Category: Labor Economics

Increase in Remote Work May Increase Quality and Diversity of Hires, Increasing Firm Innovation

(p. B1) A few years ago, Mr. Laermer let the employees of RLM Public Relations work from home on Fridays. This small step toward telecommuting proved a disaster, he said. He often couldn’t find people when he needed them. Projects languished.

“Every weekend became a three-day holiday,” he said. “I found that people work so much better when they’re all in the same physical space.”

IBM came to a similar decision. In 2009, 40 percent of its 386,000 employees in 173 countries worked remotely. But in 2017, with revenue slumping, management called thousands of them back to the office.

. . .

As long ago as 1985, the mainstream media was using phrases like “the growing telecommuting movement.” Peter Drucker, the management guru, declared in 1989 that “commuting to office work is obsolete.”

. . .

(p. B4) Apart from IBM, companies that publicly pulled back on telecommuting over the past decade include Aetna, Best Buy, Bank of America, Yahoo, AT&T and Reddit. Remote employees often felt marginalized, which made them less loyal. Creativity, innovation and serendipity seemed to suffer.

Marissa Mayer, the chief executive of Yahoo, created a furor when she forced employees back into offices in 2013. “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people and impromptu team meetings,” a company memo explained.

. . .

At the beginning of the year, the unemployment rate was low and workers had some leverage. All that has been lost, at least for the next year or two. Widespread remote work could consolidate that shift.

“When people are in turmoil, you take advantage of them,” said John Sullivan, a professor of management at San Francisco State University.

“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.”

Innovation, Dr. Sullivan added, might even catch up eventually.

“When you hire remotely, you can get the best talent around and not just the best talent that wants to live in California or New York,” he said. “You get true diversity. And it turns out that affects innovation.”

For the full story, see:

David Streitfeld. “Working From Home Has a Checkered Past.” The New York Times (Tuesday, June 30, 2020): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date June 29, 2020, and has the title “The Long, Unhappy History of Working From Home.”)

Musk Pivots Tesla to Be Less Automated and to Do More In-House

(p. B2) Mr. Musk became deeply interested in improving and automating the car-building process after painful struggles to increase production of the company’s first SUV, the Model X, in 2016.

In a rare public acknowledgment of error, Mr. Musk conceded in 2018 that he went overboard with his automation attempts for the Model 3. That mistake snarled the company’s efforts to ramp up production in 2017 and 2018—a dark period that shook investor confidence in his ability to execute on his vision for Tesla to evolve from a niche luxury brand into a mainstream electric-car company.

. . .

The factory expansion is a further acknowledgment by Tesla that some of its founding assumptions were off. The original business plan for the company, founded in 2003, was to create a car company resembling more of a personal technology company, rather than a traditional auto maker, by outsourcing vehicle assembly much like how gadgets were made.

But that effort was eventually abandoned as Mr. Musk began to realize the importance of controlling more of a company filled with complex logistics and manufacturing nuances.

He has since brought in-house more of his supply chain than is normal for a car maker, including seat manufacturing, and developed greater expertise in battery cell manufacturing.

For the full story, see:

Tim Higgins. “Tesla Races To Boost Vehicle Production.” The Wall Street Journal (Friday, July 24, 2020): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 23, 2020, and has the title “Tesla Prepares for Hiring Boom as Elon Musk Targets Manufacturing Expansion.”)

Blacks Most Hurt by Creeping Credentialism

(p. A15) Nonessential degree requirements aren’t race-neutral. They embed into the labor market the legacy of black exclusion from the U.S. education system—namely, the antiliteracy laws that made it illegal for blacks to learn to read, the separate and unequal schools that kept them from catching up, and the limited progress since then on policies designed to remedy racial discrimination.

This spring, we and six other colleagues wrote a National Bureau of Economic Research working paper that questioned the fundamental assumption undergirding the proliferation of degree requirements: that workers without four-year degrees who earn low wages are low-skilled.

For the 71 million U.S. workers who have a high-school diploma but not a four-year degree, we used the skill profile of their current jobs as a proxy for their employability for higher-wage work. Their job experience suggests they are skilled through alternative routes, so we call them by the acronym STARs. They make up 60% of the active U.S. workforce.

Our research found that 16 million STARs have the skills for high-wage work, defined as earning more than twice the national median. Yet 11 million of them are currently employed in low-wage or middle-wage work. This suggests an extraordinary market failure: U.S. companies are systematically overlooking talent.

. . .

Our research suggests there are changes companies can make to address this problem:

• Hire for skills and work experience, not degrees. Rather than using the degree requirement as a default, employers should examine the skills that their jobs require and then use skill requirements for job postings, screenings and assessments. IBM adopted this type of skills-based approach with its New Collar initiative, launched in 2017.

. . .

Black workers face extraordinary barriers to economic mobility. By valuing skills over degrees, companies can improve the way the labor market functions for black STARs—a necessary step to ensure that the economy works for all.

For the full commentary, see:

Peter Q. Blair and Shad Ahmed. “The Disparate Racial Impact of Requiring a College Degree.” The Wall Street Journal (Monday, June 29, 2020): A15.

(Note: ellipses added; bullet point and italics in original.)

(Note: the online version of the commentary has the date June 28, 2020, and has the title “A Coronavirus Vaccine: Faster, Please.”)

The NBER working paper mentioned above is:

Blair, Peter Q., Tomas G. Castagnino, Erica L. Groshen, Papia Debroy, Byron Auguste, Shad Ahmed, Fernando Garcia Diaz, and Cristian Bonavida. “Searching for Stars: Work Experience as a Job Market Signal for Workers without Bachelor’s Degrees.” In NBER Working Papers: National Bureau of Economic Research, Inc., March 2020.

“Fat Cats” Fund Cancer Detection “Holy Grail”

(p. A15) So often the future shows up when you’re looking for something else. In 2013, DNA sequencing company Illumina bought Verinata Health and began offering noninvasive prenatal testing. Using a pregnant woman’s blood, a now-$500 DNA test can spot Down syndrome and other chromosomal conditions. Since then, the use of very invasive needle-to-the-womb amniocentesis testing has dropped.

But that’s not the story here. Of the first 100,000 women tested, 10 (or 0.01%) had unusual chromosome patterns. The fetus was fine, but in each case, the mother had cancer of differing types.

. . .

So Illumina spun out a new company named Grail in Menlo Park, Calif., to do what’s known as Circulating Cell-free Genome Atlas studies. Running DNA sequencing on regular blood samples, Grail generates hundreds of gigabytes of data per person—the well-known A-T-G-C nucleotides, but also the “methylation status,” or whether a particular DNA site’s function is turned on or off (technically, whether or not it represses gene transcription).

. . .

. . . , Grail’s chief medical officer Josh Ofman tells me, “cancer may show up as thousands of methylation changes, a much richer signal to teach machine learning algorithms to find cancer” vs. a single site. “There are 30 million methylation sites in the entire human genome on 100,000 DNA fragments. Grail looks at a million of them.” It takes industrial-grade artificial intelligence to find patterns in all this data, something a human eye would never see.

. . .

Grail is detecting the signature of actual cancer cells in your blood. According to validation data published in the Annals of Oncology, the test can find 50 different types, more than half of all known cancers.

. . .

Grail has raised almost $2 billion, including from Bill Gates and Jeff Bezos. Isn’t that interesting? Though much maligned as fat cats sitting on piles of gold coins and monopolists out to control the world, Messrs. Gates and Bezos are investing in technology—this is not philanthropy—that may save you or a relative’s life someday.

Innovation comes through surprises. This is a big one. And while worrywarts brood over artificial intelligence and robot overlords, early detection of cancer is really what machine learning is meant for. This is the Holy Grail.

For the full commentary, see:

Andy Kessler. “INSIDE VIEW; Cancer Screening Leaps Forward.” The Wall Street Journal (Monday, July 6, 2020): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 5, 2020, and has the same title as the print version.)

Tough Advice from Experienced Advisers Helps Us Acquire Skills

(p. R6) Recent studies suggest that people tend to favor advisers who are positive, cheerleader-types over tough talkers and voices of experience. But such preferences, the researchers also say, often lead to detrimental results, a finding with wide-ranging implications for companies and managers.

A paper published in March [2020] in the Journal of Experimental Psychology: General summarized the findings of six connected studies. Subjects of inquiry included: what characteristics people predict they will use when selecting an adviser; those people’s actual adviser selections; and the potential consequences of these decisions.

. . .

And when researchers looked at the outcomes of these decisions, they noted a disturbing pattern. Those who relied primarily on cheerleader-types generally underperformed those who were guided more by expertise.

Catherine Shea, an assistant professor at Carnegie Mellon’s Tepper School of Business who focuses on organizational behavior and theory, says that choosing an experienced mentor who may be rough around the edges can be like taking cough medicine.

“It tastes awful, but it works,” she says. “Sometimes you really do need the skill set, and sometimes the nice person is not going to give it to you.”

For the full story, see:

Cheryl Winokur Munk. “People Want Mentors Who Are Their Cheerleaders. That May Not Be Wise.” The Wall Street Journal (Monday, June 15, 2020): R6.

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

(Note: the online version of the story has the date June 14, 2020, and has the title “People Like Their Mentors to Be Cheerleaders. That May Be a Mistake.”)

The March 2020 paper mentioned above is:

Hur, Julia D., Rachel L. Ruttan, and Catherine T. Shea. “The Unexpected Power of Positivity: Predictions Versus Decisions About Advisor Selection.” Journal of Experimental Psychology: General (published online in advance of print on March 16, 2020).

Transcript of Political Economy Podcast Interview with Arthur Diamond on Openness to Creative Destruction

The lightly edited transcript was posted on July 30, 2020 on the American Enterprise Institute web site.

Yesterday Jim Pethokoukis posted a lightly edited transcript of my conversation with him on his American Enterprise…

Posted by Arthur Diamond on Friday, July 31, 2020

“The Ever-Evolving Standards of Wokeness”

(p. A6) . . . I was pleased this month when “Hamilton” became available to watch on the streaming service Disney+. But now the show is being criticized for its portrayal of the American Founding by many of the same people who once gushed about it. Is it a coincidence that affluent people loved “Hamilton” when tickets were prohibitively expensive, but they disparage it now that ordinary people can see it?

. . .

The upper classes are driven to distinguish themselves from the little people even beyond art. This explains the ever-evolving standards of wokeness. To become acculturated into the elite requires knowing the habits, customs and manners of the upper class. Ideological purity tests now exist to indicate social class and block upward social mobility. Your opinion about social issues is the new powdered wig. In universities and in professional jobs, political correctness is a weapon used by white-collar professionals to weed out those who didn’t marinate in elite mores.

. . .

To understand the neologisms and practices of social justice, you need a bachelor’s degree from an expensive college. A common refrain to those who are not fully up to date on the latest fashions is “Educate yourself.” This is a way of keeping down people who work multiple jobs, have children to care for, and don’t have the time or means to read the latest woke bestseller.

For the full commentary, see:

Rob Henderson. “‘Hamilton’ Loses Its Snob Appeal.” The Wall Street Journal (Weds., July 15, 2020): A19.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 14, 2020, and has the same title as the print version.)

Blacks in Detroit Have Public Transit to Die For

(p. A1) DETROIT — Paris Banks sprayed the seat with Lysol before sliding into the last row on the right. Rochell Brown put out her cigarette, tucked herself behind the steering wheel and slapped the doors shut.

It was 8:37 a.m., and the No. 17 bus began chugging westward across Detroit.

. . .

This hardscrabble city, where nearly 80 percent of residents are black, has become a national hot spot with more than 7,000 infections and more than 400 deaths. One reason for the rapid spread, experts say, is that the city has a large working-class population that does not have the luxury of living in isolation. Their jobs cannot be performed from a laptop in a living room. They do not have vehicles to safely get them to the grocery store.

(p. A12) And so they end up on a bus. Just like the No. 17 — a reluctant yet essential gathering place, and also a potential accelerant for a pandemic that has engulfed Detroit.

For the full story, see:

John Eligon. “No Choice but Shoulder to Shoulder on the Bus.” The New York Times (Thursday, April 16, 2020): A1 & A12-A13.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 16, 2020, and has the title “Rolling Through the Pandemic.”)

Quarantine Conditions Conspire Against “Flow”

(p. A24) Because I’m a mother, and because I once wrote a book about modern parenthood, I’ve spent a lot of time these days trying to diagnose why it is, exactly, that the nerves of so many parents have been torn to ribbons in the age of quarantine.

. . .

. . . : “Flow” is that heavenly state of total absorption in a project. Your sense of time vanishes; it’s just you and the task at hand, whether it’s painting or sinking shots through a basketball hoop.

It turns out that flow is critical to our well-being during this strange time of self-exile. A few weeks ago I spoke to Kate Sweeny, a professor of psychology at the University of California, Riverside, who recently collaborated on a survey of 5,115 people under quarantine in China. To her surprise, the people who best tolerated their confinement were not the most mindful or optimistic; they were the ones who’d found the most flow. She suspected it was why Americans have spent the last two months baking bread and doing puzzles. “They’re intuitively seeking out flow activities,” she said.

Flow, unfortunately, is rare in family life. The father of flow research, Mihaly Csikszentmihalyi, told me so point-blank when I wrote my book. When kids are small, their developing brains actually conspire against flow, because they’re wired to sweep in as much stimuli as possible, rather than to focus; even when they’re older, they’re still churning windmills of need.

And that’s during the best of times. Now, not only are we looking after our children, an inherently non-flow activity, and not only are we supervising their schoolwork and recreational pursuits — two things we used to outsource — but we’re working.

You need a stretch of continuous, unmolested time to do good work. Instead, your day is a torrent of interruptions, endlessly divided and subdivided, a Zeno’s paradox of infinite tasks. There’s no flow at all.

For the full commentary, see:

Jennifer Senior. “We’re Not Really Parenting. We’re Managing Parenthood in a Pandemic.” The New York Times (Monday, May 25, 2020): A24.

(Note: ellipses added; italics in original.)

(Note: the online version of the commentary has the date May 24, 2020, and the title “Camp Is Canceled. Three More Months of Family Time. Help.”)

The book Senior mentions above, is:

Senior, Jennifer. All Joy and No Fun: The Paradox of Modern Parenthood. New York: HarperCollins Publishers, 2014.

“Can You Imagine Turning on Someone Who Saves Your Life?”

(p. A20) WASHINGTON — Alice Marie Johnson was watching the Super Bowl with two of her sisters on Sunday night [Feb. 2, 2020] when she saw her own face in an advertisement amid the commercials for Doritos and Audis.

Ms. Johnson was serving a life sentence in an Alabama prison for a nonviolent drug conviction when the president commuted her sentence in 2018. The reality television star Kim Kardashian West had discovered Ms. Johnson’s story on social media and personally appealed to him on her behalf.

And now the 64-year-old African-American woman was the star of the Trump campaign’s multimillion-dollar Super Bowl ad, . . .

. . .

“I’ve been such a source of pride for him,” she said. “Who doesn’t want to show something they’re proud of during an election year? That’s what all the candidates do. For him to highlight me, it makes me know he’s not only proud, he’s super proud.”

She described herself as “not an expert in politics” but someone fighting for “anything that advances my cause, anything that advances my cause of bringing people home.”

Ms. Johnson would not say whether she would vote for Mr. Trump if she could. “I can’t vote, and that’s part of what I’m fighting for,” she said. But as for criticizing Mr. Trump, she said that was simply out of the question for her.

“Can you imagine turning on someone who saves your life?” she said. “Just on a personal level, can you imagine?”

For the full story, see:

Annie Karni. “Life as the Face of Trump’s Super Bowl Ad.” The New York Times (Friday, Feb. 7, 2020): A20.

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

(Note: the online version of the story has the date Feb. 6, 2020, and the title “What It’s Like to Be the Face of Trump’s Super Bowl Ad.”)

For 12-Year-Old, 10 Hours a Day in Mine “Really Meant Freedom for Me”

(p. A15) For Jack Lawson, “ten hours a day in the dark prison below really meant freedom for me.” At age 12, this Northern England boy began full-time work down the local mine. His life underwent a transformation; there would be “no more drudgery at home.” Jack’s wages lifted him head and shoulders above his younger siblings and separated him in fundamental ways from the world of women. He received better food, clothing and considerably more social standing and respect within the family. He had become a breadwinner.

Rooted in firsthand accounts of life in the Victorian era, Emma Griffin’s “Bread Winner” is a compelling re-evaluation of the Victorian economy. Ms. Griffin, a professor at the University of East Anglia, investigates the personal relationships and family dynamics of around 700 working-class households from the 19th century, charting the challenges people faced and the choices they made. Their lives are revealed as unique personal voyages caught within broader currents.

“I didn’t mind going out to work,” wrote a woman named Bessie Wallis. “It was just that girls were so very inferior to boys. They were the breadwinners and they came first. They could always get work in one of the mines, starting off as a pony boy then working themselves up to rope-runners and trammers for the actual coal-hewers. Girls were nobodies. They could only go into domestic service.”

Putting the domestic back into the economy, Ms. Griffin addresses a longstanding imbalance in our understanding of Victorian life. By investigating how money and resources moved around the working-class family, she makes huge strides toward answering the disconcerting question of why an increasingly affluent country continued to fail to feed its children. There was, her account makes clear, a disappointingly long lag between the development of an industrialized lifestyle in Britain and the spread of its benefits throughout the population.

For the full review, see:

Ruth Goodman. “BOOKSHELF; Livings And Wages.” The Wall Street Journal (Monday, June 8, 2020): A15.

(Note: the online version of the review has the date June 7, 2020, and has the title “BOOKSHELF; ‘Bread Winner’ Review: Livings and Wages.”)

The book reviewed above, is:

Griffin, Emma. Bread Winner: An Intimate History of the Victorian Economy. New Haven, CT: Yale University Press, 2020.