Friday, April 29, 2022

Ten Months on Robots, Automation, and Artificial Intelligence

Big topics, little communication.  My cupboard is not quite bare, but has some odds and ends, which are worthwhile, even if they add up to one post instead of the three these matters seem well worth.

Artificial intelligence, or AI, seems to be springing leaks, if not in how it is progressing but how people deal with it.  A stern view on one, by George Maliha et al. in Harvard Business Review on July 13th, was “To Spur Growth in AI, We Need a New Approach to Legal Liability.”  We hit the issue of which humans are legally responsible for post-algorithmic technology with driverless cars, which haven’t spread enough for anything resembling legal precedents, and here we have the straightforward assertion that “the existing liability system in the United States and other countries can’t handle the risks” it entails.  The authors recommend “revising standards of care” especially for medical AI applications, granting radiologists, for example, immunity from malpractice if they provide secondary image reading after AI provides the first; “changing who pays:  insurance and indemnity” including insurers giving better rates for professionals using favored AI systems;  “revamping the rules:  changing liability defaults” such as, if autonomous cars are involved, not automatically blaming a human driver in the striking vehicle for a rear-end collision;  “creating new adjudicators:  special courts and liability systems” using more sophisticated knowledge than most judges have;  and “ending liability completely:  total regulatory schemes” or institutionalizing knowledge that in some cases nobody is at fault.  A good start, all of this.

Julian Jacobs addressed another future problem area in the Brookings TechTank on November 22nd, with “Automation and the radicalization of America.”  Jacobs found that combining one study assigning mechanization potential to occupations with another giving demographic data on people working them told us that those more likely to be replaced by machines “tend to have a dark and cynical view of politics, the economy, the media, and humanity” and skew left on financial issues but slightly right on “socio-cultural ones.”  He stopped short of predicting revolutionary activity among these workers, but such, if they do indeed lose their jobs, could happen this decade or next.

“Will Robots Really Destroy the Future of Work?”  Peter Coy revisited this old overstatement in the January 24th New York Times, featuring an interview with labor economist David Autor, who “loves” both robots and unions and wants the two to be coordinated better, ideally on better-paying jobs.  Per Coy, such means realizing that “workers need training so they can use automation, not be replaced by it.”  I see no mention of the number of positions that we can expect to be lost, and it seems na├»ve to think it will not be substantial, even if some are created – the major point of mechanization is to reduce labor costs, which would not happen if almost as many jobs are created to work with it.  Now, as opposed to two years ago, we can better justify trading lower-paying positions for fewer higher-compensated ones, but there is hardly a guarantee 3%+-unemployment will last indefinitely.  Destroy, no – damage and change, yes.

The Writing on the Wall” was a long April 17th Steven Johnson piece in the magazine section of The New York Times.  The subtitle of sorts was “A.I. has begun to master language, with profound implications for technology and society.  But can we trust what it says?”  We’re now at the point where such a system can write good-looking essays proposing plausible solutions to complicated problems in a second or so, through abilities to determine missing words and access massive numbers of sites, not all truthful or prudent.  The core of this issue is that the machines themselves cannot judge written material and cannot always identify lies, meaning human input is still needed.  We also are not avoiding the issue of what AI language modules may produce without confidential influences, which could well offend or even upend modern sensibility.  Overall, Johnson’s view that “the very premise that we are having a serious debate over how to instill moral and civic values in our software should make it clear that we have crossed an important threshold” seems appropriate – and solutions may depend on specific assumptions such as “people are basically good” and “guns in houses are safe enough,” which could be revealed to all.  A long way to go we have, and this piece does help.

Shrinking to a less general concern, we have Tanya Moore’s April 19th New York Times “Can A.I. All but End Car Crashes?  The Potential Is There.”  We don’t have many autonomous vehicles, but there are plenty of others with related software – even my ordinary, year-old Toyota Camry beeps when I cross a center line.  Moore mentioned various other mechanistic improvements, and others in progress – this area is burgeoning.  That means that even if we don’t lose drivers, we will still gain a lot of safety and save many lives.

I end with a robot application with smaller import, but the kind which we can solidly expect.  It’s “Jack in the Box to pilot Miso Robotics’ Flippy 2, Sippy” (Lucas Manfredi, Fox Business, April 26th).  It will start in only one of the fast-food chain’s locations, and not until late this year, but the first of these “takes over the work for an entire fry station” at a 30% production increase, and the second cuts drink spills as it “efficiently moves cups,” “accommodates a range of cup sizes and groups cups by order for easy delivery to customers.”  At today’s rates, Flippy 2’s $3,000 per month is less than only one full-time fast-food worker, and will work many more hours.  Like it or not, if the trial works, it will propagate, help the business, and potentially save customers’ time and money.  Look for many more – and don’t forget these growing and evolving issues, as, headlines or not, they won’t leave us alone forever. 

Friday, April 22, 2022

Inflation, Employment, Recession, and Housing: Where the Economy Is Now, and Where It Is and Isn’t Heading

What’s happening with our financial system?  We’ve heard a lot about inflation, but there’s more on other aspects as well.  All from the last month – let’s go!

The Washington Post’s Breaking News told us on April 12th that “Prices climbed 8.5% in the year ending in March, amid growing fears that inflation will cause a broad economic slowdown.”  This is a fresh 41-year high, but at least the rate seems to be topping off, and seems unlikely to reach even 10%.  With booming weaker-Covid demand, the Ukraine war, Chinese pandemic problems, nagging supply chain issues, and even another Japanese earthquake it won’t go away soon, though, but will start falling this summer, such general optimism supported by Paul Krugman in the March 24th New York Times “How High Inflation Will Come Down.”  However, if you are thinking about buying a vehicle, you might as well do it soon, as per Jeanne Smialek in the April 10th New York Times, we’re looking at “Few Cars, Lots of Customers:  Why Autos Are an Inflation Risk,” with one dealer saying “If I could get 100 Toyotas today, I would sell 100 Toyotas today,” and their supply-demand situation calling for them to fetch maximum prices indefinitely.  Emma Goldberg told us that “With Inflation, Workers Are Facing Return-to-Office Sticker Shock” (The New York Times, April 20th), meaning there is a new disadvantage of not being able to work from home, as gas, coffee, and lunch food all cost more and the differences can add up quickly.

Again in the Times, Andrew Ross Sorkin et al. posed the question “Is U.S. employment at Its Peak?” on April 1st.  That’s good to ask, with official joblessness under 4% and still dropping, the count of open job advertisements of variable quality reaching all-time highs, and the American Job Shortage Number (AJSN) within one or two good employment reports of reaching a decade-plus-long latent-demand low.  The economy is still “two million jobs short of its prepandemic peak,” but two years of intensified efficiency and automation, along with the usual globalization, account for much of that, and national population growth, about one-third of that time’s level, has not been able to help.  We may soon drop through unemployment’s 3% and the AJSN’s 16 million, and if we do we will know the March report was not the high mark.

You may have heard of the Big Mac Index, which uses international prices for that sandwich to assess whether their currencies are overvalued or undervalued relative to others, but how about the men’s underwear index?  I learned about that in “Is a recession coming?  Alan Greenspan days the answer is in men’s underwear” (Nicole Goodkind, CNN Business, March 26th).  The former Federal Reserve chair supports the idea that, since other people rarely see other men’s shorts and their sales are “usually stable,” when they decline “that means that men are so pinched that they are deciding not to replace underpants.”  The piece contained no data on this metric, but also mentioned the “skyscraper index,” based on the notion that “an increase in very tall buildings happens as we’re approaching a bust,” and the “lipstick index,” trading on the thought that cosmetics function as economic inferior goods, as in hard times “women replace more expensive purchases with small pick-me-ups.”  None of these things are comprehensive, of course, but all seem worthwhile.  As for a recession soon, since neither employment nor consumer demand seem at all likely to crash, and cited precedents were all without pandemics, there’s little reason for a gloomy forecast.

“Is the U.S. already in a housing bubble?”  Brock Sumas asked this in Fox Business on April 20th.  Real estate prices are not a “paradox,” as Krugman has put it, but only a combination of burgeoning demand offset somewhat by higher mortgage rates.  As for a “bubble,” defined by a quoted economist as “an unsustainable period of house price growth generated by artificial demand, such as loose underwriting or speculative demand” – and we have seen both this century – this same source opined that higher prices are now “supported by the fundamentals and characterized by a shortage of supply relative to demand.”  Suras said that the presence of a bubble was “open to debate,” and there surely will be some localized price decreases, but to me it looks nonexistent.

We end with another, more comprehensive query: “Is America’s Economy Entering a New Normal?” (Jeanna Smialek, March 24th, The New York Times).  With Covid-19 still in progress, it seems too soon to answer anything this long-range, or be surprised that “economists have spent the past two years expecting many of the pandemic-era trends to prove temporary, but that has not yet been the case.”  We also need to understand that we will have gone through a significant amount of time, with as before change in some areas being accelerated, when American new case numbers drop below 1,000 per day and deaths reach double figures or less.  Other changes, such as more remote work, have been cyclical, and other factors, such as pooling up of money and most work acceptors not being technically unemployed, long predate the first coronavirus case.  Six to twelve months from now, an aggressive if anything estimate on the pandemic’s fading, is as soon as we should even consider what will happen long-term with our economy – and, even then, we will be unsure.  That may not be encouraging, but it is realistic – and realism is what we need.

Friday, April 8, 2022

Offices vs. Remote: Perceptions and Changes Keep Coming In, And Will Continue

One of the great employment-related 2020s issues is whether to work, or allow work, from an office.  As I have written, that’s really a 30-year-old problem, pushed to the forefront by and evolving faster because of the pandemic.  What has been written about it in recent months?

The oldest here is “One Size Doesn’t Fit All:  Employees’ Needs Are Changing Work Spaces” by Jane L. Levere in the October 19th New York Times.  The lead example was “M. Moser’s 10,000-square-foot Manhattan headquarters,” “designed in 2018 and revamped in 2020” to be more “flexible,” in other words without personal office space.  An architectural firm is advocating that workers arrive in an “anti-anxiety office entry” with “breathable and easily navigable spaces” to “choreograph the arrival experience to reduce crowding.”  Whew.  Perhaps this stuff will work, but more likely it’s just another set of business fads, to be swept away when businesses rediscover more efficient space design.

Is it true that “Remote Work Is Failing Young Employees” (Anne Helen Petersen and Charlie Warzel, The New York Times, November 22nd)?  It’s about how workers’ online instructions for getting acclimated to their jobs, right or wrong, don’t work as well as getting help in person, summarized by an interviewed new hire who said “I was shocked at how all the skills I had learned on how to navigate this type of environment in person evaporated remotely.”  Another claimed he “found it nearly impossible to socialize with colleagues,” perhaps caused by “well-intentioned but frazzled managers” with little “support or practice in remotely onboarding employees.”  A real gap, which may require working from home to be preceded by at least a week or two with others.

Strange times bring a strange vocabulary, and to keep you up at least partially, we got, from the same author, date, and publication as the previous, “The New Language of the Office, From Al Desko Dining to Zoombies.”  The two expressions in the title came along with “bookcase credibility” (specific titles on display during video calls); “commuter’s delight” (treats brought into the office for those unlucky enough to be there); “polywork,” or non-company financial projects consuming remote workers’ office-hours effort; and “synchronous time,” reflecting more difficulty in connecting simultaneously.  As “office lingo signals affiliation with an in-group,” these terms, and others coming along, are not only valuable but constructive.

“Is working remotely an option for the long haul?” (Paul Davidson, USA Today and published in the Times Herald-Record, December 27th)?  This piece, mainly a primer on then-current statuses which change month by month, doesn’t answer that.  People saying yes and no could write dueling books – a debate would be too short – and we could decide.  My take is “it depends in the individual employee and their job responsibilities,” but we’re hardly likely to decide quickly.  One possible response, by Amy Sinatra Ayres from and in the same publications and appearing January 16th, titled “Experts:  Virtual work is here to stay,” emphasized employee preferences while admitting that “finding the right combination of in-person and virtual work will take creativity and experimentation” and that “nobody knows the answer.”  And most businesses will understand even less when the pendulum swings back yet again.

Another issue primarily but not exclusively with working from home is “What We Lose When Work Gets Too Casual” (Elizabeth Spiers, The New York Times, February 7th).  So, “which parts of office culture were obliterated by Covid and need to be restored because they benefit workers more than they benefit corporations?”  For Spiers, that could include “fixed start and stop times,” “managerial hierarchies with clear pathways for advancement,” and “professional norms that create boundaries between personal and professionally acceptable behaviors.”  She makes cases for why these help employers at the expense of employees, such as a study showing fuzzier times meant unpaid extra hours, flat chains of command meant “employers can punt on” promotions, and Zoom backgrounds allowed us to draw inferences when “you finally get to see where Tyler from quality assurance lives – whether you want to or not.”  This is another group of concerns in flux, built on by “Can Workers Climb the Career Ladder From Outside the Office?” by Corrine Purtill in the March 3rd New York Times, which aired matters such as whether “you can feel people’s energy better when you’re around them” for “assessing someone’s availability,” a controversy about the effectiveness of “virtual water coolers” (which the article did not mention could store and transmit comments), “bonding opportunities like virtual happy hours” with the same problems which may not work across time zones, potentially less real or perceived sex and race discrimination against people not in your field of vision, and reduced numbers of “side conversations,” from which “a lot of decisions are made.” 

Despite any certainty, a strong downward pandemic trend has influenced companies to call employees in on future dates.  That’s what Andrew Keshner found in “Google isn’t the only company requesting workers go back to the office.  Jobs report shows more people are joining the ‘Great Return’” (MarketWatch, March 7th).  Will that mandate hold?  And how will the issues in this post play out?  Only time, and maybe our best projections, will tell.

I will not be posting next week.  Expect the next issue, on a topic to be determined, April 22nd.

Friday, April 1, 2022

Another Solid Employment Report, Showing People Returning to the Labor Force – AJSN Shows Latent Demand Down 400,000 to 16.6 Million

Four weeks ago, I predicted this morning’s Bureau of Labor Statistics Employment Situation Summary would again be especially strong.  Was it?

We added 431,000 net new nonfarm payroll positions, on top of the only estimates I saw (450,000 and 455,000), not in February’s 678,000 class but still about ten times what we need for our current, reduced population increase.  Almost all of the numbers I have been covering improved as well.  Seasonally adjusted and unadjusted unemployment fell 0.2% and 0.3% respectively, to reach 3.6% and 3.8%.  We reached 6.0 million officially jobless people, off 300,000, of whom 787,000, of 101,000 fewer, were on temporary layoff and 1.4 million, also down 300,000, have been out of work for 27 weeks or longer.  The two measures of how common it is for people to be working or unemployed, the labor force participation rate and the employment-population ratio, improved 0.1% and 0.2% and are now at 62.4% and 60.1%.  The laggers were the count of people working part-time for economic reasons, up 100,000 to 4.2 million after last time’s 400,000 gain, and average hourly nonfarm payroll earnings, up 15 cents per hour to $31.73, less than inflation despite February’s loss. 

The American Job Shortage Number or AJSN, the measure of how many new positions could be quickly filled if all knew they were easy to get, decreased 402,000, as follows:

 The effect of a lower number of unemployed was significantly offset by more people wanting to work but not looking for it for a year or more.  That was a clear indication that those who in February said they did not want jobs, which decreased over 600,000 in March, came back to the workforce.  The other factors above significantly improved, with their AJSN effects largest for those discouraged and those in school or training.  The share of the AJSN from those officially jobless fell from 35.9% to 33.5%, meaning that essentially two-thirds of new job acceptors would not have been what the Bureau of Labor Statistics considered unemployed.

Compared with a year before, the AJSN has dropped almost 3.9 million, 3.4 million of that from those jobless, half a million from a lower count of people interested in work but not searching for it for at least 12 months, and the other statuses collectively little changed. 

On the pandemic front, the differences in seven-day rolling daily averages between February 15th or 16th and March 16th all showed the dramatic fading of the Omicron variant, with new cases down 75% to 31,216, deaths off 46% to 1,263, people hospitalized dropping 70% to 25,558, and vaccinations, including boosters, 54% lower at 237,025.  There is scant reason, and even less day by day, to think a significant number of people are taking undue risks by working. 

So how good was it… really?  It wasn’t as super-strong as February’s, and the two-month trends of more people counted as employed without the full-time work they want and pay raises not covering increasing prices are causes for concern.  Yet our unemployment rates are only a few tenths of percent higher than they were just before Covid, and much of the effect of higher oil and food prices from the Ukraine war, three weeks old at survey time, is already baked in.  How we do from here will depend on how many of those 600,000-plus new entrants find work.  If they do, April should match or exceed March, but if they don’t, we may more or less break even next time.  For now, though, once again the turtle took a good step forward.