Friday, July 22, 2016

Robots: Misinformation Still Coming Out

One of the several jobs-related topics getting gobs of press this year has been robots.  I could write a post every week on only the stories released, even if I just hit their high and low points.  However, in the interest of writing on other topics as well I have restrained myself to two, on January 15th and May 2nd, unless you count my March 25 artificial intelligence issue. 

On May 2 I named nine points for universal agreement, on robots’ lack of actual intelligence, their need for controlled environments, their one-way progress, their potential to do any algorithmic task, the value of projecting where they are going, their productivity gains always involving job takeovers, their uncertain acceptance, and the dangers of their being programmed amorally.  These aren’t really controversial, and everyone from Luddites to Ray Kurzweil should buy into them.  However, too many otherwise good recent articles have included clearly incorrect statements.  What are they, and why are they wrong?

“March of the machines” (The Economist, June 25th) cited artificial intelligence (AI) researcher Andrew Ng as saying that worrying about a general AI breaking free of human controls “is like worrying about overpopulation on Mars before colonists have even set foot there.”  While I have not taken what is now called AI as seriously as most, since to me it seems only incrementally more advanced than simple if-then computer programming, if we can teach systems how to learn and how to set their own goals we must consider what they might do, as their actions could be far less controllable than regulating the number of people moving to or even living on an extraterrestrial base.

In Harvard Business Review’s June 23rd “Knowledge Jobs Most Likely to Be Automated,” authors Julia Kirby and Thomas H. Davenport noted the trend for robots and other automating features to take over parts of jobs, which they say prevents naming areas where people should avoid jobs and careers.  That is false, since as I documented in 2013’s Choosing a Lasting Career, jobs in the 25 U.S. Department of Labor career groups vary vastly in how susceptible they are to not only automation, but globalization, efficiency, and 18 other current or anticipatable trends.  Whether you agree or disagree with my findings, the mass of which are still current, there is no reason for employers to minimize automation gains by maintaining the same numbers of pertinent workers.  As well, the authors’ statement that machines will be “freeing up humans to work on more value-creating projects” is erroneous, at least in the huge majority of fields with good job candidates not being hired as it is.

In “Industrial robot sales hit record” (Financial Times, June 22), Michael Pooler quoted a company robotics head as saying that “people today don’t want to do dull, dirty, dangerous and delicate jobs any more.”  I could introduce this man to tens of thousands of Americans in my state alone who would gladly do all of those things – if the pay were right.  Almost all skills shortages are really training and pay shortages; while those are the free choices of the companies involved, and they are entitled to position them as workers’ shortcomings instead, we have the final option in what we will believe.

Eduardo Porter’s June 7 New York Times piece, “Jobs Threatened by Machines:  A Once ‘Stupid’ Concern Gains Respect,” looked at some invalid thinking on work and automation across the years, in response to Wassily Leontief’s pithy and prescient response to those doubting machines could take over jobs, “They replaced horses, didn’t they?”  It included another economist, Kenneth S. Rogoff, saying that “it seems unlikely that millions of workers are headed to the glue factory like discarded horses” (why not, and why doesn’t that simile fit?), and a comment from a young Lawrence H. Summers that productivity gains from technology would create so many jobs from people having more money to spend that employment would stay at least the same (sure, if there were no products like software where cost per item drops almost as fast as the number of items sold goes up, and if companies paid workers according to productivity instead of on supply and demand).   It is common in economics to see even eminent practitioners saying things that, on further analysis, simply don’t make sense – I suspect political biases for some, but don’t understand its other causes.

On June 1, The Washington Post published Robert J. Samuelson’s “The robot invasion that isn’t yet here.”  Samuelson, who has written much fine material, took a remarkably anti-job-loss stance here, saying that since our country had added 14 million jobs in six-plus years “there’s little evidence that robots have yet had much effect on job creation in the current recovery.”  That does not follow to me.  He also wrote that according to a University of Michigan study “only 16 percent of respondents wanted self-driving vehicles” (there were 260 million registered in the U.S. in 2014, which works out to “only” 41.6 million).  At the end of the piece, he fell into the common trap of saying that “workers may become scarce” when “baby boomers age and retire” (as I have documented in no fewer than three books, most in the baby boom generation will not voluntarily retire, and despite 10,000 Americans turning 65 every day, latent demand for work is stronger, in relation to official unemployment, than it has ever been.) 

Lilah Raptopoulos’s April 8 Financial Times compilation “Robots:  friend or foe?  You told us” presented readers’ comments on robotics, with most chosen ones being excellent.  One responder said that he asked his 17-year-old son if he thought his “future profession already exists.”  That is not an error, but brings up an important distinction.  Even though many specific job tasks are completely new from five or ten years before, the overall positions change remarkably little.  Martin Ford, in The Lights in the Tunnel, documented how, in 2006, not a single American job area, except for the subset of restaurant work labeled “fast food,” with at least one million workers was nonexistent in 1930.  Obviously that could change, but we know of no reason why it should.

Finally, an old area of automata reappeared, by Maija Palmer on May 4th, also in Financial Times:  sexbots.  Maybe my recollection is wrong, but it seemed a foregone conclusion two decades ago that not-quite-human sex partners would be common by mid-century if not sooner, and I have read almost nothing since.  This story, “Prospect of sexual relationships with robots poses moral dilemmas,” started almost from the beginning, with cinematic references, currently available sex dolls with semi-robotic features, and one commentator’s thought that “female sex robots will dehumanise women” since “creating objects that closely resemble human females… leads men to regard women as objects.”   Well, if they don’t resemble human females, they won’t be too popular, so I expect the mainstream view on such things to take two parts:  one, and more than anything else, apathy; and two, seeing such things as economic inferior goods like bottom-grade beer.  


On that not really titillating note, I wrap up.  Be assured, no matter what, that robots will take over plenty more jobs somewhere and somehow – maybe not huge amounts today or tomorrow, but during, if you are lucky, your lifetime.  Let’s think straight about them.      

Friday, July 15, 2016

Checking In With Work’s New Age Issues in the News, May-June 2016

Four and a half years ago I released a book with the thesis that the jobs crisis was permanent.  I still stand by that, as although the official unemployment at press time was about double what it is now, other metrics have trailed.  Some have even got worse, such as the labor force participation rate, down from 64.0% in December 2011 to 62.7% last month.  The American Job Shortage Number or AJSN, which I invented in September 2012, has fallen since then only from 20.7 million to 17.6 million, with the portion of latent demand from people beyond those technically jobless up from 10.2 million to 10.8 million.  As even the most partisan Obama and Democratic-administration supporters agree that despite that 4.9% unemployment all is hardly well with the economy, it is to the credit of those interpreting the monthly Bureau of Labor Statistics data that net job growth has replaced the unemployment rate as the headline figure.  Accordingly, over the past several months, there has been a jump in publicized views on concerns I identified and evaluated in Work’s New Age.

On June 28th, The Atlantic published “Would a Work-Free World Be So Bad?”  It looked beyond the resurgence of guaranteed income commentary I wrote on last month, and considered the human side of near-universal joblessness.  It held that people’s problems could be much like those faced by retirees:  lack of purpose, boredom, malaise, and even depression.  Author Ilana E. Strauss compared this possible future to what all humans experienced up to 10,000 years ago, life as hunter-gatherers without separate concepts of labor and leisure, and to farmers before 1600 who “mixed work and play in their daily lives.”  Per Strauss, recreational patterns may move away from the likes of “beer and TV” catering to “tired workers,” education might also change, and families could be together for far more hours than now.  These thoughts add depth to the now-materializing trend toward futurist Herman Kahn’s concept of unpaid replacements for service jobs he called “quaternary” involvements.

The Economist’s June 25th issue devoted a 16-page insert to artificial intelligence, with rather melodramatic emphasis on whether that could “cause mass unemployment or even destroy mankind.”  It recapped automation concerns as far back as 1964, and documented that jobs likely to be lost would not necessarily be manual but “routine,” or algorithmic.  Both these perceptions, though old, are correct and worthy of repeating, even though artificial intelligence is still limited to identifying and following clearly defined sequences of tasks. 

On May 27th, CNBC had a story on one comprehensive solution to the permanent jobs crisis, shorter working hours.  It concluded that while such an experiment in Sweden last year seemed successful, with higher productivity offsetting at least some of the time shortfall, it might not work in the United States, as “the eight-plus hour workday ethic is embedded too deeply,” and full-time workers are actually on the job an average of 47 per week.  I can’t agree at all, as even a cut to 40 hours would be in the right direction, and that would call for base weekly hours of 30 or so.  I will leave to you to decide what the country would be like if we had not made improvements over the past couple of centuries due to previous practices being “embedded too deeply.”

Patricia Cohen’s May 25th New York Times piece, “Fewer Americans Choose to Move to New Pastures,” addressed why worker mobility is down.  She found some of the reasons, but cited “economists” as saying, as Yogi Berra might have, in effect that people not moving makes it hard for them to move, and also quoted a Notre Dame professor who did not understand that Facebook and LinkedIn are not proving poor substitutes for “personal connections,” but, in 2016, are those connections.  More important than almost any cause Cohen mentioned are four others:  that people don’t leave low-level positions if better ones don’t exist; that everyone will be more hesitant to change cities for opportunities that rate to last for shorter and shorter lengths of time; that the job market simply doesn’t want enough people in their 20s for many to move away from their parents; and, as mentioned by one article commenter, that full relocation packages are almost a thing of the past.

On May 24th, again in The Atlantic, the title of Derek Thompson’s “The Myth That the President Can Save the Economy” was enough to remind us that no candidate can be expected to do it all by himself or herself.  While our 2017 inauguree can push us in the right direction, he or she can’t repeal historic trends, and it is wrong to think that “5 percent growth will suddenly appear if somebody thinks of the right marginal tax rate.”  A good reminder this year.

A May 23rd cnn.com article asserted that “The U.S is ‘basically at full employment.’”  Even occasional  readers of this blog can guess my view on that, which author Heather Long unwittingly reinforces by naming as still-remaining problems income inequality (a product of the hardly-over jobs crisis) and wages not increasing much (too large a supply of workers, whether officially jobless or not).  The AJSN shows that latent demand for work is comparable to times with 6 or 7 percent unemployment, and it may reach record levels with the next recession.

Finally, in foreignpolicy.com on May 19th Daniel Altman took on giddiness about globalization in “Economics Has Failed America.”  He made many of the same points I raised over four years ago but without noting the cause of scalability, the post-industrial capacity to produce a million copies of a product for barely more in money or workers than a thousand.  Altman correctly noted that “job destruction” is not “healthy” as others have said but is one of the worst results of international trade, and that while “globalization reduces inequality among countries” it raises it within them.  None of this is justification for protectionism, but we still need to be fully conscious of these challenges. 


Are these articles good or bad for our job situation?  Except for possibly the regressive cnn.com piece, all are positive.  As they will sooner or later require solutions, the issues here are well worth our attention now.  At times, the state of American jobs has seemed out of sight and out of mind – that is not the case anymore, and that is good for our country.   

Friday, July 8, 2016

Calm, Rebounding June Jobs Data Almost Offsets May’s: AJSN Says We’re Now 18.1 Million Jobs Short

This morning, I was ready to declare a Pee-wee’s Playhouse era of federal employment reports – in other words, we’ll never know who or what we’ll see.  This month, though, came in at almost exactly what would be expected after May’s wild data, if we decided were not expecting a recession.  Official joblessness rebounded upwards to 4.9%.  We gained 287,000 net new nonfarm positions, up from the previous 38,000.  Those looking for 27 weeks or longer gave back half of last month’s improvement to reach 2.0 million.  The count of those working part-time for economic reasons, or holding on to less than full-time jobs while wanting and not finding one of those, more than erased its huge worsening, losing back not only the 468,000 it gained in May but another 121,000.  The two measures showing best how likely it is for Americans to be working, the labor force participation rate and the employment-population ratio, were split, with the former regaining half of the 0.2% it fell last time to reach 62.7%, and the latter down 0.1% on higher official joblessness to 59.6%.  Unadjusted unemployment was up beyond the seasonal effect of more people working in May than in June, going from 4.5% to 5.1%.  Average wages rose a little something, 2 cents per hour, to $25.61. 

The American Job Shortage Number or AJSN, showing in one number our latent demand for additional positions, gained over 550,000, as the officially unemployed, up 937,000, can now absorb almost 6.5 million new jobs.  About one quarter of that was offset by a 269,000 fall in the count of those wanting to work but not looking for a year or more; the numbers of those temporarily unable to take jobs, and those saying they did not want them at all, were also down significantly.  Overall, the AJSN came in as follows:


Compared with a year before, the AJSN is down just over 700,000, with lower official unemployment, but also fewer discouraged and fewer not looking for a year or more.  The year-over-year improvements are shrinking but are still large, meaning that prospects for Americans to find jobs continue to get better.


If we spread out May’s nuttiness by taking the last two months together, where are we?  The headline unemployment rate is down from 5.0% to 4.9%, net new nonfarm jobs gained an average of 162,500 per month, and the long-term jobless and those working part-time for economic reasons each fell almost 200,000, but the two key percentages each worsened 0.1%.  Pay was up 4 cents per month, roughly equal to inflation.  Accordingly, we are still slightly improving, though the lower employment-population ratio and labor force participation rate remain causes for concern.  In six months, will we be plumbing new depths, or will we be higher than we have been for years?  Probably neither.  In the meantime, the turtle took a good step forward.     

Friday, July 1, 2016

Driverless Cars in America and Beyond: Levels of Autonomy, Implementation Years, and Job Losses

Last week I wrote about the fast pace of developments in autonomous vehicles, and looked at why the technology itself will be well ahead of other factors determining when it can be put into service.  This week, we’ll see what steps there are on the way to total automation, and when substantial numbers of vehicles will be on each.

The U.S. National Highway Traffic Safety Administration recognizes four automation stages, but the first three are tied to specific innovations in cars which require active drivers.  The difference between this organization’s level 3 and level 4 is a chasm, moving from technology dependent on human takeover to, as a May 8th Fox Business piece put it, “a fully autonomous car.”  When we realize that there are a significant number of intermediate steps between these two, and when we want to put self-driving technology in groups characteristic of these phases, we can see a need for another scheme.  Accordingly, here is one. 

We are now primarily at Plane 1.  Vehicles there, as I define it, require drivers to be at the controls essentially continuously.  They can still have a variety of robotic or semi-robotic facilities, such as parallel parking capability, but such features do not remove the need for human attention.  At this level, most automated tools must be explicitly activated by the driver, who must stay in his or her seat.  Plane 1 does not require anything more from the road system or elsewhere in the driving environment than what is there now, and the current, visual-only “Check Engine” lights are perfectly appropriate ways of communicating possible mechanical problems.

At Plane 2, vehicles would only need partial human driving, with something like an aircraft autopilot taking over for long amounts of time.  (Indeed, a similar feature already available on Tesla cars, which was announced yesterday to have been involved in what may be remembered as the first self-driving death, is named “Autopilot.”)  Drivers here would handle the less routine trip parts, such as their beginning, their end, unusually heavy and complex city traffic, and turning and merging onto expressways.  As this phase progresses it would require upgrades to the environment, particularly continuously available Wi-Fi, very detailed GPS, or both.  Licensed drivers would still be needed in each vehicle, but they could leave their seats for as long as hours on end.  Almost all automated systems could be manually overridden.  Vehicles overall would have about as much autonomy as jetliners do today. 

Plane 3 still calls for someone in the vehicle able to control it, along with a steering wheel and such, but that person would be more properly called a supervisor instead of a driver.  They could still drive, but that would be unusual, mainly for emergency or extreme weather situations, for which the vehicle’s software would provide algorithmically-based notifications.  This stage would require robust Wi-Fi or other satellite communication at the start, with further capabilities following as the phase progressed.  As in Plane 2, a visual Check Engine light would need to be replaced by something auditory.  The general autonomy level of Plane 3 vehicles would resemble that of washing machines or dryers today, with few problems once they are powered on and activated.
The next phase, Plane 4, would remove the need for anyone controlling from inside.  The main characteristic here would be autonomous vehicles remotely supervised.  One person could monitor, as the stage progressed, from one to dozens of them.  As this phase became more established, the need for any kind of physical onboard controls, such as steering wheels and brake pedals, would go away.  Passengers, who could now be in any seat, could set the destinations and some other factors, as could supervisors, who would be notified about mechanical failures electronically through systems that could also stop the vehicles or redirect them to a garage or other place where their problems could be solved.  Supervisors would also initiate refueling in the same manner.  Plane 4 vehicles would have the general autonomy level of today’s large computer system hardware.

The next phase, Plane 5, is where means of transportation would be totally autonomous, with no direct human monitoring.  Passengers, police, or owners could set their directions, and compartments could look more like living rooms than the insides of today’s cars.  Algorithms would determine when and where they would take on fuel, a process which would not need to involve humans.  All trips would be automatically logged with their data uploaded, and precise vehicle locations would be available continuously.  The amount of human intervention Plane 5 cars required would approximate that of a refrigerator. 

Given these phases, the rapid progress of self-driving technology in general, and the resistance factors I named last week, when might we see which levels of progress around the world?  Taking our best guesses that taxis will be one of the first applications at each stage, but that trucks will much more slowly reach them due to fear holding back their legal approval, how long will it take for jobs driving both to go away?  Here is how all that might look:


To give some examples to explain this chart, I project that by 2018, 20% of the vehicles in the countries that prove to be the most advanced at driverless vehicle implementation, possibly the likes of Switzerland and Qatar, would be operating at Plane 2 as described above.  The United States will have half of its vehicles fully autonomous by 2033.  In 2021, there will be about as many Americans driving cabs as there are today, but by 2037 there will be 95% less.  


Here is more about the future of self-driving vehicles as I see it.  They will be produced not by software, automotive, ride-sharing, or electronic-technology companies alone, but by consortiums of at least three of these four.  While that sounds like an easy opportunity for investors, in reality the industry will turn out to be a wild place to put money, with massive winners and total losers as happened with their driver-requiring versions a century before.  Electric cars will probably not succeed even as taxicabs, as they have been pushed as viable alternatives or even replacements for hydrocarbon-powered ones since the 1960s and, despite heavy subsidies and even when grouped with electricity-gasoline hybrids, still have only 2% of United States passenger-car sales, with no new reasons for fundamental improvement.  Mercedes-Benz has announced several Plane 2 features, including what they call “Drive Pilot” and “Active Brake Assist,” for some 2017 models.  And, once again, invisible prosperity will improve while employment will worsen, continuing what looks like the main story of the 21st century.   

Friday, June 24, 2016

Driverless Cars in America: Will the Technology Outstrip Everything Else?

It’s been seven months since my last post on self-driving automobiles.  Normally, that’s too short a time to tackle the subject again even for many technical propositions, but this one has been zooming along like a Ferrari.  Since November, a mass of work, most being completely proprietary to the software companies, automakers, and electronics firms doing it, has been finished.  The otherwise beleaguered gypsy cab companies Lyft and then Uber have been working with Ford and General Motors toward offering driverless taxis.  Microsoft and Alphabet, Google’s parent company, have made their like ambitions public.  An elaborate artificial city section in Ann Arbor, Michigan, complete with storefront facades, 13 different traffic light varieties, expressway ramps, and parking meters, is being used by at least five world-class car manufacturers to test their autonomous products, and others are under construction in Ypsilanti, California, and Virginia.  There has been an outpouring of articles, ranging from Neal E. Boudette’s New York Times “5 Things That Give Self-Driving Cars Headaches” to one of course much better than the grammar of its headline, “As a senior citizen, a self-driving car will be my godsend,” in the Washington Post, and on to attempts to find the best related investment targets.  There is also a subtopic taking form about driverless large trucks, with many companies seeing them as a way of resolving their long-standing driver shortages without sufficiently raising pay. 

Although it is impossible to even decently estimate the amount of money and person-hours currently going toward this effort, it is crystal-clear that by 2020 or so such technology will be usable for ordinary consumers.  That, though, will prove to be its least limiting factor.    

The largest sticking point is the lack of a suitable environment.  At the least, places allowing driverless vehicles will need large-scale Wi-Fi, for the constant communication with online facilities these cars and trucks will require.  Citywide or better still statewide or nationwide wireless connectivity, built robustly and redundantly enough to make outages almost nonexistent, is the best way of dealing with potholes (located precisely through GPS), poor visibility on snowy roads (through detailed maps), and detours (with up-to-the-minute rerouting instructions).  Unfortunately, that is exactly the kind of infrastructure project that Congress has refused to fund.  Ultimately, only countries willing to build such a network will be able to fully implement driverless technology.  

There is a set of additional problems which might be described as barriers to mentality.  The first is one of the five headaches in Boudette’s story, described as “ethics on the road.”  One example he poses is a ball, followed by children, bouncing into the car’s path, giving it no choices beyond hitting the ball’s pursuers or crashing into something on the side of the road and endangering its occupants.  In this and many other situations, some people will lose and others will be spared, and there will be no human driver to explain his or her actions, only computer code with unknown originators.  Another is bizarre accidents rare but not unheard of, which will kill people before they are programmatically forestalled.  A third problem is one more from Boudette, “unpredictable humans,” which may never be eliminated.  (Could a modern-day superbly maintained bullet train driven on its immaculate track by a completely sober, prudent, and experienced engineer avoid tragedy when a person, suicidal or otherwise, somehow appears, say, 130 feet directly in front of it, or half a second away at its 180 miles per hour?)  The fourth issue concerns autonomous 18-wheel trucks, of which many people will, even if mishap rates are microscopic, be terrified.  Although it is clear that driverless vehicles will prove vastly less dangerous than human-driven ones, resistance to the accidents they will have, many of which would not take place if they were manually driven, will still be at least a temporary problem. 


What are the chances that we can overcome the concerns above?  How might self-driving technology be implemented in stages?  What else will happen with and around it?  These will be the subjects of next week’s post.  

Friday, June 17, 2016

Guaranteed Income, an Idea with Plenty of Merit, Returns to the News

There are few comprehensive possible solutions to the permanent jobs crisis caused mostly by automation, globalization, efficiency, and the exclusively one-way movement of these trends.  Three of the only four I have seen that could remove the problem completely are reduced working hours, assured government jobs, and a system of payments for providing electronic content.  The fourth is a guaranteed citizen’s income.

I wrote favorably about such a thing in a November 2014 post, and analyzed it in detail in Work’s New Age Chapter 8, so I will be brief about introducing it.  It has a long, honorable place in American political thought, with advocates on both the left (Bertrand Russell and John Kenneth Galbraith) and the right (Thomas Paine and Milton Friedman), since it offers not only the ultimate in social security but a minimum of government involvement.  Similar programs, from Alaska’s annual dividend to the national Earned Income Credit, have succeeded.  Its conceptual appeal rests on two facts:  that functioning markets not only require sellers but buyers, who must have money from somewhere; and that, although we have replaced jobs in extraction areas such as farming, fishing and mining with manufacturing ones, and in turn exchanged those for ones in services, we know of no paying employment that will replace endangered and disappearing jobs there.  To qualify as guaranteed income, as opposed to welfare, federal governments must provide money to all adult citizens, regardless of how much they earn from other sources.  Its largest obstacle is, of course, its cost.

After years of only occasional mention, guaranteed income – also called a “basic income” – has made the pages of The New York Times, The Economist, Financial Times, and elsewhere.  The impetus was probably Switzerland’s June 5 referendum, in which automatic monthly payments of SFR2500 and SFR625 in their currency almost at par with the U.S. dollar would have been made to each citizen adult and citizen child respectively.  Only 23% voted in favor of it, but its supporters expressed delight at that percentage being so high. 

In the wake of the Swiss plebiscite, commentators made several points about guaranteed income, with varying amounts of merit.  They suggested that it would cause reduced motivation for working, which is correct, but that would be held to a favorable level, reducing demand for work to something approximating the number of jobs available, if the stipend amounts were more like the $10,000 I have recommended instead of the too-high $30,000+ on which the Swiss voted, which would mean that people would need other sources of money if they wanted, for example, cars and sit-down restaurant meals.  (Interestingly, only 2% of Swiss citizens surveyed thought even the amount on which they voted would cause them to leave their jobs, but one-third thought others would do that – I suspect that Americans have the same perception gap.)

Writers also mentioned, as one put it, the problem of losing “the centrality of paid work to the way people live.”  That would be a more valid concern if it were not happening already, and there were fewer than the current 94 million not in the labor force at all.  The idea that the market, or “capitalism” in one commentator’s words, has always provided new jobs and so will continue to do that is also weak, since the only positions beyond extraction, manufacturing, and services are unpaid.  And it silly to suggest, as two did, that there would be a “stigma” about getting money every American would receive.

Three things from recent articles were more worthwhile.  The first was a chart in The Economist’s June 4th “Sighing for paradise to come,” a fine comprehensive piece despite its misleading title.  It showed how much money 12 different developed countries were now spending annually per person on social, non-health-care programs.  That, a starting point for funds redirectable to guaranteed income, showed that Denmark and Norway were highest at $10,900 and $10,700, with Sweden, Finland, and France also over $9,000 and Germany at $8,300.  The United States came in at $6,000, still a large amount and higher than Japan, Australia, New Zealand, and Canada.  I have seen little before about two other concerns mentioned, that such redistribution, since it would benefit those with high incomes along with others, would be regressive, and that it would be incompatible with either open borders or with all residents receiving equal treatment.  Those may actually be good things, but are worthy of continuing discussion.

So where is the idea of guaranteed income going from here? Brazil, Canada, the Netherlands, and even India are now running small-scale experimental rollouts on it.  In Finland, 10,000 adults will receive 550 euros per month, or about $7,500 annually, for two years, toward possible national implementation.  It is hardly unthinkable that Switzerland might try another vote with a lower amount.  Two sources of increased American taxes worthy of consideration would be higher ones on estates, mentioned by Eduardo Porter in The New York Times, and a levy on financial transactions.  Both would affect those in the higher income brackets the most, paying for much of the stipends going to their economic peers.  Charles Murray, a nationally-known conservative author and commentator who has written before on basic income, is scheduled to soon publish an update to his previously released plan to provide $10,000 to each American 21 or over without increasing any taxes.


Overall, though, the bottom line is that it is premature to implement a guaranteed income in the United States.  There are still 151 million Americans employed, which, though decreasing as a percentage, is only doing so slowly.  That, though, is not the same as saying we should not be talking about it or even planning for it.  Perceptions can move at glacial paces, and this one may go from radical to necessary as soon as a couple of presidents from now.  “Forewarned is forearmed” is an ancient proverb for a reason, and dealing with guaranteed income before it is needed will prove to be one more example.          

Friday, June 10, 2016

Another Result of the Permanent Jobs Crisis: The Middle Class, As We Know It, Will Continue to Dwindle

Last month a Pew Research Center study made national news.  It found that the share of middle-class families, which it defined as those with between 66%+ and 200% of median household income, had dropped greatly and broadly.  The center found that of 229 metropolitan areas, 203 had a smaller percentage of middle-class households in 2014 than in 2000.  No longer, per the survey, do a majority of American adults have middle-class income. 

That however does not mean that American affluence is falling, for three reasons.  One, of the 229 there were more gaining upper-class shares (172) than lower-class ones (160).  Two, middle class as Pew defined it is only relative to others, without regard to how high that mean or median national income actually is.  Three, when you are evaluating nothing but income you have at best a rough approximation of true prosperity, which includes all the resources to which people have access;  if as now many things are free or much lower priced than in the past, they are measured little or not at all in income-based analyses.

The Pew piece precipitated various articles bemoaning the “shrinking,” if not “vanishing” or “disappearing,” middle class.  They came from the left, which incorrectly blamed American corporations, and the right, which incorrectly blamed Barack Obama.  They did, though, have some points worthy of concern.  Average family income has dropped $4,000, inflation-unadjusted, in 16 years.  Debt as a percentage of annual income has more than doubled since 1989, to 122%.  And perhaps saddest of all, median 2014 middle-class retirement savings, despite households getting older in general, sat at only $20,000.

Reestablishing a high middle-class percentage does not look easy from here.  We now have 4.7% official unemployment, which cannot get much lower without even more people leaving the labor force.  Women are fully integrated into the workforce, and their income, in most families, has done little more than offset how much less their husbands’ good career jobs pay, adjusted for inflation, compared to those a generation or two ago.  An increasing share of newly created positions pay too little for even two spouses working full-time at them to be assured of middle-class status as defined above.  Work, and income with it, has become increasingly concentrated into fewer and fewer people.  The savings rate is unlikely to improve, as the baby boom generation has been as a whole poor at keeping money, and younger millennials simply do not have work opportunities sufficient for them to do what would be best, setting cash aside in their 20s.  America may, frankly, simply have less economic equality than it has in the past. 
 
What can we do?  The best answer is for us to stop seeing ourselves in classes at all.  Over the next ten years or so we can refine a package of amenities within reach of all Americans.  They can include sufficient food, shelter, freedom from violent crime, health coverage through Obamacare or otherwise, a home computer with Wi-Fi or other high-speed Internet service and commensurate access to email along with vast numbers of free websites and oceans of information, the opportunity to live in such a way as to benefit from rising life expectancy, availability of low-priced consumer products as now available in Walmarts among other places, adequate heating, air conditioning in most climates, microwave ovens, cell phones, and more.  Most of those things would have been beyond the reach of our grandparents when they were our age, and we should not take them for granted.  The bulk is in place now, needing little more than national Wi-Fi, an idea now overdue – the rest we should continue to expect.

There is another side, though.  Some things we have long associated with the middle class will become indulgences that fewer people will have.  Those start with cars, and we should not take it as a sign of impoverishment that Americans, particularly those in cities with good public transportation, will be less likely to own them, or that couples, even if working, will more often share one.  Large cash holdings, whether used for savings or consumption, will continue being less the norm.  Having children should be a thoughtful choice, with many or even most choosing not to undertake that ever-increasing financial burden.  In contrast to postindustrial products such as software, hand-made items, whatever they are, will become luxuries, as will many manufactured ones.  And, of course, we can no longer expect that everyone with the ability to work will be able to find it.


The name for this new set of people?  If we want one at all, we can call it “sustaining class.”  That is where over 80% of Americans will be, with their prosperity gains real but coming more from technology improvements than from better jobs.  That is where our future is pointing.