Category: Labor Economics

Those Who Are Overconfident Convince Others They Are More Competent

(p. B6) What is it about an elite upbringing that seems to make people feel qualified for tasks where they have little experience? This is one of the questions that inspired a study published Monday in The Journal of Personality and Social Psychology.

The researchers suggest that part of the answer involves what they call “overconfidence.” In several experiments, they found that people who came from a higher social class were more likely to have an inflated sense of their skills — even when tests proved that they were average. This unmerited overconfidence, they found, was interpreted by strangers as competence.

. . .

In an attempt to understand the implications of overconfidence, the researchers constructed a mock job interview. The students were asked the same question and videotaped. A group of strangers then watched the videos and rated the candidates. The selection committee generally opted for the same people who’d overestimated their trivia abilities. Overconfidence was misinterpreted as competence.

. . .

So how do managers, employers, voters and customers avoid overvaluing social class and being duped by incompetent wealthy people? Dr. Kennedy said she had been encouraged to find that if you show people actual facts about a person, the elevated status that comes with overconfidence often fades away.

“We may also need to punish overconfident behavior more than we do,” she said.

For the full story, see:

Heather Murphy. “Why High-Class People Think They Know More, and Why You Believe Them.” The New York Times (Tuesday, May 21, 2019): B6.

(Note: ellipses added.)

(Note: the online version of the story has the date May 20, 2019, and has the title “Why High-Class People Get Away With Incompetence.”)

The study mentioned above from the Journal of Personality and Social Psychology, is:

Belmi, Peter, Margaret A. Neale, David Reiff, and Rosemary Ulfe. “The Social Advantage of Miscalibrated Individuals: The Relationship between Social Class and Overconfidence and Its Implications for Class-Based Inequality.” Journal of Personality and Social Psychology (May 20, 2019), published online in advance of print publication.

SpotMini Robot Looks Like a Dog, but “Is Like a Hollow Doll”

(p. B3) Last time in this esteemed newsletter, my colleague Steve Lohr warned that automation would change the economy. But as he also explained, jobs are “more likely to be transformed by digital technology than destroyed by it.” This becomes clear as you look a little closer at the progress of robotics, including everything from the robotic arms that help build stuff in factories to the jaw-droppingly agile machines under development at a company called Boston Dynamics.

This past week, I wrote about Boston Dynamics, which runs a semi-secretive lab in Waltham, Mass., about 10 miles outside Boston. Built to move like animals and even humans, its machines are truly amazing (as YouTube watchers will attest).

At times, you can’t help but think of these mechanical creations as living things. The company will start selling one of them, a doglike robot called SpotMini, in the coming year. But even Boston Dynamics is not quite sure what these robots are actually good for.

Robots play tricks on the mind. We tend to think they are more advanced than they really are, perhaps because of science fiction movies or because our brains are wired to believe in bots. This is particularly true when it comes to the biomimetic machines inside a lab like Boston Dynamics.

“When we see a biped that looks like a person or a quadruped that looks like a dog, we project our previous experiences with people and dogs onto these machines. But, in fact, there is nothing inside,” said Gill Pratt, who worked with Boston Dynamics as an official at Darpa, a research arm of the Defense Department, and is now exploring new forms of robotics as the chief executive of the Toyota Research Institute. “It is like a hollow doll.”

For the full commentary, see:

Cade Metz. “The Week in Tech; Robots Are Improving Quickly, But They Can Still Be Dumb.” The New York Times (Monday, Oct. 1, 2018): B3.

(Note: the online version of the commentary has the date Sept. 28, 2018, and has the title “The Week in Tech; The Robots Aren’t as Human as They Seem.”)

Some Routine Tech Jobs in India Can Be Automated

(p. B2) . . . the global tech industry is increasingly relying on automation, robotics, big data analytics, machine learning and consulting — technologies that threaten to bypass and even replace Indian workers. For example, automated processes may soon replace the kind of work Mr. Choudhari was performing for foreign clients, which involved maintaining software by occasionally plugging in simple code and analyzing data.

“What we’re seeing is an acceleration in shedding for jobs in India and an adding of jobs onshore,” said Sandra Notardonato, an analyst and research vice president for Gartner, a research and advisory company. “Even if these companies don’t have huge net losses, there’s a person who will suffer, and that’s a person with a limited skill set in India.”

. . .

Of course, new technologies will create new jobs. The impact of automation and artificial intelligence still is not clear, and they could open up new areas that simply shift tech work rather than eliminate it.

For the full story, see:

Nida Najar. “Tech Jobs Cut in India. A Reason? Technology.” The New York Times (Monday, June 26, 2017): B2.

(Note: ellipses added.)

(Note: the online version of the story has the date June 25, 2017, and has the title “Indian Technology Workers Worry About a Job Threat: Technology.”)

As Some Occupations Decline, Others Advance

Occupations that the Bureau of Labor Statistics expects to grow and to decline. Source: WSJ article cited below.

(p. B3) . . . the impact of automation is increasingly spreading to the service sector as well. Government economists expect steep declines in employment for typists, telephone operators and data-entry workers. Even jobs that might once have seemed relatively secure, such as legal secretaries and executive assistants, are expected to decline in coming years.

At the same time, technology is creating new opportunities for statisticians, engineers and software developers — the workers developing the algorithms that are changing the global job market.

For the full story, see:

Ben Casselman. “Experts Foresee a U.S. Work Force Defined by Ever Widening Divides.” The New York Times (Wednesday, Oct. 25, 2017): B3.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 24, 2017, and has the title “A Peek at Future Jobs Shows Growing Economic Divides.”)

New York City Made $855 Million Selling Over-Priced Taxi Medallions to Trusting Immigrants

(p. A1) At a cramped desk on the 22nd floor of a downtown Manhattan office building, Gary Roth spotted a looming disaster.

An urban planner with two master’s degrees, Mr. Roth had a new job in 2010 analyzing taxi policy for the New York City government. But almost immediately, he noticed something disturbing: The price of a taxi medallion — the permit that lets a driver own a cab — had soared to nearly $700,000 from $200,000. In order to buy medallions, drivers were taking out loans they could not afford.

. . .

Medallion prices rose above $1 million before crashing in late 2014, wiping out the futures of thousands of immigrant drivers and creating a crisis that has continued to ravage the industry today. Despite years of warning signs, at least seven government agencies did little to stop the collapse, The New York Times found.

Instead, eager to profit off medallions or blinded by the taxi industry’s political connections, the agencies that were supposed to police the industry helped a small group of bankers and brokers to reshape it into their own moneymaking machine, according to internal records and interviews with more than 50 former government employees.

For more than a decade, the agencies reduced oversight of the taxi trade, exempted it from regulations, subsidized its operations and promoted its practices, records and interviews showed.

Their actions turned one of the (p. A20) best-known symbols of New York — its signature yellow cabs — into a financial trap for thousands of immigrant drivers. More than 950 have filed for bankruptcy, according to a Times analysis of court records, and many more struggle to stay afloat.

“Nobody wanted to upset the industry,” said David Klahr, who from 2007 to 2016 held several management posts at the Taxi and Limousine Commission, the city agency that oversees cabs. “Nobody wanted to kill the golden goose.”

New York City in particular failed the taxi industry, The Times found. Two former mayors, Rudolph W. Giuliani and Michael R. Bloomberg, placed political allies inside the Taxi and Limousine Commission and directed it to sell medallions to help them balance budgets and fund priorities. Mayor Bill de Blasio continued the policies.

Under Mr. Bloomberg and Mr. de Blasio, the city made more than $855 million by selling taxi medallions and collecting taxes on private sales, according to the city. Continue reading “New York City Made $855 Million Selling Over-Priced Taxi Medallions to Trusting Immigrants”

News Reports by A.I. Complement News Reports by Humans; Expanding Coverage of Routine Minor Recurring Events

(p. B1) As the use of artificial intelli-(p. B3)gence has become a part of the industry’s toolbox, journalism executives say it is not a threat to human employees. Rather, the idea is to allow journalists to spend more time on substantive work.

“The work of journalism is creative, it’s about curiosity, it’s about storytelling, it’s about digging and holding governments accountable, it’s critical thinking, it’s judgment — and that is where we want our journalists spending their energy,” said Lisa Gibbs, the director of news partnerships for The A.P.

. . .

In addition to leaning on the software to generate minor league and college game stories, The A.P., like Bloomberg, has used it to beef up its coverage of company earnings reports. Since joining forces with Automated Insights, The A.P. has gone from producing 300 articles on earnings reports per quarter to 3,700.

. . .

The A.P., The Post and Bloomberg have also set up internal alerts to signal anomalous bits of data. Reporters who see the alert can then determine if there is a bigger story to be written by a human being. During the Olympics, for instance, The Post set up alerts on Slack, the workplace messaging system, to inform editors if a result was 10 percent above or below an Olympic world record.

For the full story, see:

Jaclyn Peiser. “As A.I. Reporters Arrive, The Other Kind Hangs In.” The New York Times (Tuesday, Feb. 5, 2019): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 4, 2019, and has the title “The Rise of the Robot Reporter.”)

Wages Depend More on “Nonemployment” Than on Narrower “Unemployment”

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

(p. B5) Many economists were puzzled by the slow pace of pay increases because it looked as if a fundamental relationship had broken down.

Decades ago, economists observed that when unemployment falls, wages tend to rise, as companies are forced to offer higher pay to attract workers. Yet even as the unemployment rate fell from 10 percent in 2009 to less than 5 percent in 2016, wages rose slowly. Even now, with the unemployment rate near multidecade lows, wages are not rising as quickly as standard models suggest they should be.

Economists proposed all sorts of theories to explain the mystery: Globalization and automation meant that Americans were competing against lower-paid workers overseas and against robots at home. The rising power of the biggest corporations, paired with falling rates of unionization, made it harder for workers to negotiate for higher pay. Sluggish productivity growth meant that companies couldn’t raise pay without eating into profits.

The recent uptick in wage growth suggests a simpler explanation: Perhaps the job market wasn’t as good as the unemployment rate made it look.

The government’s official definition of unemployment is relatively narrow. It counts only people actively looking for work, which means it leaves out many students, stay-at-home parents or others who might like jobs if they were available. If employers have been tapping into that broader pool of potential labor, it could help explain why they haven’t been forced to raise wages faster.

It appears as if that is exactly what is happening. In recent months, more than 70 percent of people getting jobs had not been counted as unemployed the previous month. That is well above historical levels, and a sign that the strong labor market is drawing people off the sidelines.

For the full story, see:

Ben Casselman. “Why American Wages Are Finally Rising, a Full Decade After the Great Recession.” The New York Times (Friday, May 3, 2019): B1 & B5.

(Note: the online version of the story has the date May 2, 2019, and has the title “Why Wages Are Finally Rising, 10 Years After the Recession.”)

Where Worker Pool Is Large, Employers Demand College Degrees for More Jobs

(p. B1) The median wage for workers with some college education but no four-year degree is $835 per week, about 10 percent less than it was at the turn of the century, after inflation. Workers with a bachelor’s degree typically make one-third more.

Underneath the grim average, however, the truth is that there are better-paid jobs available to workers without the requisite college credential. The trick is finding them. They are not always in the most obvious places.

Keith Wardrip of the Federal Reserve Bank of Philadelphia and Kyle Fee and Lisa Nelson of the Federal Reserve Bank of Cleveland have put together a map. Its most resounding and confounding recommendation: Stay out of the superstar cities. Their booming tech, health and financial industries may offer great jobs for the college educated. But if you don’t have the degree, they have little for you.

What’s a good job?

Mr. Wardrip, Mr. Fee and Ms. Nelson define a “good job” in simple terms: It has to pay more than the national median wage, $37,690 in 2017, adjusted for the cost of liv-(p. B5)ing in the area. In Springfield, Mo., the cutoff is $33,100. In San Jose, Calif., it is $47,900. To figure out how many of these jobs are open to people without degrees, the researchers scoured nearly 30 million local job ads across 121 metropolitan areas to determine their minimum educational requirements. They called them “opportunity jobs.”

. . .

San Francisco is not for you

The most striking finding is how these jobs are distributed geographically. In Asheville, N.C., more than four in five job openings for computer-user support specialists do not require a bachelor’s degree. In San Francisco, only about a third are open to people without a degree. Fewer than half the nursing jobs in Raleigh, N.C., are open to people who haven’t graduated from a four-year college, compared with 85 percent in Huntsville, Ala. Continue reading “Where Worker Pool Is Large, Employers Demand College Degrees for More Jobs”

Cheaper to Teach Humans than to Upgrade Robots

(p. A1) SASEBO, Japan—Yoshihisa Ishikawa’s one-night stay at a robot-staffed hotel in western Japan wasn’t relaxing.

He was roused every few hours during the night by the doll-shaped assistant in his room asking: “Sorry, I couldn’t catch that. Could you repeat your request?”

By 6 a.m., he realized the problem: His heavy snoring was triggering the robot.

Turns out, robots aren’t the best at hospitality. After opening in a blaze of publicity in 2015, Japan’s Henn na, or “Strange,” Hotel, recognized by the Guinness Book of World Records as the world’s first robot hotel, is now laying off its low-performing droids.

So far, the hotel has culled over half of its 243 robots, many because they created work rather than reduced it.

. . .

(p. A8) The hotel launched with around 80 robots. The initial positive reaction encouraged it to add many more for guests’ entertainment, such as a team of human and dog robot dancers in the lobby.

That’s when problems started to pile up, said the hotel’s general manager, Takeyoshi Oe.

Toshifumi Nakamura, a former hotel guest, recalled that about half the puppy-size lobby dancers appeared to be broken or in need of charging when he visited in mid-2016. Mr. Oe said the hotel increased overtime for the human staff to cope with the additional workload.

. . .

Mr. Ishikawa, the heavy snorer, said he wasn’t sure how to turn Churi off.

“She got a bad reputation,” said Hideo Sawada, president of the travel company that owns the hotel. Churi was among the robots removed.

. . .

Mr. Oe said the hotel has considered upgrading some robots but has to weigh the potentially high costs of frequent replacements. Churi was in service for four years, plenty of time for the technology to become outdated.

“Many people get a new phone every couple of years, so four years seems really old,” said Mr. Oe.

. . .

Mr. Sawada said he hasn’t given up on the idea of a hotel without human staff, but Strange Hotel has taught him that there are currently many jobs suited only for humans. “When you actually use robots you realize there are places where they aren’t needed—or just annoy people,” he said.

For the full story, see:

Alastair Gale and Takashi Mochizuki. “The World’s First Robot Hotel Is Looking for a Few Good Humans.” The Wall Street Journal (Tuesday, January 15, 2019): A1 & A8.

(Note: ellipses added.)

(Note: the online version of the story has the date Jan. 14, 2019, and has the title “Robot Hotel Loses Love for Robots.”)

More Job Quits Lead to Better Matches and Higher Productivity

(p. A1) Kimberly Enoch had a stable job working from home managing grants for a Little Rock, Ark., nonprofit, but she was bored and thought she could do better.

So she quit.

Within three months, she landed a job as a grant writer at Southern Bancorp Community Partners, snagging a 14% raise, a faster pace at work and an easy seven-minute commute.

“I knew I could do more,” Ms. Enoch said.

She is part of a bigger trend. Workers are choosing to leave their jobs at the fastest rate since the internet boom 17 years ago and getting rewarded for it with bigger paychecks and/or more satisfying work.

Labor Department data show that 3.4 million Americans quit their jobs in April [2018], near a 2001 peak and twice the 1.7 million who were laid off from jobs in April.

Job-hopping is happening across industries including retail, food service and construction, a sign of broad-based labor-market dynamism.

Workers have been made more confident by a strong economy and historically low unemployment, at 3.8% in May, the lowest since 2000. Ms. Enoch started getting interview opportunities the same day she began sending out applications online.

The trend could stoke broader wage growth and improve worker productivity, which have been sluggish in the past decade.

. . .

(p. A2) The recent uptick in quitting goes against a long-running decline in worker mobility. In recent decades, as the population aged and business startups became relatively more rare, employees tended to stick at their jobs longer, said Steven Davis, an economist at the University of Chicago who studies labor-market churn. He and co-author John Haltiwanger presented the findings of diminished economic dynamism to central bankers at the Federal Reserve’s annual Jackson Hole, Wyo., symposium in August 2014.

The problem was exacerbated by the 2007-2009 recession. Fretful workers stayed in roles that weren’t good matches for them, also hurting national productivity. Now that they are looking for better matches, productivity could improve.

For the full story, see:

Harrison, David and Eric Morath. “Economy Spurs Job Hopping.” The Wall Street Journal (Thursday, July 5, 2018): A1-A2.

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

(Note: the online version of the story has the date July 4, 2018, and has the title “In This Economy, Quitters Are Winning.”)

Productivity Rises at Fastest Rate in Almost 10 Years

(p. A2) WASHINGTON—U.S. workers’ efficiency improved during the past year at the best pace in nearly a decade, laying groundwork for stronger wage growth and continued economic expansion.

The productivity of nonfarm workers, measured as the output of goods and services for each hour on the job, increased at a 3.6% seasonally adjusted annual rate in the first quarter from the prior three months, the Labor Department said Thursday [May 2, 2019]. From a year earlier, productivity rose 2.4%. That was the best gain year-over-year since the third quarter of 2010, when the economy was just emerging from a deep recession.

Productivity tends to be strong in the early days of an economic cycle. Accelerating improvement nearly 10 years after the recession ended raises hopes that a combination of more efficient workers and Americans rejoining the labor force could provide necessary fuel to extend one of the longest expansions in the post-World War II era.

For the full story, see:

Eric Morath. “Productivity Rises at Fastest Pace in Years.” The Wall Street Journal (Friday, May 3, 2019): A2.

(Note: bracketed date added.)

(Note: the online version of the story has the date May 2, 2019, and has the title “U.S. Worker Productivity Advances at Best Rate Since 2010.”)