Thursday, June 21, 2018

Simple Answers to Perpetual Questions


Why, despite money supply numbers going well up year after year, is there so little inflation?  Because money, instead of circulating, is pooling up in the largest corporations and many individuals.  That is one result of more and more products being scalable, or one copy costing barely more for a million than for one.  That is the same reason that precious metal, and base metal for that matter, prices are going nowhere – it doesn’t matter how much money is out there if it’s going nowhere.

Why are wages not increasing, despite lower and lower unemployment?  Because latent demand for jobs is still way high – per the American Job Shortage Number (AJSN), we could easily fill 15.9 million new positions, if all knew that getting one was as easy as getting a pizza.  That is also why stories claiming that we are on the verge of a worker shortage, what with all the baby boomers retiring and so on, are wrong – two-thirds of the people who would materialize to fill open positions are not officially jobless.

Why is nationwide productivity falling?  Because disappearing work opportunities are now most likely to be at the high end, with many menial positions resistant to both globalization and automation.  Stock market analysis can be done much better by automata than janitorial tasks. 

Why are driverless car crashes precipitating strong negative reactions while the over 30,000 fatal human-caused ones in this country alone are ignored?  Because people are afraid of change, afraid of the unknown, and afraid of gigantic technology shifts.  Those things attract inordinate fear at best and conspiracy theories at worst.  Not to worry, though, as the level of safety that studies show autonomous vehicles will need for reasonably full acceptance – one-fourth the fatal accident rate of human-driven ones – is well within what will be achieved within the next ten years.

Why are Americans still getting jobs in the information technology field?  Because no courageous large company has led the way with hiring far-cheaper Indians or Russians.  When a Google or Microsoft does that, such positions will quickly disappear from the “Best Jobs of 20xx” lists.

Why do so many people support protectionism?  They don’t, but a few key ones in power seem to feel that way.  We will all pay the price, with many more jobs lost due to higher prices than artificially retained by tariffs, and a lower standard of living nationwide.

Why are 3-D printers not making everything in sight?  Because they are too slow for manufacturing, and they are lacking an application most people can use. 
Why have electric cars not become the norm?  Because, even after 50 years of subsidies and development, recharging needs to be done too often and takes too long, and continuous availability, even if most people don’t truly need it, is highly valued.

How long will it be before the next recession?  Good question.

Thursday, June 14, 2018

The BLS Study: Is the Gig Economy Stalling Out?


This week’s jobs-related news featured some surprising and controversial Bureau of Labor Statistics research on non-payroll employment.  First though, a few items on how this section of the workforce does not need to be.

The first was from the April 30th New York Times, as Noam Scheiber told us that the “Gig Economy Business Model” was “Dealt a Blow in California Ruling.”  That’s not correct, unless those employers never need to “follow minimum-wage and overtime laws and to pay workers’ compensation and unemployment insurance and payroll taxes,” even if, as “industry executives” said, that “tends to cost 20 to 30 percent more.”  Boo hoo!  The second gaffe, by Christina Caron in the same publication on June 12th, “Cheesecake Factory Is Found Partly Liable in $4.6 Million Janitor Wage Theft Case,” was a well-known company apparently thinking that hiring workers as contractors would allow them to forget about required breaks and hold them, presumably without pay, until “kitchen managers conducted walk-throughs to review their work.”  Those offenses weren’t mitigated much by the vice president of legal services saying “we take matters of this nature very seriously.”  Then we have the old vinegar-turned wine of multilevel marketing now surprising the Atlantic in the April 2018 “Beware of Selling Yoga Pants on Facebook,” which called that old shell game “the social-media gig economy.”  Repeat after me:  Online auspices do NOT constitute new business models!  And nothing in this paragraph is inherent to this way of earning money.

So, back to the BLS paper.  It said, per Ben Casselman’s June 7th New York Times “How the Gig Economy Is Reshaping Work:  Not So Much,” that “roughly 10 percent of American workers in 2017 were employed in some form of what the government calls “alternative work arrangements,” a broad category including Uber drivers, freelance writers and people employed through temporary-help agencies,” and which “represents a slight decline from 2005,” also a good economic year.

Several people responded to how this result came about.  First was in this same article, with Casselman writing that “separate data released by the Federal Reserve this month” replaced the 10% with “nearly a third,” a finding echoed by “private-sector studies.”  The BLS study, also per Casselman, did not include those with regular-job equivalents employed by outside agencies, or those “selling products online or working erratically as a freelancer.”  He also quoted a former BLS commissioner saying that “we’re not asking the right questions,” and noted that “income-generating activities that people might not consider “work,” like renting out a home on Airbnb,” were not included.  In “What gig economy?  Fewer working as freelancers, contractors than believed” (Paul Davidson, USA Today, June 7th), we got a Staffing Industry Analysts report result that 29% of the American labor force “performed contingent work in 2015,” and news that the BLS data did not include people with “side hustles” as well as conventional jobs.  That exact phrase also turned up in the headline of Daniel B. Kline’s June 10th Motley Fool piece; “Side hustles are changing how people plan for retirement” related how these additional propositions were on the rise, as I predicted six years ago, and usually undertaken to pay off debt.  That’s nothing new – in decades past they were called “second jobs” – but are facilitated, not dictated, by opportunities using modern technology.

John Younger’s June 11th Forbes “The Death Of The Freelance Revolution Is Greatly Exaggerated” made a different point.  It acknowledged the inferior-good nature of most gig assignments, but mentioned an opposite proposition, “lawyers, doctors and other highly skilled professionals” who “earn as much, on average, as standard employees,” even if they tend to get less in benefits, and of whom “nearly eight in 10 say they prefer being an independent contractor to being an employee,” some of which was also cited by Casselman.  There are likely more of these than there were 13 years ago. 

What can we conclude from this study and those writing about it?  Clearly it missed two-thirds of the data it was supposedly trying to capture.  Working on the side is becoming more common, and may be closer to the spirit of the gig economy than being employed full-time, temporarily, while seeking a W-2 position.  To conclude that fewer, not more, people are earning money through these modern-setting temporary-help propositions, we need more of a breakdown.  And when, not if, the next recession hits, we will all be able to see the value, for many, the gig economy truly has.  

Friday, June 8, 2018

Artificial Intelligence: Our Choices - II


As described in my May 25th post, the development and implementation of artificial intelligence (AI) is growing, expected to be massive, and is bringing numerous old and new issues to the forefront.  What ten observations, attitudes, and adjustments would serve us best?

First, AI evolution will be a process of discovery about us and the world.  What do human beings really want?  Do we truly make decisions of our own volition?  Do we ultimately want more than our own comfort and enjoyment?  If we discover that all objective knowledge stems from algorithms, what will that eventually mean to us?  These questions and many more may someday be answered by progress in this field.

Second, while autonomous vehicles represent the largest single change we anticipate facing in the 21st century, their technology is only a subset of AI, which is like a massive computer system with driverless cars only one of its applications.

Third, accordingly, AI, itself, presents a multicentury-level challenge.  Its significance is hard to overestimate.

Fourth, because of data mining discoveries, some of our core values and wishes, such as the inherent equality of groups of people, may get the most serious nonideological challenges they ever have, and may even be essentially proven false.  If such happens, after and during a long time of denial, large sections of our belief systems will be overturned.  We need to prepare for that. 

Fifth, AI may seem brilliant, but as with other computer applications it is intrinsically totally stupid.  It has no common sense and no idea of what it is doing.  The ancient data processing law of garbage in, garbage out applies with AI as much as it ever has, with bad assumptions or instructions capable of causing totally false conclusions. 

Sixth, while we can debate the dangers of research into artificial general intelligence, it is wrong to try to suppress progress on the narrow version.  As its scope is limited, it will serve us without threatening to take over.

Seventh, we need to avoid hating or attributing conspiracies to AI simply because it is major change.

Eighth, we must think flexibly about AI, and deal with its problems using logic instead of ideology.  It will leave neither conservative nor liberal philosophies unscathed, so we, as individuals as well as collectively, need to consider the values of both sides when assessing and dealing with it.

Ninth, the potential AI-caused mass employment-opportunity elimination means we need to start discussing possible jobs-crisis solutions.  We’re seeing that now with guaranteed basic income, but need more there, along with more serious debate on assured government employment, payments for online content contribution, shorter working hours, and a more widespread use of ad hoc or “gig” jobs.  True, these are mainly solutions for future problems, but we may need one or more of these as soon as the 2020s.

Tenth, on the nonpolitical issue of dealing with artificial intelligence, we need to remember we are Americans and work with those of other backgrounds and beliefs.  For once.  Yet again, our choice is between living together as brothers and perishing together as fools.

Friday, June 1, 2018

May Was Another Fine Employment Month, Though the AJSN Gained 135,000 – We’re Now Short 15.9 Million Jobs


The strength of several, maybe most, of the past year’s Bureau of Labor Statistics Employment Situation Summaries has been debatable.  This morning’s, though, was not.

It started with an official adjusted unemployment rate down again, this time to 3.8%, an 18-year low.  It continued with a drop from 6.3 million to 6.1 million jobless, a 100,000 cut in the number of long-term unemployed (out 27 weeks or longer) to 1.2 million, and a similar decline in those working part-time for economic reasons, or keeping less than full-time work while thus far unsuccessfully seeking that, to 4.9 million.  Even the average private nonfarm payroll wage got in the act by gaining 8 cents per hour, more than inflation, to $26.92.  The unadjusted unemployment rate fell once more, to 3.6%.  The only loser was the labor force participation rate, off 0.1% to 62.7%, offset by the employment-population ratio’s same-amount gain to 60.4%. 

It may seem strange, then, that the American Job Shortage Number or AJSN, the one-figure measure of latent employment demand, increased, in this case 135,000, as follows:


The reason for the gain, though, is easy to understand.  The count of those claiming no interest in working often falls back during strong employment times, and from April it lost almost a million.  The missing people who did not find jobs moved into statuses with higher latent demand rates, most likely not looking for a year or more and temporarily unavailable to take a position.  Gains in those two categories affected the AJSN more than the reduction in unemployment, which, followed by the 5% share of those not wanting work, subtracted the most from the metric. 

Compared with May 2017, the AJSN is down about 800,000.  Almost all of that is from the official jobless drop, with decreases in the sum of those not looking for a year or more and those in institutions, in the services, and off the grid also contributing improvements of over 100,000.  Only the best estimate of the number of American expatriates, up 700,000 over the May-to-May year, raised the AJSN a comparable amount.

As before, there can be little argument that May was a strong American employment month.  What we need to stay aware of, though, is, that with only 32.5% of the AJSN’s value coming from those officially jobless, the first month since before the Great Recession in which it was less than one-third, the massive majority of people likeliest to start working again are not in that category.  Otherwise, the turtle took a solid step forward. 

Thursday, May 24, 2018

Artificial Intelligence: Our Choices - I


In some ways, this is an old topic.  At least as far back as the 1960s, many people have been concerned that computers, robots, and other technology manifestations have potential to do more harm than good.  It’s now 50 years since the cutting-edge machine HAL was graphically and effectively portrayed in 2001:  A Space Odyssey, killing a crew member to follow its highest-priority directive of mission success, and 34 since The Terminator reinforced the dangers of what one of its characters accurately called “autonomous goal-seeking programs.”  Since then it has crept into the mainstream, with products such as Amazon Echo Show and Google Home, taking over small household tasks for millions, constituting large jumps in the past year.  Sixty-five-million-people Great Britain has a chance, per Jeremy Kahn in the October 14th Bloomberg.com, to add the equivalent of $837 billion to its economy with it over the next 17 years, and the potential in the United States is far higher. 

Even more than with driverless vehicle technology, artificial intelligence has attracted efforts to regulate and limit it.  As Andrew Burt put it in “Leave A.I. Alone” (The New York Times, January 4th), “December was a big month for advocates of regulating artificial intelligence,” with local and national bills setting the stage for its control.  Yet such governing has not actually happened.  The best sources now on how we should deal with it are the commentators.  Here are two.

The March 31st Economist titled a 12-page “special report” “GrAIt Expectations,” which started with the observation that “artificial intelligence is spreading beyond the technology sector, with big consequences for companies, workers and consumers.”  It touched on data mining, a perfect application for this technology as while it seems intense it is truly only computational, but, in only the second body-text paragraph, jumped the rails by naming a consulting company, Accenture, using it to “pick the best candidates,” something no machine, or human for that matter, can consistently do.  I liked better the section’s supply-chain-progress heading “In algorithms we trust,” which is still what artificial intelligence is all about, even if modern-day computing power can do such things as determine optimal multi-stop routes, for which, with 25 locations to visit, there are 15 septillion possibilities, and replace human customer service representatives with automata in many ways better.  The set of articles touched on a rapidly brewing artificial-intelligence controversy, or what we will do with information such as identifying sexual orientation, detecting unusual opinions, and potentially determining that members of certain groups may be, in general, less suited for specific employment or financial treatment.  It was relatively easy for medical scientists to disregard Nazi-experiment findings, since they were less valuable, but if the latest and most powerful data mining resource were to “determine,” for example, that even when controlling for income, family background, credentials, and every other variable it can find, blacks are less successful at engineering jobs, we would have hard decisions to make.

The second piece is Tad Friend’s May 8th New Yorker “How Frightened Should We Be of A.I.?”.  In this remarkably stunning and comprehensive piece, Friend started with the difference between “artificial narrow intelligence,” which harmlessly powers everything from Roombas to refrigerators, and “artificial general intelligence,” the potential 2001 or Terminator-style version, with prospects alarming even to the likes of Elon Musk, Stephen Hawking, and Alan Turing.  The strictly algorithmic nature of artificial narrow intelligence, limited or not, has shown that intuition, long believed to be necessary for success in Go, is at least sometimes computational and therefore within the range of computers, including the one that beat a major champion at that game two years ago. 

That intuition finding puts one thing into doubt.  That is the expectation that many tasks will always require live people.  Friend cited computer scientist Larry Tesler as saying that “human intelligence “is whatever machines haven’t done yet.””  As an atheist might say that religion as commonly practiced fills in only current gaps, that with today’s knowledge people no longer think that God moves planets, it could be that only our failure to understand how to reduce all human abilities to if-A-then-B thinking is stopping us from seeing that artificial intelligence can someday handle anything.  Indeed, computers are already, per Friend’s citations and examples, passing the Turing test by writing in the style of petulant 13-year-olds and otherwise pretending to vary from the linear sequences we expect of them.

Three classic philosophic issues come forth as well in Friend’s article.  The presence or absence of free will, or people choosing their actions themselves, may be solved by further artificial intelligence achievements.  The same is true of the differences between feelings and logical thoughts.  The question of whether we would want to make our planet “into a highly enriched zoo environment that’s really fun for humans to live in” may thus force itself on us.  There is much more here, and I recommend anyone with interest in these topics to read it – it is at  https://www.newyorker.com/magazine/2018/05/14/how-frightened-should-we-be-of-ai .

After a one-week break for the latest employment situation, I will continue this topic on June 8th with artificial-intelligence-related observations for employers, employees, and the rest of us. 

Friday, May 11, 2018

Robots and Guaranteed Income – Two Halves of a Puzzle?


Here are two strongly jobs-related topics on which I have written over 10,000 words.  We know by now that robots and other mechanical systems are continuing, irregularly, to replace human employees across a wide spectrum.  We also know that universal basic income, if we consider the issues of incentive to work (which I think is both illusory and not a problem anyway) and how to pay for it (much but hardly all would come from ending existing social programs such as food stamps) to be nonfatal, is one of the few conceivable solutions to the long-term jobs crisis.  As we will see, these areas are connected. 

Although it is silly to maintain that robots will create more jobs than they cost, there are some real opportunities.  Per Mike Duffy, Keystone Automation founder and CEO, as quoted in Dave Gardner’s “Trends in Technology: Robotics” in the July 2017 Northeast Pennsylvania Business Journal, implementation of automata is more important in many business areas than its development, requires more skill than most of the positions it will replace, and now there is a shortage in industrial automation graduates.  Most of the time I consider highly specialized bachelor’s degrees too risky, as they leave their holders poorly placed if they cannot find employment in their tiny fields, but robotics is guaranteed to be strong for many decades to come.  Despite a steady flow of career recommendations for software development, I rate physical automation opportunities more long-lasting, as they must be implemented and maintained locally.  If this is not now one of the hottest four-year and two-year majors, it should be.

Something I like less, though, Pedro Nicolaci da Costa advocated in the July 15th Business Insider “A solution to job-stealing robots is staring us right in the face.”  Getting retrained is a good move for many individuals, but it’s not an overall solution, as it only tends to change who gets hired and who does not.  Another positive view turned up in “Can robots help the U.S. get its economic mojo back?” in TechCrunch on September 4th, as Steve Cousins correctly stated that automata help overall prosperity but oversold it by crediting China’s world-leading robot spending for its unsurpassed national affluence rise, which came first. 

The next month, though, we began to see the direct connection between the two subjects.  In Fast Company’s October 10th “Robot Taxes Are A Good Idea As Long As The End Goal Is Basic Income,” Ben Schiller considered using the first, actually advocated by Bill Gates, to pay for the second.  Schiller wrote that two economists were advocating “taxing the purchase of equipment that replaces routine work” so governments could “transfer “a certain amount to all the agents in the economy, regardless of their occupation or income.”” 

It was only one day later that www.resilience.org published a paper titled “How to Fund a Universal Basic Income Without Increasing Taxes or Inflation.”  The piece cited an Oxford study projecting that “there was a 50 percent chance of (artificial intelligence) outperforming humans in all tasks within 45 years,” and that “all human jobs were expected to be automated in 120 years.”  Further research cited here suggested that guaranteed income of $1,000 per month to each American adult, the exact proposal I made in 2012’s Work’s New Age, “would add $2.5 trillion to the US economy in eight years,” and that a true universal basic income would not “encourage laziness,” a point also in that book.  With so much money pooling up I can’t agree that its movement will help prosperity as much as in times past, but we may indeed be closer to covering payments to everyone than we had thought. 

While I agree that “The Universal Basic Income Is An Idea Whose Time Has Not Come,” (J. David Patterson, The Federalist, October 20), we need to be exploring and testing it.  And indeed we are doing some of that.  Per Frances Coppola in Forbes on October 15th, “The IMF Gives a Cautious Welcome to Universal Basic Income,” a decision influenced by reduced money movement as above and countries’ differences in “transfer systems” or safety nets.  As Coppola perceptively pointed out, such programs could be especially effective in “oil-exporting developing countries,” and whether you consider, for example, Qatar to be developed or developing, there are several like it that could probably pay for such a scheme right now.

Three places have made the news with what they called pilot guaranteed income efforts, but two weren’t.  The city of Hamilton, Ontario, the subject of “Canada tests ‘basic income’ effect on poverty amid lost jobs” (Fox News, November 29th), is now giving the equivalent of $13,000 to single people and $19,000 for married couples with incomes below $26,000, with amounts reduced for work earnings.  That may or may not be a valid unemployment and welfare arrangement, but it is not universal basic income.  Peter Goodman told us on April 24th in The New York Times that “Finland Has Second Thoughts about Giving Free Money to Jobless People,” and is ending its program, which was not, as Goodman put it, an “experiment with so-called universal basic income,” but the same sort of “free money” Americans in any state get if and only if they lose their jobs.  The real McCoy, in Stockton, was the one Chris Weller described in the October 18th Business Insider’s “A California city is launching the first US experiment in basic income – and residents will get $6,000 a year.”  It’s not nearly enough for them to live on alone, but the program will benefit “a select group of residents” for three years.  We’ll watch this one.

We bring automata back with a story about exactly the sort of quixotic 2020 presidential candidate we need to hear from.  In The New York Times on February 11th, Kevin Roose told us about businessman Andrew Yang, in “His 2020 Slogan:  Beware of Robots.”  Yang expected serious social unrest from both robots and driverless cars, and proposed as a solution what he called a “Freedom Dividend,” or “a monthly check for $1,000 that would be sent to every American from age 18 to 64, regardless of income or employment status.”  In other words, a true guaranteed income.  Look for Yang to influence other candidates, as neither of these issues will go away soon. 

Next week, I will be a long way away and not posting.  I will return on May 25th with commentary and a recap on another issue that won't go away soon - artificial intelligence.  

Friday, May 4, 2018

April: Another Good Jobs-Data Month, as AJSN Drops Another Half-Million to Show We’re Now 15,800,000 Jobs Short


Once again, the American employment situation improved, though not in the ways we expected.

Again we didn’t make the projected increase in net new nonfarm payroll positions.  It was 204,000, and we missed that by 40,000.  But, once more, the other numbers more than compensated.

The big news was the headline seasonally adjusted unemployment rate ending its six-month stay at 4.1% in the good direction.  Its current 3.9% is the lowest it has been since December 2000, and came with a 300,000 cut in the number of officially jobless people, to 6.3 million.  The unadjusted rate also reached a long-term low at 3.7%, the difference showing that April is an above average month for jobs.

The worst of this morning’s readings were in the labor force participation rate and employment-population ratio.  These measures of how common it is for Americans to be working went down, falling 0.1% apiece to 62.8% and 60.3% respectively.  Although both greatly improved earlier this year, these have now given back about half of that gain, a seemingly unusual result given unemployment’s drop.  The count of the long-term jobless, those without work for 27 weeks or longer, stayed the same at 1.3 million, as did the number of people working part-time for economic reasons, or holding on to short-hours propositions while unsuccessfully seeking full-length ones, still at 5.0 million. 
The American Job Shortage Number or AJSN, which shows in one figure how many new positions could be filled if all new that getting one were as easy as ordering a pizza, also improved more than the season would indicate (the AJSN is unadjusted), down 492,000 from March as follows:






The nature of the drop, though, tells us why the two percentage indicators of working-likelihood worsened.  While latent demand from officially jobless people fell 665,000, over a quarter of that was offset by a 238,000 rise in the number wanting employment but not looking for it for a year or more.  There were also increases in the counts of those currently and temporarily unavailable and those claiming no interest in jobs, though the discouraged category fell more than 10%. 

Compared with a year before, the AJSN is down just over 800,000, with over two-thirds of that difference coming from reduced official unemployment and the rest more or less from an annual cut, despite this month’s worsening, in those wishing to work but not trying for 12 months or longer. 

The monthly AJSN decrease, and more so the annual one, is another outcome in support of the interpretation, accurate I believe, that our employment situation is still improving.  Jobs growth is only sitting around the 130,000-140,000 needed to cover our population increase, but with other numbers tending to improve, even with their advances in the past few years, that is good enough.  Once again, the turtle took a small but significant step forward.    

Friday, April 27, 2018

Driverless Cars – A Wider Windshield – II


Autonomous vehicle progress, which was cruising along at highway speeds, hit a bump on March 18th, when a self-driving Uber hit and killed a Tempe, Arizona pedestrian.  Although media and public reactions were swift and severe, the mishap was not routine – per “Arizona Tragedy Will Not Slow Autonomous Vehicles” (Jon Markman, Forbes, April 24th), a police investigation “showed no fault by Uber,” and that the victim “emerged abruptly from shadows behind a dimly lit center median” and then “pushed a bicycle laden with plastic bags into oncoming traffic.”  It was, though, as Daisuke Wakabayashi fairly put it in “Self-Driving Uber Car Kills Pedestrian in Arizona, Where Robots Roam” in the March 19th New York Times, “the first pedestrian death associated with self-driving technology” and “was a reminder that self-driving technology is still in the experimental stage.” 

Along with overreactions, stories such as “Uber’s Self-Driving Cars Were Struggling Before Arizona Crash” (also Wakabayashi in the Times, March 23rd) implied that the tragedy was not a general driverless problem but more likely inherent to that company, which over the past two years has shown irresponsibility in a variety of other areas and in the autonomous realm was having its drivers “being asked to do more” such as, unlike those working for others, “going on solo runs.”  Uber was also averaging 13 miles “before the driver had to take control from the computer to steer it out of trouble,” compared with Waymo’s “nearly 5,600.”  As well, according to “Uber Clarifies Autonomous Vehicles’ Biggest Problem” (The Motley Fool in Fox Business, March 23rd), “consumer advocacy group Consumer Watchdog” stated that “Uber simply cannot be trusted to use public roads as private laboratories without meaningful safety standards and regulations.” The headline of Alan Ohnsman’s March 24th Forbes “Waymo CEO On Uber Crash:  Our Self-Driving Car Would Have Avoided Pedestrian” gave one intra-industry reaction, which I am inclined to believe.  We may never know all the circumstances, but the company in charge seems uncoincidental. 

Even without the Uber connection, the state of the field was well summarized by Andrew Krok in CNET’s Road Show, as described by the story’s headline, “Fatal Uber crash in Arizona is autonomy’s Apollo 1 moment,” and its ending of “how the developers of autonomous vehicles act from here on out will make or break the idea of this happening anytime remotely soon.  Let’s make sure we still get to the moon.”  Kevin Roose, in “The Self-Driving Car Industry’s Biggest Turning Point Yet” in the March 30th New York Times, said that his driverless rides had varied from “calm and boring” to “terrifying white-knuckle,” that they are now heterogeneous in safety, and that “as Uber’s autonomous driving program stalls out,” Waymo’s “is shifting into overdrive.”

I end with another Motley Fool effort, Chris Neiger’s April 13th “How to Make Money in Self-Driving Cars.”  That now seems easier to assess in this industry headed for, per an Intel estimate, “a new “passenger economy” that will be worth $7 trillion by 2050,” but, in what became a gigantic market the last time around, the likes of Stutz and Hupmobile once looked strong.  Neiger echoed Roose by saying “at this point there’s likely no stopping driverless cars from becoming a major part of our transportation industry in the coming decades,” and recommended Waymo parent company Alphabet and car-computer-maker NVIDIA, with consideration also for General Motors, Ford, and Tesla and overall guidance that “investors who are looking to benefit from the autonomous vehicle market may want to consider hitching a ride now.”  The technology is marching on, and, as has been the case for since at least the beginning of last year, whether we like it or not we must join it, work with it, and make sure our financial assets reflect this reality.  Those choices will serve us best.

Friday, April 20, 2018

Driverless Cars – A Wider Windshield – I


It’s now been a hair under four months since I concluded months of reporting on autonomous vehicles with ten central ideas.  Those points are still valid, but since then there has been plenty of progress and news both good and bad.  Unless you want to grant that to artificial intelligence in general, this field remains at the forefront of technological growth, and will have a massive and progressive effect on employment in America and the world.

There continues to be an outpouring of news – technical progress here and there, regulatory changes, companies appearing and then either staying in the public eye or vanishing from it, lawsuits, sincere or other publicizing of future milestones, and a wide range of speculations and projections.  I could easily fill a post every week with those.  I will, instead, focus instead on the largest events, ideas I haven’t documented before or those worthy of more emphasis, and a broader look at how this transformation will affect us.  Here, then, is what since December 22nd fits.

We have already got used to free online services paid for by advertisers, so how about rides the same way?  The Atlantic explored that possibility, in December’s “Driverless Cars Could Make Transportation Free for Everyone – With a Catch.”  The unbilled authors suggest that people could routinely take self-driving vehicles that also stopped at “thoughtfully targeted” sponsoring places, using information gathered from virtual assistants and other electronic sources, as well as the likes of Starbucks and McDonalds, and might “drive slowly past featured properties for sale.”  Some would be disturbed by the use of personal data, but many others would like the lack of fares more, so such services would get plenty of customers, who would eventually dictate the proper level of privacy invasion through accepting or refusing such rides.  This service seems highly likely to be offered.

January had good driverless news in the form of a successful Consumer Electronics Show.  Although few ideas presented there had not been leaked or publicized, the Las Vegas convention gave attendees a chance to see them in person.  Some highlights, per Will Nicol’s “At CES 2018, autonomous cars took the wheel and drove into the future” (Yahoo News, January 11th), were Toyota’s e-Palette “big and largely empty” concept vehicle usable for anything from deliveries to mini-stores, Nvidia’s dedicated Drive Xavier processor, and, provided by Lyft and Aptiv, actual rides in self-driving vehicles, which the participants called, reassuringly enough, “remarkably ordinary.”  If the CES were open to the public, it would have hundreds of thousands of attendees. 

Finally, for this week, The Economist dedicated much of its March 3rd issue to autonomous technology.  Its front article, “Who is beyond the wheel?,” touched on several things.  For one, “AVs are on the threshold of being able to drive, without human supervision, within limited and carefully mapped areas.”  The piece correctly noted that car ownership would drop mainly in urban areas, and that its effects would probably include reduced traffic, cities changed by greater acceptance of long commutes, retailing when “shops can come to you,” easy entrée to “dynamic road-tolling and congestion charging,” and subsidized travel to chosen destinations.  Most importantly, the article discussed ways in which driverless vehicles documenting their passengers and trips “could also become a powerful means of social control,” in doing and acting on the likes of Uber’s identification of one-night stands and restriction of movement through refusing to go to certain places either in general or with specific riders. 

The remaining Economist stories were in a twelve-page Special Report, “Reinventing wheels.”  The section started with a recap of now-standard observations, such as changes in car ownership, the connection between driverless and electric vehicles, the need to deal with local as well as general driving rules and customs, their accessibility to children and the substance-impaired as well as those in wheelchairs, their broad-based and unexpected effects, and a brief technological wrap-up.  Author Tom Standage projected that they would not be available for private purchase until about 2028, but would be in fleets far before then, and would cause the number of urban vehicles, worldwide, to drop from one billion in 2015 to half that by 2035.  He pointed out that they could be integrated with public transportation by waiting at railway stations to take people home, and could facilitate a 50% reduction in, also, “the area of paved surface.”  In another piece, Standage quoted a Mobileye spokesman as suggesting that American road deaths could be cut from 40,000 per year to 40, and considered some extra consequences, such as fewer organ donations, and, as half of cigarettes are sold at gas stations, a further drop in smoking.  He said, about a situation already in progress, that “if cars are no longer symbols of independence and self-definition for the young,” something yet unidentified will need to replace them.  As our modern meatmobiles did with horse carriages, he noted, the move to driverless will greatly increase prosperity but at the cost of some freedoms.  That is the way modern history has been headed, and will continue to move. 

Next week, another look at the Arizona pedestrian death, along with what has happened in the driverless world since then. 


Friday, April 13, 2018

Scattered Views, Reactions, Observations, and Discontents


Here is my file of odds and ends, for your consideration, agreement, disagreement, or just plain thought provocation.

One problem with reading too much into the extremely broad statistic that women earn, on overall average, less than what men do is that those who are fully willing to sacrifice their comfort, child-raising and family time, and general work-life balance are unaware of how many of their sex are not.  Simple arithmetic will tell you that if 40% of women are choosing careers which pay half as much as comparably educated mens’, the others averaging the full 100% gets us to our current 80%, with no room at all needed for the effects of real or imagined discrimination.

Economic protectionism is idiocy.  It benefits a few at the expense of everyone else.

Businesses should stop carping about not finding enough good workers and pay more, train more, and remove some of their disqualifying factors, such as off-hours recreational drug use and certain criminal records.  Then, with over 16 million Americans wanting to work but not doing that, they’ll find them.

Drug testing for welfare and food stamp recipients is not only a mean-spirited idea but a stupid one.  The cost of such tests could more than offset any so-called savings, and would we really want to stop our countrypeople from eating or surviving?  Not to mention that marijuana is 10 years, 20 tops, from full national legalization.

Both conservatives and liberals use straw-man arguments, in which they tell us about the most extreme proposals from the other side and imply that all of their political opponents think that way.  The advantage, though, is that we now have good sources for learning about such ideas:  for liberal ones, on Fox News; for conservative ones, on The New York Times and The Washington Post.

There is gun control, there has always been gun control, and some gun control has never had opposition.  If you doubt that, try installing a howitzer on your front yard.  After that, where do you draw the line and why?

True conservatives now have no political party.  Donald Trump is not truly conservative, and Republican encouragement of deficit spending means their legislators aren’t either.  Do they need one?  Will they create one?

The problem with paying teachers more is not the work they do or the value they have – it is simple supply and demand.  Most states have far more certified teachers than jobs for them, and our country has millions more who would be effective without that credential.  Doubling their pay would, at least, quadruple the number of applicants, a disproportionate share of whom would be men – so much for helping women in that way.

There is nothing wrong with Fox News’s material.  There is everything wrong with what they select to report.  Broadcast news, which caters to the tastes of viewers and listeners, remains entertainment first.

I still don’t understand why the great bulk of Americans have slates of opinions, instead of choosing them individually.  For example, I see no objective reason why most people wanting gun rights, which perforce include accepting more violence, are against abortion rights, which do the same.  Is it that people don’t want to make the hard choices of what to stand for, or have they thought little about what they think?

Symbolism is a powerful force in politics today, which may not be anything new.  Say “Jane Fonda” to conservatives, or the erroneous phrase “mass incarceration” to liberals, and you get quick unstudied reactions.  As with slates of opinions, it’s just too easy not to think.

Over the past two years, political hypocrisy has become so common I just ignore it.  I hope I, and we, don’t soon do the same thing with politicians’ lying. 

One reason I left the United States, nine years ago, was that people here too rarely want to learn.  I think that’s still true.  Maybe there’s something about having access to more information on our desktops than the Library of Congress had two generations ago that stops us from wanting to understand.  For that reason, it’s long been a cliché that people don’t want to be confused by the facts, and that’s looking like a permanent situation.

There’s one thing to be grateful about, though.  Our president does not seem competent enough to be an effective dictator.  Otherwise, we as a nation have plenty of problems, so, in all, let’s hope that our decade doesn’t turn out like the last 10’s, about which Bill James said “Lord, it was an awful time, and then the war started.” 

There you go.  I feel better now.


Friday, April 6, 2018

Another Decent Employment Month, and AJSN Reports Half-Million Drop in Latent Work Demand to 16.3 Million

This time, we didn’t make the projections.  Observers closer than I predicted over 180,000 net new nonfarm American positions for March, and it turned out to be 103,000, below the 135,000 we need to cover population increase.  So how good a month, overall, did it end up?

The seasonally adjusted number of unemployed Americans fell 100,000 to 6.6 million, with the actual count just more than that, at 6,671,000, befitting the move from generally poor-employment February to averageish March.  Adjusted joblessness stayed yet again at 4.1%, with the unadjusted rate falling from 4.4% to that same figure.  The number of long-term unemployed, out for 27 weeks or longer and still officially jobless, fell 100,000 to 1.3 million, and the tally of those working part-time for economic reasons, or seeking a full-time opportunity unsuccessfully thus far, dropped 200,000 to reach 5.0 million.  The two best measures of how common it is for Americans to have jobs, the employment-population ratio and the labor force participation rate, held and almost held last time’s 0.3% improvements, ending at the same 60.4% and down 0.1% to 62.9% respectively.  Average nonfarm payroll earnings were up 7 cents per hour, a tad more than inflation, to $26.82.

The American Job Shortage Number or AJSN, which tells in one number how many more positions could be easily filled if it were common knowledge that they were available, improved substantially but mostly seasonally to 16.3 million, as follows:



Noteworthy AJSN component changes were unemployment, unadjusted as are all the metric’s inputs, down over 400,000 for a 378,000 net effect, an almost 200,000 fall in the count of those who did not look for 12 months or longer which cut the AJSN by 156,000, and a 77,000 rise in those reporting as discouraged adding a net total of 69,000.  The number claiming no interest in working gained almost 500,000, but, at only 5% of them presumed to work if opportunities were truly plentiful, nudged the AJSN up less than 24,000.

Compared with a year before, the statistic showed that we are still improving beyond simple low unemployment.  It is now 933,000 lower than March 2017, with only 551,000 from reduced official joblessness but almost 400,000 from the half-million improvement in those wanting work but not looking for it over the past year.  That is impressive. 

So how, overall, did we do?  The net new jobs number, though the 90th consecutive nominal gain, was disappointing, but the other figures were generally good.  There easily could have been more fallback after February’s stellar performance.  As a result, it wasn’t large, but I did see the turtle step forward once again.

Friday, March 30, 2018

Accommodating Millennials and the iGen at Work: Some Emerging Ideas, and Some That Shouldn’t Still Be


Millennials, which the Pew Research Center defines as being born between 1981 and 1996, are now from 21 to 38 years old, making up almost perfectly the youngest half or third of American workers.  It also means that most are hardly new to workplaces.  Yet, somehow, articles keep coming out on how to get the best from them and their companies.  Here are two.

The oldest is Mark Hall’s November 8th Forbes “What The Ideal Workplace Of The Future Looks Like, According To Millennials.”  This effort offers only bits and pieces, using a broad brush more suitable for assessing a generation barely understood than for people on the job for over a decade already.  Perhaps “by 2025, roughly 75% of the global workforce will be millennials,” but not in this country, where the population pyramid looks like a Jenga stack.  Hall reported that three-fourths of this cohort “thinks that a “work from home” or “work remotely” policy is important,” as if that distinguishes them from others, and that they rather unsurprisingly “prefer communicating electronically at work.”  More worthwhile was his thought that virtual reality has more current appeal than videoconferencing did decades ago, when no matter how good the technology it still felt like a telephone call, and airline bookings for conferences continued to increase.  Yet we aren’t exactly on page 1 of this book.

The newer one was “Why Businesses Need to Work to Retain the Next-Gen Workforce,” from William Craig, on January 16th and also in Forbes.  After tipping his hat to the Winning by Default Years (“There was a span of several decades in America when job creators could take employee loyalty and retention for granted”), he used “next-gen” synonymously for millennials, and pointed out that they “already are, actually” “tak(ing) the economic reins in a pretty big way.”  He fell into the skills-gap trap, but partially redeemed that by saying, right afterwards, that “simultaneously, it’s not uncommon to hear young people complain about the lack of decent jobs.”  He mentioned the desirable-to-millennials workplace attribute of having a “pro-social context,” that they often “begin job searches on company websites themselves” meaning that “they want your culture to impress them” (italics his), that they “are inquisitive and eager to learn,” and are “way past rigorously regimented company structures and immutable job descriptions.”  A worthwhile summary, but hardly breaking information.

A third article, “The workforce of the future is already here: are you ready?”, published on March 9th in CIO, took one more shot at generational workplace evolution, but was targeted toward employees instead of employers.  We need to be aware that “emerging technologies like IoT, AI and machine learning” are not only making headlines but “seeing rapid adoption” in cubicle jobs, even if their connections with “big data analysis and the cloud” should surprise no one.  The piece is geared more to the future than the present, focusing on changes taking place “as more young generations join the workforce as digital natives,” which referred to the iGen, those born after 1996, instead of millennials.  It touched on the issues of robots replacing human workers, and that “human beings adapt” (even if they may not be hired),  but took pitfalls on “fewer than 5 percent of occupations today can be entirely automated by existing technology” (when the human-needing job tasks can be consolidated into smaller numbers of new positions), and the idea that “engineering and artificial intelligence” will provide “massive potential for job gains” (if headcount could not be cut overall, they wouldn’t bother automating).  The need to “commit to lifelong learning” is not news, and “staying intellectually curious, confident in your skillset and willing to stay informed on new emerging trends,” while a good idea, is not by itself enough to “help ensure that your future stays bright, regardless of what 2030 looks like.”  Still, the unbilled author gets points for providing a good synopsis, whether intended as that or not.

Perhaps I have been too critical of these pieces, as what we might call “generation lag” has been happening for decades.  Into the 1980s people wrote as if masses of young men were still growing long hair, saying countercultural things, and protesting wars.  One author about ten years ago wrote as if Generation X, then a minimum of 28 years old, was just arriving in the workplace.  And all too many have conflated the 1960s and 1970s.  Yet we should be more careful about running generations together.  It is tempting to think of younger people as being in one solid group, but we should consciously avoid that.  It is also easy, as we get older, to fail to realize how much time has passed, and that what seemed like a new generation yesterday isn’t anymore.  The average millennial, using the definition above, is now 29, older than my father, who served in World War II, was in 1955.  If we are still searching to understand what those in established generations are likely to want, then we, whatever it is, are doing something wrong. 

Friday, March 23, 2018

Uber, Lyft, The Gig Economy, The Sharing Economy, and Work at Less Than Minimum Wage – II

Where are we now with all five of these things?

First, time out to address Uber’s recent self-driving pedestrian fatality.  It is no shock that this sort of thing can happen with the current state of driverless technology.  Three things are almost certain to take place:  the developers will research and determine exactly what happened, they will explain it in all the detail we want, and they will solve the problem.  We should expect no long-term slowdown.      

Now, on to some general points.

First, the gig economy, which refers to people getting one-off work assignments, is not the same as the sharing economy, in which provision of resources, such as bedrooms, cars, and power tools, is primary.   

Second, online payment and customer engagement does not make the products offered by Uber, Lyft, and AirBnB distinct.  They are de facto taxi and lodging providers and should be subject to the same regulation as others.

Third, because of low rates of pay, which can drop even more when pertinent expenses are included, gigs are, as Steve Tobak of Fox Business put it, “no substitute for a career.”    

Fourth, poorly accounted-for expenses, especially involving private vehicles, often make either gig or sharing opportunities less profitable or even unprofitable than they may seem.   

Fifth, even though most gigs and sharing are economically inferior, their effect in partially repealing the minimum wage is a good thing, and it is wrong to object to them on grounds that they should pay more, which, given that we are still over 16 million jobs short as well as having 5.2 million people working part-time and wanting but not finding full-time positions, is only another way of saying “let them eat cake.”

Sixth, Uber’s business model is clearly dependent not only on its drivers not comprehending the true impact of their car expenses but on skirting or avoiding normal taxi regulations.  Its only long-term hope for survival, except for a top-to-bottom management and business-practices makeover, is through driverless technology, which, as above last week, also took a hit.

So what do we need to know?

Customers will do well to continue, as their needs and wishes dictate, using gig and sharing services.  There is nothing immoral about hiring people or their possessions for low rates.

Investors should stay clear of Uber, which could crash as a company and a stock at any time.  If and when they have initial public offerings, Lyft and AirBnB may offer some opportunity, depending on their environments at the time. 

Workers should look at the full weighted costs of participating in gig or sharing opportunities before accepting them, and continue if they think, given all hidden expenses, they are worthwhile.  

AirBnB’s management would do well to work out official agreements with their largest locations, and otherwise adhere to laws as they are, otherwise their company will have no future.  Lyft and Uber managers should continue to emphasize self-driving technology, and work to consistently stay within legal and ethical boundaries.  And, maybe more than anything else, anyone working for these three companies should maintain current résumés.    

Friday, March 16, 2018

Uber, Lyft, The Gig Economy, The Sharing Economy, and Work at Less Than Minimum Wage – I


It’s been about two years since I started writing about what were then two newly-named forms of work.  Since “the gig economy” started turning up on headlines, it, and its twin “the sharing economy,” have progressed, largely in ways my April 2016 post projected.  

I won’t recap what has happened with these new or not-really-new ways of earning money before my last, September 15th, pertinent post.  I’ll do some of that next week.  For now, I will get you caught up on developments since then.

That same day, Mike Isaac and Katie Benner told us, in The New York Times, that “Funding Talks at Uber and Lyft Complicate Ride-Hailing Alliances.”  They started by saying that “the only thing changing faster than who is winning the race in the cutthroat world of ride hailing are the shifting of behind-the-scenes allegiances between those companies and investors.”  Defensible, but perhaps nobody is winning.  Look for Lyft to eventually be absorbed by a driverless-car consortium and for Uber to collapse under the weight of its business practices.

Those who doubt the last half of the previous sentence should look at October 11th’s Mashable “Uber is under fire in *five* criminal investigations.”  Less than five months after that company’s similar spring, reporter Kerry Flynn related that “authorities are looking at whether Uber violated price transparency laws and determining how the company may have stolen documents from Alphabet’s self-driving technology division,” along with the Greyball authority-avoiding technique, “its toxic workplace culture and other shady practices” including using software to illicitly vary fares, that Uber’s Chief Legal Officer was on the way out, and that, to no surprise, on the story “Uber declined to comment.” 

An issue connected with ridesharing in general took the spotlight in “Is Uber Helping or Hurting Mass Transit?” (Emily Badger, The New York Times, October 16th).  That is a good question with the overall answer very much unknown, as the service, in different instances, replaces walking, legal taxis, the subway, people’s own cars, getting rides from friends or relatives, or not going at all.  In small towns and rural areas the mix is different, so it is hard to generalize.  Although this issue is mostly about helping people choose whether to be positive about the likes of Uber and Lyft, it is still worthy of more research.

Brooks Rainwater and Nicole DuPuis’s “Do cities still want a sharing economy? (TechCrunch, November 9th) suggested we are at a crossroads with not only Uber and Lyft but with AirBnB underregulated hotel services as well.  The former have achieved “an outright ban in London,” easy to understand with the level of training and regulation of taxis and their drivers there, but have found friendlier places elsewhere.  The authors found that cities were remarkably polarized on the three companies, with 51% claiming “good” relationships with Uber, Lyft, and AirBnB and 33% calling them “very poor,” leaving only one-sixth in the middle.  From municipal standpoints, sharing cars was more favorable than sharing living quarters, but, unless it was implicit in that 33%, the article did not mention the possibility of regulating these providers like the hoteliers and taxi services they are. 

In “Uber’s Year of Backfires” (The New York Times, November 29th), Robert Cyran told us that “Uber’s year of efficiency is backfiring,” perhaps appropriate for a company with net revenue, or fares minus payments to drivers, growing 70 percent per year to $2 billion in the third quarter, but achieving a corresponding net loss of $1.5 billion.  The previous two months, per Cyran, revealed two more worms, as “it emerged this month that Uber had paid the perpetrators of a data hacking $100,000 to keep the breach secret,” and, in its “courtroom battle” with Alphabet’s Waymo, “the judge said he no longer trusted Uber’s lawyers in the case.”

That brings us to this month’s news about a MIT study, flawed but revelatory to doubters, showing that the median net pretax earnings of Uber and Lyft drivers were $3.37 per hour, with 74% making less than their areas’ minimum wages and 30% actually, after vehicle expenses, losing money.  Per James Doubek in “Researcher Says ‘Criticism Is Valid,’ Will Revise Study Finding Low Uber And Lyft Pay” (npr.org, March 7th), the methodology behind that result was quickly challenged by Uber, and lead author Stephen Zoepf agreed, giving two sets of tentative revisions, one arriving at $8.55, 54%, and 8%, with the other concluding $10,00, 41%, and 4%.  It will be months before Zoepf issues a formal revision.  Yet all we need to do, per Noah Smith in Bloomberg’s March 8th “Uber Better Not Be the Future of Work,” is “to use Uber’s own data,” which claims a gross hourly $21.07, becoming $15.80 after the company’s 25% service fee and less after car expenses, which authors of studies have (under)estimated at 25 cents to 32 cents per mile, or an average $5.00 to $6.40 per hour.  Accordingly, typical hourly earnings seem to be no more than $10, which does not as Smith put it “impoverish workers” (they may opt out and avoid that poverty), but, with no benefits, means driving for Uber or Lyft is not a good job.  Indeed, “a gig economy that relies on small independent contractors consistently making bad business decisions isn’t the future of work” – not to mention the lack of regulation, which will not last forever. 

So where do we, as customers, investors, workers, and company managers, now stand with the gig and sharing economies?  That will be the subject of next week’s post.

Friday, March 9, 2018

February: A Tremendous Employment Month, With Latent Work Demand Shrinking: American Job Shortage Number (AJSN) Down to 16.8 Million


This morning, we expected a good set of Bureau of Labor Statistics employment data, but not this good. 

The publicized projection for net nonfarm payroll employment growth was 236,000, and it turned out even better – 313,000.  That, though, was only in a three-way tie for the best number.  It had to share that with each of the two measures of how common it is for Americans to actually be working.  The labor force participation rate jumped 0.3%, with 0.1% being a solid gain, to 63.0%, and the employment-population ratio did the same to reach 60.4%.  Both of these are now nowhere near last year’s lows, and are clear indications that an increasing number of people are not only avoiding official unemployment, which stayed at 4.1% adjusted and fell 0.1% to 4.4% unadjusted, but finding jobs.

The other results were mixed.  There is still an adjusted number of 6.7 million unemployed.  The count of people out for 27 weeks or longer also held, at 1.4 million.  The tally of those working part-time for economic reasons, or continuing to work at shorter-hours propositions while seeking full-time ones, however, worsened 200,000 to 5.2 million.  After last month’s 9-cent gain, which was adjusted to 7 cents, average nonfarm payroll hourly earnings were up only 4 cents, less than inflation, and are now at $26.75.   

The American Job Shortage Number or AJSN, which shows in one figure how many more positions could quickly be filled if all knew that finding work was as easy as finding a grocery store, shrank 344,000, a lot since it is not seasonally adjusted and January and February typically have similar levels of employment, as follows:


Its decrease from January was unusually broad-based, with 121,600 coming from those who wanted to work but have not looked for it for 12 months, 88,200 from lower official unemployment, 70,200 from those claiming discouraged status, and a rare fall, of 54,550, from those denying any interest in working.  The share of the AJSN from those technically jobless is now less than 38%, another post-Great-Recession low.  Its year-over-year change continued to be strongly favorable, with reductions in official unemployment, did not search, and the count of those non-civilian, institutionalized, and off the grid propelling the AJSN to a 1.07 million improvement since February 2017.  

I loved this month.  That 313,000 will get the headlines, but the bolstering of the employment-population ratio and labor force participation rate may be even more valuable.  The across-the-board shrinkage of those marginally attached, as in the statuses just mentioned, gives the job market overall strength behind its marquee numbers.  The turtle took a robust step forward. 

Friday, March 2, 2018

43 Years of College as the Presumed Choice – Its Meaning, Changes, and Value – II


Last week we showed that the percent attending postsecondary school has grown 50-fold since the Civil War.  We also saw the views of two unsure if that was justified, and what things around employment and university attendance have stayed the same since Caroline Bird wrote 1975’s The Case Against College.  Now we look at four things which haven’t evolved much, along with six overall points to understand.

The first much-the-same area is that, although preparation for specific careers now broadly dominates over personal enrichment, there remains debate over the usefulness of nonvocational course material.  Both sides have merit, with things resonating superbly with enough people to justify their teaching offset by the small likelihood of their appreciation by those with marginal ability.

Second, the smartest students and those most open to knowledge in general still benefit immensely, personally, from the liberal arts.  Although that is a minority position and has been ever since those in roughly the bottom half of high school graduates started routinely going to college, those running institutions specializing in letters and pure science should not be discouraged.

Third, college still serves valid purposes for students beyond academics.  It is a time for them to gain social skills, learn at least partially how to live away from their parents, and experience a relatively protected setting for mistakes they would probably otherwise perpetrate later.  While there are problems with excessive drinking among undergraduates, for example, they are smaller and less consequential than they would be if around cars, families, and career jobs. 

Fourth, it also continues to fill additional needs for our society.  Bird called colleges “aging vats” and warehouses for people frankly unneeded; with the jobs crisis just getting underway in 1975 those functions had only started, but are now crucial and entrenched.  Globalization, automation, and efficiency have eliminated most job-market demand for twenty-year-olds, and with even less to do than the average 27 weekly hours in class and studying, many would get in more, and more serious, trouble. 

So what can we conclude, and what should we do? 

Number one, right or wrong, college is probably more sacrosanct than ever.  In scary career times – and if you think our low unemployment rates are putting people at ease, try to confirm that with anyone around age 18 or their parents – the average wage gap between those with and without bachelor’s degrees will overpower any other perception, or reality.

Number two, as Bryan Caplan of this year’s The Case Against Education showed, this statistical pay difference is due less to the merits of college than to its attendance in the first place by the smartest, most capable, and most motivated people.  The advantage they get is not from universities themselves, but from their ability to “signal,” as he put it, their worthiness for the best opportunities by graduating.

Number three, those in the top half of students on merit still cannot afford to skip it.  For every Bill Gates, who dropped out of Harvard and did rather well thereafter, there are not hundreds but thousands who cut off their attendance and did not professionally succeed.  The signaling above may be superficial, but it has no viable widespread alternative.

Number four, the equation changes for those who, in the probably paraphrased words of Mike Royko, should be slicing salami instead of reading spreadsheets.  I am not aware of any completed analysis, but potential university students of the most modest levels, with their high nongraduation rate, should not accrue large amounts of debt in the attempt.  If they have the inclination and aptitude, skilled construction-related trades, which still have excellent prospects, would be better choices. 

Number five, from all standpoints other than the often-unaffordable luxury of an improved social life, starting with two years at a community college and, if successful, transferring to a four-year school is preferable for all but the smartest and richest.      
 
Number six, education for credentials, as Bird implied and on which Caplan wrote extensively, still helps the individuals getting them more than our nation as a whole.  As I showed in Work’s New Age, more schooling does not mean more work opportunities, but only changes who get them; as Caplan ended “The World Might Be Better Off Without College for Everyone” (The Atlantic, January/February 2018), “Trying to spread success with education spreads education but not success.”  These are the best attitudes.

Friday, February 23, 2018

43 Years of College as the Presumed Choice – Its Meaning, Changes, and Value – I


What do people do after graduating from high school? 

Once upon a time there were many common answers to this question, but in recent decades one has increasingly and remarkably steadily become the norm for above average students and many below.  It has hardly been that way throughout the nation’s history; according to the U.S. Department of Education, in the 1869-1870 school year only 1.3% of 18 to 24-year-old Americans were enrolled in college.  That share edged up to 2.3% in 1899-1900, reached 4.7% by 1919-20, and even in the Depression-time 1933-34 was at 6.7%.  By 1945-46, the beginning of the G.I. Bill, it reached 10.0%, achieving 17.7% only ten years later and 27.7% in fall 1963, on the eve of U.S. Vietnam War involvement.  With the end of conscription twelve years later, 40.3% of Americans attended, not exceeding that rate until 1981 but reaching 53.7% by the fall of 1991.  Sources conflict after those dates, but per the Bureau of Labor Statistics 70% of high school students went directly to college in 2005, though dropping to 65.9% by the fall of 2013.  Most other first-world countries have not reached these levels; in a 44-country list from the Organization for Economic Cooperation and Development, only Australia, Canada, Ireland, Japan, Lithuania, Luxembourg, Norway, Russia, South Korea, and the United Kingdom had a higher share of 2014 25 to 34-year-olds with at least two-year degrees than America’s 46%. 

Since the Civil War, this massive and inexorable-seeming social trend has built with a remarkable lack of opposers.  One classic exception was author Caroline Bird, whose 1975 The Case Against College argued that fewer people should attend.  The book includes sections on how universities and even two-year schools benefit from a “mystique,” the cost of college to parents and students, its real, statistical, and erroneously purported advantages, a look at the true sources of success, and a 44-page chapter on alternative courses of action.  The work got attention, but as above did not stop the enrollment rise.

Now, 43 years later, we have picked up another dissident, this time professor Bryan Caplan, author of last month’s The Case Against Education.  In some ways, the roles and situation of college have transformed; in some ways they have not.  Here are nine changes, from Caplan and elsewhere, since Bird’s book.

First, the cost of college has massively increased even in relation to inflation.  The prices quoted by Bird, including $22,256 for all expenses for four years at Princeton, $2,400 per year including books and support for resident state-school students, and a medical school graduate expecting to owe “close to $15,000” now seem quaint.  According to former U.S. Secretary of Education Lamar Alexander, college tuition rose 260% from 1980 to 2014, compared with 120% for the Consumer Price Index.  Anecdotally, and by adding a few years to each end, we can get much higher jumps.  Tuition at Lawrence University, which I attended for the 1975-76 school year, has more than decupled from $4,400 to 2016-2017’s $44,544.  That at the University of Wisconsin Milwaukee, for state residents, soared 14-fold from 1977’s $680 for two full-credit semesters to $9,534 per year.  As a student I covered that with 320 hours of minimum-wage work, at $2.30 per hour less payroll tax deductions – today, at Wisconsin’s $7.25, it would take 1,424.    

Second, vocationalism, which was starting to vie with pure learning for main college directions in 1975, largely won that battle in the early 1980s, with school-wide emphasis changes and accounting becoming the most popular undergraduate major.

Third, the percentage of graduates has also increased substantially.   In 1975, 17.6% of American males, and 10.6% of females had four-year degrees; by 2016 those numbers were up to 33.2% and 33.7%, or a combined share 137% higher.

Fourth, the average statistical advantage for graduates has also gone up, with the expected “earnings premium,” cited by Caplan as rising from 50% more over a lifetime than those only finishing high school in the late 1970s to 73% last year.

Fifth, there are more college dropouts than ever, and they are not counted in the statistical gain above.  They accrue sometimes considerable debt, impede themselves from earning more during their enrollment times, cost their parents money as well, and, per Caplan, may after failing “be too embittered to go back and learn a trade.” 

Sixth, employers’ main response to degrees becoming more common has been to raise their educational requirements.  In the 1950s, people wanting careers in business rarely went to college.  Later, I saw that personally in AT&T management – when arriving in 1988, my bachelor’s degree was a solid credential, with many peers and even my first on-the-job boss without one, but in only nine years so many such managers had retired, been downsized, or were otherwise replaced by those two steps more educated, that I felt naked without a master’s degree.  The tasks themselves did not change nearly that much, with intelligence and technical aptitude still most required.

Seventh, academic work and studying hours in college have dropped.  Per Caplan, average 1967 students took 40 hours per week for class and study time – in 2017, that was 27. 

Eighth, and strangely given the last difference, above-average universities have become significantly more selective.  Even correcting for high school grade inflation, many successful 1970s and 1980s professionals could not now get into the colleges they attended with the credentials they had.  To name only one example, the University of Wisconsin at Madison then accepted almost all applicants with gradepoint averages in the top half of their classes – now the average is 3.85, and over half of those seeking to attend are rejected.  

Ninth, the general incompetence of graduates, in conjunction with their learning only narrow pieces of subjects, has worsened.  For me, the most depressing parts of learning about Caplan’s work were his examples of what people who successfully completed college, the most recent of whom have overcome these high admission requirements, paid modern-day tuition, and avoided falling to the no-degree wayside, often or even generally cannot do.  Per Caplan, 20% had only “basic” or even “below basic” literacy, and many could not “make sense of a table explaining how an employee’s annual health-insurance costs varied with income and family size, or summarize the work-experience requirements in a job ad, or even use a newspaper schedule to find when a television program ended.”  He also discovered Harvard psychologist Howard Gardner’s finding that “students who receive honor grades in college-level physics courses are frequently unable to solve basic problems and questions encountered in a form slightly different from that on which they have been formally instructed and tested.”  Caplan glumly noted that while “those who believe that college is about learning how to learn should expect students who study science to absorb the scientific method, then habitually use it to analyze the world,” it “scarcely occurs.”  While 1970s universities with their arena-sized classrooms and predominant “multiple-guess” exams had, though to a lesser extent, these problems as well, few good academic departments would have let people graduate without having more flexible capability within their fields. 

Next week, we look at what has stayed the same since Bird’s work, and what is now happening, overall, with American higher education.