The Future of Work: How You Can Ride the Wave of Change
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For the average job-seeker or any parent wondering what kind of livelihood awaits the next generation, the current headlines are the stuff of anxiety attacks. Last month, the Associated Press announced that it would begin using an automated writing service to cover more than 10,000 minor league baseball games each year. Driverless trucks may soon be taking over from humans, elbowing out an entire profession. New technology purports to bring great change to a surprising number of fields, including law, medicine and financial services. What will be the human toll and net effect on the economy? Has the U.S. reached an epoch of irreversible job loss?

To a large extent, the public discussion over the future of work has followed a storyline that says technology and globalization are coming to whisk your job away. But behind the obvious forces, other perhaps more powerful factors are at play, says Wharton management professor Peter Cappelli, director of the school’s Center for Human Resources. “If one wanted to look at single changes that matter a lot to work, the biggest in my view has been ideology, the shift from the idea that business had a responsibility to all stakeholders toward the idea that they have responsibility only to one – shareholders.” He adds that the second most impactful change has been the rise of China and “the addition of maybe 500 million semi-skilled workers to the world labor force. Neither of those were predictable a decade or more in advance of them happening.”

The implications are as much political as economic, says Wharton management professor Matthew Bidwell. “Certainly for hundreds of years, people have said in the future nobody is going to work and machines will do it all for us, and that has yet to happen. First of all, up until now technology has created as many jobs as it has destroyed.”  

Still, he says, the trends, for reasons quite apart from technology, are extremely worrisome.

“The working class has not had a good 30 or 40 years in the U.S. and the U.K. The destruction of the minimum wage and destruction of the unions played a role, technology has played a role, and globalization has played a role,” he notes. “Generally, modernization is not working terribly well for a lot of people, and it does result in Brexit, Trump and all that sort of stuff.”

The shift is alarming, Bidwell adds, “because one perspective is these technologies are complex enough that you will see a few organizations controlling more and more of them. There is a huge barrier to entry. And I think then the only way to change is major social strife. If jobs really change as much as people say they are going to, for me the scariest piece is the political implications — the massive concentration of power that is likely to result.”

Evaporating Jobs 

Nailing down the future of work has long been a line of work in itself. Author Martin Ford argues that artificial intelligence threatens to make many professions obsolete, and has advocated for a basic income guarantee. About 47% of the U.S workforce is in jobs at high risk for becoming automated within the next two decades, according to the 2013 Oxford University study “The Future of Employment: How Susceptible are Jobs to Computerisation?” by Carl Benedikt Frey and Michael A. Osborne. And not only the jobs you might expect: “Occupations that require subtle judgment are also increasingly susceptible to computerisation [sic]. To many such tasks, the unbiased decision making of an algorithm represents a comparative advantage over human operators,” says the study, which included 702 occupations in its analysis.

What about creative industries, like music and screenwriting, and jobs that require the very human qualities of strategy, wisdom and intuition, like journalism? These jobs are, of course, safe, right? Not so, says Bidwell. “When you look at some of the industries some of the technology has devastated in the last 30 years, journalism and music are very high up the list,” he notes. “I think part of the problem is that now you have this infinite distribution capacity, and those markets have been superstar markets, but a smaller number of people are making quite a bit of money. Customers have access into that content, but employees in those industries have not fared terribly well. If all the drudgework gets taken out, are we all going to be doctors or screenwriters? I’m not so sure.”

To wit, just because a profession is producing something desirable, or even necessary to the functioning of society, doesn’t mean society has figured out a way to pay for the care and feeding of its practitioners.

We have always argued that we are on the precipice of a profound change in the workplace, says Cappelli. “What history tells us is that the big changes move inexorably but reasonably slowly, and there is no single cause,” he says. “The current spate of stories about the future of work are driven by stories about technology, but what we know about technology is that it has rarely been the source of immediate change.” The ability to do something with technology is quite different than the notion that it will spread, let alone spread quickly, Cappelli says.


The impact of technology gets mediated by its cost and complexity, he adds. For example, in the 1980s there were reports that VCRs would wipe out traditional television because of the ability to record and then blow through commercials. “Even though it was possible to do, it was difficult to use, so it never happened,” Cappelli points out. “The problem basically is that employers are sitting on one side of a supply chain saying, ‘We’d like workers with these skills, and by the way, we don’t want to train them.’ On the other are individuals looking for jobs. Sort of in the middle are community colleges and for-profit schools. The groups trying to help make matches are state and local workforce development agencies.”

Change may be slow, but that does not mean it isn’t coming. Nearly half of all respondents interviewed as part of a Pew Research Center study on the evolution of work envision a future in which robots and digital agents have displaced significant numbers of both blue- and white-collar workers, “with many expressing concern that this will lead to vast increases in income inequality, masses of people who are effectively unemployable and breakdowns in the social order.” The 2014 study was not the typical representative poll of workers and managers, but, rather, a survey of 1,896 internet experts screened by Pew for previously insightful predictions about the internet.

On the hopeful side, these experts believed that although technology would displace certain kinds of work, it would also free us up from drudgery, leading us to invent new kinds of work.

But they also conclude that while some highly skilled workers would triumph in the new work order, others would be forced into lower-paid jobs or suffer permanent unemployment. “Our educational system is not adequately preparing us for work of the future, and our political and economic institutions are poorly equipped to handle these hard choices,” the study concludes.

Closing the Skills Gap

A society poorly prepared for the future of work is precisely Art Bilger’s concern. The venture capitalist — he is a founding partner of Shelter Capital Partners — has founded an advocacy group called WorkingNation to create public awareness on the issue. With the national non-profit organization, Bilger is sounding the alarm bell on looming “mass structural unemployment” in the U.S. as a result of technology, globalization, longevity and an educational system that has failed to keep pace. The group is producing and distributing content — short videos and documentaries — arguing that society must do more to prepare for change, and spotlighting examples of groups coming up with solutions.

“Never before in history have we had such a steep slope,” says Bilger. “This is truly about the heart of American society — the middle class, the very wealthy and those who are impoverished. There is not an aspect of society that won’t be impacted by this if we don’t deal with it appropriately.”

Bilger says that the movements that have sprung up around both Republican Presidential nominee Donald J. Trump and Democratic candidate Bernie Sanders are a reaction to the looming jobs crisis.

“I believe at the core of them are exactly these issues. We don’t have to look five years down the road, there are millions of people in this country who are in pain, there is absolutely pain out there and it’s economic and job-related pain,” he notes. “It manifests itself in different ways, but whether you are a Trump fan or a Sanders fan, at the core they are exactly the same issues.”

WorkingNation has commissioned well-regarded filmmaker Barbara Kopple to produce a series of pieces on the way work is changing, and how corporations are dealing with the skills gap. One success highlighted is Year Up, a Boston-based non-profit that works in urban areas to provide low-income young adults with skills development, college credits, corporate internships and other forms of support. Additional programs that have caught the eye of WorkingNation are College for Social Innovation, Operation Hope, Americorps, and Service Year Alliance. Bilger’s group aims to create a “Future Proof Index” that will guide users to organizations that can assist them.

“What I’d like to see in the near-term,” says Bilger, “is a real discussion of these issues so that the average American can understand what’s going on — to have mom and pop looking up at the dinner table with their 12-year-old and understanding where the jobs will be and what the mitigating strategies are. I’d like to see people broadly talking about this.”

As for where the responsibility lies for preparing the workforce for the future, Bilger says policy at a federal level can help, but the best solutions are to be found on a local level, with organizations like the ones he is highlighting — and with businesses. “I do think corporations can play a very significant role, and I think they have a real responsibility. Corporations have the greatest visibility as to how jobs are changing. If they can’t fill jobs, and that is a problem today, they have a real need in terms of day-to-day business. And they’ve got the greatest resources. When you look at the financial and human resources they could bring to the table, that could be very valuable.”

Where Will the New Jobs Come From?

But retraining workers is just one step in restoring real job growth. The other part of the equation is finding ways to actually create jobs, says Colleen LaRose, president and CEO of the North East Regional Employment and Training Association. “The workforce system has historically been divorced from the economic development system. They run on separate tracks, and there is very little collaborative work that they currently do,” she says. “The problem is that they are each going and talking to employers separately, so they are not sharing information.”

For instance, LaRose says, if the economic development side learns that a particular company in its area is going to start exporting to China, economic development is not then calling the workforce development side to share the news and suggest that new recruits should speak Chinese. By the same token, she notes, when the workforce system goes out to talk to businesses, they talk with employers about the things they are ‘selling’ — like tax credits offered to employers for hiring from certain populations with barriers to employment. “But workforce development does not take that valuable time spent with the employer to also speak with them about their plans for expansion, exporting, etc. And if they do happen to learn something that may be of interest to economic development, they seldom if ever share that information with economic development.”

Economic development agencies largely use tax incentives to bring in business from other regions. “It’s a zero-sum gain in a lot of instances because when you move a company from another area that other area is losing [jobs]. There has to be a way to grow jobs that are honest-to-goodness new jobs, sustainable jobs, in a way that isn’t a win-lose,” she says.

LaRose sees great promise in the economic gardening movement — a model in which promising second-stage companies are identified (generally having between 10 and 99 employees, with annual revenue between $1 million to $50 million) and given support in a variety of forms that would allow them to grow to the next level. “If a typical business brings on five or six new employees, that’s not as sexy as bringing in 2,000 jobs, but they are new jobs, not relocated jobs, and if you do that over and over, you are really having an impact,” LaRose says.

Between 1995 and 2013, although second-stage companies comprised only 13% of U.S. establishments, they generated 35% of all jobs and about 34% of sales, according to the Edward Lowe Foundation, a champion of the idea.

For Bidwell’s money, a good investment in being able to ride the ongoing wave of change in the nature of work is not necessarily vocational training, but getting a good, solid education. “The old cliché about college teaching people to think probably has a lot of truth to it,” he says. “A lot of reading and writing and a certain amount of math — when you talk about adaptability, it provides you with this ability to take on new kinds of knowledge and rely on those basic skills.

When you learn a particular welding technique, that’s not necessarily helpful in five years.”

The political mood at the moment doesn’t point to government taking a strong role in ensuring the future of work, says Bidwell, “because the market has made it very clear that we can pay some people stratospheric amounts of money and other people very little money, and that does not lend itself to a healthy society. But unless you are going to allow the government to intervene, that’s where we’re going to end the conversation.”

A restoration of balance hinges on redistribution of wealth, spending on education, skills training, higher minimum wages and other interventions to raise the bargaining power of the low-skilled worker. But, Bidwell says, “from my perspective, the political situation in this country is 180 degrees from what would improve their lot.”

Says Cappelli: “In short, I don’t see any story pointing to fundamental change in the workplace beyond what we are already seeing, which is the continued efforts by employers to get labor cheaper in all kinds of ways without worrying much about the consequences. We’ve also been seeing the unwinding of the great corporate model that operated from the 1950s to the 1980s. What comes next?

No clear pattern.”


Why Democracy Requires Trusted Experts

Jean Pisani-Ferry
. Newsart for Why Democracy Requires Trusted Experts



PARIS – Last month, I wrote a commentary asking why voters in the United Kingdom supported leaving the European Union, defying the overwhelming weight of expert opinion warning of the major economic costs of Brexit. I observed that many voters in the UK and elsewhere are angry at economic experts. They say that the experts failed to foresee the financial crisis of 2008, put efficiency first in their policy advice, and blindly assumed that the losers from their policy prescriptions could be compensated in some unspecified way. I argued that experts should be humbler and more attentive to distributional issues.
 
The piece elicited far more comments from readers than any of my others. Their reactions mostly confirm the anger I had noted. They regard economists and other experts as isolated from and indifferent to the concerns of ordinary people; driven by an agenda that does not coincide with that of citizens; often blatantly wrong, and therefore incompetent; biased in favor of, or simply captured by, big business and the financial industry; and naive – failing to see that politicians select analyses that suit their ends and disregard the rest. Experts, said some, are also guilty of fracturing society by segmenting the debate into myriad narrow, specialized discussions.
 
Remarkably, I also received comments from professionals in the natural sciences who said that citizens’ growing distrust of experts was pervasive in their disciplines, too. Scientific views in fields like energy, climate, genetics, and medicine face widespread popular rejection. In the United States, for example, a Pew Research survey found that 67% of adults think that scientists lack a clear understanding about the health effects of genetically modified organisms.
 
Mistrust of GMOs is even higher in Europe. Whereas overall support for science remains strong, many citizens believe that it is manipulated by special interests, and on some issues, the common view departs from the established evidence.
 
This divide between experts and citizens is a serious cause for concern. Representative democracy is based not only on universal suffrage, but also on reason. Ideally, deliberations and votes result in rational decisions that use the current state of knowledge to deliver policies that advance citizens’ wellbeing. This requires a process in which experts – whose competence and honesty are trusted – inform decision-makers of the available options for meeting voters’ stated preferences. Citizens are unlikely to be satisfied if they believe that experts are imposing their own agenda, or are captured by special interests. Distrust of experts fuels distrust of democratically elected governments, if not of democracy itself.
 
Why is there such a divide between experts and society? Every country has had its own series of high-profile public health or safety scandals. Experts have been guilty of sloppiness and conflicts of interest. Hard-won reputations have been quickly lost.
 
But critics often fail to recognize that science involves more – and more stringent – scrutiny than, say, business or government. It is actually the standard-bearer of good practices concerning the validation of analyses and the discussion of policy proposals. Errors regularly occur in academia, but they are more swiftly and systematically corrected than in other fields.
 
The collective nature of scientific validation also provides guarantees against capture by special interests.
 
The problem may, in fact, be deeper than the common grievances against experts suggest. A few decades ago, it was widely assumed that progress in mass education would gradually bridge the gap between scientific knowledge and popular belief, thereby contributing to a more serene and more rational democracy.
 
The evidence is that it has not. As Gerald Bronner, a French sociologist, has convincingly shown, education neither increases trust in science nor diminishes the attraction of beliefs or theories that scientists regard as utter nonsense. On the contrary, more educated citizens often resent being told by experts what science regards as truth. Having had access to knowledge, they feel empowered enough to criticize the cognoscenti and develop views of their own.
 
Climate change – which the scientific community overwhelmingly regards it as a major threat – is a case in point. According to a 2015 Pew Research survey, the three countries where concern is the weakest are the US, Australia, and Canada, whereas the three in which it is the strongest are Brazil, Peru, and Burkina Faso. Yet average years of schooling are 12.5 for the first group and six for the second. Evidently, education alone is not the reason for this difference in perception.
 
If the problem is here to stay, we had better do more to address it. First, we need more discipline on the part of the community of experts. The intellectual discipline that characterizes research is often lacking in policy discussions. Humility, rigorous procedures, the prevention of conflicts of interest, an ability to acknowledge mistakes and, yes, punishment of fraudulent behavior are needed to regain the citizens’ trust.
 
Second, there is a case for revising curricula to equip future citizens with the intellectual tools they will need to distinguish between fact and fiction. Society has everything to gain from citizens whose minds are both less suspicious and more critical.
 
Finally, we need better venues for dialogue and informed debate. Serious magazines, general-interest journals, and newspapers traditionally filled the space between the ether of peer-reviewed journals and the deep sea of hoaxes; yet they all struggle to survive the digital revolution. Other venues, perhaps new institutions, are needed to fill that space. What is clear is that democracy cannot thrive if it is left empty.
 
 


Inflation’s Great Divide

Goods prices have been dropping while services prices are on the rise—a gap that might only grow if the Federal Reserve raises rates

By Justin Lahart


The gap between inflation’s haves and have-nots is wide. All the Federal Reserve may be able to do is make it worse.

To judge from the price tags on stuff that gets sold in stores, much less the signs at gasoline stations, the U.S. is mired in deflation. But if it is services like renting a car or going to a show that one is paying for, inflation is very much on the scene.

It is a divide that has been on display in second-quarter results. Falling prices are one of the things that has been weighing on revenues at goods-producing companies. Among those in the S&P 500 that have reported so far, the median sales decline was 2.6%, according to FactSet.

The median service-sector company, on the other hand, experienced a 3.6% sales gain.

That divide was also on display in inflation figures the Commerce Department released Tuesday. Overall, consumer prices were up 0.9% in June from a year earlier, while core prices, which exclude food and energy prices to better capture inflation’s underlying trend, were up 1.6%. Prices for goods, however, were 1.8% below their year-earlier level, while services prices were up 2.2%.

Falling gasoline prices—regular averaged $2.37 a gallon in June versus $2.80 a year earlier—were only part of what drove the decline in goods prices. Prices for durable goods, which include long-lasting items like washing machines and bicycles, were down 2.2%. Much of the blame for the drop rests with weakness outside of the U.S., lowering imported good prices and forcing domestic competitors to follow suit. Given the gloomy global economic outlook, those price pressures will likely persist.

Services inflation, on the other hand, may heat up. Wages have been picking up, making it easier for service providers, which face little overseas competition, to raise prices. A fading drag from the Affordable Care Act on health-care prices should provide an additional boost.


When it comes to inflation, services, which account for two-thirds of consumer spending, carry more oomph—particularly when it comes to the core measure. So even if goods prices continue to cool, inflation may continue to drift close to the Fed’s 2% target. That would make policy makers at the central bank more comfortable with the prospect of raising rates before the year is up.

But the most immediate thing a Fed rate increase would likely do is breathe new life into the dollar, since it would boost the returns on U.S. fixed-income assets, drawing foreign investment. That, in turn, would push import costs, and goods prices lower. Services prices, largely insulated from the dollar, might not be nearly as affected.

The have-nots could end up having even less.


Middle East

Iran’s Top Leader Distances Himself from Nuclear Pact, Which He Once Supported

By RICK GLADSTONE

 Ayatollah Ali Khamenei in Tehran on Monday. He accused the United States of breaching its promises in the nuclear accord reached a year ago. Credit Office of the Iranian Supreme Leader, via Associated Press    
   

Iran’s top leader distanced himself on Monday from the nuclear agreement reached with major powers a year ago, accusing the United States of failing to honor pledges in the accord and citing “the futility of negotiations with the Americans.”

In blunt remarks prominently featured in Iran’s state news media, the senior leader, Ayatollah Ali Khamenei, said the talks that led to the nuclear agreement in July 2015 should be regarded as an instructive lesson on the dangers posed by interactions with governments he regards as enemies.

Ayatollah Khamenei, who has the final word on Iran’s national security and other vital issues, did not suggest that he wanted to abandon the agreement, which took effect in January and sharply limited Iran’s nuclear activities in exchange for the lifting of many Western economic sanctions.

But his remarks indicated that he was hedging against any unraveling of the agreement. He had endorsed the accord despite many of his own public warnings of interactions with the United States.

“Today, even the diplomatic officials and those who were present in the negotiations reiterate the fact that the U.S. is breaching its promises, and while speaking softly and sweetly, is busy obstructing and damaging Iran’s economic relations with other countries,” Ayatollah Khamenei said in a translation reported by Press TV, an official Iranian English-language news site.

He said the agreement, known officially as the Joint Comprehensive Plan of Action, “once again proved the futility of negotiations with the Americans, their lack of commitment to their promises and the necessity of distrust of U.S. pledges.”

He cautioned against talks with the United States on other regional crises, presumably including the wars in Syria and Yemen and the Islamic State extremist group. The experience of the nuclear deal, he said, “tells us that taking this step would be a deadly poison and that the Americans’ remarks cannot be trusted on any issue.”

Ayatollah Khamenei’s remarks may strengthen the hard-line conservative factions in the Iranian hierarchy and their hostility toward President Hassan Rouhani, who made achieving a nuclear agreement a central objective in his 2013 election campaign.