Category: Labor Economics

Widely-Used HireVue Algorithm Can Lock-In Hiring Biases

(p. A23) The products of a company called HireVue, which are used by over 600 companies including Nike, Unilever and even Atlanta Public Schools, allow employers to interview job applicants on camera, using A.I. to rate videos of each candidate according to verbal and nonverbal cues. The company’s aim is to reduce bias in hiring.
But there’s a catch: The system’s ratings, according to a Business Insider reporter who tested the software and discussed the results with HireVue’s chief technology officer, reflect the previous preferences of hiring managers. So if more white males with generally homogeneous mannerisms have been hired in the past, it’s possible that algorithms will be trained to favorably rate predominantly fair-skinned, male candidates while penalizing women and people of color who do not exhibit the same verbal and nonverbal cues.

For the full story, see:

Joy Buolamwini. “The Hidden Dangers Of Facial Analysis.” The New York Times (Friday, June 22, 2018): A23.
(Note: the online version of the story has the date June 21, 2018, and has the title “When the Robot Doesn’t See Dark Skin.”)

Obits for Gig Economy Are Premature

(p. A21) Data confirm the “gig economy” is taking off–or do they? A 2017 Upwork study found that 36% of the labor force engaged in some form of contract or freelance work in 2017. In 2015 the Mercatus Center counted 1099-MISC and W-2 tax forms, which report contractor and employee income, respectively. The number of W-2s declined 3.5% between 2000 and 2014, while the 1099-MISC count grew 22% (albeit from a much smaller base).
But then the Bureau of Labor Statistics weighed in. Its Contingent and Alternative Employment Arrangements survey, released last week, caused a flurry of clickbait headlines like “Everything we thought we knew about the gig economy is wrong” and “Gig economy jobs aren’t really taking over America’s workforce.”
. . .
A notable study by economists Lawrence Katz and Alan Krueger used the same questions as the BLS survey, but worked with a different sample population (the RAND American Life Panel) and used an internet survey. It found that alternative employment arrangements as a worker’s primary form of employment grew more than 50% between 2005 to 2015, when they collected their data.
It would at least be hasty to conclude that alternative employment arrangements declined between 2005 to 2017. And more important, the BLS data are not an accurate description or measure of gig-economy work, since they exclude most workers engaged in this type of work through supplementary income.

For the full commentary, see:
Liya Palagashvili. “Don’t Be So Sure the Gig Is Up; Contract work has fallen as a share of employment, a BLS study finds. But there are reasons to doubt it..” The Wall Street Journal (Wednesday, June 13, 2018): A21.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date June 12, 2018.)

They study by Katz and Krueger, mentioned above, is:
Katz, Lawrence F., and Alan B. Krueger. “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015.” National Bureau of Economic Research, Inc, NBER Working Papers: 22667, 2016.
Also relevant is their:
Katz, Lawrence F., and Alan B. Krueger. “The Role of Unemployment in the Rise in Alternative Work Arrangements.” American Economic Review 107, no. 5 (May 2017): 388-92.

In a Robustly Redundant Labor Market Most “Will Find New Jobs Quickly”

(p. A1) Tesla Inc. on Tuesday [June 12, 2018] said it will cut about 9% of its workforce in an effort to deliver its first profit during a make-or-break period of building a mass-market electric car.
The layoffs of about 3,500 employees come as Chief Executive Elon Musk reorganizes Tesla’s management structure to make it flatter, and as the company tries to ramp up production of the all-electric Model 3 compact sedan.
In a memo to employees, Mr. Musk said the job cuts are mostly aimed at salaried staff and won’t affect production workers assembling the company’s vehicles. “This will not affect our ability to reach Model 3 production targets in the coming months,” he wrote.
. . .
(p. A8) “What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable,” Mr. Musk wrote in the email to employees Tuesday. “That is a valid and fair criticism of Tesla’s history to date.”
. . .
On Twitter, Mr. Musk acknowledged that he was losing good people. “I think they will find new jobs quickly,” he said.

For the full story, see:
Higgins, Tim. “Tesla to Cut Workforce by 9%, In Bid for Sustainable Profit.” The Wall Street Journal (Wednesday, June 13, 2018): A1 & A8.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date June 12, 2018, and has the title “Tesla Cutting About 9% of Global Workforce.”)

A.I. Assists, but Does Not Replace, Humans

(p. B4) Some Phoenix-area residents have been hailing rides in minivans with no drivers and no human safety operators inside. But that doesn’t mean they’re on their own if trouble arises.
From a command center, employees at Alphabet Inc.’s Waymo driverless-car unit monitor the test vehicles on computer screens, able to wirelessly peer in through the minivan’s cameras. If the robot brain maneuvering the vehicle gets confused by a situation–say, a car unexpectedly stalled in front of it or closed lanes of traffic–it will stop the vehicle and ask the command center to verify what it is seeing. If the human confirms the situation, the robot will calculate how it should navigate around the hazard.

For the full story, see:
Tim Higgins. “Driverless Autos Get Help From Humans Watching Remotely.” The Wall Street Journal (Monday, June 7, 2018): B4.
(Note: the online version of the story has the date June 5, 2018, and has the title “Driverless Cars Still Handled by Humans–From Afar.”)

Human Intelligence Helps A.I. Work Better

(p. B3) A recent study at the M.I.T. Media Lab showed how biases in the real world could seep into artificial intelligence. Commercial software is nearly flawless at telling the gender of white men, researchers found, but not so for darker-skinned women.
And Google had to apologize in 2015 after its image-recognition photo app mistakenly labeled photos of black people as “gorillas.”
Professor Nourbakhsh said that A.I.-enhanced security systems could struggle to determine whether a nonwhite person was arriving as a guest, a worker or an intruder.
One way to parse the system’s bias is to make sure humans are still verifying the images before responding.
“When you take the human out of the loop, you lose the empathetic component,” Professor Nourbakhsh said. “If you keep humans in the loop and use these systems, you get the best of all worlds.”

For the full story, see:
Paul Sullivan. “WEALTH MATTERS; Can Artificial Intelligence Keep Your Home Secure?” The New York Times (Saturday, June 30, 2018): B3.
(Note: the online version of the story has the date June 29, 2018.)

The “recent study” mentioned above, is:
Buolamwini, Joy, and Timnit Gebru. “Gender Shades: Intersectional Accuracy Disparities in Commercial Gender Classification.” Proceedings of Machine Learning Research 81 (2018): 1-15.

Earned Income Matters More Than Equal Income

(p. A13) The concept of a universal basic income, or UBI, has become part of the moral armor of Silicon Valley moguls who want a socially conscious defense against the charge that technology is making humanity obsolete.
. . .
We need policies that encourage job creation and working, not policies that pay people not to work.
In the mid-1960s, about 5% of men aged 25 to 54 were jobless. For 40 years that share has risen, and for much of the past decade the rate has remained over 15%. Suicide, divorce and opioid abuse are all associated with nonemployment, and many facts suggest that the misery of joblessness is far worse than that of a low-paying job. According to the most recent data, only 7% of working men in households earning less than $35,000 report being dissatisfied with their lives. But that share soars to 18% among the nonemployed of all incomes. This suggests that promoting employment is more important than reducing inequality.
. . . 50 years of evidence about labor supply in the U.S. suggests that giving people money will lead them to work less.
The Negative Income Tax experiments of the 1970s–when poorer households in a number of states received direct cash payments to keep them at a minimum income–are the closest America has come to a UBI. But they did not show “minimal impact on work,” as Mr. Yang suggests. Rather, they produced a quite significant work-hours reduction of between 5% and 25%, as well as “employment rate reductions . . . from about 1 to 10 percentage points,” according to one capable study.

For the full review, see:

Edward Glaeser. “‘BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.” The Wall Street Journal (Tuesday, July 10, 2018): A13.
(Note: first two ellipses added; third ellipsis in original.)
(Note: the online version of the review has the date July 9, 2018, and has the title “BOOKSHELF; ‘Give People Money’ and ‘The War on Normal People’ Review: The Cure for Poverty? A guaranteed income does nothing to address the misery of joblessness, nor the associated plagues of divorce, opioid abuse and suicide.”)

Entrepreneur Mackay Deserved to Be Dealt Four Aces

(p. C9) One evening sometime in the 1850s, John Mackay, a prospector, was playing poker with his fellow silver miners in Virginia City, Nev. The wagering was furious, and Mackay was playing well. In one hand, he was dealt an improbable three aces. The man next to him was “betting like a cyclone,” when Mackay drew the astonishing fourth ace, whereupon he laid down his cards and walked away without picking up the pot. “Leave me out, boys,” he said. He didn’t need it. At this point in his life, he had more money than he could ever spend.
. . .
With not a cent to his name, Mackay began swinging a pick ax for subsistence wages on other peoples’ claims, eventually working his way up to mine supervisor. “Mackay tried to cast his imagination into the rock,” Mr. Crouch says, “looking for clues that would lead him to a greater understanding of what wealth lay underground.” By 1865 he had acquired enough cash to buy a stake in a promising mine called the Kentuck. At first the investment looked to be another bust, but it suddenly hit big, paying out $1.6 million of the “precious needful,” as miners called valuable ore, over the next two years.
. . .
The author saves for last an account of the delicious comeuppance Mackay delivered to the American businessman Jay Gould –“the most hated man of the age.” Gould had secured a monopoly on trans-Atlantic telegraphy. Without competition, he gouged users, prompting Mackay, a believer in private enterprise, to lay his own undersea cable, thus breaking Gould’s stranglehold and winning public admiration on both sides of the Atlantic.
Mr. Crouch clearly admires his protagonist, at times nearly to distraction. He portrays Mackay throughout this well-written and worthwhile book as a man of high principle–kind, charitable and fair, dependably doing the noble thing. Strong and silent, he is the Gary Cooper of the sagebrush set. It ever so lightly strains credulity, however, to believe that Mackay didn’t harbor a little larceny in his heart, like nearly everybody on the Comstock during the mad rush. But readers may well want to take the author’s word that a man of such humility and generosity was exactly that. Nowhere will you read John Mackay’s name among the robber barons of his era. Some men who are dealt four aces in life deserve them.

For the full review, see:
Patrick Cooke. “‘The Man Who Hit the Mother Lode.” The Wall Street Journal (Saturday, July 7, 2018): C9.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 5, 2018, and has the title “‘The Bonanza King’ Review: The Man Who Hit the Mother Lode.”)

The book under review, is:
Crouch, Gregory. The Bonanza King: John Mackay and the Battle over the Greatest Riches in the American West. New York: Scribner, 2018.

“Meditation Is Demotivating”

(p. 6) . . . on the face of it, mindfulness might seem counterproductive in a workplace setting. A central technique of mindfulness meditation, after all, is to accept things as they are. Yet companies want their employees to be motivated. And the very notion of motivation — striving to obtain a more desirable future — implies some degree of discontentment with the present, which seems at odds with a psychological exercise that instills equanimity and a sense of calm.
To test this hunch, we recently conducted five studies, involving hundreds of people, to see whether there was a tension between mindfulness and motivation. As we report in a forthcoming article in the journal Organizational Behavior and Human Decision Processes, we found strong evidence that meditation is demotivating.

For the full commentary, see:
Kathleen D. Vohs and Andrew C. Hafenbrack. “GRAY MATTER; Don’t Meditate at Work.” The New York Times, SundayReview Section (Sunday, June 17, 2018): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date June 14, 2018, and has the title “GRAY MATTER; Hey Boss, You Don’t Want Your Employees to Meditate.”)

The article by Hafenbrack and Vohs, mentioned above, is:
Hafenbrack, Andrew C., and Kathleen D. Vohs. “Mindfulness Meditation Impairs Task Motivation but Not Performance.” Organizational Behavior and Human Decision Processes 147 (July 2018): 1-15.

For Job Creation, Firm Youth and Fast Growth Matter More than Small Size

(p. C3) Economist David Birch of the Massachusetts Institute of Technology claimed in the late 1970s–inaccurately, as it turned out–that small businesses were the jobs engine of the economy, which allowed advocates to argue that aid to small businesses was a driver of economic growth. This narrative was reinforced by the wave of startups in the tech sector in the 1980s and 1990s. By 2000, all new businesses, no matter how technologically primitive or undercapitalized, were being called startups. A new biotech company was a startup, but so was a new three-person lawn-mowing business. Only child-labor laws prevented lemonade stands from being classified as startups, too.
A 2010 study published by the National Bureau of Economic Research showed, however, that it is the age of a firm, not its size, that matters for job creation. Just as children grow faster than adults, young firms grow faster than mature ones.
. . .
Government at every level can certainly do more to eliminate unnecessary regulations and to streamline those regulations that serve crucial public ends. But such reforms should benefit all businesses, regardless of size.
. . .
Beyond the injustice of it, small-business favoritism reverberates throughout the economy, slowing growth in two ways. First, subsidies and other size-based industrial policies slow productivity growth by enabling less efficient small firms to gain more market share than would otherwise be the case. Second, discriminatory policies provide an incentive for small firms to remain small. Why add five more workers when doing so would subject you to a host of new regulations and restrict your access to government handouts?

For the full commentary, see:
Robert D. Atkinson and Michael Lind. “Stop Propping Up Small Business.” The Wall Street Journal (Saturday, April 7, 2018): C3.
(Note: ellipses added.)
(Note: the online version of the commentary has the date April 6, 2018.)

The commentary quoted above, is based on:
Atkinson,‎ Robert D., and Michael Lind. Big Is Beautiful: Debunking the Myth of Small Business. Cambridge, MA: The MIT Press, 2018.

The published version of the 2010 National Bureau of Economic Research working paper, mentioned above, is:
Haltiwanger, John C., Ron S. Jarmin, and Javier Miranda. “Who Creates Jobs? Small Vs. Large Vs. Young.” Review of Economics and Statistics 95, no. 2 (May 2013): 347-61.

Collaborative Robots (Cobots) Fall in Price and Rise in Ease of Programming

(p. B4) Robots are moving off the assembly line.
Collaborative robots that work alongside humans–“cobots”–are getting cheaper and easier to program. That is encouraging businesses to put them to work at new tasks in bars, restaurants and clinics.
In the Netherlands, a cobot scales a 26-foot-high bar to tap bottles of homemade gin, whiskey and limoncello so that bartenders don’t need to climb ladders. In Japan, a cobot boxes takeout dumplings. In Singapore, robots give soft-tissue massages.
Cobots made up just 5% of the $14 billion industrial-robot market in 2017, according to research by Minneapolis-based venture-capital firm Loup Ventures. Loup estimates sales will jump to 27% of a $33 billion market by 2025 as demand for the robotic arms rises. About 20 manufacturers around the world have started selling such robots in the past decade.

For the full story, see:
Natasha Khan. “Robots Shift From Factories to New Jobs.” The Wall Street Journal (Monday, June 11, 2018): B4.
(Note: the online version of the story has the date June 9, 2018, and has the title “Your Next Robot Encounter: Dinner, Drinks and a Massage.”)

Splendid, Excellent, Salubrious, Salutary, Healthy, Great Jobs Numbers

(p. A16) The real question in analyzing the May jobs numbers released Friday [June 1, 2018] is whether there are enough synonyms for “good” in an online thesaurus to describe them adequately.
So, for example, “splendid” and “excellent” fit the bill. Those are the kinds of terms that are appropriate when the United States economy adds 223,000 jobs in a month, despite being nine years into an expansion, and when the unemployment rate falls to 3.8 percent, a new 18-year low.
“Salubrious,” “salutary” and “healthy” work as words to describe the 0.3 percent rise in average hourly earnings, which are up 2.7 percent over the last year — a nice improvement but also not the kind of sharp increase that might lead the Federal Reserve to rethink its cautious path of interest rate increases.
And a broader definition of unemployment, which includes people who have given up looking for a job out of frustration, fell to 7.6 percent. The jobless rate for African-Americans fell to 5.9 percent, the lowest on record, which we would count as “great.”
If anything, some of the thesaurus offerings don’t really do these numbers justice.
. . .
It isn’t perfect — wage growth remains unexceptional despite its growth spurt in May, and the ratio of prime-age adults working remains below its historical levels.
But it has been a strikingly durable and steady expansion, which is what the nation needed after the scars of the 2008 recession. And that’s just plain “good.”

For the full story, see:
Neil Irwin. “How Good? Words Fail Us.” The New York Times (Saturday, June 2, 2018: A16.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date June 1, 2018, and has the title “We Ran Out of Words to Describe How Good the Jobs Numbers Are.” The online version says the print version appeared on May 6 on p. A17 of the New York Edition. My print version, as usual, was the National Edition.)