We Must Get The Employment Effect Of Technology Right

From Our Swindon Correspondent:

No, This Simply isn’t Right

From The Guardian

We have now lived through what one might call Automation 1.0. The paradigmatic example is car manufacturing. Henry Ford’s production line metamorphosed into Toyota’s “lean machine” and thence to the point where few humans, if any, are visible on an assembly line. Once upon a time, the car industry employed hundreds of thousands of people. We called them blue-collar workers. Now it employs far fewer.

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Hey, Bozo! If You Protect Jobs There Will Be Fewer Jobs

Sure, if you prevent people from being fired then you’ll preserve those jobs you can’t fire people from. But the flip side of this is that people won’t offer jobs, won’t even create them, if they then can’t fire people. Job protections reduce the number of jobs. It’s not a coincidence that somewhere like Britain, with it’s low labour protections, has one of the lowest unemployment rates.

The detrimental effect of job protection on employment: Evidence from France
Pierre Cahuc, Franck Malherbet, Julien Prat 11 June 2019

Standard economic models predict that employment protection legislation reduces both job destruction and job creation, with the negative impact on job creation caused by the anticipation of separation costs.…

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In What Universe Are Taxi Drivers Normally Employees?

That some to many don’t like Uber’s employment policies is true. But to think that taxi drivers are normally employees, with sick pay, holidays, fixed wages is to be simply ignorant. That’s not how the industry is or ever has been organised:

By now, most Americans are well acquainted with the “gig” economy. Companies reclassify their employees as contractors, thereby shedding costs and responsibilities for workplace rights and benefits. Uber is the prime example. The company claims to be a technology platform rather than an employer, transforming and upending the traditional relationship that a taxi company has with its staff and making drivers cheap, disposable widgets.

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The End Of The McJob?

It used to be that the “Do you want fries with that?” McJob was the initial prospect of those who left school without much in the way of qualifications. If you like it was a sort of base employment safety net of our high employment economy.

McDonalds actually do try hard to turn raw unskilled but willing input into better workers and do promote as appropriate. They have training courses and their own university and everything.…

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National Pay Scales Reduce Both Earnings And Employment

As we know having a national pay scale for nurses in the NHS kills people. In high pay areas it’s difficult to get nurses to come work – thus there are fewer than might be wise and people die. Schools also find it hard to hire in expensive areas on those national wage scales. So too, in a recent story, with social workers.

This is, in fact, true of jobs in general under national pay scales.

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What’s Wrong With Ghana’s Economy – Only 2% Of Employment Is In Formal Sector

We may or may not want to take as precisely accurate this estimate of the employment in Ghana’s formal economy – only 2%. This is, note, the percentage of the those entering the labor market each year, not the average over all age cohorts. But if this is anything like accurate, to within even an order of magnitude, then we can easily diagnose what is wrong with Ghana’s economy. Wages are too high, regulation and taxation of business is too great.…

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US Job Openings, A 7.3 Million Record – A Record For The Whole 19 Years We’ve Collected The Number

That this or that is a record is interesting, possibly even amusing. We would expect that whatever the record is, a high or low temperature, wind speed, number of hot dogs eaten in the Coney Island July 4th contest, to increase over time. Just whatever variability we do see in it, we’d expect the extremes to be wider the longer we’ve been collecting the number.

Think on it, temperature variation over three centuries is going to be greater than that over one decade.…

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America’s Industrial Disaster – US Manufacturing Output At Record Levels

As we all know – because we’re repeatedly told so by Lighthizer, Navarro and The Donald – American manufacturing is in a parlous state. Cruelly persecuted by those dastardly foreigners even. The problem with this justification for a trade war, tariffs and the subsequent making us all poorer being that it simply isn’t true.

Here’s US manufacturing output. Yes, this is value and it’s inflation adjusted:

Manufacturing sector real output. Credit, BLS, public domain via FRED


Here’s manufacturing employment over the same period of time:

Manufacturing employment Credit BLS via FRED, public domain

So, if output has been going up over the decades  – and yes, manufacturing is always more highly leveraged to the business cycle than services – while employment hasn’t recovered then what else must be happening?…

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Where Have All The Manufacturing Jobs Gone?

Interesting research and data:

Manufacturing employment has seen major shifts over the past several decades. The share of manufacturing in aggregate employment has been steadily declining for over four decades in advanced economies (Figure 1), with most countries experiencing outright declines in the number of manufacturing jobs since the 1990s. In most developing economies, the share of manufacturing jobs has levelled off at relatively low levels as labour has shifted from agriculture to services, largely bypassing the manufacturing sector.…

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