Category: Labor Economics

Steve Case’s “Heroic Push” to Encourage Entrepreneurship Outside Silicon Valley, in “Surprising Places”

(p. C12) This is why one of the most energizing books I read this year was Steve Case’s “The Rise of the Rest.” It chronicles Steve’s journey to nurture tech startups in what some might consider “surprising” places. Think: Milwaukee vs. Silicon Valley.

. . .

Steve’s book is a heroic push encouraging us to widen the aperture. With the right investments and visibility, we can change the American landscape for the better, leveling the playing field and creating a more inclusive economy for years to come.

For the full review, see:

Asutosh Padhi. “12 Months of Reading; Asutosh Padhi.” The Wall Street Journal (Saturday, Dec. 10, 2021): C12.

(Note: ellipses added.)

(Note: the online version of the review has the date December 8, 2022, and has the title “Who Read What in 2022: Political and Business Leaders.”)

The book praised by Asutosh Padhi is:

Case, Steve. The Rise of the Rest: How Entrepreneurs in Surprising Places Are Building the New American Dream. New York: Avid Reader Press, 2022.

New Technology Creates More Jobs Than It Destroys

(p. 3) The pessimist’s basic mistake is to focus too much on what is lost to competition and technology, and too little on what is gained. Over the past 25 years, as McKinsey & Company, the consulting firm, has pointed out, about a third of the new jobs created in the United States were types that did not exist or barely existed 25 years ago.

. . .

In New York City the car replaced the horse carriage within the first 15 years of the 20th century, killing off the carriage trade and giving birth to the taxi trade — as well as to highly paid auto mechanics. Uber threatens the taxi trade, and the self-driving car threatens the Uber driver. But it has also brought multimillion-dollar signing bonuses for self-driving-car engineers and created new opportunities for mechanics. People tend to find a way to work with and profit from new technology.

. . .

In most cases, an industry without enough workers to meet customer demand would simply hire more, or at least raise wages to attract them.

Yet, according to the Bureau of Labor Statistics, neither of those things happened last year. The number of pharmacists employed in the United States dropped about 1 percent from 2020 to 2021. On balance, employers did not raise wages — in fact, median pay fell slightly, even without adjusting for inflation.

. . .

. . . there is no evidence so far to support forecasts of a nearly jobless future. If robots threatened human labor, human joblessness would be growing. But it’s not. In fact, since 2008, job growth has been strongest in countries like Germany and Japan, which deploy the most robots.

For the full commentary, see:

Ruchir Sharma. “No, That Robot Will Not Steal Your Job.” The New York Times, SundayReview Section (Sunday, October 8, 2017): 3.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Oct. 7, 2017, and has the same title as the print version.)

Pharmacy Benefit Managers (PBMs) Create Incentives to Reduce Hiring and Pay of Pharmacists

(p. A1) If any group of workers might have expected their pay to rise last year, it would arguably have been pharmacists. With many drugstores dispensing coronavirus tests and vaccines while filling hundreds of prescriptions each day, working as a pharmacist became a sleep-deprived, lunch-skipping frenzy — one in which ornery customers did not hesitate to vent their frustrations over the inevitable backups and bottlenecks.

“I was stressed all day long about giving immunizations,” said Amanda Poole, who left her job as a pharmacist at a CVS in Tuscaloosa, Ala., in June. “I’d look at patients and say to them, ‘I’d love to fill your prescriptions today, but there’s no way I can.’”

Yet pay for pharmacists, who typically spend six or seven years after high school working toward their professional degree, fell nearly 5 percent last year after adjusting for inflation. Dr. Poole said her pay, about $65 per hour, did not increase in more than four years — first at an independent pharmacy, then at CVS.

For many Americans, one of the pandemic’s few bright spots has been wage growth, with pay rising rapidly for those near the bottom and those at the top. But a broad swath of workers in between has lagged behind.

. . .

(p. A16) Pharmacies also faced external challenges. To hold down the cost of prescription drugs, insurance companies and employers rely on so-called pharmacy benefit managers to negotiate discounts with drugmakers and pharmacies. Consolidation among benefit managers gave them more leverage over pharmacies to drive prices lower. (CVS merged with a large benefits manager in 2007.)

Big drugstore chains often responded by trying to rein in labor costs, according to William Doucette, a professor of pharmacy practice at the University of Iowa. Several pharmacists who worked at Walgreens and CVS said the formulas their companies used to allocate labor resulted in low levels of staffing that were extremely difficult to increase.

According to documents provided by a former CVS pharmacist, managers are motivated by bonuses to stay within these aggressive targets.

. . .

In most cases, an industry without enough workers to meet customer demand would simply hire more, or at least raise wages to attract them.

Yet, according to the Bureau of Labor Statistics, neither of those things happened last year. The number of pharmacists employed in the United States dropped about 1 percent from 2020 to 2021. On balance, employers did not raise wages — in fact, median pay fell slightly, even without adjusting for inflation.

. . .

Several pharmacists said they were especially concerned that understaffing had put patients at risk, given the potentially deadly consequences of mix-ups. “It was so mentally taxing,” said Dr. Poole, the Tuscaloosa pharmacist. “Every day, I was like: I hope I don’t kill anyone.”

. . .

Asked about safety and staffing, CVS and Walgreens said they had made changes, like automating routine tasks, to help pharmacists focus on the most important aspects of their jobs.

Many pharmacists contacted for this article quit rather than face this persistent dread, often taking lower-paying positions.

Still, none had regrets about the decision to leave. “I was 4,000 pounds lighter the moment I sent my resignation email in,” said Dr. Wommack, who left the company in May 2021 and now works at a small community hospital.

As for the medication she had taken for depression and anxiety while at Walgreens, she said, “Shortly after I stopped working there, I stopped taking those pills.”

For the full story, see:

Noam Scheiber. “Why Working At Pharmacies Lost Its Luster.” The New York Times (Tuesday, September 13, 2022): A1 & A16.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version, and has the title “How Pharmacy Work Stopped Being So Great.”)

Office Space Designers Finally Pull Back from Extreme “Open” Space that Forces Collaboration at the Price of Blocking Concentration

(p. 1) First there were individual offices. Then cubicles and open floor plans. Now, there is a “palette of places.”

. . .

. . . the move toward pure open floor plans that packed more workers into less and less space . . . was supposed to drive collaboration, but many experts agree it often went too far, with row upon row of desks and workbench-style seating more likely to generate ennui than efficiency.

. . .

The new model is largely open, but not entirely. Under the revised thinking, breaking down walls to bring people together is good, but so are “team spaces” and standing tables, comfortable couches and movable walls.

Privacy is also good, particularly for tasks that require intense concentration, the thinking goes. That doesn’t mean a return to the glory days of private offices, but it does mean workers have more space and more places to seek solitude than in the neo-Dickensian workbench settings. The new designs often include “isolation rooms,” soundproof phone booths, and even lounges where technology is forbidden.

. . .

(p. 4) But in 2010, Microsoft started testing open designs with a quarter of a floor, and then expanded. Since 2014, it has opened 10 renovated buildings without offices, including four this year.

Microsoft, Mr. Ford said, has taken a test-and-learn approach. It learned, for example, that its early designs were too open plan, with 16 to 24 engineers in team-based spaces. Engineers found those spaces noisy and distracting, and concentration suffered. Too much openness can cause workers to “do a turtle,” researchers say, and retrench and communicate less — colleagues who retreat into their headphones all day, for example.

Today, there are more private spaces, and the team areas hold only eight to 12 engineers. “That’s the sweet spot for Microsoft,” Mr. Ford said.

The company thinks it is working. Microsoft’s Azure cloud software business has surged in the last few years, as has the company’s stock price. Mr. Ford said about 20 percent of the workplaces have been redone on Microsoft’s campus in Redmond, Wash., and the surrounding area. Within five years, he said, he expects the renovated share to reach 80 percent.

For the full story, see:

Steve Lohr. “Don’t Get Too Comfortable at That Desk.” The New York Times, SundayBusiness Section (Sunday, October 8, 2017): 1 & 4.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 6, 2017, and has the same title as the print version.)

A Dog (But Not A.I.) Can Put Together What It Learns in Two Separate Contexts, and Apply It in a Third Context

(p. 6) . . . an engineer named Blake Lemoine . . . worked on artificial intelligence at Google, specifically on software that can generate words on its own — what’s called a large language model. He concluded the technology was sentient; his bosses concluded it wasn’t.

. . .

There is no evidence this technology is sentient or conscious — two words that describe an awareness of the surrounding world.

That goes for even the simplest form you might find in a worm, said Colin Allen, a professor at the University of Pittsburgh who explores cognitive skills in both animals and machines. “The dialogue generated by large language models does not provide evidence of the kind of sentience that even very primitive animals likely possess,” he said.

Alison Gopnik, a professor of psychology who is part of the A.I. research group at the University of California, Berkeley, agreed. “The computational capacities of current A.I. like the large language models,” she said, “don’t make it any more likely that they are sentient than that rocks or other machines are.”

. . .

(p. 7) “A conscious organism — like a person or a dog or other animals — can learn something in one context and learn something else in another context and then put the two things together to do something in a novel context they have never experienced before,” Dr. Allen of the University of Pittsburgh said. “This technology is nowhere close to doing that.”

For the full story, see:

Cade Metz. “A.I. Does Not Have Thoughts, No Matter What You Think.” The New York Times, SundayBusiness Section (Sunday, August 7, 2022): 6-7.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. 11 [sic.], 2022, and has the title “A.I. Is Not Sentient. Why Do People Say It Is?”)

Gig Work Thrives Because Workers Value Flexibility to Pursue Balance or Fulfilment

(p. B1) American workers are experiencing, by many measures, one of the best job markets ever. The unemployment rate has matched a 53-year low. Job listings per available worker are at historic highs. Wages, while not quite keeping up with inflation, are rising at their fastest pace in decades.

So why would people keep doing gig work, a notoriously difficult and insecure way to make a living?

. . .

Picking up shifts offers something that traditional permanent employment still generally doesn’t: the ability to work when and as much as you want, demand permitting, which is often essential to balance life obligations like school or child care.

. . .

(p. B5) “We were seeing this move towards multiple income streams, because that work was picked up as a stopgap and then continued,” Dr. Gervis said.

Take Denae Bettis, a 23-year-old Steady user living in Severn, Md. After dropping out of college, she got a job at UPS, and after a few years rose to become a safety supervisor, usually starting at 4 a.m. During the pandemic, she took on more responsibilities.

“The job got really stressful, and I felt like I had no way out,” Ms. Bettis said. So in June 2020, she started a side gig through Instacart, shopping for people holed up at home. The next month, she quit her job, making it easier for her to pursue her passion: working as a personal makeup artist, which often requires taking early-morning appointments.

Surviving on income from gigs — which for Ms. Bettis now include DoorDash as well as Instacart — isn’t easy. But Ms. Bettis thinks she can save enough money to open her own storefront.

“We just went through a period where millions died, so are you going to spend your time at your job if it doesn’t fulfill you?” Ms. Bettis said, summing up gig work’s appeal. “Everybody loves stability, but if the flexibility isn’t there, I don’t think a lot of people are going to go back.”

For the full story, see:

Lydia DePillis. “Why Gig Work Is Thriving.” The New York Times (Tuesday, August 16, 2022): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. 17, 2022, and has the title “If the Job Market Is So Good, Why Is Gig Work Thriving?.”)

Initially Socialist Israeli Kibbutzim Gradually Embraced Entrepreneurial Capitalism

(p. C4) Today, in a break with . . . [its] communal past, Ms. Barnea’s kibbutz is farming for profit, and its main cash crop is medical marijuana. She recently retired from managing the greenhouse that grows the drug.

The shift at Kibbutz Beit HaEmek is just the latest sign of how much Israel’s kibbutzim are changing, as both Israel and the kibbutz movement move away from their socialist roots to become more entrepreneurial and profit-driven.

“We have to survive,” said Ms. Barnea, now 64, walking around the greenhouse as the smell of marijuana wafted past.

. . .

Facing a bleak financial future, young people abandoned the kibbutzim in the 1990s. Meanwhile, Israel’s vibrant technology sector took off, providing an additional pull away from the communes.

To reverse the exodus, Israel’s kibbutzim dismantled much of their socialist model. In 1995, Kibbutz Merom HaGolan became the first to go through a so-called privatization process, paying members salaries on a scale.

Today, most kibbutzim have undergone some form of privatization. Many members now earn salaries outside the kibbutz but pay taxes for the community’s upkeep. New members can take out mortgages with banks and buy land on the kibbutz for their homes.

. . .

Only about 40 kibbutzim still share resources and give equal allowances as envisioned in the original model. Most of these communities had created successful businesses that helped them maintain the communal way of living.

One such community is Kibbutz Sdot Yam, on Israel’s central coast between Tel Aviv and Haifa. In the 1980s, the kibbutz opened a factory that constructed quartz surfaces for tables and floors. Despite that venture’s success, the kibbutz is now considering whether to allow members—most of whom work outside the community—to earn their own salaries, rather than sharing them with the commune, said Doron Stansill, a 47-year-old member.

For the full essay, see:

Rory Jones. “The Kibbutz in a Capitalist Israel.” The Wall Street Journal (Saturday, Oct. 14, 2017 ): C4.

(Note: ellipses added.)

(Note: the online version of the essay has the date Oct. 13, 2017 , and has the title “The Kibbutz Movement Adapts to a Capitalist Israel.”)

Resilient Entrepreneurs Quickly Rebuilt Chicago After “Great Fire” of 1871

(p. C8) Along with the San Francisco earthquake of 1906, the Great Chicago Fire of 1871 stands as one of America’s foundational urban legends, a story of death and rebirth, a monument to the resiliency of the nation’s character.

. . .

Photographs taken immediately after the fire show the utter devastation facing residents: a flattened, rubble-strewn landscape, with only the jagged husks of buildings jutting into the smoky air. But “Chicago’s Great Fire” goes beyond the disaster and its cause to recount the remarkable way the city sprang back. An energizing sense of optimism and opportunity, along with a heavy dose of boosterism, had fueled the city’s explosive growth, and those elements quickly went to work. “Almost immediately,” Mr. Smith writes, “many Chicagoans paradoxically came to see the heroic destruction of their city as an unexpectedly positive event, a stage in its irresistible upward development rather than a dispiriting setback.”

“CHEER UP,” exhorted the headline on an editorial in the Chicago Tribune’s first postfire edition, three days after the inferno started. Even while tens of thousands of residents remained homeless, an emissary assured Eastern financiers that the city warranted a new round of investment. Local entrepreneurs built crude shacks in the rubble to sell necessities. Debris not used for rebuilding was dumped on the edge of Lake Michigan, thus enlarging the size of the downtown.

For the full review, see:

Richard Babcock. “A Cow, a Lantern, a City in Flames.” The Wall Street Journal (Saturday, Oct. 17, 2020): C8.

(Note: ellipsis added.)

(Note: the online version of the review has the date October 16, 2020, and has the title “‘Chicago’s Great Fire’ Review: Rising From the Ashes.”)

The book under review is:

Smith, Carl. Chicago’s Great Fire: The Destruction and Resurrection of an Iconic American City. New York: Atlantic Monthly Press, 2020.

Fewer Jobs Require College Degree Than Prepandemic

(p. A3) The tight labor market is prompting more employers to eliminate one of the biggest requirements for many higher-paying jobs: the need for a college degree.

Companies such as Alphabet Inc.’s Google, Delta Air Lines Inc. and International Business Machines Corp. have reduced educational requirements for certain positions and shifted hiring to focus more on skills and experience. Maryland this year cut college-degree requirements for many state jobs—leading to a surge in hiring—and incoming Pennsylvania Gov. Josh Shapiro campaigned on a similar initiative.

U.S. job postings requiring at least a bachelor’s degree were 41% in November [2022], down from 46% at the start of 2019 ahead of the Covid-19 pandemic, according to an analysis by the Burning Glass Institute, a think tank that studies the future of work. Degree requirements dropped even more early in the pandemic. They have grown since then but remain below prepandemic levels.

. . .

Lucy Mathis won a scholarship to attend a women in computer science conference. There, she learned about an IT internship at Google and eventually dropped out of her computer science undergraduate program to work at the company full time. The 28-year-old now makes a six-figure sum as a systems specialist.

“I found out I had a knack for IT,” she said. “I’m not good at academics. It’s not for me.”

More than 100,000 people in the U.S. have completed Google’s online college-alternative program that offers training in fast-growing fields such as digital marketing and project management, the company said. It and 150 other companies are now using the program to hire entry-level workers.

For the full story, see:

Austen Hufford. “Employers Rethink Need for a Degree.” The Wall Street Journal (Monday, Nov. 28, 2022): A3.

(Note: ellipsis added.)

(Note: the online version of the story has the date Nov. 26, 2022, and has the title “Employers Rethink Need for College Degrees.” I am grateful to Zhigang Feng for calling my attention to the article quoted above.)

To End Inflation, Fed Should Commit “To Good Policy Rules,” and Not Stray to Increase Jobs

(p. A9) Growing up in Glens Falls, N.Y., Edward C. Prescott got an insider’s view of business from chats with his father, an engineer and later comptroller for a global supplier of pigments. Those insights made the economics courses he took in college seem less theoretical and more relevant than they might have seemed to other students.

. . .

With Dr. Kydland, he published an influential 1977 paper called “Rules Rather Than Discretion: The Inconsistency of Optimal Plans,” concluding that policy makers could err by straying from long-term goals to address short-run problems. For instance, central bankers might be tempted to ease up on their commitments to contain inflation in the short run as a way to boost employment. If so, the professors argued, people might start assuming that prices were out of control, creating a psychology that led to faster inflation for long periods.

Sticking to a sound policy was far more effective than jolting the economy with frequent adjustments, they argued. “You should not think in terms of controlling the economy,” Dr. Prescott said. “That leads to bad outcomes. You should think in terms of committing to good policy rules.”

. . .

Though revered by many of his students and colleagues, Dr. Prescott sometimes baffled them. The problem, he once explained, was that he thought much faster than he could talk. He sometimes jumped from one topic to another with no transition.

“His brain did not work like other people’s,” said Timothy Kehoe, an economics professor at the University of Minnesota who worked with Dr. Prescott for four decades, “and in some ways that was a tremendous advantage.”

For the full obituary, see:

James R. Hagerty. “Economist’s Policy Advice: Stick to Long-Term Plan.” The Wall Street Journal (Saturday, November 12, 2022): A9.

(Note: ellipses added.)

(Note: the online version of the obituary was updated Nov. 8, 2022, and has the title “Nobel-Winning Economist Edward C. Prescott Dies at 81.”)

Future Disney Fashion Designer Was “Fascinated” by “Snow White” Movie as a Child

(p. A20) Alice Davis, a Disney Company costume designer who created the outfits worn by the animatronic figures in two of the company’s most enduring and popular rides, It’s a Small World and Pirates of the Caribbean, died on Nov. 3 [2022] at her home in Los Angeles.

. . .

Ms. Davis had been designing lingerie and other garments for several years when Walt Disney himself asked her in 1963 if she wanted to work on the costumes for It’s a Small World.

. . .

She had been fascinated with animation since seeing “Snow White and the Seven Dwarfs” when she was 8 (“I just about vibrated out of my seat,” she said), and she hoped to pursue the form as a career.

. . .

She was steered to costume design, although Ms. Chouinard suggested that she also take an animation drawing class with a new instructor at the school: Marc Davis, who was by then one of a core group of animators Mr. Disney referred to as his “nine old men.”

She graduated in 1950 and married Mr. Davis in 1956; he died in 2000. She leaves no immediate survivors.

Ms. Davis’s other Disney work included establishing costuming and quality-control procedures for the company and creating standards for three-dimensional characters in other rides and shows.

In 2012, Disney recognized Ms. Davis as its most famous costume designer with a tribute that is among the company’s highest honors: a commemorative window installed on a storefront on Disneyland’s Main Street. It sits next to a similar pane honoring her husband.

For the full obituary, see:

Ed Shanahan. “Alice Davis, 93, Who Designed Outfits For Two of Disney’s Most Popular Rides.” The New York Times (Saturday, November 19, 2022): A20.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary has the date Nov. 18, 2022, and has the title “Alice Davis, Costume Designer for Disney Rides, Dies at 93.”)