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.