Thursday, March 27, 2014

The Job Apocalypse Is Hiding in Plain Sight

March 27, 2014
CEPR: The Job Apocalypse That Is Hiding From The Bureau of Labor Statistics

There is a growing industry in the United States of people promoting stories about how robots and other technological innovations are going to make us all unemployed.

...

The issue is simply one of how fast we might expect these new technologies to increase productivity and displace workers. The answer we have been getting to date from the Bureau of Labor Statistics (BLS) is not very fast.

The following chart shows real output per person in the business sector.


Click to enlarge.

It would seem that the exponential trend failure in this chart has created a Center for Economic and Policy Research sarcasm failure. That's two failures in one!

The Sarcasm Knife


Sarcasm is a dangerous weapon, especially when holding it by the blade instead of the handle.

Source Data:
St. Louis Fed: Business Sector: Real Output Per Hour of All Persons

16 comments:

Troy said...

If only there were a mechanism to direct corporate profits back into the paycheck economy!

http://research.stlouisfed.org/fred2/graph/?g=uP2

corporate income tax / corporate AGI

Anonymous said...

So, around 1997, 1998, productivity jumped off the trendline, maybe mostly due to automation. I remember the days when every office had typing pools, filing staff, mail boys, lots of bookkeeping, and when much of the engineering was tedious pre-Excel, pre-specialized programs, grind-it-out type effort. I find it amazing how much engineering is now effectively automated. Interestingly, the sudden new benefits started to taper off around 2005 about the time that energy (oil) costs were climbing.

I didn't understand the CEPR reference (your sarcasm is getting to subtle for some of us).
Fred

Stagflationary Mark said...

Troy,

If only there were a mechanism to direct corporate profits back into the paycheck economy!

If only! At the rate we're going, at what point does the government actually start paying corporations to sell us goods and services for huge profits?

I wish that was a rhetorical question. Sigh.

Stagflationary Mark said...

Fred,

CEPR's "The Job Apocalypse That Is Hiding From The Bureau of Labor Statistics" was being sarcastic.

They don't see the "job apocalypse" and therefore chose to belittle it by using sarcasm. They think it is just business as normal.

From the link...

So why should we think that productivity growth will lead to a problem of too few jobs, as opposed to providing a basis for rising wages and living standards? if there is some huge productivity boom facing us in the near future, it is hiding pretty well from the folks gathering the data at BLS.

They can't see it even though my chart clearly shows that it exists.

Stagflationary Mark said...

As a side note, I really call BS on the "in the near future" disclaimer. Who cares about the near future? It's the frickin' long-term future that I care about.

As seen in my chart, we're about 10% more productive now than we would have thought we'd be in 1997 (using the 30 year exponential trend from 1967). That's a mind boggling amount.

If we weren't 10% more productive, then we'd need about 14 million extra people (10% of nonfarm payrolls) to work in order to produce the same amount of goods and services. And if those people were actually working, we would need/want even more goods and services than we currently do (since those extra working people would have the extra income needed to spend more). Go figure.

CEPR is claiming that I'm wrong to be worried about this. I claim they are wrong not to worry.

CEPR used sarcasm. I claim they used it in error.

Troy said...

CEPR aka Dean Baker is pretty far to the left, about where I am I guess. We agree on 90% at any rate.

http://research.stlouisfed.org/fred2/graph/?g=uQF

blue is real GDP per worker, red is Gini (right axis)

Shows the brutal stagnation in productivity in the 1970s.

the story there is we still added 20M jobs, which no doubt had a hand in generating all that inflation!

But so much of our GDP is just rent-taking in disguise. $2T for our housing expense, ~$9000 per capita for health care.

http://www.oecd.org/unitedstates/Briefing-Note-USA-2013.pdf

$1T natsec state, we've apparently got to borrow 10% of GDP each year:

http://research.stlouisfed.org/fred2/graph/?g=uQJ

to keep the wheel spinning.

Debt rising at 10%+, GDP rising at 2%.

http://research.stlouisfed.org/fred2/graph/?g=uQQ

YOY GDP growth vs YOY debt growth (red)

bottom line AFAICT is we've got to double taxes on everyone, the top 10% to bend that Gini curve back down and the middle quintiles to stop us from collectively driving housing costs (mortgages and rents) up so much.

the bottom 47% don't pay any taxes other than sales and FICA, they're cool as they are.

Stagflationary Mark said...

Troy,

CEPR aka Dean Baker is pretty far to the left, about where I am I guess. We agree on 90% at any rate.

For what it is worth, I am an equal opportunity heckler.

It's funny though. All it takes to push me more to the left is to hear someone from the far right speak, lol.

Stagflationary Mark said...

Troy,

Shows the brutal stagnation in productivity in the 1970s.

This is a really good point.

Imagine what the chart in my post would look like if the price of oil hadn't been a similar drag in the past decade!

Put another way, automation is improving productivity but higher oil prices are hurting it.

Neither of these two "features" is good for long-term job growth though. Sigh.

Troy said...

If people don't understand the actual problems, their opinions are going to be risible.

Few people even understand the shape of the problems we face, let alone the particulars.

I think our problems are more solvable than Japan's, maybe, but it's a really tough call.

This is assuming perfect technocratic government that had the power to institute necessary and sufficient reforms at the optimal pace of introduction.

The thing that haunts me most about the US economy is that pop-wise we're apparently growing like a third-world country.

http://geography.about.com/od/lists/a/2050pop.htm

I just see billions of poor -- f'd -- people on that list. (If Japan were to grow 30% like us they'd be #9 in 2050, between Bangladesh and the Philippines, not #16)

Gov't is spending $6T now yet we've got so much poverty, I don't even understand how that's possible since that's $18,000 per man, woman and child . . .

http://research.stlouisfed.org/fred2/graph/?g=uR9

We need "perestroika" here, but chances are we'll just get what happened to post-Gorbachev Russia in the 1990s instead, some faux-populist idiot elected that gives it all away.

Maybe that happened in the 1980s already, here.

Troy said...

Why does that last graph look exactly like a volcano?

Stagflationary Mark said...

Troy,

If people don't understand the actual problems, their opinions are going to be risible.

I had to look up risible. What a great word, lol.

Few people even understand the shape of the problems we face, let alone the particulars.

The most depressing thing for me personally, is just how many people think that America will grow like it once did. And what's the (circular) reasoning? It always has.

Why can't we just admit it is slowing and adjust to compensate? That would be admitting there's a problem though, and nobody in power wishes to do that until the problem has turned to crisis again. Sigh.

Why does that last graph look exactly like a volcano?

The volcano erupts if you adjust it for inflation.

Troy said...

http://imgur.com/gallery/4UViP

^ nordic-state PRISONS are a better situation than what half this country has.

https://research.stlouisfed.org/fred2/series/LFWA24TTUSM647N

US age 15-24 population.

1970-1990 was tough, but we expanded eventually to get everyone working.

1980-2000 was beneficial thanks to Alaska and the North Sea peaking at the same time, flooding the world with oil.

Not that oil is the primary headwind of the current economy. $750/mo per capita health costs and similar-scale housing costs are much bigger burdens on everyone now, plus of course the ~$30,000 Gen Y has been forced to borrow to get a degree.

meanwhile,

http://research.stlouisfed.org/fred2/graph/?g=uRq

the bottom has dropped out of mfg, construction, and information job markets

it's retail or nothing apparently.




Troy said...

the good news is that the age 15-24 population is going to stall where it is now, even falling 1M and staying there through 2027.

But from 2027 through 2060 it will rise 20% . . .

Japan managed to stop this baby-boom echo stuff, since their baby boom was just 3 years in duration.

Stagflationary Mark said...

Troy,

Not that oil is the primary headwind of the current economy. $750/mo per capita health costs and similar-scale housing costs are much bigger burdens on everyone now, plus of course the ~$30,000 Gen Y has been forced to borrow to get a degree.

Yeah, oil is more like an insult to injury these days.

it's retail or nothing apparently.

The Amazons of the world are opting for the nothing plan, as best they can.

All Employees: Retail Trade: Nonstore Retailers

That's just not a whole lotta employment growth for such an explosive growth industry. Some additional jobs *may* be added of course. I'm not sure what the math looks like for that though.

On the one hand, more people will be delivering packages.

On the other hand, the less people drive to the malls, the fewer cars will be needed (jobs), the less cars will deteriorate, and therefore the less maintenance they will require (jobs). And when taken to an extreme, the restaurants near malls may also suffer someday.

I have to think that a fully loaded delivery truck is much more efficient than many slightly filled cars when it comes to moving goods.

Swerve Left: Progress

If that really is the GDP of the future, then we are in trouble. It also hits a bit close to home for me, lol. ;)

Troy said...

http://research.stlouisfed.org/fred2/graph/?g=uYD

blue is full employment (1999 level)

red is mfg+info+construction+retail employment

red is down to 1990 levels, but blue is 30M higher.

I predict this will not be an campaign issue this year or 2016, 'cept maybe for Sanders.

Funny how if one really is the nefarious anti-American traitor bent on the destruction of America, your best strategy is clearly to just vote straight-ticket GOP every year, to get the power of a entire movement behind your intention.

Stagflationary Mark said...

Troy,

Yeah, it's funny in that gutting the last unicorn on earth for its meat kind of way.

I'd laugh, but my gallows humor can apparently only go so far. Sigh. :(