare, old-boy network, open economy, Pareto efficiency, Paul Samuelson, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, rolodex, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, ultimatum game, union organizing, Vilfredo Pareto, working-age population, World Values Survey

Dube, Lester and Reich (2010) took the methodology of Card and Krueger to the national level. They compared the employment performance and wage developments in the low-paying industries of all neighboring counties located in two different states, only one of which saw changes in the state minimum wage. They found no evidence for employment loss, but strong evidence of an improved income situation for low-skilled workers in these industries. Neumark and Wascher (2007) did a number of studies in which they found a negative impact for young workers in France in particular. Young workers tend to be less productive. This makes it likely that for relatively large numbers of them a minimum wage which might be moderate for experienced workers is far above what is justified by their own productivity level. Many countries with minimum wage rules, including the UK, take this into account by exemptions or separate rules for young workers.


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

balance sheet recession, banking crisis, basic income, Bernie Sanders, Bretton Woods, business climate, business cycle, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, G4S, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, mass incarceration, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income

But since 1980, real hourly labour productivity in the US (non-farm) business sector has increased by around 85 per cent, while real hourly compensation has increased by only around 35 per cent.21 Since 1999, the ILO calculates that across thirty-six developed economies, labour productivity has increased at almost three times the rate of real wage growth (see Figure 7). At the same time as the labour share has been falling, more of it has been going to workers at the top of the earnings scale and less to those in the middle and bottom. Across advanced economies, higher-skilled workers claimed an additional 6.5 percentage points of the labour share between 1980 and 2001, whereas low-skilled workers saw their portion shrink by 4.8 percentage points.22 Meanwhile, those at the very top of the income distribution have done exceedingly well. In the US, between 1975 and 2012, the top 1 per cent gained around 47 per cent of the entire total of pre-tax increase in incomes (see Figure 8). In Canada over the same period it was 37 per cent, and in Australia and the UK over 20 per cent.23 In the US, the incomes of the richest 1 per cent rose by 142 per cent between 1980 and 2013 (from an average of $461,910, adjusted for inflation, to $1,119,315) and their share of national income doubled, from 10 to 20 per cent.


pages: 359 words: 97,415

Vanishing Frontiers: The Forces Driving Mexico and the United States Together by Andrew Selee

Berlin Wall, call centre, Capital in the Twenty-First Century by Thomas Piketty, Donald Trump, energy security, Gini coefficient, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, informal economy, job automation, low skilled workers, manufacturing employment, oil shale / tar sands, open economy, payday loans, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Silicon Valley startup, Steve Wozniak, Y Combinator

Two industries in particular—medical devices and communications equipment—took off as anchors of Tijuana’s new growth, because they were already important industries in San Diego. Plantronics, one of the largest audio-engineering companies in the world, which supplies headsets for air-traffic controllers, pilots, astronauts, emergency workers, and ordinary consumers, was one of the first communications equipment companies to discover the city. While earlier maquiladoras had used low-skilled workers, Plantronics needed people who could assemble precision equipment. And it also built its own design team of more than a hundred engineers drawn from Tijuana’s universities, which were pumping out a new generation of educated professionals. To retain employees, the company invested in a gym, a basketball court, and employee-wellness programs. As more technologically complex industries have taken root, leadership of the factories has also become increasingly local.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, Plutocrats, pre–internet, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Rory Sutherland, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, women in the workforce, Zipcar

But now, serving as middlemen, sponsors would obtain a cut of the profits. If Anthony hears that Google’s Akron office needs programmers, he can look for programmers. Anthony will still gain from the sponsorship, as will the migrant worker and the local economy. Who would come? Most likely a mix of unskilled workers like Bishal and skilled ones as in our Google example. The illegal economy is currently dominated by low-skilled workers—strawberry pickers, nannies, gardeners, slaughterhouse workers. VIP would put this work on a legal footing, while channeling some of the surplus away from the employers and into the pockets of native workers. Skilled migrants would be treated like any other migrants under our system. They would earn far greater income than unskilled migrants and thus there would be substantial competition among hosts to gain a share of their income.


pages: 346 words: 97,330

Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

Affordable Care Act / Obamacare, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, basic income, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, crowdsourcing, data is the new oil, deindustrialization, deskilling, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, market friction, Mars Rover, natural language processing, new economy, passive income, pattern recognition, post-materialism, post-work, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Nature of the Firm, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, women in the workforce, Works Progress Administration, Y Combinator

If someone cannot feed and house themselves, they can be coerced to support tyrannical rule to preserve their access to resources. Thomas Paine felt that UBI could guarantee the capacity of citizens to say no to despots hoping to exploit their economic desperation. UBI has come to the fore as a way to make sure workers with limited skills aren’t left behind as technological progress races past them. But universal basic income assumes that “low-skill” workers need an economic floor because they will have no options once machines beat them out for jobs. Here’s what’s wrong with that logic. This argument assumes that AI will eventually conquer all and people will be irrelevant to its advancement or extending the services that it proposes. But, as suggested by the history of task churn common to platforms, humans do not go away in the future of AI.


pages: 267 words: 106,340

Europe old and new: transnationalism, belonging, xenophobia by Ray Taras

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, British Empire, carbon footprint, centre right, collective bargaining, energy security, full employment, Gunnar Myrdal, illegal immigration, immigration reform, Kickstarter, low skilled workers, mass immigration, Mikhail Gorbachev, Naomi Klein, North Sea oil, open economy, postnationalism / post nation state, Potemkin village, Ronald Reagan, World Values Survey

The country’s most popular comedy show was Cronica Carcotasilor (“The Fault Finder’s Chronicle”), which lampooned political leaders and celebrities. “This program also has a coterie of female dancers who perform between sketches.” The news from Britain was not so upbeat for potential job seekers from Bulgaria and Romania. One report summed up their situation. “When the two countries joined the European Union in January, Britain capped the number of low-skilled workers it would admit to 20,000, despite offering an open door to migrants from new EU states such as Poland three years ago.”7 If over 600,000 eastern Europeans had come to Britain following the 2004 EU enlargement, only 40,000 Bulgarians and Romanians were expected to arrive in 2007. To be sure, one report suggested that it was not anti-Balkan discrimination but a skill set not fitted to the British labor market that may have kept the numbers low: “Rather than the plumbers and builders many expected, the top profession listed by Romanians is ‘circus artiste.’


pages: 385 words: 111,113

Augmented: Life in the Smart Lane by Brett King

23andMe, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, agricultural Revolution, Airbnb, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple II, artificial general intelligence, asset allocation, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business intelligence, business process, call centre, chief data officer, Chris Urmson, Clayton Christensen, clean water, congestion charging, crowdsourcing, cryptocurrency, deskilling, different worldview, disruptive innovation, distributed generation, distributed ledger, double helix, drone strike, Elon Musk, Erik Brynjolfsson, Fellow of the Royal Society, fiat currency, financial exclusion, Flash crash, Flynn Effect, future of work, gig economy, Google Glasses, Google X / Alphabet X, Hans Lippershey, Hyperloop, income inequality, industrial robot, information asymmetry, Internet of things, invention of movable type, invention of the printing press, invention of the telephone, invention of the wheel, James Dyson, Jeff Bezos, job automation, job-hopping, John Markoff, John von Neumann, Kevin Kelly, Kickstarter, Kodak vs Instagram, Leonard Kleinrock, lifelogging, low earth orbit, low skilled workers, Lyft, M-Pesa, Mark Zuckerberg, Marshall McLuhan, megacity, Metcalfe’s law, Minecraft, mobile money, money market fund, more computing power than Apollo, Network effects, new economy, obamacare, Occupy movement, Oculus Rift, off grid, packet switching, pattern recognition, peer-to-peer, Ray Kurzweil, RFID, ride hailing / ride sharing, Robert Metcalfe, Satoshi Nakamoto, Second Machine Age, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart transportation, Snapchat, social graph, software as a service, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, TaskRabbit, technological singularity, telemarketer, telepresence, telepresence robot, Tesla Model S, The Future of Employment, Tim Cook: Apple, trade route, Travis Kalanick, Turing complete, Turing test, uber lyft, undersea cable, urban sprawl, V2 rocket, Watson beat the top human players on Jeopardy!, white picket fence, WikiLeaks

It seems Amazon considered the automation of its own warehouses to be so valuable that it would forgo the profits from selling the system and keep the technology away from its competition. Today, Amazon uses the Kiva solution in its own warehouses to minimise warehouse workers and order fulfilment costs while improving order accuracy. Amazon offers us a glimpse of something that we’ll see often in the future: automation technology reduces the need for and number of low-skilled workers and highly paid sales and marketing employees while creating an entirely new division within the company of highly skilled roboticists and AI software workers. We said earlier that every person and company needs a robot strategy. Who are the early leaders in robot strategy and what are they doing? We’ve seen Amazon embrace robotics with its Kiva warehouse system acquisition. Google acquired eight robotics companies and put them all in a former NASA blimp hangar13 like a giant child’s playroom and made what is probably the most cinematic yet confusing move, since the military nature of the robots seems at odds with Google’s core business and its civilian focus on search.


pages: 391 words: 105,382

Utopia Is Creepy: And Other Provocations by Nicholas Carr

Air France Flight 447, Airbnb, Airbus A320, AltaVista, Amazon Mechanical Turk, augmented reality, autonomous vehicles, Bernie Sanders, book scanning, Brewster Kahle, Buckminster Fuller, Burning Man, Captain Sullenberger Hudson, centralized clearinghouse, Charles Lindbergh, cloud computing, cognitive bias, collaborative consumption, computer age, corporate governance, crowdsourcing, Danny Hillis, deskilling, digital map, disruptive innovation, Donald Trump, Electric Kool-Aid Acid Test, Elon Musk, factory automation, failed state, feminist movement, Frederick Winslow Taylor, friendly fire, game design, global village, Google bus, Google Glasses, Google X / Alphabet X, Googley, hive mind, impulse control, indoor plumbing, interchangeable parts, Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, Jeff Bezos, jimmy wales, Joan Didion, job automation, Kevin Kelly, lifelogging, low skilled workers, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, Menlo Park, mental accounting, natural language processing, Network effects, new economy, Nicholas Carr, Norman Mailer, off grid, oil shale / tar sands, Peter Thiel, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, Republic of Letters, robot derives from the Czech word robota Czech, meaning slave, Ronald Reagan, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley ideology, Singularitarianism, Snapchat, social graph, social web, speech recognition, Startup school, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, technoutopianism, the medium is the message, theory of mind, Turing test, Whole Earth Catalog, Y Combinator

One of Google’s great innovations in building the data centers that run its searches was to use software as a means of isolating each component of the system and hence of separating component failure from system failure. The networking software senses a component failure (a dying hard drive, say) and immediately bypasses the component, routing the work to another, healthy piece of hardware in the system. No single component matters; each is dispensable and disposable. Maintaining the system, at the hardware level, becomes a simple process of replacing failed parts with fresh ones. You hire a low-skilled worker, or build a robot, and when a component dies, the worker, or the robot, swaps it out with a good one. Such a system requires smart software. It also requires cheap parts. 3. Executing an algorithm with a physical system is like putting a mind into a body. 4. Bruce Sterling, the cyberpunk writer, gave an interesting speech at a European tech conference a couple years back. He drew a distinction between two lifestyles that form the poles of our emerging culture.


pages: 366 words: 117,875

Arrival City by Doug Saunders

agricultural Revolution, Ayatollah Khomeini, Berlin Wall, Branko Milanovic, call centre, credit crunch, Deng Xiaoping, desegregation, ghettoisation, Gini coefficient, guest worker program, Hernando de Soto, Honoré de Balzac, illegal immigration, immigration reform, income inequality, informal economy, Jane Jacobs, Kibera, land reform, land tenure, low skilled workers, mass immigration, megacity, microcredit, new economy, Pearl River Delta, pensions crisis, place-making, price mechanism, rent control, Silicon Valley, special economic zone, the built environment, The Chicago School, The Death and Life of Great American Cities, upwardly mobile, urban planning, urban sprawl, white flight, working poor, working-age population

Such restrictions failed partly for the economic and political reasons described above, but also for a third reason: When immigrants are brought over without their networks of relatives and village neighbors, they are more likely to become isolated and unsocialized, to fall into criminality or social conservatism. This happens when family-reunification migration is restricted or when countries rely on temporary guest-worker programs to attract low-skilled workers without their families, as Germany did in the 1970s and Canada and Australia are attempting today. When settlement of families is restricted, arrival cities and their supportive networks are unable to take shape, and behavior changes. A study by Dennis Broeders and Godfried Engbersen at Erasmus University, in Rotterdam, examined immigrants forbidden to bring over relatives: Without family networks to support them, the migrants were forced into a “dependence on informal, and increasingly criminal, networks and institutions.”19 Arranged marriages, often to a cousin from a distant village whom the primary-immigrant spouse hadn’t met, became commonplace, even when the migrants are from countries such as Bangladesh or Turkey, where these practices are dying out.


pages: 380 words: 118,675