Friday, March 31, 2017

Higher Views: What’s Happening and Not Happening with the United States and Employment

Already this year we’ve had remarkably headline-grabbing commentary on the direction of not only American jobs, but the country in general.  What have people been saying and how much value does it have?

On January 11th, Salon shouted out “Sorry, Trump voters:  Those factory jobs aren’t coming back – because they don’t exist anymore.”  Author Conor Lynch made good points toward his correct thesis about those nostalgia-inducing positions, that since the Great Recession year of 2009 manufacturing output has increased 20% while employment is only up 5%, with “automation technologies, not foreign workers” the culprit in 80% of those lost opportunities.  That is the problem we face, and is another reason why efforts to vilify immigrants are inappropriate.

Noteworthy observations punctuated “Lifelong learning,” published January 14th in The Economist.  The column started with a shaky assumption, that “education fails to keep pace with technology,” and described “working lives” as “lengthy,” which they would be if people got what they wanted, but then laid down a law that workers “must” add new skills with time.  The unbilled author proposed an offset to the trend toward narrow college majors and courses of study, that “those with specialised training tend to withdraw from the labour force earlier than those with general education – perhaps because they are less adaptable.”  That, at least generally true, would make as good a subject for a book as for an article.

The same is true for a piece in the February 6th New York Times, in which Patricia Cohen discussed something I have mentioned in the past but have seldom seen elsewhere.  “The Economic Growth That Experts Can’t Count” said that, although American gross domestic product is growing more slowly, to it “a delectable $20 meal that would wow Julia Child is equal to a rubbery, tasteless one that costs the same amount,” and that “digital dark matter” such as Wikipedia which demonstrably increases productivity is likewise not included.  Indeed, ordinary Americans have advantages even the most affluent did not have only ten years ago, some of which Cohen documented.  They are not creating jobs as they once did, and Wikipedia employs far fewer people than would a Library of Congress-sized institute in each city, but they are real.

Is less than 17 years enough time to say that “This Century Is Broken”?  David Brooks posed that question in the February 21st New York Times.  He said that from 1951 to 2000 there were “no world wars, no Great Depressions, fewer civil wars, fewer plagues,” and asserted that slow economic growth was the core problem of the years since then.  Brooks cited increased numbers of men aged 25 to 55 out of the labor force, a group with 57% getting government disability, and “about half” taking pain medication daily, those two depressing statistics related, one way or another, to the work shortage.  It is too early to say anything comprehensive about 2001 through 2100, but in some ways we clearly are, indeed, off to a bad start.      

Along with Brooks, Robert J. Samuelson (“Have Americans gone complacent?,” February 28, The Washington Post) reacted last month to a new Tyler Cowen book, The Complacent Class.  In it, Cowen argued that our country is, as Brooks put it, “decelerating, detaching, losing hope, getting sadder.”  As symptoms, Cowen named lower entrepreneurism rates and less tendency to move for jobs;  the last is easily explained by work opportunities being increasingly temporary, but the first, especially Brooks’s interpretation that “millennials may be the least entrepreneurial generation in American history,” fueled both by Cowen’s telling us that the percentage of those under 30 owning businesses is down 65% in about 30 years and that generation having a sky-high underemployment rate, is worthy of concern.  Samuelson’s observation that we “increasingly cluster with people ‘like us’” is nothing new, and neither is his thought that what Cowen called “complacency” was really “entitlement” (I would call it “justified fear”).  However, Brooks’s question, “where is the social movement that is thinking about the fundamentals of this century’s bad start and envisions an alternate path?” is a good one.  I project that such a crusade will take shape within a few years.

Another good one, “The Big Question for the U.S. Economy:  How Much Room Is There to Grow?” was posed by Neil Irwin in the February 24th New York Times.  There is still plenty of “economic slack,” in the forms of underused factories (the rate much the same as it was five years ago), unoccupied business property (down only from 17.6% to 15.8% since 2011), and of course potential employees who aren’t working (see the latest AJSN at  Because of this extra capacity, Irwin called for fewer interest rate increases, to “create a virtuous cycle” by attempting “to run the economy a little hot.”  That is the strategy with the most merit, and would get more of our 17.9 million surplus workers into jobs.  That, not fine-tuning, is what we need now as ever.         

Friday, March 24, 2017

Driverless Cars Tootle, Or Rather Speed, Into 2017 – Part 2

We continue with some old business, in “Tesla’s Self-Driving System Cleared in Deadly Crash” (Neal E. Boudette, The New York Times, January 19).  The federal government concluded that that company’s “autopilot” feature, despite being overnamed and being engaged in a fatal May collision, did not need to be recalled.  It has been modified to shut off once the driver ignores three warnings to put their hands on the steering wheel, and two competitive systems, from General Motors and Audi, will monitor driver’s eyes (!) for the same purpose.

“Are General Motors and Lyft About to Crush All Self-Driving Rivals?”  John Rosevear posted this question on February 19th in The Motley Fool.  GM is planning on making “thousands” of driverless Bolts next year for Lyft’s ridesharing, which the latter company apparently and rather reasonably considers critical not only to their prosperity but to their survival.  In an area this fast-moving they can’t be sure, so the short answer to Rosevear’s query is “no.”  Meanwhile, per Yahoo Tech three days later, competitor Uber is now testing its self-driving cars in Arizona, where the governor took a ride in one and praised it. 

In the February 23rd New York Times, John R. Quain raised the issue of product standardization between driverless vehicle manufacturers.  True, we will need that, but it’s too early to try to establish such conventions.  We don’t know which self-driving technologies will win out on merit and in the market, which are two different things.  It will be later in the process, maybe two years from now, before official standards are agreed upon and put into place.

The consortia and partnerships are well under way, and so are the legal cases.  Per The New York Times (“A Lawsuit Against Uber Highlights the Rush to Conquer Driverless Cars,” February 24), Google’s Waymo driverless vehicle organization has brought an action against Uber for allegedly stealing trade secrets.  With top technicians getting high seven-figure bonuses to change companies, and nondisclosure agreements insufficient to clearly define the thin and permeable line between personal knowledge and proprietary information, this was neither the first nor the last.  The same goes for such ploys as, attributed to Uber executive Anthony Levandowski, trying to pay off “distracted” employee’s girlfriends to break up with them, and, as did Uber’s Otto division, filming videos of legally unapproved self-driving trucks.  It’s an exciting high-stakes game out there – don’t be surprised to see many more of these sorts of things.

On March 8, we learned from Fox Business that “Uber Self-Driving Cars Are Coming Back to California Roads.”  They were barred from them in December, but now have a permit to test there again, if for only two units, to become the 26th company allowed.  That state has also proposed that cars without steering wheels be testable there (USA Today, March 10th). 

My latest “why didn’t I think of that” moment came from John R. Quain’s March 9 New York Times “Cars Will Talk to One Another.  Exactly How is Less Certain.”  Since driverless vehicles will be receiving a lot of electronic information, it only makes sense for them to broadcast it to others nearby.  Per Quain, they can relay news of “disabled cars and vehicles that are braking hard ahead, as well as slippery road conditions.”  And more.  They may not be able to stop stupid human drivers from trying to beat trains to intersections, but can at least tell them they are there.  Two great advantages this communication will have – and I am almost certain it will be built into all American cars within ten years – is that it works even in areas without cellular service, and does not require infrastructure improvements.  Perhaps it could also issue warnings about people cruising, in the left lane, at two-thirds of the speed limit. 

This month’s most massive transaction was, as reported in The Wall Street Journal on March 13th (“Intel Joins Silicon Valley’s Race to Make Best ‘Server on Wheels,’” Ted Greenwald), was Intel buying Israeli car-camera company Mobileye for $15.3 billion.  The two together will form only part of a driverless-vehicle consortium, but, with Intel’s chips, it’s a powerful combination.  Intel’s estimate of “autonomous-driving systems, services and data” reaching $70 billion by 2030 strikes me as conservative, and, just maybe, if enough others share Intel CEO Brian Krzanich’s view that “what’s under the hood” will soon refer to computing features, millennials may find more interest in driving.

We finish with “The 5 Biggest Challenges to the Driverless Car Revolution,” or at least how Justin Loiseau saw them in his March 11th Motley Fool piece:  pricing, consumer understanding, “safety/security issues,” regulation, and technology.  It’s way too early to worry about the first.  The second is also premature, as we don’t know exact capabilities yet.  The third is more a matter of perception, as driverless vehicles should start cutting highway deaths as soon as next year.  The outlooks for the last two, though, are clearly positive.  The bad news for investors, to which The Motley Fool caters, is that we can’t yet tell the Fords and Chevrolets from the Stutz’s and Hupmobiles.  But driverless cars are the McCoy, the real deal, the genuine article; if you have an appetite for risk, you should place some bets somewhere.        

Friday, March 17, 2017

Driverless Cars Tootle, Or Rather Speed, Into 2017 – Part 1

The current year is shaping up as a critical one for self-driving vehicles.  A great deal has happened already.

One large choice, or “metadecision,” as we could call it, is how much of the burden of getting driverless vehicles information on what’s around them should be borne by the roadways.  In “States Wire Up Roads as Cars Get Smarter” (The Wall Street Journal, January 2), author Paul Page described signs recently installed in the Washington area warning drivers of upcoming problems, such as in the story a sudden thunderstorm, of which they may not yet be aware.  Such things are valuable both for our current meatmobiles and for self-driving cars and trucks, but, as Page mentioned and probably understated, the amount of money “needed to wire the nation’s more than 4 million miles of paved roads and 250,000 intersections” would be in the billions of dollars.  For a variety of reasons, including lower cost and more flexible technology improvement implementation, I expect that the vehicles will need to be the smart ones, and industry consensus on that should be reached within two years.

The same publication, a week later, issued Stephen Wilmot’s “How the Auto Makers Can Survive the Self-Driving Car.”  This piece was directed toward investors, who would do better to disregard two things it contains: the assertion that “electric cars are starting to take off” (which they have been doing for 50 years, and look no stronger now with recent sales crashing to almost nothing in states which have replaced their subsidies with registration charges in lieu of fuel taxes), and the idea that driverless taxi services, since rides in them will cost less, will cause huge drops in car sales, even starting “this decade.”  Wilmot also pointed out, though, that concentrated auto purchases by whatever companies win the self-driving taxi battle will “undermine the stable system of car dealerships that has controlled the industry for decades” (good riddance, as I see it), and that those who choose not to buy cars, who will be almost exclusively in urbanized areas, will instead purchase “mobility as a service,” which could take the form of agreements with these corporations to obtain transportation in different ways to cover different needs.  Companies could, for example, deploy automated taxis for trips to airports, but deliver customer-driven Jeeps for summer-home weekends – look for such agreements to be commonplace by the middle of the next decade.

We learned, also from Paul Page in The Wall Street Journal, that one of the last things the Obama administration did was to start a federal point of contact for driverless-vehicle regulation (“U.S. Sets Up an Advisory Panel on Self-Driving Cars,” January 11).  The 25-person committee was designed to include top executives from General Motors, Amazon, Uber, Alphabet, and FedEx, so can hardly be accused of being anti-business.  Creation of that panel, even though we don’t yet know what regulations will be ongoing, was a positive step.

Driverless technology has also moved along this year.  “Waymo’s self-driving cars need less driver intervention” (Ryan Randazzo, Arizona Republic, January 13) documented how Google’s driverless autos, which have been tested in Arizona for several months, now need human intervention only every 5,000 miles, and, by using GPS and radar, can assess their environments for 200 yards in each direction.  Still, new problems continue to appear.  In “These Drivers Are Not Crazy – They’re Just Doing the ‘Pittsburgh Left’” (The Wall Street Journal, January 20), James R. Hagerty described that city’s motorists’ custom of letting others turn left in front of them.  While technically illegal it is commonplace there, and is often authorized by drivers waving or blinking lights.  The same practice is also frequent in Boston, and other American areas, such as New Jersey and California with multiple consecutive lane-changes, have their own deviations.  Either laws against these maneuvers will end up being enforced, driverless vehicles will need to anticipate them in some places but not in others, or that light-clash or hand-wave will be officially mandated – something will work.

Given that most people have never seen one in action, it is no surprise that we have “consumers still confused about self-driving cars” (AFP Relax News, January 18).  This early in their implementation, it is not disturbing at all that 72% to 81% of Korean, German, Japanese, and American survey respondents said they didn’t yet trust the things.  More telling, however, is the 68% of people in our country who “said they’d change their opinion once such cars have proven they’re safe.”  Those in one industry, though, understand them much better.  In “Self-driving Cars a Sure Bet – Just Ask Insurance Companies” (Newsmax, January 17), Lee Gruenfeld called their implementation “a slam-dunk certainty,” and cited an insurance executive as saying “the self-driving car is going to eat us alive” and that his or her company had planned on “automobile-related revenues being down by 50 percent at the end of ten years.”  We can take that to the bank, since, as Gruenfeld put it, “if you know any actuaries, you know that these are serious people not given to flights of fancy.”  We may not achieve great oil-consumption savings, as he suggested, but the almost certain precipitous drop in highway deaths is reason enough to agree.

Given that, we can take the idea of making driverless vehicles illegal in my state, to save jobs, as humorous.  Yet, in David Curry’s “Really?  A 50-year ban to self-driving cars in New York?” (Transport, January 17), we learn that the Upstate Transportation Association is trying to do just that.  They have about as much chance of success as this week’s 26 inches of snow has of melting this weekend – and that is a good thing. 

More on this topic next week.

Friday, March 10, 2017

February: Almost Every Jobs Number Improved, Including the AJSN Showing Latent Demand Down to 17.9 Million

This morning’s Bureau of Labor Statistics employment data was superb. 

All 9 of what I consider the front-line BLS statistics were positive.  Nonfarm payroll employment went up 235,000, about 100,000 more than our population increase absorbed.  Seasonally adjusted unemployment was down 0.1% to 4.7%, and the unadjusted one fell 0.2% to 4.9%.  The total number of officially jobless Americans was off 100,000 to 7.5 million, including 1.8 million out for 27 weeks or longer, also down 100,000.  The count of those working part-time for economic reasons, or seeking full-time work while holding on to part-time labor, now 5.7 million, dropped the same amount.  The two measures showing how common it actually is for people to have jobs, the labor force participation rate and the employment-population ratio, after gaining a large 0.2% apiece last month, were each up another 0.1% to reach 63.0% and 60.0% respectively.  Average nonfarm payroll earnings, which had done well recently, were given another positive adjustment, and might have been due for a correction, were up a well-over-inflation 6 cents per hour to $26.09.

The American Job Shortage Number or AJSN, which shows in one non-seasonally-adjusted figure how many more positions could be quickly filled if getting one were as easy as getting a pizza, also improved, as the counts of people in most statuses of marginal attachment improved as well.  Overall, the AJSN fell 448,000, as follows:

Compared with a year before the AJSN is almost 300,000 lower, with almost exactly that amount due to a drop in official unemployment.  Otherwise, the largest changes were in those reporting they wanted to work but did not search for it in the previous year, down 269,000 for a latent demand reduction of 215,200, and in those who fall through the cracks, the non-civilian, institutionalized, and unaccounted for, up almost 1.5 million since February 2016 and thus expectable to absorb about 150,000 more positions. 

There is no doubt about the strength of this data.  February was the best month in years, with its advance unusually broad-based.  The AJSN went along with that, with its large improvement completely meaningful as similar numbers of people usually work in January and February.  The only bad news is that another interest rate hike is now almost certain – however, if it is small, the economy can take it.  As for the turtle, he took another step forward – and even stretched in the process.   

Friday, March 3, 2017

Robots and Jobs: Scary Pizza and Way Beyond

For those who think robots won’t cut many jobs – and we’ll meet a couple of them here – how about “a new pizza delivery truck equipped with 56 ovens and staffed by just one employee, whose only tasks are driving the truck, slicing the pizza, and delivering it to the doorstep”?  Zume Pizza out of Mountain View in Silicon Valley is doing just that, per The Christian Science Monitor on October 2.  And it started in 2016, not 2036.

What views have we heard about robots since then?  Futurist Elon Musk came out for a guaranteed income, not now but eventually (CNBC, November 4), saying that “there is a pretty good chance we end up with a universal basic income, or something like that, due to automation.”  The New York Times also made the distinction between that and globalization, in Claire Cain Miller’s December 21st compendium of workers’ stories “The Long-Term Jobs Killer Is Not China.  It’s Automation.” 

While foreign employees have replaced Americans and will continue to do so, technology is more responsible for work going away.  That correct conclusion of Miller’s was strengthened if not explicitly echoed in “Robots Are Coming to Take Your Job” (Fox Business, December 29, credited to  This investment-focused piece mentioned what is shaping up as one of the most commonly implemented automation areas this year, used by the pizza company above, McDonald’s and Starbucks per this article, and widely publicized this week as soon to arrive at Wendy’s, the use of apps and kiosks instead of counter workers to receive food orders.  It should take no more than a year for companies diligently refining this technology to find that the clear majority of customers, even without phones, will prefer to order this way.

The best thing about “The Robot Revolution Will Be the Quietest One” (Liu Cixin, The New York Times, December 7) was its intriguing title.  Otherwise, we didn’t need Cixin, a nine-time winner of China’s highest science fiction writing award along with a Hugo, to tell us what’s here, even if he said “it’s my duty.”  We already know that “the robot revolution has begun” and that driverless vehicles will replace various jobs, and it is still wrong to say that “car ownership is likely to become nearly obsolete.”  (The people who believe that should take a drive, automated or otherwise, into a truly rural area and see how little traffic there is.)  It wasn’t news even in December that artificial intelligence has great potential but is still almost completely in the future.  Cixin does get points for noting that people not needing to work may have something in common with old-time “aristocrats” who “have often spent their time entertaining and developing their artistic and sporting talents while scrupulously observing elaborate rituals of dress and manners” – that’s a form of futurist Herman Kahn’s idea of quaternary activity, as described in his now 41-year-old The Next 200 Years – but it’s not mentioned enough.

On the other hand, how quickly will these changes occur?  Steve Lohr’s “Robots Will Take Jobs, but Not as Fast as Some Fear, New Report Says” (The New York Times, January 12), concerns an excellent recent McKinsey Global Institute study.  The findings of the research include that “what is technically possible is only one factor in determining how quickly new technology is adopted” (time lag, cost-effectiveness, and high early prices being only three reasons), and that in the “near-term” many more jobs will be changed than eliminated (and in what we might call the medium-term, positions will go away as human workers take the nonautomatable tasks from multiple jobs).  The McKinsey study named “natural language processing” as a great facilitator of employment losses, and said, again correctly, that “the jobs of America’s 1.7 million truck drivers” are not, driverless technology or not, “in imminent peril.”  The article implied, rightly once more, that delayed automation effects should not fool us into thinking they won’t happen, as, eventually, almost all work which can be quantified into algorithms will be endangered.

These conclusions would have been useful in influencing Jay Wacker’s views in a Forbes piece released only six days later, “How Much Will AI” (artificial intelligence) “Decrease The Need For Human Labor?”  Wacker, an “ontology architect,” was asked to comment on the title’s subject, and came up with too much wrong.  Saying that “generally, other professions grow to fill the loss” does not recognize that we know of no major phase of work beyond services.  “Computer, mathematical, engineering, and science occupations” don’t look like a “growth industry,” but rather areas vulnerable to both automation and globalization.  The vast reduction in number of agricultural jobs does not assure the remaining ones.   When robots can’t make up a hotel room, I doubt that “robots and AI will decrease the need for cleaning.”  He also failed to distinguish between jobs rating to go away within the next few years and those almost certain to be lost by, say, the mid-2030’s, which would tell us why driving positions are not yet “imperiled” in the same sense that warehouse workers, which Wacker mentioned in the next sentence, already are.

A February 20th Washington Post editorial, “No, Robots Aren’t Killing the American Dream,” landed somewhere between these two last pieces.  It pointed out that people have been concerned about losing work to automata for centuries, and “that today’s fear of robots is outpacing the actual advance.”  From there, though, the article went into a rather fuzzy advocacy of liberal talking points, in particular unions, “a robust federal minimum wage” (why federal?), and even “legislation to foster child care.”  How these requirements could get jobs to return, or even slow their departure, is beyond me.

We finish with’s February 21 “Bill Gates’s Plan to Deal with Job-Stealing Robots:  Just Tax Them.”  Yes.  But let’s go with what I wrote half a decade ago, that we should factor the number of jobs created or maintained into corporate tax rates, so that, for example, restaurant chains employing hundreds would, all other things being equal, pay much less than law firms with fewer than a dozen.  Yet the image of an automaton, such as my toy John Robot, getting a W2 and paying taxes (would they be charged for Social Security as well?) injects some badly needed humor.  Which, yes, we can use.