International Drop in Trust

Diana Marszalek at Reuters:

The 2022 Edelman Trust Barometer finds faith in government and media continues to drop, perpetuating a cycle of distrust that “threatens societal stability.”

The survey of 36,000 consumers in 28 countries found 48% of respondents view government and 46% view media as divisive forces today, versus business and NGOs which fared better with 31% and 29% respectively.

On top of that, government leaders (42%) and journalists (46%) are the least trusted societal leaders, whereas people have the most confidence in coworkers (74%) and scientists (75%). Most respondents also believe that the government (66%, up nine points) and journalists (67%, up 8 points) are lying to them.

The numbers show a precipitous fall from grace for government, which was the most trusted institution in May 2020 but has dropped 13 points (from 65% to 52%) to third behind business (61%) and NGOs (59%). Only the media (50%) fared worse.

“Government is seen as less competent than business, and we are in a whole new game,” said Edelman CEO Richard Edelman. “We have very big problems and government isn’t seen as able to manage them.”

The collapse in government trust was particularly acute in developed democracies (not one reached a 60-point score), largely pinned to respondents in every one of those countries believing they will be worse off financially in five years — and 85% fear they will lose their jobs to factors including automation. The US ranks 43 in the trust index (a 10-point drop since 2017), 40 points lower than China, at 83.

Automation and Inequality

 Daron Acemoglu & Pascual Restrepo have an NBER paper titled "Tasks, Automation, and the Rise in US Wage Inequality." The abstract:

We document that between 50% and 70% of changes in the US wage structure over the last four decades are accounted for by the relative wage declines of worker groups specialized in routine tasks in industries experiencing rapid automation. We develop a conceptual framework where tasks across a number of industries are allocated to different types of labor and capital. Automation technologies expand the set of tasks performed by capital, displacing certain worker groups from employment opportunities for which they have comparative advantage. This framework yields a simple equation linking wage changes of a demographic group to the task displacement it experiences. We report robust evidence in favor of this relationship and show that regression models incorporating task displacement explain much of the changes in education differentials between 1980 and 2016. Our task displacement variable captures the effects of automation technologies (and to a lesser degree offshoring) rather than those of rising market power, markups or deunionization, which themselves do not appear to play a major role in US wage inequality. We also propose a methodology for evaluating the full general equilibrium effects of task displacement (which include induced changes in industry composition and ripple effects as tasks are reallocated across different groups). Our quantitative evaluation based on this methodology explains how major changes in wage inequality can go hand-in-hand with modest productivity gains.

Technology and Inequality

 Thomas Edsall at NYT:

Technological advancement has been one of the key factors in the growth of inequality based on levels of educational attainment, as the accompanying graphic shows:

 

The change in weekly earnings among working age adults since 1963. Those with more education are climbing ever higher, while those with less education — especially men — are falling further behind.

[Daron] Acemoglu warns:

If artificial intelligence technology continues to develop along its current path, it is likely to create social upheaval for at least two reasons. For one, A.I. will affect the future of jobs. Our current trajectory automates work to an excessive degree while refusing to invest in human productivity; further advances will displace workers and fail to create new opportunities. For another, A.I. may undermine democracy and individual freedoms.

Post-Pandemic Jobs Bust

Erica Pandey at Axios:

By the numbers: The pandemic's disruption of work will push around 17 million U.S. workers to find new occupations by 2030, according to a recent McKinsey Global Institute report.

• "Even before the pandemic, 70% of employers reported having trouble filling roles because of a skills gap in the labor force, per Bloomberg.
• After the pandemic, high-skilled jobs, like web developers and epidemiologists, are expected to boom. And low-skilled ones, like restaurant hosts, bartenders and ticket agents are projected to bust.

"We knew artificial intelligence was going to devastate jobs, but, frankly, I thought that was five or seven years away," says Plinio Ayala, CEO of the job training company Per Scholas.

• "The pandemic accelerated that. The number of jobs that existed before the pandemic will not be the same number after, and most of those jobs were occupied by people of color and women."
• "I’m concerned about a real uneven recovery.

Automation, Employment,and Inequality

At Axios, Kaveh Waddell and Alison Snyder write that automation is a sleeper political issue.

Why it matters: "If we stay on the trajectory we're on currently, we're going to have greater income inequality, less social mobility, greater political unrest and greater income insecurity," says Elizabeth Reynolds, executive director of the MIT Task Force on the Work of the Future.

• Unchecked, job losses from automation could knock out bottom rungs of traditional career paths, worsen inequality and increase political polarization.
• Now, fast advances in AI and robotics threaten to fundamentally alter both low- and high-skilled jobs, increasing the urgency for political leaders to address the issue, Reynolds says.

The big picture: The effects of automation fit into a puzzle that includes trade policy. But while trade and China hog political attention, automation gets passed over, leaving a gaping hole in critical preparations for the future of work.

• Estimates of coming American job loss to automation range wildly, from 10% to 47%. But even the most conservative calculations threaten millions of workers.
• Technology could also create as many as 50 million new jobs by 2030, and step in where workers are scarce. Where those new jobs will arrive remains unclear.

Automation, Employment and Middle America

Erica Pandey, Kaveh Waddell at Axios:

The backstory: The last wave of technological disruption — the IT revolution of the 1980s — created new jobs, but the bulk of the job and wage gains were on the high and low ends of the labor market. Scores of middle-wage, middle-skill jobs in manufacturing, largely in the middle of the country, were automated away or sent abroad.

Now, the new wave of automation and AI is projected to hit high- and low-paying jobs in addition to middle-income jobs, says Marina Gorbis, executive director of the Institute for the Future.

The next crop of vulnerable jobs — which include middle-wage occupations like trucking and administrative office work as well as lower-wage jobs like waiting tables and farming — are scattered all over the country, but the highest concentration is once again in the heartland, per a new report from the Brookings Institution.

By the numbers:

• A quarter of all jobs across the U.S. have high chance of being wiped out by automation.
• The five states with the highest share of at-risk jobs are Indiana (29%), Kentucky (29%), South Dakota (28%), Arkansas (28%), and Iowa (28%) — all of which went for President Trump in 2016.
• Compare that to the bottom five: New York (20%), Maryland (20%), Massachusetts (21%), Connecticut (22%) and New Mexico (22%), all of which went for Hillary Clinton.

But the extent of the hit to middle America is even clearer when zooming in to the county level.

• For example, in Jerauld County, South Dakota, 53% of jobs are hanging in the balance.
• 48% of jobs are vulnerable in Scott County, Miss.; 48% in Dakota County, Neb.; and 46% in Colfax County, Neb.

James Bessen and James Kossuth at Harvard Business Review:

New AI and robotics technologies are increasingly automating work tasks. How much of a threat does automation pose to workers? A new study by one of us (James Bessen), along with Maarten Goos, Anna Salomons, and Wiljan van den Berge, provides the first large-scale quantitative evidence of how automation affects individual workers, using government data from 2000-2016 for 36,000 firms in the Netherlands, covering about 5 million workers each year.

We found that automation does indeed affect many workers. Each year, about 9% of the workers in the sample are employed at firms that make major investments in automation. Yet relatively few workers are adversely affected. Only about 2% of tenured workers at automating firms leave the year of the automation event as a result of automation; after five years, 8.5% will have left, cumulatively. (We can’t differentiate between those who choose to leave and those who are let go or fired.)

Nevertheless, those who do leave suffer significant economic costs, largely due to spells of unemployment. This affects both their economic prospects and their overall wellbeing. And though welfare programs like unemployment insurance are often framed as the way to address these costs, our data confirm that they don’t nearly make up for the income that workers lose.

Surprisingly, this burden falls more frequently on highly-educated and highly-paid workers. Contrary to conventional wisdom, they are more likely to leave as a result of automation, although they also seem to find new jobs faster. In other words, highly-paid workers are more commonly affected, but the effects are more severe for less well-paid workers.

Robots, Blue Collars, and Labor Force Participation

Robots are hitting the working class.

Thomas B. Edsall at NYT:

In a paper that was published earlier this year, “Robots and Jobs: Evidence from U.S. Labor Markets,” Daron Acemoglu and Pascual Restrepo, economists at M.I.T. and Boston University, demonstrate that the Midwest and sections of the South have far higher ratios of robots to population than other regions of the United States.

They calculate the job losses resulting from the addition of one robot in a “commuting zone.” Their bottom line: “one more robot in a commuting zone reduces employment by about six workers.”

These job losses are concentrated

in blue collar occupations such as machinists, assemblers, material handlers and welders. Workers in these occupations engage in tasks that are being automated by industrial robots, so it is natural for them to experience the bulk of the displacement effect created by this technology.

...

One of the most striking developments in recent decades is the ongoing decline in work force participation among men, from 88.7 percent in July, 1947 to 68.7 percent in September, 2010, according to the Federal Reserve.

This drop in participation has been sharpest for men without college degrees.
In an email, David Autor, who is also an economist at M.I.T., explained the situation:

We find that automation displaces employment and reduces labor’s share of value-added in the industries in which it originates. In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand.

Overall, according to Autor,

employment is growing steadily, and its growth in terms of number of jobs has not been discernibly dented by technological progress. But the sum of wage payments to workers is growing more slowly than economic value-added, so labor’s share of the pie of net earnings is falling. This doesn’t mean that wages are falling. It means that they are not growing in lock step with value-added.

Automation and productivity improvements, Autor wrote,

tend to grow the economic pie in aggregate while simultaneously considerably diminishing some slices and yet expanding others’ dramatically. Most new workplace technologies displace some worker tasks and entire jobs, devalue certain skills, and disrupt livelihoods. This is individually and socially costly and politically disruptive.

Automation Gains Momentum

Evan Halper at LAT:

Driverless vehicles threaten to dramatically reduce America’s 1.7-million trucking jobs. It is the front end of a wave of automation that technologists and economists have been warning for years will come crashing down on America’s political order. Some predict it could rival the impact of the economic globalization and the resulting off-shoring of jobs that propelled Trump’s victory in the presidential election.

“This is one of the biggest policy changes of our generation,” said Sam Loesche, head of government affairs for the Teamsters. “This is not just about looking after the health and welfare of America’s workers, but also their livelihoods.”

Washington isn’t ready for it. The Trump White House already has indicated it sees it as some future administration’s problem. Silicon Valley remains in shock over Treasury Secretary Steven T. Mnuchin’s remark in the spring that economic fallout from this type of automation is 50 to 100 years off and “not even on my radar screen.”

“I don’t think anybody there is thinking about this seriously,” said Martin Ford, author of “Rise of the Robots: Technology and the Threat of a Jobless Future.” “They are still looking at this as futuristic and not having an impact and not politically toxic. … Once people start seeing the vehicles on the roads and jobs disappearing because of them, things will quickly become very different.”

The arrival of that reckoning is getting accelerated by Washington’s bipartisan excitement for self-driving technology, one of the few policy issues advancing. New Trump administration regulations don’t require industry to submit certain safety assessments, leaving it voluntary. And legislation — already approved in the House and expected to pass in the Senate — strips authority from states to set many of their own safety guidelines.

At Reuters, Lisa Baertlein and P.J. Huffstutter explain that immigration crackdowns are creating more jobs ... for robots

 Convincing big U.S. dairy owners to buy robots to milk their cows - and reduce the farmhands they employ - used to be a tough sell for Steve Fried. Recently, his job has gotten easier, he says, in part because of President Donald Trump.

...
 Trump’s crackdown on illegal immigration through stepped-up arrests and border enforcement has shaken the U.S. agricultural sector, where as many as 7 in 10 farm workers are undocumented, according to the American Farm Bureau Federation.

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A 2014 report by WinterGreen Research forecast significant growth in the use of robotics in “every aspect of farming, milking, food production” and other agricultural enterprises. The report put the market for agricultural robots at $817 million in 2013 and projected that it would reach $16.3 billion by 2020.