Category: Labor Economics

Princeton Economist Blinder Wrongly Forecast Huge Offshoring of Jobs

(p. A1) A widely covered 2007 study by Alan S. Blinder, a Princeton economist and former Clinton administration official, estimated that a quarter or more of jobs were vulnerable within the next decade. But many companies discovered that labor savings were offset by other factors: time differences, language barriers, legal hurdles and the simple challenge of coordinating work half a world (p. A14) away. In some cases, companies decided they were better off moving jobs to less expensive parts of the United States rather than out of the country.

“Where in retrospect I missed the boat is in thinking that the gigantic gap in labor costs between here and India would push it to India rather than to South Dakota,” Mr. Blinder said in a recent interview. “There were other aspects of the costs to moving the activities that we weren’t thinking about very much back then when people were worrying about offshoring.”

. . .

In a follow-up paper released Friday [Sept. 27, 2019], another economist, Adam Ozimek, revisited Mr. Blinder’s analysis to see what had happened over the past decade. Some job categories that Mr. Blinder identified as vulnerable, like data-entry workers, have seen a decline in United States employment. But the ranks of others, like actuaries, have continued to grow.

Over all, of the 26 occupations that Mr. Blinder identified as “highly offshorable” and for which Mr. Ozimek had data, 15 have added jobs over the past decade and 11 have cut them. Altogether, those occupations have eliminated fewer than 200,000 jobs over 10 years, hardly the millions that many feared. A second tier of jobs — which Mr. Blinder labeled “offshorable” — has actually added more than 1.5 million jobs.

For the full story, see:

Ben Casselman. “White-Collar Jobs Were Supposed to Go Overseas. They Didn’t.” The New York Times (Monday, September 30, 2019): A1 & A14.

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

(Note: the online version of the story has the same date as the print version, and has the title “The White-Collar Job Apocalypse That Didn’t Happen.”)

The Alan Blinder paper mentioned above, is:

Blinder, Alan. “How Many U.S. Jobs Might Be Offshorable?” Princeton University, Department of Economics, Center for Economic Policy Studies, Working Paper # 142, March 2007.

The “follow-up paper” mentioned above, is:

Ozimek, Adam. “Overboard on Offshore Fears.” 2019. https://www.upwork.com/press/economics/report-overboard-on-offshore-fears/

Start-Up Is Building Largest Greenhouse in U.S., Creating 285 Jobs in Kentucky

(p. B6) MOREHEAD, Ky. — Proximity to big markets is crucial for the fresh produce business.

So when AppHarvest, a two-year-old start-up, was looking for a site for a greenhouse, it picked a 366-acre field in Rowan County just outside Morehead, a university town in eastern Kentucky.

The greenhouse, the largest in the United States, will be just a day’s drive from almost 70 percent of American consumers, including those who love fresh tomatoes.

Next summer, when AppHarvest begins production at its $97 million building, 285 employees will start shipping 45 million pounds of fresh produce annually, primarily tomatoes, to grocery stores from Atlanta to New York, and as far west as Chicago and St. Louis.

For the greenhouse to be cost-effective, size was as important as location. The 60-acre, 2.76-million-square-foot building will be big enough to lower costs on materials, production and distribution.

“I asked the engineers, ‘How big can we possibly be to operate efficiently and effectively?’” said Jonathan Webb, AppHarvest’s 34-year-old founder and chief executive. “We have to compete with produce coming from 2,000 miles away.” Continue reading “Start-Up Is Building Largest Greenhouse in U.S., Creating 285 Jobs in Kentucky”

Some Workers Seek to Unionize Brooklyn Food Co-op

(p. 29) Had you found yourself with nothing to read at any point this summer, the letters section of The Linewaiters’ Gazette, the bi-weekly newsletter of the Park Slope Food Coop, might have sated a certain narrative hunger. Serving a community of 17,000 members, The Gazette is a forum for news, grievance, debate, inquiry and perhaps above all, the expression of principle.

. . .

Given the seriousness with which the co-op takes matters of equity and justice, it surprised many members to learn that an effort on the part of some paid workers to unionize had not been going smoothly. Member owned and operated since its founding in the 1970s, the co-op permits only those who work a certain number of hours per month (behind the cash register, unloading delivery trucks, stocking oranges and so on) to shop there. It also employs about 75 people, all but 11 or so of whom receive an hourly wage.

How was it possible that these workers in an institution so famously aligned with the left were not already unionized? It was like imagining the Catholic Church without baptism. As one stunned member pointed out in his letter to The Gazette, the co-op is “literally on Union Street.”

Money is not what has motivated the movement. Many workers receive upward of $27 an hour, and health-insurance fees are not deducted from that pay. Instead, as Marc Thompson, who has been behind the effort to organize, told me, the problems have had more to do with strained dynamics between workers and supervisors and poor communication generally.

Another big issue is that the co-op is an “at will” shop, meaning that workers can be let go at any time for any reason, without managers having to offer cause. Although it rarely happens, the notion that such a scenario could play out has troubled certain employees. The last time someone was abruptly fired, it was because of theft, Mr. Holtz explained, and that was three years ago.

. . .

In a letter to The Gazette that appeared in May [2019], a group of workers representing the majority who oppose the union said they had “doubts that the traditional union model is the right fit for our very nontraditional workplace.” They were pro-union as a matter of political belief but thought that the co-op had “a rich history” of solving its own problems. Whatever was wrong could be handled within the family, in essence.

For the full story, see:

Ginia Bellafante. “BIG CITY; A Labor Rights Rift? Say It’s Not So, Park Slope Food Coop!” The New York Times, First Section (Sunday, September 22, 2019): 29.

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

(Note: the online version of the story was last updated on Sept. 30 [sic], 2019, and has the title “BIG CITY; They Tried to Unionize the Park Slope Food Coop. Guess What Happened.” Above, I cite the title, section, and page number from my National print edition. Those may have been different in the New York print edition. Where there are differences in wording between the online and print versions, the passages quoted above follow the print version.)

Netflix’s Reed Hastings Was Blunt for the Sake of the Project

(p. B1) SANTA CRUZ, Calif. — Long before binge-watching, the streaming wars and “Netflix and chill,” there were two guys barreling down Highway 17 — the California roadway that connects Santa Cruz to Silicon Valley — trying to come up with the next big thing.

One was Marc Randolph, an entrepreneur and marketing specialist who had co-founded a start-up, Integrity QA. The other was Reed Hastings, then the head of the software company Pure Atria.

It was 1997. Mr. Randolph, whose start-up had been acquired by Pure Atria, did most of the pitching. Customized dog food, customized baseball bats, customized shampoo — all sold over the internet and delivered by mail.

Mr. Hastings was the one with the cash and the ability to shoot down ideas without worrying about hurt feelings.

They flirted with the notion of challenging Blockbuster Video with a mail-order videocassette business, only to decide that mailing VHS tapes would cost too much. Finally, they thought they had something: DVDs, sold and rented online and delivered to customers by mail.

Although few people had DVD players at the time, they forged ahead, with Mr. Randolph as the chief executive and Mr. Hastings (p. B5) as the chairman backing the operation.

. . .

Mr. Randolph describes an evening in 1998 when he got a big dose of Netflix’s radical honesty. It happened after a botched investor pitch and a promotion deal with Sony that went horribly wrong. Mr. Hastings asked to see Mr. Randolph alone and subjected him to a PowerPoint presentation detailing the reasons he was no longer fit to remain chief executive.

In the book, Mr. Randolph describes what he said in reaction to the surprise presentation: “‘There is no way I’m sitting here while you pitch me on why I suck.’”

Mr. Hastings closed his Dell laptop. By the end of the talk, Mr. Randolph was bumped down to president, and Mr. Hastings was the new chief executive. As part of the demotion, Mr. Hastings persuaded Mr. Randolph to give up some 650,000 stock shares, which reduced his Netflix stake to 15 percent.

“Doing it with a PowerPoint slide show perhaps wasn’t the most empathetic gesture,” Mr. Randolph said with a laugh. “But he was right.”

The episode, as described in the book, helps form a portrait of Mr. Hastings as someone whose bluntness results more from a sure sense of what a business needs than from an inner ruthlessness.

“What I really want from the book is to paint Reed as a real person,” Mr. Randolph said. “I hope it comes through that I have this tremendous respect and affection for him, as opposed to bitterness. Most people wouldn’t have had the strength to say that. But he recognized it was the right thing for the company.”

For the full review, see:

Nicole Sperling. “Pushing the Red Envelope: A Memoir of Netflix’s Birth.” The New York Times (Thursday, Sept. 19, 2019): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the review has the date Sept. 18, 2019, and has the title “Long Before ‘Netflix and Chill,’ He Was the Netflix C.E.O.”)

The book under review is:

Randolph, Marc. That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. New York: Little, Brown and Company, 2019.

Pilots of Delivery Robots Benefit from Video Game Skills

(p. B4) Michael Niedermayer used to fly drones for the U.S. Army and the Central Intelligence Agency, gathering real-time, life-and-death intelligence on battlefields in Iraq. Now he pilots delivery robots for a San Francisco Bay Area startup that wants to disrupt burrito delivery.

Postmates, which in mid-August received a permit to operate its Serve delivery robot in San Francisco and is already testing it for food delivery in Los Angeles, employs a growing team of “pilots” to remotely oversee, and at times steer, these four-wheeled food ferries.

“We will probably see a drastic increase in our workforce over the next five years,” says Postmates Chief Executive Bastian Lehmann.

Disrupting “last-mile” delivery—historically the domain of box trucks, bike couriers and personal vehicles—“felt like a great fit for my military background,” says Mr. Niedermayer.

His story is hardly unique. Across industries, engineers are building atop work done a generation ago by designers of military drones. Whether it’s terrestrial delivery robots, flying delivery drones, office-patrolling security robots, inventory-checking robots in grocery stores or remotely piloted cars and trucks, the machines that were supposed to revolutionize everything by operating autonomously turn out to require, at the very least, humans minding them from afar.

Until the techno-utopian dream of full automation comes into effect—and frankly, there’s no guarantee that will ever happen—there will be plenty of jobs for humans, just not ones their parents would recognize. Whether the humans in charge are in the same city or thousands of miles away, the proliferation of not-yet-autonomous technologies is driving a tiny but rapidly growing workforce.

. . .

When Postmates managers interview potential delivery-robot pilots like Diana Villalobos, they ask whether or not they played videogames in their youth.

“When I was a kid, my parents always said, ‘Stop playing videogames!’ But it came in handy,” she says.

For the full commentary, see:

Christopher Mims. “KEYWORDS; Behind ‘Autonomous’ Tech, a Person Playing Robot.” The Wall Street Journal (Saturday, Aug. 31, 2019): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “KEYWORDS; The Next Hot Job: Pretending to Be a Robot.”)

With Work Ethic, but Not Much Education, “You Can Come Out Here and Still Make Six Figures”

(p. B1) When Mike Wilkinson moved to Midland, Tex., in 2017, he hoped the world’s largest oil field would change his life. His marriage was in tatters. He owed tens of thousands in credit card debt. His morale was broken.

He soon began working as a “hot shot” truck driver, carrying loads for drillers who need pipes or drums in a hurry. The United States is the world’s largest producer of oil, surpassing Saudi Arabia and Russia, and demand for “hot shots” has soared.

The epicenter of the oil boom is the Permian Basin in Texas and New Mexico, a massive layer cake of shale that’s cracked open with a blasting technique known as fracking. The country’s growing energy dominance has created tens of thousands of jobs in this part of the Southwest in recent years, many for people like Wilkinson looking for fresh starts.

. . .

(p. B4) There are now 55,000 people now work in the Permian. Mr. Wilkinson says he’s found a certain camaraderie with other transplants: “They are either escaping debt or family issues or poverty.

. . .

“I have to make money, and this is the best way I can make money,” he said. “If you’re not educated and have a good work ethic, you can come out here and still make six figures.”

For the full story, see:

Clifford Krauss. “Boom Times and Fresh Starts.” The New York Times (Thursday, Sept. 19, 2019): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 10, 2019, and has the title “‘This Is the Most Lonesome Job’: Ride With a ‘Hot Shot’ Trucker in Oil-Rich Texas.” The online version highlights photographs by Tamir Kalifa. The online and print versions have significant differences in wording and ordering. Where there are differences, the passages quoted above, follow the print version.)

45 Is Average Age of Gazelle Founders

(p. B7) It took an entrepreneur to reimagine the mundane home thermostat as an object of beauty — and then to make a fortune based on that vision.

The entrepreneur was Tony Fadell, who had that thermostat epiphany after decades in the tech industry, including at companies like Apple. Mr. Fadell embodied his idea in a new company, Nest, which he started with the help of a colleague from Apple in 2010, at age 41.

The Nest thermostat had a sleek and intuitive design, smartphone connectivity and the ability to learn its owner’s temperature-setting habits. The product was a big hit, and within a few years Google acquired Nest for $3.2 billion.

Mr. Fadell’s deep experience and relatively mature age when he started Nest are typical of superstar entrepreneurs, who are rarely fresh out of college — or freshly dropped out of college. That’s what a team of economists discovered when they analyzed high-growth companies in the United States. Their study is being published in the journal American Economic Review: Insights.

The researchers looked at start-ups established between 2007 and 2014 and analyzed the top 0.1 percent — defined as those with the fastest growth in employment and sales. The average age of those companies’ founders was 45.

For the full commentary, see:

Seema Jayachandran. “ECONOMIC VIEW; High-Flying Tech Has a Touch of Gray.” The New York Times, SundayBusiness Section (Sunday, September 1, 2019): B7.

(Note: the online version of the commentary has the date Aug. 29, 2019, and has the title “ECONOMIC VIEW; Founders of Successful Tech Companies Are Mostly Middle-Aged.”)

The forthcoming article mentioned above, is:

Azoulay, Pierre, Benjamin Jones, J. Daniel Kim, and Javier Miranda. “Age and High-Growth Entrepreneurship.” American Economic Review: Insights (forthcoming).

Medical Paperwork Wastes Resources and Burns Out Physicians

(p. A23) Consider the use of medical scribes, who complete doctors’ electronic paperwork in real time during patient visits. The American College of Medical Scribe Specialists reported that 20,000 scribes were working in 2014, and expects that number to climb to 100,000 in 2020.

I have heard doctors say they need a scribe to keep up with electronic medical records, the mounting demand of which is driving a burnout epidemic among physicians. Scribes allow doctors to talk with and examine patients without having a computer come between them, but at base they are a workaround for the well-known design flaws of electronic medical records.

As a nurse, when I first learned about scribes, I was outraged. On the job, nurses hear repeatedly how health care companies can’t afford to have more nurses or aides to work with patients on hospital floors — and yet, money is available to pay people to manage medical records. Doctors who use scribes tend to see their productivity and work satisfaction increase, but the trade-off is still there: Scribes demonstrate the extent to which paperwork has become more important than patients in American health care.

For the full commentary, see:

Theresa Brown. “Our Jury-Rigged Health Care.” The New York Times (Friday, September 6, 2019): A23.

(Note: the online version of the commentary has the date September 5, 2019, and has the title “The American Medical System Is One Giant Workaround.”)

Median Income Rising More Under Trump Than Under Bush and Obama

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

(p. A17) President Trump’s critics can’t deny that the economy is doing well, so instead they insist all the benefits have gone to the rich and large corporations. “America’s middle class is under attack,” Sen. Elizabeth Warren asserted in her presidential campaign announcement last December.

The latest data from the Census Bureau monthly surveys tell a different story. Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July. That’s the highest level ever and a gain of $4,144, or 6.8%, since Mr. Trump took office. By comparison, during 7½ years under President Obama—starting from the end of the recession in June 2009 through January 2017—the median household income rose by only about $1,000.

These statistics were published by two former census income-research specialists with 50 years experience who now run Sentier Research, a nonpartisan research group.

For the full commentary, see:

Stephen Moore. “Trump’s Middle-Class Economic Progress.” The Wall Street Journal (Monday, Sept. 30, 2019): A17.

(Note: the online version of the commentary has the date Sept. 29, 2019, and has the same title as the print version.)

A.I. Needs People to Set the Objectives

(p. A2) Although Deep Mind’s Alpha Zero can beat a grand master at computer chess, it would still bomb at Attie Chess—the version of the game played by my 3-year-old grandson Atticus. In Attie Chess, you throw all of the pieces into the wastebasket, pick each one up, try to put them on the board and then throw them all in the wastebasket again. This apparently simple physical task is remarkably challenging even for the most sophisticated robots.

But . . . there’s a more profound way in which human intelligence is different from artificial intelligence, and there’s another reason why Attie Chess may be important.

. . .

The basic technique is to give the computer millions of examples of games, images or previous judgments and to provide feedback. Which moves led to a high score? Which pictures did people label as dogs?

. . .

But people also can decide to change their objectives. A great judge can argue that slavery should be outlawed or that homosexuality should no longer be illegal. A great curator can make the case for an unprecedented new kind of art, like Cubism or Abstract Expressionism, that is very different from anything in the past. We invent brand new games and play them in new ways.

. . .

Indeed, the point of each new generation is to create new objectives—new games, new categories and new judgments. And yet, somehow, in a way that we don’t understand at all, we don’t merely slide into relativism. We can decide what is worth doing in a way that AI can’t.

. . .

. . . , we are the only creatures who can decide not only what we want but whether we should want it.

For the full commentary, see:

Alison Gopnik. “MIND & MATTER; What A.I. Is Still Far From Figuring Out.” The Wall Street Journal (Saturday, March 23, 2019): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 20, 2019, and has the same title as the print version.)

Alison Gopnik’s comments, that are quoted above, are related to her paper:

Gopnik, Alison. “AIs Versus Four-Year-Olds.” In Possible Minds: Twenty-Five Ways of Looking at AI, edited by John Brockman. New York: Penguin Press, 2019, pp. 219-30.

Some Workers Willingly Forego Higher Pay for Greater Flexibility

(p. 11) In a survey of 11,000 workers and 6,500 business leaders by Harvard Business School and Boston Consulting Group, the vast majority said that among the new developments most urgently affecting their businesses were employees’ expectations for flexible, autonomous work; better work-life balance; and remote working. (Just 30 percent, though, said their businesses were prepared.)

Technology is a big reason for the change. The youngest people entering the work force don’t remember a time when people weren’t always reachable, so they don’t see why they would need to sit in an office to work. (They also say they are more practiced than older colleagues at setting boundaries on how much they use their phones, so it doesn’t become overbearing.)

. . .

. . . more young people, recruiters say, are asking for flexibility upfront, and some prioritize it over pay or seniority. Recruiters who visit college campuses say new graduates no longer see it as something to negotiate for, said Marcee Harris Schwartz, the national director of diversity and inclusion at BDO, the accounting firm: “It’s just assumed it’s part of the deal.”

“Years ago, the interview was, for lack of a better word, a test,” said Kamaj Bailey, who works in recruiting at Con Edison, the power company. “Now it’s a conversation. Yes, I want to show that I’m a good candidate, but I’m also seeing if I’m going to get what I expect.”

John Paul Graff, 34, is a pathologist, as was his father, who worked in private practice at least 12 hours a day. Dr. Graff decided to work in academic medicine, and the No. 1 reason was for work-life balance. He estimated that he gave up about $100,000 a year but said it’s worth it to work 40 hours a week.

For the full story, see:

Claire Cain Miller and Sanam Yar. “Can I Work When I Want?” The New York Times, SundayStyles Section (Sunday, Sept. 22, 2019): 1 & 10-11.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 20, 2019, and has the title “Young People Are Going to Save Us All From Office Life.”)