Labor Economics – Page 2 – artdiamondblog.com

Firms Find Humans More Flexible Than Robots

(p. B2) JACKSON CENTER, OHIO–Airstream’s factory here is racing to fill a backlog of orders for its retro, high-end travel trailers that spans well into next year. The company is hiring, adding dealers and spending $50 million to build a bigger plant.
I counted eight workers climbing through an Airstream to bolt a hulking aluminum shell to a steel chassis, and snake fluid lines and wires through walls. To finish the shiny, silver capsule off, workers will need to install 3,000 rivets by hand.
There’s not a robot in sight. They may speed production, but the machines require a substantial investment that risks being wasted if the economy slumps
. . .
“We see in U.S. manufacturing a race between technology and human capital,” Stanford University economist Nicholas Bloom said. While some companies like electric-car maker Tesla Inc. are racing to automate almost every process on the factory floor, he said many executives are reluctant to sink investments in equipment that “will be hard to reverse.”
. . .
Robotics spending is forecast to equal $90 billion in 2018, according to researcher International Data Corp., with a hefty chunk of that investment aimed at industrial or manufacturing uses. That is a considerable increase compared to prior years, but it is only a sliver of the nearly $3 trillion committed to capital investment.
John Van Reenen, a Massachusetts Institute of Technology economics professor and Mr. Bloom’s research partner, said executives in many industries –including health care and retailing–aren’t sold on the technical revolution. “There is a big debate on whether robots are really delivering on the productivity benefits they might promise.”
At an event to commemorate the revamp of a factory west of Detroit last month, Ford Motor Co.’s president of global operations, Joe Hinrichs, said a lot of industrial automation happened several decades ago. Now companies are trying to “optimize how they use people” rather than install more machines.
Ford spent nearly $1 billion converting the factory to go from making small cars to producing pickup trucks. Much of that went toward new tooling for stamping out body parts, but relatively little went toward adding automation, Mr. Hinrichs said. Artificial intelligence is now integrated into the final inspection lines to boost quality. But skilled workers are needed to interact with the AI tools.
Mr. Bloom said incremental efforts like this are helping boost worker productivity, even if at a lower rate than was experienced during the decadelong boom that started in the mid-1990s. He said economists may need to get comfortable with 1% annual productivity gains, particularly because it takes a lot of investment just to maintain that modest rate.

For the full commentary, see:
John D. Stoll. “ON BUSINESS; Humans Are Winning the Battle With Robots.” The Wall Street Journal (Saturday, Nov. 3, 2018): B2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Nov. 1, 2018.)

92-Year-Old American Airline Mechanic

(p. A19) Azriel Blackman, an airline mechanic for American Airlines, is not allowed to climb ladders, drive on the airfield at Kennedy International Airport or even use any tools.
That’s understandable — Mr. Blackman turns 92 next month.
But those constraints have not stopped him from showing up to work at a job he started in an era when trans-Atlantic commercial flights were novel feats.
“He loves coming to work,” said Robert Needham, Mr. Blackman’s boss and the station manager for the airline’s New York maintenance base. “His work ethic is something I’d love every one of my 368 mechanics here to have.”
Five days a week, Mr. Blackman drives himself from his home in Queens Village to the airport long before sunup and well before his 5 a.m. start time. His job as crew chief is to review paperwork detailing what maintenance has been completed and what remains to be done on 17 jetliners that are kept overnight at the airport. Then, wearing a lime-green vest and clutching a paper containing a list of planes and service requests, he starts his walk through a massive hangar, often passing below an enormous mural on the wall featuring his portrait surrounded by four types of aircraft flown by American.
. . .
“Every day the job is different,” Mr. Blackman said. “You’re not doing the same thing repetitively, and that’s good. If in my journey around the hangar I see something I can help on, I do that.”

For the full story, see:
Christine Negroni. “For 75 Years, Helping to Keep Planes Aloft.” The New York Times (Tuesday, June 18, 2017): A19.
(Note: ellipsis added.)
(Note: the online version of the story has the date June 17, 2017, and has the title “For 75 Years, a Mechanic Has Helped Keep Planes Aloft.” The online version identifies the page number of the New York edition as A18. The page number in my copy of the National edition was A19.)

Deirdre McCloskey Offers Advance Praise for Openness to Creative Destruction

Astoundingly rich in ideas and stories, Diamond’s sweet and beautiful book is more: an open-handed guide to what really matters in explaining, and sustaining, the Great Enrichment of 3,000 percent per person 1800 to the present. Diamond assuages the ancient fear of betterment, recently haunting us with spooks of AI and technological unemployment. He shows conclusively that an “innovative dynamism” enriches us all, materially and spiritually. The poor are bettered. The jobs are bettered. Read the book and be bettered, freed from specious and politically poisonous worries about economic change.

Deirdre McCloskey, UIC Distinguished Professor of Economics and of History Emerita. Author of Bourgeois Equality and many other works.

McCloskey’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Government Fiscal Stimulus Does Not Speed Job Growth

Source of graph: online version of the WSJ article quoted and cited below.

(p. A17) . . . is there evidence that stimulus was behind America’s recovery–or, for that matter, the recoveries in Germany, Switzerland, Sweden, Britain and Ireland? And is there evidence that the absence of stimulus–a tight rein on public spending known as “fiscal austerity”–is to blame for the lack of a full recovery in Portugal, Italy, France and Spain?
A simple test occurred to me: The stimulus story suggests that, in the years after they hit bottom, the countries that adopted relatively large fiscal deficits–measured by the average increase in public debt from 2011-17 as a percentage of gross domestic product–would have a relatively speedy recovery to show for it. Did they?
As the accompanying chart shows, the evidence does not support the stimulus story. Big deficits did not speed up recoveries. In fact, the relationship is negative, suggesting fiscal profligacy led to contraction and fiscal responsibility would have been better.

For the full commentary, see:
Phelps, Edmund. “The Fantasy of Fiscal Stimulus; It turns out Keynesian policies are correlated with slower, not faster, economic growth.” The Wall Street Journal (Tuesday, Oct. 30, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Oct. 29, 2018.)

“The Market Doesn’t Care If You’re Indigenous or Not”

(p. A8) MELBOURNE, Australia — It was a disempowering experience at a large corporate organization that prompted Morgan Coleman to become an entrepreneur.
Initially, he was proud to work there. But soon, as one of the few Indigenous employees, he felt patronized and unwelcome by some, and worried that his manager resented him because of his Torres Strait Islander background.
Now, as part of a growing number of Indigenous Australians finding success in the entrepreneurial world even as the rate of non-Indigenous business ownership has fallen, he feels his future rides solely on his merit.
“Whether I succeed or not, it’s entirely up to me,” Mr. Coleman, 28, said in a recent interview at the Melbourne offices of Vets on Call, the app he left his corporate job to start. “The market doesn’t care if you’re Indigenous or not.”

For the full story, see:

Kenneth Chang. “For Indigenous Australians, Defining a Destiny Through Entrepreneurship.” The New York Times (Monday, Feb. 4, 2019): A8.

(Note: the online version of the story has the date Jan. 30 [sic], 2019, and has the title “”It’s Entirely Up to Me’: Indigenous Australians Find Empowerment in Start-Ups.”)

Top Fourth of Humanities Grads Earn Far More Than Bottom Fourth of Engineering Grads

(p. A3) Graduates of liberal arts areas like philosophy, foreign languages, ethnic and gender studies, history and English all have a better-than-even chance of landing a job that fits their education level.
They may not pay well, with teaching and social services popular destinations, but graduates can expect to fare better in terms of landing credential-appropriate roles than transportation, culinary services, agriculture and public administration majors.
. . .
The report’s findings are bolstered by research from Georgetown University’s Center on Education and the Workforce, which has found that job prospects and earnings vary widely by college major, with some counterintuitive results. For example, the bottom quartile of architecture and engineering majors earn far less than the top quartile of humanities and social science majors.

For the full story, see:
Melissa Korn. “Many Grads Underemployed After College.” The Wall Street Journal (Saturday, Oct. 27, 2018): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 26, 2018, and has the title “Some 43% of College Grads Are Underemployed in First Job.”)

Civil-Rights Leaders Argue That Green Policies Saddle the Poor “with Higher Living Costs”

(p. A19) French President Emmanuel Macron stirred popular rage by trying to raise the gasoline tax by about 25 cents a gallon. He argued that higher taxes would reduce fuel use and hence emissions of CO2, helping France meet the lower emissions goals to which it is pledged as a signatory to the United Nations’ Paris Agreement to fight climate change.
Mr. Macron has learned the hard way that voters don’t see climate change as a threat demanding personal sacrifices. The rebellion is global. Green measures that caused energy prices to soar damaged Chancellor Angela Merkel in Germany’s 2017 election. Green energy plans were repudiated by voters in Australia and helped cause a political upheaval in the Canadian province of Ontario.
Voters in Washington state and Arizona rejected November ballot measures aimed at reducing CO2 emissions. The Journal’s William McGurn reported last week that 200 prominent civil-rights leaders have filed suit against the California Air Resources Board. Green policies, they argue, are saddling the poor with higher living costs.

For the full commentary, see:
George Melloan. “The Yellow Jackets Are Right About Green Policies; They have distinguished company in questioning the science behind climate-change dogma.” The Wall Street Journal (Monday, Dec. 17, 2018): A19.
(Note: the online version of the commentary has the date Dec. 16, 2018.)

“Artificial Barriers to Housing Production”

(p. A3) America’s housing shortage is more wide-ranging than cloistered coastal markets, stretching from pricey locales such as California and Massachusetts to more surprising places, such as Arizona and Utah.
Some 22 states and the District of Columbia have built too little housing to keep up with economic growth in the 15 years since 2000, resulting in a total shortage of 7.3 million units, according to research to be released Monday by an advocacy group for loosening building regulations.
California bears half of the blame for the shortage: The state built 3.4 million too few units to keep up with job, population and income growth.
. . .
“The artificial barriers to housing production aren’t constrained just to California,” said Mike Kingsella, executive director of the Up For Growth National Coalition. “As we dug into the numbers behind this, at a local market level, we’re seeing a pronounced affordability challenge in places like even Arizona.”
Arizona and Utah are among the states that have built too little housing in the 15-year period, according to the report.

For the full story, see:
Laura Kusisto. “Shortages in Housing Are Widespread.” The Wall Street Journal (Tuesday, April 17, 2018): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 16, 2018, and has the title “Homebuilding Isn’t Keeping Up With Growth, Development Group Says.”)

Worn Down by Growing Regulations, American Entrepreneurs Leave China

(p. A1) SHANGHAI–Fifteen years ago in California, a tall technology geek named Steve Mushero started writing a book that predicted the American dream might soon “be found only in China.” Before long, Mr. Mushero moved himself to Shanghai and launched a firm that Amazon.com Inc. and Alibaba Group Holding Ltd. certified as a partner to serve the world’s biggest internet market.
These days, the tech pioneer has hit a wall. He’s heading back to Silicon Valley where he sees deeper demand for his know-how in cloud computing. “The future’s not here,” said the 52-year-old.
For years, American entrepreneurs saw a place in which they would start tech businesses, build restaurant chains and manage factories, making potentially vast sums in an exciting, newly dynamic economy. Many mastered Mandarin, hired and trained thousands in China, bought houses, met their spouses and raised bilingual children.
Now disillusion has set in, fed by soaring costs, creeping taxation, tightening political control and capricious regulation that makes it ever tougher to maneuver the market and fend off new domestic competitors. All these signal to expat business owners their best days were in the past.
The Trump administration is making a hard-nosed challenge to China using trade tariffs, in-(p. A12)vestment controls and prosecution of technology thieves, and many in American business are cheering, if silently, having soured on the market after years of trying.
. . .
From Silicon Valley in 2003, Mr. Mushero felt China’s rumblings and started writing his book, “Off-Shoring the Middle Class.” He saw U.S. companies save money by shifting accounting, X-ray evaluations and other technical jobs overseas. China, he thought, was becoming globalization’s “one-stop-shop” for manufacturing, basic tech work and advanced research.
He predicted a broad shift to China of not only factory work, but U.S. white collar jobs, too.
. . .
At a Starbucks in mid-2008, he sketched out “a napkin business plan” for a new company called ChinaNetCloud (Shanghai) Co. with Mr. Eron. China was overtaking the U.S. as the biggest internet market, and the partners would trail-blaze into cloud services by managing the online operations of local businesses.
. . .
Tougher regulations and competition deterred foreign players. China’s reputation for technology theft kept many out of the market, which reduced the number of Mr. Mushero’s potential clients. In 2013, the American Chamber of Commerce said only 10% of its members trusted data security enough to consider cloud services in China.
Walt Disney Co. tapped ChinaNetCloud to manage the computers hosting some interactive games in 2012, including one based on its hit movie “Frozen.” Mr. Mushero looked forward to more work with the U.S. entertainment giant, but Disney scrubbed the gaming push in mid-2014. Disney declined to comment. Online gaming in China is dominated by big domestic tech companies; it is derided by regulators as chaotic and harmful and hit regularly with new rules.
. . .
On a recent drizzly afternoon, flanked by framed commendations from Amazon and Microsoft for his firm’s achievements in China, Mr. Mushero said that after New Year’s he will head back to California, where he sees burgeoning demand for corporate online services, to market the company’s cloud-management tools.

For the full story, see:
James T. Areddy. “American Entrepreneurs in China Are Heading Home, Disillusioned.” The Wall Street Journal (Saturday, Dec. 8, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 7, 2018, and has the title “American Entrepreneurs Who Flocked to China Are Heading Home, Disillusioned.”)

“Not Enough Workers”

(p. B1) MILWAUKEE — At Western Building Products’ banana-shaped factory on the lip of the Menomonee River outside Milwaukee, the company’s president, Mark Willey, is wrangling with a stubborn problem: not enough workers.
“If someone is here a year, they never leave,” Mr. Willey said. “Our problem today is just finding people who want to work.”
It is a headache employers across the country are confronting, as Friday’s monthly jobs report from the government illustrated. The unemployment rate in November [2018] held steady at 3.7 percent — the lowest in nearly half a century. And while the pace of hiring slowed to 155,000 from October’s above-average showing, the parade of payroll gains marched on uninterrupted for the 98th month

For the full story, see:
Patricia Cohen. “‘Hiring Slows in a Labor Pinch.” The New York Times (Saturday, Dec. 8, 2018): B1.
(Note: bracketed year added.)
(Note: the online version of the story has the date Dec. 7, 2018, and has the title “As Hiring Slows, Employers Say It’s Getting Harder to Find Workers.”)