Friday, May 31, 2024

Where Gig Work and Side Hustles Have Been Going, and What They Mean

There’s nothing new about either gig work or side hustles.  The first was called off-the-books, or in some circles, “owlhooting,” with pay or other compensation unknown to the authorities.  I engaged in it at age 10 or so when a fruit delivery truck driver offered me a “nice yellow apple” if I helped him find an apartment receiving his products.  The second type was known as “moonlighting,” and was generally not revealed to primary employers – I did that for almost my entire business career, ending over 20 years ago, and kept it to myself.

Both forms of work have evolved in significance as well as legally.  One problem is a tendency to illegitimately classify ordinary jobs that way.  The latest case I have seen was described by Terri Gerstein in “More People Are Being Classified as Gig Workers.  That’s Bad for Everyone” (January 28th, The New York Times).  It’s bad for the workers but not for employers, as they can thereby avoid providing benefits such as a minimum wage, overtime, and sick leave.  The law is simple – per Gerstein, “an independent contractor is considered someone who works primarily free of control and direction and is “customarily engaged” in an independent trade or business related to the service performed.”  In the case of temporary employees, seemingly a gray area between employment and gig work but a clear case of the former, companies in Colorado have been drawing fines from governmental department Denver Labor for treating restaurant “servers, bartenders, line and prep cooks, and… dishwashers” as if they could choose their own hours, uniforms, and work locations.  That’s a legal matter, as it should be.

One explanation for increased appeal of these two labor types to some people is “Why do women look for freelance, gig jobs?  Avoiding the ‘old boys network’ at the office” (Paul Davidson, USA Today, February 9th).  The author said that “there’s a reason lots of women are freelancing, doing contract or gig jobs and saying goodbye to the traditional workplace – and it’s not just about flexible hours.  They don’t want to deal with co-workers.”  That factor was the most common reason why, in a December survey, “they find gig work more attractive than working in an office,” with flexibility, “setting their own hours,” and “avoiding time-wasting commutes” also common reasons.  The difference between men and women was huge, with 77% of women naming the problem with fellow employees but only 23% of men agreeing.  A National Women’s Law Center executive thought “women don’t always feel empowered and don’t feel comfortable,” and “a feeling of uneasiness” about “work-life balance” affects them often as well, all worsened by lowered amounts of allowed remote labor.  Yet “thirty-eight percent of men and 17% of women describe themselves as flexible or gig workers.”  I have read elsewhere about Generation Z employees, especially, wanting more flexibility – it is probable that there will be some common workplace practice changes along these lines in the next decade or sooner.

That cohort is prominent in “Rising number of workers depend on side jobs” (Christopher Murray, Fox Business, April 16th).  Per a February study, “22% of workers in the U.S. had side gigs,” with 53% of those “living paycheck to paycheck.”  Of Generation Z, 32% had outside jobs.  Although that is easy to explain because of lower income and net worth, that number sounds higher than for other generations at similar ages.  Consistently, from a different source, the “Share of gig workers hit a new high in March” (Eric Revell, Fox Business, May 3rd).  Bank of America customers make up a different set of people, and the 3.8% of them “who received income from gig platforms through direct deposits or debit cards” may seem puny but was “above the previous peak that was reached in early 2022.”  That may be only a small subset of people working that way, but the comparison with early data is worthwhile.

What about gig employment and other secondary work would be beneficial change?  One thing likely to happen is that, whether their employees talk about it with others or not, managements will expect that a good share of their people have such ventures.  That has consequences for human resources practices – for example, de facto requirements that workers put in extra time may meet with greater resistance than before.  Understanding people is an important business skill, and helps with deliverables as important as cutting turnover.  Accordingly, firms that tolerate more of workers’ off-hours choices, including earning money elsewhere, will be more successful.  We may be seeing the end of work’s centrality to identity, and organizational handling of gig work and side hustles rates to be an important part.  That, beyond the income they provide, is their true significance.

Thursday, May 23, 2024

Around the Economy: Consumer Shifts, Productivity, the Stock Market, And Of Course Inflation

How are we doing now?  If not consistently well, what’s the problem?

According to Emily Stewart, in “America has a ‘trapped in place’ economy” (Business Insider, March 20th), your economic happiness depends on whether “you like your situation right now – your job, your house, your car,” in which case “you can keep it.”  However, “if you aren’t so satisfied,” then ”well, tough luck, because you might have to keep it anyway.”  Her thinking was that buying things in general costs more from the past few years’ inflation, interest rates have gone up with mortgages up from 2.5% in 2019 to about 7% recently, substantially fewer businesses are hiring, and housing prices are “47% higher than they were in 2019.”  Although our 3.9% unemployment is historically low, that is more a matter of existing positions staying than new ones opening.

One improvement relatively new to 2024 is that “Productivity is way up” (Neil Dutta, Business Insider, March 21st).  The boost from artificial intelligence hasn’t much happened yet, but “labor productivity – the wonkish measure of how much a worker can get done in a given hour – is already on the rise.”  Productivity results have previously been distorted by factors having little to do with people creating more – for example, it jumped in the early pandemic because workers in the least productive fields, such as food service and preparation, were losing their jobs and dropping out of the calculation.  One element that legitimately contributes, though, is the thinning out and consolidating of corporate positions, as slack time is reduced.  In all, higher productivity is good, but it must be accompanied by other positive measures to be meaningful.

One area of prosperity has been fantastic – stock performance.  As of late yesterday morning, the Dow Jones Industrial Average was up 5.69% this year and Nasdaq has risen 14.12%.  Both have seen frequent all-time highs, with a large milestone for the former, about which Paul Krugman asked “What Does the Dow Hitting 40,000 Tell Us?” (The New York Times, May 20th).  He concluded that while “by the numbers, the economy looks very good,” with 27 straight months of sub-4% joblessness, inflation “way down from its peak in 2022,” and “U.S. economic growth over the past four years… much faster than in comparable major wealthy nations,” stock prices are not “a good measure of economic success.”  There is still no denying, though, that they are “hitting new highs.”

That brings us to inflation in particular.  First, Krugman in the Times again, with “Remember that news report about low gas prices?  Neither do I.” (May 7th).  The author presented several graphs intended to debunk common incorrect assertions.  The first showed “rates of wage growth” of the bottom and top income quartiles, showing that for every month from 2020 to 2023 the bottom quarter’s average percentage increases had been higher.  The next compared “wages and inflation” for almost the same period, with the latter, different for every income cohort, being outstripped by wage growth for “bottom,” “middle,” and “top” groups, the largest difference in the lowest.  His second-to-last chart was a stunning look at “TV mentions vs. nominal gas price,” with a consistently close relationship between higher levels of both.  That showed how easy it is for distorted price perceptions to be facilitated, even if unintentionally.

On May 15th a key measure came in, reported on that same day in “Inflation Moderated Slightly in April, Offering Some Relief for Consumers” (Ben Casselman, The New York Times).  The Consumer Price Index edged down from March’s 3.5% year-over-year reading to 3.4%, as “the “core” index – which strips out volatile food and fuel prices… – rose 3.6 percent last month, down from 3.8 percent a month earlier.”  Later that same day, also in the Times, Krugman returned with “Is Disinflation Back on Track?”  He concluded, considering business price-change expectations, that “underlying annual inflation is probably around 2.5 percent, maybe even less,” but said “even if I’m right, it’s going to take at least a fer more months of good inflation news before this happy reality sinks in.”

Yet, consistent with the first article mentioned in this post, not all recent economic news is good.  I end with “Rent Is Harder to Handle and Inflation Is a Burden, a Fed Financial Survey Finds” (Jeanna Smialek, The New York Times, May 21st).  “American households struggled to cover some day-to-day expenses in 2023, including rent, and many remained glum about inflation even as price increases slowed.”  However, “households feel good about their job and wage growth prospects and are saving for retirements.”  On inflation, though, “65 percent of adults said that price changes had made their financial situations worse,” as a depressing “ninety-six percent of people making less than $25,000 said that their situations had been made worse.”  Overall, “the report underscores that even though inflation is cooling, it remains a major concern for many Americans, one that may be a big enough worry to take the shine away from an economy that is growing quickly and adding jobs.”

That’s the problem.  Lower current inflation does not mean prices are returning to even 2022 levels.  They are higher, and people are feeling it.  That is the reason why so many Americans say the economy is going poorly.  That is also why as small as inflation seems to be, it is still important that we bring it down.  I expect we will, but if we don’t, we can expect some real social problems – and a presidential election result many of us do not want.

Friday, May 17, 2024

Even Beyond Tesla’s Self-Inflicted Problems, EVs are Slowing Down

Electric vehicles, the sales of which grew 52% in America last year, are not continuing that.  I won’t deal with what’s been happening with Tesla, because I don’t know any more than anyone else what CEO Elon Musk is trying to do, and why they would release the Cybertruck with more bugs than a Kolkata food stand.  Individual companies will come and go no matter what, and Tesla, hardly assured of continuing to lead United States sales, is not the industry.

There has been a gap for a while, as “What electric vehicle shoppers want isn’t what’s for sale, and it’s hurting sales:  poll” (Medora Lee, USA Today, April 3rd).  I wondered, when I got a non-plug-in hybrid as a rental two years or so ago and enjoyed full convenience along with 60 miles per gallon, why that wasn’t the direction companies wanted to follow.  Instead, in this piece, an Edmunds study said potential buyers wanted “lower prices” (which have improved slightly in the weeks since), “cars and SUVs, not electric pickups” with the latter getting buyer interest in EVs far lower than for liquid fuel ones, and “EVs from the most trusted brands,” particularly Toyota and Honda, which combined at article time for one model selling new in America.  However, as a result, “the dearth of EVs for sale that EV shoppers want has pushed them to hybrids,” also cheaper “and ease people’s range and charger anxieties.”

A third well-established company has discovered that, as “Ford Slows Its Push Into Electric Vehicles” (Neal E. Boudette, The New York Times, April 4th).  It has “delayed the production of at least two new electric cars and said it would pivot to making more hybrids.”  That will mean production of its “large electric S.U.V.” will be put off two years at at least one plant.  It may indeed be doing the right thing, as “Hybrid vehicle sales revving up as EV demand sputters” (Brock Dumas, Fox Business, April 11th); a Kelley Blue Book editor called 2024’s “hottest auto trend… “Hybrids – a lot more hybrids.””  Another form of discomfort hybrids do not cause is “time anxiety,” with “parents of young children wondering how they would have to find an extra 45 minutes in their day for recharging their EV.”

Reaction to the Environmental Protection Agency’s March mandate for automakers to produce higher shares of EVs starting in 2027 has come in, and it’s not positive.  The Wall Street Journal editorial response was titled “Biden’s EV Mandate Blows its Cover.”  The Washington Post’s was “The best way to get everyone into electric cars? Hint: It’s not a mandate.”  A piece in USA Today was “If you like your car, good luck keeping it. Biden's EV mandate drives change people don't want.”  And national columnist George Will, channeling an old Ford quip about providing vehicles only black, called his writing “Biden’s impossible dream:  Any car you want, as long as it’s an EV.”  Will named several of the points I have made in this blog, and some more:  EV battery production requires huge amounts of mining including new facilities, there will be more large truck trips since battery weight reduces load capacities, we can expect extra roadway damage and additional “particulate-matter pollution” from that and necessary special tires, there will be massive electricity consumption, EVs have extra problems in especially cold or hot weather, and currently they have high rates of mechanical problems. 

Even beyond bipartisan issue-raising is concern on the left, as shown in a view “Inside the Climate Protests Hell-Bent on Stopping Tesla” (Morgan Meaker,, May 7th).  Demonstrators have been protesting outside a German Tesla “gigafactory,” calling company operations “”green capitalism,” a plot by companies to appear environmentally friendly.”  The activists have cited excessive mining, “the industry’s disruption of communities in the global south,” “unsafe working conditions,” and not only “using up local water supplies but also the potential that the company will contaminate them.”  If EV manufacturers cannot count on environmentalists’ support, they may end up with no group of core adherents at all.

A recent news item concerned a new set of import duties, as described in, among other places, “Biden announces 100% tariff on Chinese-made electric vehicles” (The Guardian, May 14th).  There are plenty of things wrong with tariffs, and one here is to raise the prices of the cheapest EVs, further discouraging people from making that transition.  Per “Don’t Slam the Door on Expensive Chinese Electric Vehicles” (Gernot Wagner and Conor Walsh, The New York Times, May 15th), “a recent survey” determined that 83% of US EV “drivers” were in the top half of national household income, with 57% with over $100,000.  Those numbers will not drop much soon.

Are electric vehicles moving in the right direction?  Not now.  It would be wrong to say they are in reverse – sales are still increasing, but they’re heading for a stall.  Do we want to almost require them within a handful of years?  It’s hard to say yes.  We won’t be ready, and the chances are increasing that we won’t during our lifetimes. 

Friday, May 10, 2024

Artificial Intelligence, Present Tense: Modest Revenues and Serious Problems

There is a massive amount of AI material online.  Almost all of it, though, deals with capabilities in development, business deals, stock performance, organizational changes, and forecasts.

How is it doing now?  I don’t know, and you don’t either.  It moves too quickly, and most of the information is proprietary and unassembled.  But if we can go back four months, to “10 Companies With Largest AI Revenues:  Success Cases from OpenAI, Anthropic & More” (Tim Keary, Technopedia, January 17th), we get some insight.  In the first paragraph it relates how “the global AI market was valued at $196.63 billion in 2023,” close to Statistica’s October 2023 $207.9 billion determination.  However, per an unsourced answer to a Google search, “the “market size” is made up of the total number of potential buyers of a product or service within a given market, and the total revenue that these sales may generate.”  As Keary told us, though, that’s not the same as what’s actually being sold.  In his section titled “10 Leading Companies in Terms of AI Revenue,” he named OpenAI, Anthropic, Microsoft, Nvidia, Hugging Face, Stability AI, Perplexity AI, IBM, Google, and Salesforce, giving annual sales figures for each.  After taking one-quarter of those from the last two, which were not broken down into AI and other offerings, I got a total of $29.7 billion, meaning that something over 15% of the market is producing revenue.  By comparison, a recent Wikipedia list of largest companies by annual sales – not entire industries – showed the 50th-largest one with over $157 billion.

Accordingly, “A.I. Start-Ups Face a Rough Financial Reality Check” (Cade Metz, Karen Weise, and Tripp Mickle, The New York Times, April 29th).  The main point here was that “the A.I. revolution… is going to come with a very big price tag.  And the tech companies that have bet their futures on it are scrambling to figure out how to close the gap between those expenses and the profits they hope to make somewhere down the line.”  Although “investors have poured $330 billion into about 26,000 A.I. and machine-learning start-ups over the past three years,” they may not maintain that pace.  Indeed, “Wall Street’s Patience for a Costly A.I. Arms Race Is Waning” (Andrew Ross Sorkin et al., New York Times DealBook Newsletter, April 25th). 

Also, “A.I. is running out of power” (Andrew Ross Sorkin et al., New York Times DealBook Newsletter, April 18th).  As a result, “tech executives are increasingly warning that electricity supplies need a boost,” with a notice that “there’s “not enough energy right now” to power new generative A. I. services,” and because of that the technology “could also spur a geographic shift for tech” to areas with more of it to spare.  With that, it is fair to ask “How Bad is A.I. for the Climate?” (the same source on May 6th), as it “risks throwing companies’ climate pledges off track” since “the A.I. revolution will largely run on fossil fuels.”

Another copyright infringement lawsuit materialized last week, as “8 Daily Newspapers Sue OpenAI and Microsoft Over A.I.” (Katie Robertson, The New York Times, April 30th).  These papers, including the New York Post and the Chicago Tribune, all owned by one company, claimed that “chatbots regularly surfaced the entire text of articles behind subscription paywalls for users and often did not prominently link back to the source,” and erroneously named the papers as sources of things they did not produce.

Although many predictions show massive increases in profits as well as capabilities, “CEOs make the message clear on AI’s big payoff:  Be patient” (Lloyd Lee, Business Insider, April 25th).  To prevent AI-company stock prices from reverting to whence they came, when “many (companies) have yet to see any significant returns on their investment,” “CEOs hope to re-assure shareholders that this is to be expected.”  Venture capitalists have not always been known for patience, so even if the titanic success so often forecast for AI materializes, without every firm running out of power, data, chips, perceived accuracy, or legal acceptance, many may fail due to running out of money. 

We don’t know where or how far artificial intelligence is going, but it hasn’t done much yet.  From here, there are no guarantees – and plenty of doubts.

Friday, May 3, 2024

The Jobs Report Dips from Great to Good – AJSN Reflects Only Half of Its Seasonally Lower Latent Demand

This morning’s Bureau of Labor Statistics Employment Situation Summary may have seemed disappointing, as for once the number of net new nonfarm payroll positions fell short of public estimates.  But that was not the real reason.  The ones I saw for April, the month of the report, ranged from 223,000 to 250,000 – it came in at 175,000.  Otherwise, seasonally adjusted unemployment was up 0.1% to 3.9% and the unadjusted version was down, as is typical from March to April, 0.4% to 3.5%.  Unadjusted employment rose 234,000 to 161,590,000, with such unemployed down more than 700,000 to 5,894,000.  There were 95,080,000 people claiming no interest in work, up 266,000.  The counts of people jobless for 12 months or more and those working part-time for economic reasons, or keeping those arrangements while looking thus far unsuccessfully for full-time ones, both worsened, up from 1.2 million to 1.3 million and from 4.3 million to 4.5 million.  The two measures showing how common it is for Americans to be working or that plus those counted as jobless, the employment-population ratio and the labor force participation rate, were narrowly mixed, with the former down 0.1% to 60.2% and the latter holding at 62.7%.  Private nonfarm payroll hourly earnings increased 6 cents to $34.75, not keeping up with inflation.

The American Job Shortage Number or AJSN, the metric showing how many additional positions could be quickly filled if all knew that getting one would be little more than another daily errand, improved with a 300,000 drop from March as follows:

The number of unemployed shaved over 600,000, but increases in those discouraged and those not looking for a year or more offset more than half of that.  The share of the AJSN from those officially jobless fell to 33.1%, meaning that more than two-thirds of people taking these opportunities and not working now would have other statuses.  Compared with a year before, the AJSN gained about 650,000, more than that from a higher number of unemployed.

We have areas of concern here.  Although the number of new jobs keeps on exceeding our population increases, joblessness is at the top of its nine-month range, with several other statistics worse than in March.  If they degrade again, we may need to accept that we are not in the top employment category anymore.  In the meantime, though, the turtle took a small step forward.