A bright future for the world of work

Workers the world over have had a torrid year. But the future is bright, argues Callum Williams

The covid-19 pandemic has taken a terrible toll on the world’s workers. 

It has destroyed millions of jobs, causing a drop in employment that was 14 times bigger than the one after the financial crisis of a decade ago. 

In many countries unemployment has risen to levels last seen in the 1930s, with the pain concentrated among the low-skilled. 

The pandemic has also accentuated inequalities that had previously often only bubbled under the surface. 

“Essential” workers had to continue travelling to and from their workplaces, exposing themselves to the virus and dying in great numbers even as many of their office-based compatriots were able to shield themselves at home. 

There are plenty who now fear that the post-pandemic labour market will be one of persistently high inequality and unemployment, with work outsourced abroad or simply handed over to robots.

Yet the belief that something has gone wrong with labour markets has a history of turning out wrong. 

Since the dawn of capitalism people have lamented the world of work, always believing that the past was better than the present and that the workers of the day were uniquely badly treated. 

Adam Smith argued that the burgeoning industrial sector of late-18th-century Scotland had the potential to make workmen “as stupid and ignorant as it is possible for a human creature to become”. 

Emile Durkheim reckoned that in a glorious past in France, people had enjoyed work because they controlled it, were good at it, and did it in the bosoms of their community—but that capitalism had stolen all of this.

Even in the “golden age” of the 1950s and 1960s, when jobs were supposedly much better than they are today, a narrative of dissatisfaction loomed large. 

In the 1950s many social scientists asserted that America’s unionised car workers were unhappy because their work was boring and they lacked any autonomy. 

By the end of the 1960s, the concept of “blue-collar blues” had entered the public imagination.

Shortly before the pandemic struck early last year people had a fresh set of concerns about work. 

The received wisdom, on both the right and the left, was that 21st-century workers were stuck in insecure and badly paid jobs, if they could find them at all—and that many faced an even worse future, as ever-smarter robots pushed them aside. 

What jobs remained were, for many people, soulless, pointless and unsatisfying. 

Guy Standing, an economist, talked of a growing “precariat”. 

David Graeber, an anthropologist, coined the term “bullshit jobs” in a bestselling book in 2018. 

“Where have all the good jobs gone?” asked David Blanchflower of Dartmouth College in a book published a year later.

This special report will offer a rebuttal to such pessimistic assessments. 

Focusing on the 37 countries that are members of the oecd club of mostly rich countries, it argues that popular perceptions about the world of work are largely misleading. 

The labour market before covid-19 was far from perfect, but it was better than many critics were claiming—and it was getting better still. 

The pandemic has been a catastrophe for many, as this report will describe in detail. 

But its lasting legacy may be a better world of work, as it speeds changes that were already under way and highlights those places where further improvement is needed.

This matters. 

Labour markets are important not just because they allow people to earn enough to put food on their tables. 

People’s jobs are perhaps the biggest single constituent of their identity. 

They shape their politics. 

It is grim to be out of work if you want it, or to be stuck in a job you hate. 

High unemployment is linked with higher crime and worse health. 

Estimates from America suggest that the rise in unemployment during 2020 will cause 800,000 extra deaths over the next 15 years.

That makes it fortunate that the world of work before the pandemic struck was actually quite successful. 

In 2019 the rich world’s unemployment rate was lower than at any time since the 1960s. 

In America joblessness among black people was the lowest ever, as it was in Britain. 

Youth unemployment, which had once seemed intractable (especially in Europe) was also down.

The working-age employment rate (the share of 16- to 64-year-olds in a job), a more reliable indicator of labour-market health than unemployment, was also at an all-time high in over half of rich countries. 

A great surprise for many economists on the right was that this jobs boom occurred even as minimum wages rose smartly across the rich world and as immigration soared. 

A similar shock for those on the left was that capitalism was delivering clear gains for those at the bottom end of the labour market.

Pay may not have been rising as fast as many would have wished, but the era of ultra-measly settlements that marked the aftermath of the financial crisis of 2007-09 had come to an end. 

In late 2019 rich-world earnings were growing by nearly 3% a year (the figure was not even higher in part because poorer folk were joining the ranks of the employed in huge numbers, dragging down average pay). 

The wages of the worst-paid Americans were increasing 50% faster than those of the best-paid. 

Economists often focus on the “labour share”, which measures total pay and benefits (such as health-care or pension contributions) as a proportion of national income, to give a sense of how workers are doing relative to the growth of the economy. 

In the years immediately before covid-19 this labour share was rising across America, Britain, the European Union and Japan.

It is however also true that income inequality was high by historical standards. 

Yet by the late 2010s it was no longer rising and might even have been falling a little, as the most disadvantaged people were pulled into the jobs boom. 

There were certainly fewer low-paid jobs, defined as those that pay less than two-thirds of the median wage. 

In Britain, for example, not since 1977 had there been so few.

Nor was there much evidence of a growing “precariat”. 

A paper focusing on America, Britain and Germany, by Alan Manning and Graham Mazeine of the London School of Economics, finds “no trends in...subjective job insecurity in spite of the alleged rise in the prevalence of non-standard employment”. 

By 2019 the share of German workers who felt insecure had fallen by more than half since the middle of the previous decade. 

Official estimates of employment in the gig economy suggested that it made up only a tiny fraction of all jobs.

And more people seemed to be enjoying their work. In 2019 Gallup, an American pollster, found that the share of Americans “completely” or “somewhat” satisfied with their jobs was the second-highest since its series began in 1993. 

Various measures of job satisfaction were also rising in Europe. 

It is difficult to make direct comparisons with the economic golden age of the 1950s and 1960s, but there is little evidence from the scattered surveys which can be unearthed to suggest that job satisfaction was higher then.

Well-educated people in high-prestige posts may consider many jobs in the modern labour market to be beneath them—insufficiently taxing on an intellectual level, perhaps. 

But this was another trade-off of a hot labour market: that jobs had become more widely available to people with the lowest educational qualifications. 

For such folk, being in work offers a measure of economic security, and dignity, that being out of work never can. 

Crucially, it also makes the next job easier to get. 

A study by Burning Glass, a labour-market analytics firm, finds that half of young workers are able to translate their first job, one that often requires less than a bachelor’s degree and less than two years’ experience, into better-paying jobs within five years.

Long way home

The big question is whether, after the pandemic is over, labour markets can regain these heights and start once more working for people of all backgrounds. 

Far from making everything worse, this special report will argue that covid-19 will ultimately make things better by speeding up changes that were already under way. 

This will happen through a number of routes.

Thanks to the rise of remote work, more people will have more flexibility over when, where and how they earn their living. 

Few bosses will be wholly indifferent as to whether their employees are working in New York or in Niue. 

But the shift to a “hybrid” model of work, with some taking place in an office and some at home, is already forcing managers to become better communicators, improving employees’ job satisfaction. 

It is also stimulating helpful and long overdue changes in employment law.

This is not the only way in which policy is changing. 

What has been lost in the past year has made governments everywhere grasp the benefits of a healthy labour market, especially to families on low and moderate incomes. 

The pandemic thus presages a bigger role for governments than might previously have been expected, especially in sustaining employment, doing more to reduce inequality and coming up with better-designed systems of employees’ rights and welfare benefits.

And what of automation, another perennial fear about the world of work? 

Some worry that the past year’s experience might just give bosses the excuse they have long wanted to employ robots instead of people, leading to widespread joblessness. 

Recessions and pandemics do indeed often provoke a burst in automation. 

But the purported threat of a world without work is unlikely to come to pass—and could even recede.

In the short term, though, one question looms largest of all, and it is to this that the report turns next. 

How fast can labour markets bounce back from the shock of last spring? 

Railroads, Growth Stocks of the 19th Century, Are Hot Again

Proposed merger of Canadian Pacific and Kansas City Southern, global transportation snags highlight the value of North America’s freight rail network

By Spencer Jakab

Canadian Pacific Railway last month said it would pay about $25 billion to acquire Kansas City Southern./ PHOTO: ALEX RAMADAN/BLOOMBERG NEWS

Trains were the Teslas of the 1800s.

Even after the wonder technology had been through multiple booms, busts and bankruptcies, railroads still made up more than half of U.S. market capitalization at the turn of the 20th century just as cars and planes were about to arrive on the scene. 

Their weight today is far more modest, but recent wobbles in the complex logistical web that delivers goods across the country and the world are a reminder of how valuable their systems still are.

Last month’s deal to create the first freight-rail network that would link Canada, the U.S. and Mexico is another. 

Canadian Pacific CP 0.04% Railway, in its third attempt to hook up with a U.S. Class 1 railroad, said it would pay about $25 billion to acquire Kansas City Southern, KSU -0.07% the smallest of the major U.S. lines. 

The deal is likely to face a long approval process. 

Previous bids to merge with Norfolk Southern and CSX were unsuccessful.

Since Warren Buffett’s Berkshire Hathaway BRK.B 1.73% announced in November 2009 that it would pay $44 billion including assumed debt for Burlington Northern Santa Fe, the market value of North American railroads has risen sharply. 

That is despite a collapse in demand for the most lucrative commodity that they hauled prior to Mr. Buffett’s deal—coal shipped to power plants—and the fact that volumes have been sluggish for about three years.

An equal-weighted basket of shares of the remaining six Class 1 North American railroads bought the day before Berkshire Hathaway announced the deal would have had a total return of 862% through Monday compared with less than 300% for the S&P 500. 

Kansas City Southern, including the jump following announcement of its merger with Canadian Pacific, is the best performer over that time with a more than 1,000% return.

A successful deal could bode well for other players if it unlocks further consolidation. 

Analyst Bascome Majors of Susquehanna Financial Group notes that more deals could follow after 2022 if the official attitude toward consolidation has improved.

But even if the deal is blocked by the Surface Transportation Board, there are reasons to like railroads. 

A big one is the spread of precision-scheduled railroading—a management concept that has increased efficiency and train speeds but annoyed some smaller customers. 

Kansas City Southern’s operating ratio, a measure of efficiency, improved to 60.7% last year from 72.8% a decade earlier. 

And, as concerns mount over global warming, trains are well-placed to take advantage given their far greater fuel efficiency per ton mile than trucks for intercity freight. 

Railroads are also an excellent hedge against rising energy prices, truck-driver shortages or worsening highway congestion. 

More expensive diesel often leads to an uptick in rail traffic.

Railroads aren’t the bargain they were when Berkshire Hathaway pounced, fetching 24 times forward earnings on average, according to FactSet, compared with 15 times back then, but it is hard to see them becoming less important in coming decades. 

What Mr. Buffett said 12 years ago when he announced his rail deal remains true of the sector generally: “It’s an all-in wager on the economic future of the United States.” 

China Is Missing from the Great Inflation Debate

Once again, massive fiscal spending in the United States has invited warnings of inflation and triggered dark memories of the 1970s. But these fears are based on a model that has since been obliterated by economic realities – not least the rise of China, which has fundamentally reshaped the US and global economies.

James K. Galbraith

AUSTIN – The scale of US President Joe Biden’s American Rescue Plan (ARP) – $1 trillion in spending for this year, another $900 billion after that, plus a $3 trillion infrastructure and energy program that has been promised – has spooked many macroeconomists. 

Are their fears justified?

The bank and bond-market economists, having cried wolf before, can be disregarded. 

A year ago, many of them warned that the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act would incite hyperinflation by massively increasing the money supply. 

It didn’t happen.

More notable among the critics are neo-Keynesians like Lawrence H. Summers of Harvard University and his numerous acolytes. 

Summers has a different analysis. 

It was his uncle, Paul Samuelson, who with fellow future-Nobel laureate Robert Solow launched the Phillips curve in 1960. 

This simple model offered some of the most successful empirical predictions in economic history during its first decade, and has been an economic rule of thumb ever since.

Drawing on data from late-nineteenth-century Britain and the postwar United States, the Phillips curve postulated an inverse relationship between inflation and unemployment: as one fell, the other would rise. 

This is what seems to be bothering Summers today. 

The various rescue and federal support packages are indeed enormous, with the ARP alone accounting for about 6% of GDP. 

The full scale of federal spending is even larger, reaching 13% of GDP by one estimate. 

By comparison, the conventionally estimated “output gap” (the amount of slack in the economy) comes to only one-quarter of that, perhaps less.

Moreover, the official unemployment rate, at 6.2%, is not terribly far from the 4% level conventionally thought to represent “full employment.” 

Those receiving government relief payments are concentrated at the bottom of the income distribution, and thus should, in theory, spend more and save less of the cash disbursement, especially given that many households already have some savings held over from the CARES Act. 

By old-fashioned Phillips-curve logic, the new “stimulus” could drive the unemployment rate down to full employment and the inflation rate up from 0.6% in 2020 to at least 2-3%.

But the Phillips curve has had a rough ride since 1969. 

For about 25 years after that, the dominant economic thinking held that it was not a downward-sloping curve but a vertical line, at least “in the long run.” 

The implication was that any attempt to reduce unemployment below a “natural rate” or “non-accelerating inflation rate of unemployment” (NAIRU) would produce hyperinflation. 

Summers, I’m fairly sure, has more confidence in American capitalism than this view implies; and yet, he always hewed close to this skittish school of thought.

Reality, on the other hand, actually obliterated the Phillips curve. 

From the early 1980s – and unmistakably from the mid-1990s onward – no inflation could be found, and lower unemployment did not tend to bring it on. 

The relationship is not vertical or downward-sloping, but flat, which is to say it doesn’t exist – if it ever did. 

I pointed this out in a 1997 article titled “Time to Ditch the NAIRU.” 

Twenty-one years later, the distinguished neo-Keynesian Olivier Blanchard got around to asking essentially the same question in the same journal: “Should we Reject the Natural Rate Hypothesis?”

What happened? 

The answer can almost, if not quite, be summed up in a single word: China. 

From the early 1980s, the US dollar began to rise, crushing America’s Midwest industrial base and trade unions. 

The ensuing collapse of world commodity prices – and the Soviet Union with them – set the stage for China to emerge as the world’s leading purveyor of manufactured consumer goods.

Meanwhile, the forces that drove up US consumer prices after 1970 – including dollar devaluations, oil-price spikes, and cost-of-living adjustments for manufacturing workers (which were passed along in the form of higher prices) – all disappeared. 

Since full employment had never been the culprit, the full employment of the late 1990s and in the run-up to the COVID-19 pandemic did not bring back inflation. 

Moreover, there is no longer a tendency for oil-price fluctuations to feed through to wages and other prices, because American jobs now are mainly in services, where the price of labor is the price you pay.

But won’t China now take advantage of high US demand to push up prices? 

No, because Chinese firms fear losing market share to other countries, and because China’s economic ethos prizes not profit maximization but social stability, steady production growth, and cost reductions through learning and new technologies. 

Such firms will not alienate their customers by jacking up prices to exploit a little extra demand. 

There may be some backlogged orders and delayed deliveries, and some price increases due to higher shipping costs and higher wages in China. 

But the only real inflationary danger comes from those fanning the flames of war with China. 

War is always inflationary; a war with our largest goods supplier would be an inflation nightmare.

Short of that, US households are not suffering from a shortage of smartphones, dishwashers, and running shoes. 

What they lack is confidence and security. 

Hence, much of the Biden money will not go to China at all. 

It will go toward saving, in order to cover future rent, mortgages, utilities, and debt repayment.

Yes, some will be spent on services that were missed over the past year, reviving jobs in those sectors to a degree. 

Some will be used for housing maintenance, repairs, or upgrades – expenses that were neglected when people feared incurring the extra cost of a plumber, electrician, or painter. 

And some will go toward building new houses, as is already happening.

As for the rest, a good part will go into purchases of stocks, bonds, and real estate – especially land, suburban homes, and rural retreats made precious in the pandemic. 

It is mainly here that prices will rise, further enriching those who already own such assets. 

The wealth gap, already enormous, will grow larger. 

Because stocks and bonds, existing houses, and land are not newly produced consumption goods, these price increases will not figure in the indices that measure inflation. 

We will have to watch for them in the S&P 500 and on the real-estate platform Zillow, where rising prices are duly celebrated as a good thing.

The larger lesson is twofold. 

First, the mainstream neo-Keynesian macroeconomics of the 1960s is not a useful guide for understanding a US economy that has become fully enmeshed with the rest of the world and fundamentally reshaped by China’s rise. 

Second, America’s problems of inequality and precarity are not really issues of material scarcity. 

They reflect an unsustainable maldistribution of wealth and power.

James K. Galbraith is Professor of Government and Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. From 1993-97, he served as chief technical adviser for macroeconomic reform to China’s State Planning Commission. He is the author of Inequality: What Everyone Needs to Know and Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe. 

You Can Be a Different Person After the Pandemic

Our personalities are not set in stone. They are more like sand dunes.

By Olga Khazan

    Credit...Julia Noni/Trunk Archive

When the pandemic lockdowns began, Catherine Steffel, a medical physicist and science writer in Madison, Wis., noticed that her daily routine didn’t change very much. 

It unsettled her that her regular life so closely resembled quarantine.

Then, in January, her 29-year-old husband died suddenly from an aggressive form of cancer. 

Her husband loved to sail and fly airplanes, but Dr. Steffel had always been more cautious and work-oriented. 

In honor of his memory, she decided to embrace his zeal for living.

“There has to be something more out there,” she thought. 

“Why am I not doing it?”

She created a bucket list of new activities to try when it’s safe to do them. 

After the pandemic finally ends, she plans to try dog-sledding and glassblowing and to visit an alpaca farm.

To follow through on these plans, Dr. Steffel will need to make changes to her personality. 

Social interaction makes her tired, so she’ll have to become more extroverted: Some of the bucket-list pursuits will require taking classes full of strangers. 

She’ll also need to be more open to experience — another trait that trying new activities will require.

Dr. Steffel has been spending more time writing in a journal and doing yoga in order to soothe her anxiety. 

She’s also going to start seeing a therapist, who she hopes will help her “identify where I want to go and who I would like to be in the future.” 

Dr. Steffel will, in effect, come out of quarantine a new woman.

With the death of her husband, Dr. Steffel’s life would be changing regardless of the pandemic. 

But other people too have been reassessing their futures in this brutal year. 

Something about the strangeness and tension of the pandemic seems to have prompted some people to shake up their lives.

After all, the person who emerges from quarantine doesn’t have to be the same old you. Scientists say that people can change their personalities well into adulthood. 

And what better time for transformation than now, when no one has seen you for a year, and might have forgotten what you were like in the first place?

It was long thought that people just are a certain way, and they’ll remain that way forever. 

The Greek physician Hippocrates believed that people’s personalities were governed by the amounts of phlegm, blood, black bile and yellow bile that flowed through their bodies.

Modern science, of course, has long since discarded notions of bile and humors. 

And now, it appears the idea that our personalities are immutable is also not quite true. 

Researchers have found that adults can change the five traits that make up personality — extroversion, openness to experience, emotional stability, agreeableness and conscientiousness — within just a few months. 

Much as in Dr. Steffel’s case, the traits are connected, so changing one might lead to changes in another.

Changing a trait requires acting in ways that embody that trait, rather than simply thinking about it. 

As Richard Wiseman, a psychology professor at the University of Hertfordshire, put it in “The As If Principle,” you can behave “as if” you are the person you want to be. 

Pretty soon, you might find that it is you.

Dr. Wiseman writes that George Kelly, a prominent 1950s psychologist, went so far as to ask his clients to perform “roles” that represented personality traits they would like to adopt. 

A person who wanted to be more extroverted might sign up to speak in front of people or go to bars and talk to strangers. 

After a few weeks, many people began to think of the roles as their real selves. 

“Many of Kelly’s clients reported that the new role seemed as though it had always been their real self,” Dr. Wiseman writes, “and that it was only now that they were becoming fully aware of it.”

Geraldine Downey, a psychology professor at Columbia University who studies social rejection, has similarly found that socially excluded people who want to become part of a group are better off if they assume that other people will like them. 

They should behave as if they are the popular kid. 

Going into social interactions expecting the worst, as many socially anxious people do, tends to be a self-fulfilling prophecy.

This science behind personality change has been firmed up through recently published research. 

For example, in one study, putting more effort into homework led students to become more conscientious — a reversal of the popular notion that conscientious students put more effort into their homework. 

In another, people were able to become more extroverted or conscientious in four months just by listing the ways they’d like to change and what steps they would take to get there. 

So, someone who wanted to become more extroverted might write down, “Call Andrew and ask him to lunch on Tuesday.” 

After enough lunches with Andrew (and presumably with others, too), people became the extroverts they hoped to be.

Therapy can help with this process. 

Take neuroticism, a trait responsible for anxiety and rumination. 

Neuroticism tends to decline naturally with age. 

But one review of studies found that a month of therapy — any kind of therapy — reduced neuroticism by about half the amount you might expect to see it naturally decline over the course of your entire life. 

The individuals’ personalities remained different for at least a year after the therapy took place.

After neuroticism, introversion was the most-changeable personality trait, according to this research. 

As it happens, neuroticism and introversion are the two factors that play a major role in social anxiety. 

Change those two elements of personality, and you can extinguish much of your self-doubt.

Brent Roberts, a psychologist at the University of Illinois, Urbana-Champaign, and the lead author on that review of studies, was surprised that such a short burst of therapy could have such sizable effects. 

He thinks the reason it worked might be that when a person reaches her nadir and realizes she wants to change, there’s something beneficial about having a warm, comforting presence available for support. 

The therapist “sends an unambiguous message to you that you’re a valued person,” he told me. 

It helps to have people in our corner, even if it’s because we pay them by the 50-minute hour.

For those who can’t afford therapy, digital tools might soon be available. 

In a recent study of 1,500 participants, Mirjam Stieger, a postdoctoral researcher at Brandeis University, found that the most popular goals for personality change were to decrease neuroticism, increase conscientiousness, or to increase extroversion.

Dr. Stieger and her colleagues developed an app that reminded people to perform small tasks to help tweak their personalities, like “talk to a stranger when you go grocery shopping.” 

Then, the app asked them if they actually did that behavior. 

Dr. Stieger found that the study participants’ personalities did, in fact, change, compared to a control group who didn’t use the app. 

And at a three-month follow-up, the changes had stuck.

Here’s what a post-pandemic dispositional makeover might look like: Someone who was chronically late in the Before Times might work on being more conscientious, or timely. 

One way to show your friends how much you missed them is to start respecting their time.

Or if you’re someone who typically reacted with suspicion and anger when an acquaintance canceled plans, you could try to be more agreeable, or forgiving of minor social slights. 

Even making those plans in the first place might help you become more extroverted or open to new experiences. 

And for neurotic nerve bundles like me, Dr. Stieger suggested relaxing for, say, 10 minutes every night. 

It sounds crazy, but I suppose it might work.

Despite its chipper connotation, agreeableness involves greater empathy and concern for others. 

The pandemic has laid bare the frightening inequality of American life, and it has caused some people — such as single parents and essential workers — to carry a crushing weight. 

By becoming more agreeable, we could try to remember the uniqueness of each person’s experience, and become gentler toward one another. 

Though the pandemic will end, its scars may take a while to heal. 

Treating people with patience and, yes, agreeableness, will help in that healing.

Through painful isolation, this past year has, perversely, revealed the value of friendships and social ties. 

For those who want to renew connections that have atrophied, solidify friendships that have migrated to Zoom, or otherwise live differently, it’s very possible to do so. 

Remember that your personality is more like a sand dune than a stone.

Olga Khazan is a staff writer for The Atlantic and the author of “Weird,” from which this essay is adapted.