Agree that workers need more protections, but given my career I have some insight into this issue. I can't recall ever seeing an executive argue to cut jobs in favor of a technology solely to reduce costs. They always have evidence, often quantitative, that the technology will lead to better quality and results by cutting down on human touch points and human error. Union strength won't fix that.
What we really need is a government that has the ability to identify big issues -- like AI -- and sets forth the moral, legal and social framework to evaluate and manage them in collaboration with the right stakeholders at the table. There are some groups in government that actually aim to do this today. The FDA, for instance, tries to solicit input from various groups, including patients, to understand concerns related to major issues.
But for something as big and thorny as AI, it probably needs to be Executive led. And that type of Leadership is completely beyond the capacity of the current Administration, which governs through tweets.
8
in the end its not how many dollars you have but how much you can buy with them. if robots have any part in lowering wages they also have a part in lowering the price of the things we buy. the things that our dollars buy the least of is housing, medical care and increasingly education. these are all goods that are produced mostly without the intervention of robots.
5
I agree that the decline of Unions has contributed to stagnate wages. However another big factor is rising health care costs. Research indicates that from 1997 to 2011 productivity went up 43%, but wages only went up 10%. Rising health insurance costs absorbed half of that wage increase that workers would have received from 1997 to 2011 had their wages kept up with their productivity.
While I generally agree with Mr. Krugman, he still refuses to acknowledge the big problems and financial ruin caused by our current mutli-payer health insurance system with for-profit insurance companies. As long as we keep for-profit insurance companies, we will have uninsured, under-insured, and financial ruin from health care costs. Single-payer Medicare for All is the solution to solving theses problems with our health care system.
7
With all due respect to the coal miners, factory workers, etc. who are ALWAYS used as examples of the changing face of work, women have faced these issues - in as serious of a way - for much longer and in much more disruptive ways than men have. Yet no one writes columns about their plight in major publications.
For most of human existence, women did the "house" work and men did the "out of house" work. In WWII women were needed to "man" the factories. After the war, women were forced back into the home until the '60's, when women entered the work force, mostly as office work, nursing, or teaching. In the 90's many of those jobs disappeared. Office work is gone, nursing is good for those with higher ed (but less educated now barely make minimum wage), and we all know what has happened to teachers salaries.
Yet women soldiered on. We moved into factory work, yet it is the man who is now losing his job who is profiled. We sucked up the abuse and harassment and moved on. Coding, which should have been women's work, is now clearly men's - and women press their noses up against the window.
When Dr. Krugman next writes about the plight of the worker, I ask him to focus on how men and women have responded differently to these challenges. And how maybe, just maybe, men could learn a thing or two about strength and persistence from women.
7
Will we ever outlive the damage done to our citizenry by the amiably lethal Ronald the Dim?
8
Why is all the focus on unions? Unions don't have power, workers do. If workers own their factories, unions (the middleman in trade negotiations) become obsolete.
Have a look at worker-owned & run companies that are successful: they are called cooperatives. Google Mondragon. (And to further illuminate this, see the links below)
What we have become is a parasite economy, by the corporations, for the (non-working) shareholders & the CEOs, who get a lion's share of the profits, and where the worker is a disposable commodity.
Picture a nation's economy made up of thousands of cooperatives, that also work with one another, collaborating
in supply chains, and yes, as in any free enterprise system, compete with one another with the goal of creating a better product, not monopolies that buy-up their competition. It's time to restore dignity to the worker.
The Davids of the world can go up against the Goliaths.
Imagine 50 million Davids dismantling 10 Goliaths.
Italy is now encouraging unemployed workers to form companies (of 20 or more) and gives them the option to transform their unemployment benefits into startup capital. Google: Italy's "Marcora Law" & see links below.
https://www.democracyatwork.info/the_full_participation_economy_social_exclusion_part_iii
https://tcf.org/content/report/reducing-economic-inequality-democratic-worker-ownership/?session=1
The future is grim. ARtificial intelligence will replace the homosapien.. AI has the capacity to learn and exceed human intelligence. Human evolution will be succeededan by Ai cognitive intelligence which will soon be developed;
Its intelligence will evolve since AI is capable of learning.. such evolution of learning will be continuous accelerating far beyond human cognition.
Since AI is machine intelligence, parts can be replaced creating possible immortality. The Neanderthals disappeared and it is quite possible that humanity may well be replaced.
1
Neither robots or any other non-tax factor has had any impact on inequality. The 3 most important factors causing inequality are: 1. tax policy favoring the rich, 2. tax policy favoring the rich and 3.tax policy favoring the rich.
"...Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are those who emphasize various non-tax factors. Issues such as globalization, free trade, unionization, corporate outsourcing, minimum wage laws, single parents, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding year after year of the effect of the shift away from taxes on capital income such as dividends over time as the rich get proverbially richer which is the prime generator of inequality..."
http://seekingalpha.com/article/1543642
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The problem is capitalism run amok: governments serving corporations instead of workers. Automation is a good thing—a hard thing, albeit. Business, if done right, is a good thing. The problem is the overall tax and workers’ rights system. Support business while opposing unfair employment and compensation practices. Support education. “Simple” solutions and reactions are dangerous.
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@Christopher: "The problem is capitalism run amok: governments serving corporations instead of workers."
It's not capitalism run amok. It's corporations and government colluding to each other's benefit, aka crony capitalism.
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@hm1342
We call it crony capitalism. Mussolini called it fascism.
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Actually illegal immigrants drive down wages by working at jobs below the wage that are demanded by American workers and allowing employers to use them as a hedge against having to pay better wages
8
@EAH
The answer to that is penalizing, fining, and jailing employers who use illegal immigrant workers. Problem solved, immigrants self-deport, like Romney said. Why doesn't that work for conservatives anymore?
8
Author Wiley Cash tells the story of union organizing efforts in the Carolina cotton mills in the early 20th century in his novel "The Last Ballad." Union organizers pushed for racial integration in the mills, but in the Jim Crow South, that stance was touted by mill owners to inflame workers' passions against the union.
Workers would rather struggle economically than share even the spinning and weaving lines with blacks, let alone organize with them to elicit better compensation and working conditions.
Another example of LBJ's truth: "If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you."
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Robots don't account for low wages, yet. Feminization of the workforce and globalization account for them, for now. But eventually, it will be the robots.
Unions don't lose clout "just because." They lose clout because there are workers who will work for less than union wages. Some of them are here, in South Carolina, say, and many of them are in Asia and Mexico. If the union cannot prevent scabbing, it isn't a union.
Our political attitude is largely irrelevant to the current situation. The laws enable unions to form and bargain and strike. Competition from non-union labor makes the difference. Robots are the ultimate scab. They are slouching toward America to finish the work of their human pathfinders.
1
For skilled workers we have either a lack of necessary skills and/or fewer jobs that require those skills, or both. It looks even worse for the unskilled and semi-skilled because the jobs they can do, are fast being obliterated by automation and they are already on the bottom rung of the ladder. Additionally, more than 50% of the new job titles for the next generation do not yet exist. As the use of AI (artificial intelligence) and Machine Learning grows and spreads, it will rewrite the way a lot of white and blue-collar work is done. Forget about the new fad, learning how to “code”, the machines of tomorrow will be writing they’re own code without human intervention. How do you train one for the needs and skills that do not presently exist or are even known? It's analogous to not knowing what the unknowns are. We will have to do more to aggressively identity what the new jobs will be, then determine the necessary skills required to fill those jobs. Finally, we must then reinvent education, so our students have the capabilities to meet those requirements.
Great as usual Paul! You keep NYT on my preferred reading list. It might also be helpful to examine what was happening to "The Haves" during that period; I suspect a radical diversion in both income and accumulating wealth. Where did all those Billionaires come from, anyway. It was not that long ago when Millionaires were almost beyond comprehension for most of us.
I agree and disagree.
It is certain that American workers preyed by Corporates and Politicians and they really lost a lot during this particular hostility 1970-2010.
However automation and robotics was always advancing and I believe it has effects , undeniable.
We are slowly approaching to 2020 election , who coined the term American worker dignity is already withdrawn from the race. The rest main focus is not really American workers.
Our politicians never deeply invested to understand and seek solutions for this problem because like our second amendment , this is another taboo in US.
Simply they will put a label on person who look into this problem : Communist ( which is history ) or nowadays Socialist.
That si it.
I know a staunch Socialist, Teddy Roosevelt a republican President.
Food for thought.
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Blame the neolibs, incl. Dr. Krugman.
Poverty is a form of violence -Gandhi
The US has only 1 governing principle: free contract. In such a system bargaining power is everything. What you earn is a function of that.
The GOP has 1 prime directive: the ever greater concentration of wealth&power on behalf of the wealthy&powerful
The way they do that is to attack the agency of other groups bargaining power (unions=workers, affordable higher Ed=MidClass, ACORN=Poorest) while enhancing that of the rich: the Ltd liability Corp, an ownership collective, 80% owned by1%-see Citizens United)
From 1945 to 72 wages went up w/ GNP. After 72 wages were flat (See graph2 @: bit.ly/EPI-study), a BIG inflection point. How did this happen?
Univ Mich Econ R. Axelrod’s seminal book “The Evolution of Cooperation” proves th@ cooperation is the best strategy for 2 parties (say Mgmt & labor). The 2nd best strategy is “Tit-for-tat”: I punch u in the nose, u punch me back. When we tire from sore noses we evolve to cooperation. This theory suggest that cooperation is born from a credible threat of voilence.
How did labor lose power in 72?
Was it the RICO statutes?
@ one time unions had ties to org crime/mob. If an exec threatened to move a plant a brick might fly thru his living room window. After RICO execs were free to offshore plants.
Japan has moved beyond this paradigm: tenure+company unions force mgmt&workers to sink or swim together, forcing cooperation. Given the concession of Ltd liability is it wrong to make this bargain?
Daleks aren't actually robots.
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Wow Paul Krugman finally says something that makes sense. Pop the champagne, y’all!
What is your stance on workfare as wage suppressor? I may not be a phd nor the brightest bulb but it seems to me when Sears was ascendant and we didn't have the social safety net of Snap cards , low income housing units, medicaid all of those social programs Benefits and solid wages fell to an employer to entice a worker to work at their companies. Companies with employees who were not paid benefits or a living wage were filling up the dumpsters with goods and peddling them out of the backs of carts in back alleys those businesses failed. Don't studies show that the more government gets in the business of taking over the benefits everyone ends up with less benefit? Because you have cost shifted the benefits to the lowest common denominator and put the power in some greasy politicians hand who can always make idle promises about handing out a wee scrap. All the while said socialist politicians buy the third house and eat fifty dollars worth of the millionaires of the billionaires free lunch program. The journalists are awarded prizes to praise this false egalitarianism? Just look at how Walmart has set this agenda low wages throttling hours socializing the benefits to taxpayers, and creaming all the profits for the top. Now that this is t normal policy all others follow suit right fast food, all retail and e-commerce giants. Couple this withe end of the usury laws and I want it now culture . It aint robots that killed incomes its idiot policy.
Later in history, this article will make Krugman seem myopic.
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Professor Krugman, always looking for a capitalist bogeyman, ever-seeking a simplistic formula to blame the “other guys” ... amazing that a “distinguished economist” (just ask him) like Mr. Krugman completely ignores productivity in his analysis ... and his solution? ... to defend collective bargaining. Ugh. Am I the only one who finds it somewhat depressing that a Nobel prize winning economist promotes a 19th century solution to a 21st century challenge?
Here's a couple of recent anecdotes. Anecdote 1: One of the leading electrical engineering firms in the country recently conducted an experiment with AI. They had budgeted 2 man-years (4,160 man-hours) of electrical engineering to compete a hi-rise building. An AI firm offered to let them use AI to complete this task free of charge, to give their AI experience. The AI completed the job in 13 hours, on the first try, which is a 320:1 reduction in labor. Anecdote 2: The US Army Corp of Engineers recently announced in its newsletter that by next year AI will reduce the engineering payroll from 4,000 to 200, a 20:1 reduction. Perhaps in each of these two cases the engineering pay of the remaining engineers won't drop, but payroll certainly will, union or no union. The displaced engineers will be out on the job market competing for a rapidly shrinking number of engineering or other jobs, also being pursued by others, and so in either case bidding down pay.
It clearly does not pay to work. You need to have investments in order to garner the benefits of the increased productivity. Since we don't have unions anymore, the government has to step in and redirect a larger share of the productivity gains to the men and women who work. This means heavy taxes on corporate profits and upper income investment income. This money should then be redirected to people based on their income and family sizes. We should work because we enjoy working, but our incomes (like our health care) should be a separate matter.
Robots, AI, and other forms of automation are reducing the number of jobs. How that will play out remains to be understood. If you think that companies, and consumers who seek low low prices are not going to remove humans from production where ever they can then you are living in a dream world.
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@Scott D
Really? Why haven’t the Germans done it?
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@Scott D Please go back and read that article over again. I think it will help you sort it out.
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Globalism made made 1st world countries unskilled labor more a commodity competing in a broader market with many low cost wage sources. No surprise our unskilled wages have dropped. Right, and little help from unions.
We must use our competitive advantage, a strong education system, and move our labor up the value chain from unskilled towards skilled.
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I have been saying what Krugman is pointing out in this article for years. Automation isn’t new, take container ships, in post WWII, ships came into port, and were unloaded by hand using cargo nets, container ships, ended that, while allowing bigger ships that could carry more cargo, in individual carriers, which allows for faster sorting and storing, before finally being hooked up and taken on the road for delivery.
Unions are responsible for the middle class, safe working conditions, better pay, and benefits. Very few non union companies pay anything close to union wages or benefits. We see companies moving to right to work states, Boeing comes to mind, they pay a machinist in Carolina $21.00 an hour, the same worker in Renton Washington, doing the same work, that requires the same level of skill, $30.00 and hour. Workers have allowed themselves to be stripped of their right to unionize, the Republican Party has done that by passing right to work laws, the Supreme Court has ruled that if you don’t want to pay union dues, you don’t have to, you’ll still get the negotiated wages and benefits, and grievance rights, as a card carrying dues paying member does. All while supposedly protecting those workers first amendment rights, because after all the crux of the argument before the court was those people just didn’t want to pay union dues or rider fees, because in their minds the union was violating their first amendment rights. That is the real threat to wages, the GOP.
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the truth finally
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Early on, automation (robotics) increased the production of the individual. Now it is replacing the individual. Simple.
Unions have outlived their usefulness except for those who want to hide under antiquated union rules that protect their jobs while they can be less productive.
I have worked in union and non and union shops and have seen where union rules protect employees that would not have been there otherwise.
Unions tends to increase costs with out a revenue offset, especially in smaller companies where profits are not all that great.
Just another off the far left deep-end of the pool; one sided and very much a Krugman sob story.
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Factors of production: Land (including natural resources), labor, capital, and of late, technology. Why shouldn’t the labor component have a say at the table? I’ve worked in both too and noticed that in union shops, there seems to be an emphasis on quality in the building trades and other areas. The craftsmen take more pride in their work if they are paid a decent wage and garner respect.
1
The fault lies in the media as well. The New York Times columnists were all against the one candidate who could have an actual impact on this problem, which he has been warning us about for almost as long as the problem existed, but the Times columnists all propped up a neocon who the voters rejected. Some soul searching needed badly here
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Bravo!
Paul Krugman's columns are more revealing than he intends. Notice that he brought up mountaintop removal without the incalculable and irreparable ecological damage every crossing his mind. Paul Krugman is a Nobel laureate and he hasn't the slightest understanding of the ecological crisis we are in. That's how he keeps his column.
No Krugman does, it’s some readers (you know who you are) that don’t know squat about economics. It’s clear, that anyone that says unions are the cause of the loss of manufacturing jobs and low pay, doesn’t want to understand corporations. The robber barons of the late 1920s and early 1930s, made hundreds of millions of dollars, yet, there own workers could barely eat. In fact, it was Ford that realized that the very people that would buy his cars, worked for him. Which is why Ford, and other robber barons employed head busters, people who would break up strikes, and those who were forming unions. Ford, and the rest saw workers as a threat to their wealth, and with the support of the Republican Party then, they actively sought to keep the worker in their place.
Not much has changed in terms of what the Republican Party and corporations are willing to do, to keep workers down, to keep workers from gaining to much. The only way we as workers will ever get a livable wage, is by taking it from corporations, in the form of a contract, because that’s what they understand. But as long as there are people like you out there, that see inequality as a lady issue, you will never get a decent wage, you will never reach the American Dream.
Tax them until they squeak.
Hugh
1
Not only a Nobel prize-winning economist but a Dr. Who fan to boot!
Does this explain why Trump & the R’s keep peddling outrageous nonsense? Experience tells them, repeatedly, that at least 35 to 40% of the public will believe anything. As long as they can continue winning elections with their idiot base plus a few more thoughtless voters, they’ll keep doing it. It works for them!
I recall that during the 1970's the Teamsters' Union and many construction trade unions loved Nixon; he of the Southern Strategy and the Vietnam War. Your readers are smart enough to figure out the threads of union decline in the last 50 years just from that fact alone.
BTW I would love to know what caused Walter Reuther's plane to crash.
All progressives are with Krugman in his denunciations of the role of right-wing power and politics in keeping workers' wages low. Let's all fight the power on that front. But progressives are mostly thinking about the future of jobs, not the past. How are progressives supposed to react to McKinsey's, not Marx's, projection on the front page of the Times that by 2050 tech per se will have eliminated fully 47% of American jobs? Will those displaced be CEOs?
The weakening of unions as any counter power to big corporations has been going on for decades. Too bad Krugman has hardly ever discussed this, over years of columns. It's too taboo?
Trump came to power as a result of this destructive trend, with many voters resentful but pushed to blame the wrong people. Thousands of jobs sent overseas, factories and support business closed, whole towns left behind.
Both parties must compete for legalized mega donations, esp since Citizens United. Majorities of voters want to repeal that decision by the Court, as do many politicians.
Krugman never discusses how legalized big money poisons our politics and economy. That's been labeled too radical.
But now maybe the new Dem progressives will leave Krugman, the conscience of a liberal, looking too timid, and centrist if he doesn't start dealing with the realities of our politics---not just big bad DT/GOP.
Yes Krugman has written articles about the topics you claim he hasn’t. The NY Times has a search bar, maybe you should use it, instead of running off and making assertions that you can’t back up. I did.
I share the overall sentiment of this article but I fear it does not go far enough. Certainly, the idea of automation taking over manufacturing jobs has been cleverly furthered by some media outlets and those looking to defend maintaining low wages. It is clearly in the interest of profit-driven corporations to keep wages down in order to keep profits astronomically up. They have been successful at this because they have dedicated enormous resources to union-busting and suppression. Look at Wal-Mart, friendly face corporation with very shady practices and a history of union fear-mongering and repression. Fear of unions is tied to fear of losing power and profit and tied to anything that can counteract absolute corporate power, e.g. equitable, worker-friendly policies. Progressives would do themselves a disservice if they bought into this argument of automation. None of it is inevitable.
Unions that provide value (i.e. a well-trained workforce) do just fine. Trade unions like the UA (pipefitters) and IBEW (electricians) are able to negotiate fair contracts for their workers because their workers are skilled. But unions that simply skim fees in hope of getting a better deal only end up hurting their ranks.
Nissan threatened workers who wanted to unionize in Mississippi, Eloon Musk, did the same to Tesla workers. It’s amazing how the rich try and tell us what we don’t need. Howard Schultz, and his you don’t need healthcare trope, I guess if I was a billionaire, I wouldn’t need to buy health insurance either. When Steve Jobs needed a new liver, he just went out and bought one, he didn’t wait in line, how many people had been waiting, died because of Jobs, and his ability to buy a liver. The rich and corporations have become the biggest recipient of tax payer welfare than any of the poorest people in this country. Yet, we progressives stand by and watch.
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I usually agree with Dr. Krugman, however, today I only half agree. Certainly the destruction of unions is a large part of the problem, unions developed (against considerable resistance) because workers were abused by companies. To give away that hard fought for "right" is ridiculous. Funny thing is that there is, justifiably, unhappiness with companies leaving the US to have less regulations, less taxes and less cost of labor in other countries but the same thing is happening here in the USA where companies are going to the states with less regulations, less taxes, and less worker protections.
My disagreement is about robots. I do feel due to the increased sophistication of machine processes that people jobs are being replaced and the old belief that some thing new for people will open up may no longer hold. Just because that happened in the past it doesn't mean it will continue to happen in the future. If all trends were linear we wouldn't need calculus. What happened in the past does not necessarily predict the future.
2
Factories aren't more automated now than in say the 1960s? Two issues with unions. One is that union leaders increasingly resembled the corporate executives they negotiated with. Second is that unions go very involved in work rules, not just wages and work rules. The result is that many Americans came to dislike unions.
Krugman ends saying the fault lies not in robots but in our political leaders. But he fails to make the connection to campaign finance.
What or who is a robot? Maybe it's our politicians who have become like robots themselves, following the instructions of their biggest campaign mega donors. This dictates how the fashion their platforms to run for office. Then market themselves to voters.
Marketing to voters takes BIG money--- it's our main campaign expense--requireing mega donors. And it also brings big profits to our media. Is that why campaign finance reform is hardly discussed in our news? Too too taboo? Krugman gives it a line occasionally, then veers away. Yet it's the underlying poison in our politics.
And repealing Citizens United is favored by majorities of voters--Dem & GOP---and many politicians. Yet our news media IGNORES it.
Politicians in other democracies (with stronger unions) don't have to sell themselves to wealthy donors to pay for ads. Per wikipedia--- many nations forbid campaign advertising on TV. This frees up their politicians. They want to prevent the special interests from dominating their political discourse.
Imagine that! Which system is an operating democracy?
Will Nobel, liberal economist Krugman --concerned with economic inequality---ever take aim at this election financing issue that underlies most of the problems he writes about? Or is that too radical?
I don't believe robots are in any way dangerous to our economy.
This is a recording.
Even an allusion to Julius Caesar! Happy Ides of March.
Which is more important to you? The bargaining clout to negotiate fair working conditions for fair pay? Or is it hanging on to your guns, outlawing abortion, and keeping the brown people out of the country?
The cynical GOP knows and exploits the answer, and now we have to suffer the consequences.
4
Any job a robot can do isn't worth doing for a human.
2
OMG!!! First Krugman column in 38 months that is not about Trump? How can this be? Surely Trump is responsible for robot overlords taking over the minds of America.
We can neither compete with robots or cheap overses labor and illegals. Thus fell modern Rome. What's next? War tech modernizing itself without humans and usurping that last big money cow?
If unions had the bargaining power Krugman wishes they had, then a truck driver would earn $ 400 K a year. At that salary level, it's worth for trucking companies to invest in driver-less trucks (oops, already happening).
There is a break-even point between labor and capital (tech) and when labor pushes above that point, then capital (robots) will substitute it, and then there will be no going back.
The solution is in giving the displaced workers a safety net and to the sons and daughters of the displaced workers an education in the new way to work (think learning to code in grade school).
In 1953, I was a high school dropout working a 'boy' job in a non unionized local pharmacy making 75 cents an hour. A guy i knew was the son of a member of the pharmacy clerks union. He got me an essentially identical 'boy' job which paid $1.35 an hour.
I told this story many times to those who for some reason believed that producing more somehow inevitably results in earning less.
We need politicians to change labor law to the benefit of labor. The US Department of Labor is toothless. They do not follow their mission.
"Our Mission. To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights." This is their mission. When is the last time you have seen or heard them in action ?
How about a law strictly enforced against union busting? I would use Denmark's as a model.
There is no doubt in my mind, the decline of unions is by far the biggest reason for the income gap.
I tried to unionize the company I was working for, mostly because I felt that would bring better employees. Of course, I was fired (they called it reorganization) immediately.
Company owners hate unions.
1
Krugman is spot on. Robots can't write legislation. The real offenders are the corporations and the wealthy oligarchs that surreptitiously give politicians large amounts of money to win elections. Unfortunately, many former union workers were led astray by the right-to-work-laws and policies such as trickle-down economics and de-regulation which would increase productivity and raise wages. Productivity was increased, but all the profits went into the pockets of corporations and the wealthy one-percent. The final blow to the unions was accomplished by outsourcing American jobs to low-wage countries, which greatly benefited the corporatists. Unfortunately, corporations and the wealthy individuals want to take the workplace back to the days of the robber barons, who starved the workers and gave them no safe work place and decent wages.
This has been borne out from the 1980s to the present, leaving us with stagnated wages and higher corporate profitability and CEOs making from 350 to 500 times the average workers's wages.
Historically, unions and fair wages are connected. So unions must be re-instated to bring decent living wages, benefits and workplace safety, and to correct income inequality.
2
No mention here of the international features of labor competition that have been in play over the last 3 decades at least. Unions are impotent against moving human labor jobs to other countries. Many economic systems today operate at a global scale wherein these policies are irrelevant unless enforced trade policy demands minimum worker standards apply for every international transaction.
1
One huge factor in depressing wage growth for American workers is the massive increase in participation of women. In liberal or progressive circles, its not cool to even consider this because women having the ability to get out of the house and work is considered a positive development all around. The second wave of feminism, after all, mandated that women go to work and they did.
I don't have to be an economist to see the impact of these changes. More supply means lower prices, one of the most fundamental aspects of economics. Right now, women make up the majority of workers in America. In 1970, somewhere around 30% of all women over 16 were in the workforce, according to the labor department. That figure has risen to 60% in recent years.
If some women might not see themselves as the primary bread winner in the family, they might also be less demanding in terms of wage demands. In many jobs, women have become preferred over men. Network television news, which at one time would have one or two female reporters, is often dominated in a given evening by women reporting from the field. Statistically, women are less likely to be alcoholics and some employers find them to be more cooperative generally.
The change over the last 40 yrs. and its various impacts has been little noted in major media. We had a social revolution and no one, or few, noticed.
None of this means that women seeking professional lives is bad. It just means change can have vastly unexpected consequences.
2
"American workers can and should be getting a much better deal than they are. And to the extent that they aren’t, the fault lies not in our robots, but in our political leaders."
The republican destruction is well documented but the reasons why go beyond politics; Wall St. bears a good part of the responsibility also.
Corps are legally bound to grow profits at all times, and labor costs are are big part of the bottom line. Quarterly profit reports must show continuous growth in order to justify elevated price-to-earnings ratios, else the stocks plunge. And of course, executives own stocks so they're highly motivated to keep them flying as high as possible.
There has also been the growing ownership role Private Equity has played over the last few decades, which have sometimes ended very badly (Toys R Us) for the workers involved.
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@Chris Manjaro
"Corps are legally bound to grow profits at all times" is not true. It's part of the hyper-capitalist mythos we've been indoctrinated to believe over the past few decades, assisted by right-wing legal scholars and the growth of corporate raiders and leveraged buyout firms. It would be possible, for instance, to make leveraged buyout, where a buyer borrows an inflated amount against the asset to be purchased, illegal, but the political will doesn't exist. (Please don't complain that this would prevent home mortgages; the law could be written better than that.) Another example: the law against self-dealing that formerly (up to the 1980s, I believe) prevented a corporation from buying its own stock, could be restored.
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@Thomas Zaslavsky I should have said 'publically traded corporations.'
Those firms are legally bound by fiduciary duty, which dictates that officers and executives must at all times act to maximoze profits, which in part means keeping labor costs down.
That's why corps and executives love things like stock options, bonuses, etc because in standard accounting practices, those aren't counted as labor costs.
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@Chris Manjaro
I was referring to publicly traded corporations. Their supposed fiduciary duty to do nothing but maximize profits is simply not a fact. That is obvious if you think about it: investment hoping for future returns reduces profit, so there must be more to it than simply maximizing profit. Beyond that, corporations were thought to have a responsibility to their customers and employees until in the last quarter of the past century the doctrine of "shareholder value" was invented and promoted by interested parties, e.g., the executives.
6
I don't think robots are problem, the structure of society is. The automation does mean less need for human involvement, and that in past allowed to have 40hrs work week and social security without decreases in the wages, but it didn't happened automatically, it was fought for. With further automation, needs for human work will decrease further, and as a result we will have surplus of workers, and this problem should be address: either by accepting higher unemployment and low salaries, or decrease in working hours or/and retirement age, or by universal income.
3
@yulia
Yulia,
The founding fathers of socialism said all this before both of us were born. Alec Nove, a superb economist who taught in England after moving there and changing his name, published a truly wonderful book called The Economics of Feasible Socialism that is a must read for all progressives.
All I can say is that it is a difficult problem and it will be made more difficult if not impossible to solve if we don’t elect progressives in 2020.
1
The notion of "labor vs management" is a clever construct created & owned by capitalism. As such, labor unions are just another instrument in the capitalist toolbox.
Unions are now mere interlopers; they have become the metaphoric wall between the worker & owner-manager. They may have arisen out of noble intentions in the past, but they are now useless in the present day dialectic, where workers are now dangerously facing irrelevance (a word that Noah Yuval Harari when describing what the future may have in store for workers).
I used to think of Paul Krugman as just an economics wonk but after reading references to both Star Wars and Dr Who in this essay I have a whole new opinion.
33
@Peter There was also a Yogi Berra reference/quote!
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@Peter
Wow! What a great comment. So relevant and so worthy of your “Yellow Pick” logo!
Congrats editor.
2
Great article Paul Krugman.
This is once again a clear reminder how the GOP has manipulated their voters into voting against their own self economic interest.
Voting for the GOP is voting for tax cuts for the rich, corporate welfare and the decline of workers' rights and de-unionization.
Wake up GOP voters. You've been conned by distractions, lies and fear mongering.
If you vote for Trump's party- then don't complain when your wages continue to be cut, your Medicare is cut and your future looks bleak.
4
This is a shockingly misleading and naive article. How can the author dismiss automation, foreign outsourcing, and availability of cheap labor as the triple whammies of job decimation in the U.S.? You say that unions have lost political leverage, but why? The reason has everything to do with the above three facts.
3
Immoral greed perpetrated by big corporations and the top 1% is at the basis of stagnation and underachievement in our society.
Give any society fair access to good education and healthcare, tax the rich and force corporations to invest in the country and you will get a gradual turnaround and improvement in the lives of all citizens.
1
I wonder how much of the decline in union membership is due to a relentless anti-union campaign in popular media such as The Reader's Digest. My grandmother subscribed to it, and it seemed that nearly every issue had a union-bashing article.
2
The American people have been brainwashed by private wealth, politicians, news organizations in both print and TV broadcasts,to demonize Unions. We have the lowest percentage in full union workers of any industrial democracy. It comes as no surprise that we readily blame robots and machinery in general for lowering wages relative to inflation over the past 40 years.
We have no excuse save pure ignorance as to how and why we hate collective bargaining. The closest we get is binding arbitration from those few unions that have soldiered on from the heady days of the 60's and 70's.
It all changed under Reagan and thereafter. We blamed the Japanese, India, the Caribbean Nations, and now China to name a handfull.
Unfortunately the main culprit is ourselves in ceeding economic control to the Stock Market, Big Business, Conservative Politicians, and Private Wealth.
We consumers bought into the myth of cheaper goods and services, because they told us to. Meanwhile we also allowed the upper income and inherited wealth streams to pay lower taxes while our taxes went up in comparison.
There are a host of consequences, like an inadequate educational system, (don't start on today's College admissions scandal) higher costs in child care, "Right to Work" anti-unionism, mandatory two income families as the norm, inflated numbers of incarceration the majority of whom had non violent crimes. The list is too long for this comment. It's very simple. We let them takeover. Stop it.
1
Paul, I will take it that your family did not own a travel agency business up until the 1990s, and employ over 80 people with good paying jobs with benefits.
Take it from someone whose family once owned five Main Street travel agency stores for over 50 years that automation, or more accurately software most certainly was 100% responsible for wiping my family's way of life and 80 good middle class secure jobs off the face of the Earth in about five years during the 1990s. To say that public, political or government policies were somehow responsible for destroying the travel agency business overnight is just plain wrong.
Man, what planet do you live on?
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This kind of "lets actually examine our assumptions here" clear thinking is just what makes me love you, Paul. Keep it up!
1
"Longshoremen used to be a big part of the scene in major port cities. But while global trade has soared since the 1970s, the share of U.S. workers engaged in “marine cargo handling” has fallen by two-thirds."
---I am curious: did the share of "lost dockside marine cargo" going to the longshoreman pre-containers go down after their adoption?
1
"Predictions are hard, especially about the future". That is so Yogi Berra. Are you sure you didn't get it from him?
1
Without unions it is open season on American workers.
Just where the GOP wants them.
1
I think Krugman is making a good point, coming from a slightly different angle. Automation is forcing workers out of things like manufacturing, forging, and mining, but that is actually nothing new in the broader scheme of things. Sometime, in like 1979, Sci Am had a cover story on economics about the coming transfer of the American workforce from manufacturing based to service based. It gave several factors for the cause, but it did not sound like becoming a serviced based economy would be so bad at the time, before it happened. Automation in agriculture pushed workers into factories, and eventually things worked out. Now workers would be transferred into the service jobs. But what did that mean? I did not realize at the time that it meant, for a large part, that jobs we as high school kids used to do for extra money, like “flipping burgers,” were going to become jobs people were trying to support families on. Now they are supplemented by food stamps (no middle class life there!). When workers were first moved into factories there had to be a huge fight (i.e. labor unions) to make these jobs the kind that could sustain a living. We are there again. Worker have always had to fight for their piece of the pie. Advice: don’t be distracted by the forked tongue demagoguing voice of the wealthy class. Don’t blame immigrants for the man’s addiction to them. Blame the man for being willing to pay them doodly squat. And the government is your hammer.
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Amen!!!
But don't expect the politicians, multi-national CEOs, or the upper 1% to read the column.
They won't be happy until the working, lower-class, middle, class, veterans, and retirees are living in grass huts with dirt floors stacked from floor to ceiling with foreign goods made in Asia.
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Progress = Winners > Losers.
Coal miners, longshoremen, truck drivers share what? --almost exclusively male dominated. Often self defeating political allegiances for aberrant motives. Trump supporters... The GoP builds upon these cancers in the American body political economy to exacerbate the problem.
What about unions with significant numbers of women? Teachers? White collar and government workers? --Healthy and important unions despite the GoP's unremitting assault.
As male, masculine jobs depending on physical strength and challenging working conditions decline, often white and less educated males find themselves under economic attack and buy into the GoP's mind numbing scapegoating rejecting their natural Democratic allies.
Progress = Winners > Losers. There are, inevitably, losers. Let us hope that in the 1-2 decades we have before the proliferation of driver-less vehicles we can address education, job training, social safety-nets and ignorance sufficiently to avoid a resurgence of trump know nothings. And elect a long overdue female president to revitalize unions or at least the spirit that motivates them.
But will any of this be possible given GoP giveaways to the rich and corporations and the harm inflicted on budgets for mitigating programs? Don't count on Republican support. More robots and more angry displaced GoP supporters pretty well define their vested interests in America's future.
Progress = Winners > Losers = GoP Base...
There are tens of millions of illegal aliens that have taken the jobs that Americans had, and Paul Krugman does not see this as the problem of stagnant American wages for over 20 years.
The Republicans are all for cheap illegal aliens, while the Democrats are all for excepting the idea of illegal aliens in the United States.
Meanwhile European nations would never allow the idea of allowing illegal aliens.
FDR saved this country, Ronald Reagan ruined it.
We need trade unions. We need them to negotiate fair wages and even going back to inflation indexed minimum wages that the villain B-movie actor, former democrat and demented man killed.
We need free public colleges that will train everyone who wants to be trained in the new economy so they don’t starve.
We need Medicare for all so people can separate their decisions where to work from healthcare concerns and how to finance them.
Please have a look at Professor Gordon Lafer’s book One Percent Solution for many answers of how we got there. He may not have a Nobel Prize but speaks and writes clearly. He also supports Bernie Sanders who along with Liz Warren are the only politicians who get it.
Posted @ 12:08 NYC
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Paul,
Another outstanding column. Assuming the Democrats win the election in 2020, please consider accepting a Cabinet position. We need someone with your ability to see the “Big Picture”.
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Get rid of the Republicans who are all for the tens of millions of illegal aliens that American businesses are using instead of Americans.
Also get rid of the Democrats who are all for aiding the tens of millions of illegal aliens that are taking jobs Americans used to perform.
Then we might have a political party that understand that illegal aliens do not help American workers.
Capitalists like the Koch Bros and their Americans for Prosperity front which is about political power for the super rich at the expense of the middle class. Destroying unions was a major goal of capitalists biz owners every dollar going to a worker was a dollar that could towards a mansion and a yacht needed to get a trophy wife. Trump is the ultimate symbol of greed and glitz including a trophy wife and gilded triplex on 5th ave with his name plastered all over buildings and golf courses . The Trump tax cut was for the rich and powerful while TRump played at being for the middle class a Trump University scam pulled on the whole country and the world.
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And behind all this, the need for a new redistribution of the wealth. The cancer is capitalism.
2
These days the term political leader seems like an oxymoron.
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Why does everything I read about wealth and income inequality boil down to when, or indeed whether, working class whites will stop being played for fools? That's really the great unanswered - and perhaps unanswerable - question, isn't it?
Nothing Doctor Krugman has written in today's column should surprise anyone. Wealthy people have grabbed market power while workers have abandoned theirs, so workers are getting the shaft. Imagine, people with market power exploiting that power to line their own pockets. What a shock! And yet none of the people who are hurt the most by this seem to get it. White workers support a party and president who take away their health insurance. Farmers support a party and president who destroy their soybean export markets to China. Over and over they see this and yet what's obvious doesn't seem register. These people are so tied up with a white working class tribal identity of racism, guns and God that their blind to how they are being used by the Right. So much cluelessness would be risible if it didn't have such appalling consequences.
"Predictions are hard, especially about the future"
Really Professor?
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Interesting that Queen Elizabeth I denied a patent for a kniting machine back in the day cause she was worried about throwing knitters out of work.
We need trade unions. We need them to negotiate fair wages and even going back to inflation indexed minimum wages was killed by a villainous B-movie actor, former democrat and a man who ran the country while his dementia was obvious even to children.
We need to re-think globalization and it’s effect on our trade unions and our working population seriously. Krugman unlike Stiglitz is a huge proponent of globalization as cited by commenter “woof” here.
We need free public colleges that will train everyone who wants to be trained in the new economy so they don’t starve.
We need Medicare for all so people can separate their decisions where to work from healthcare concerns and how to finance them.
Please have a look at Professor Gordon Lafer’s book One Percent Solution for many answers of how we got there. He may not have a Nobel Prize but speaks and writes clearly. He also supports Bernie Sanders who along with Liz Warren are the only politicians who get it.
Posted @ 12:08 and 14:50 EST
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In Labor News today... we never hear that line from the media now do we.
PK is quite right that AI and robots are not (yet) responsible for stealing many jobs overall (even though this has long been the case in certain industries).
But there are two issues here: firstly, AI and modern robotics is *qualitatively* different from previous technological trends, and secondly, while AI is only taking a few jobs today, its rate of growth is geometric - perhaps doubling every year. The impact of AI, when it hits, could seem to most people to come out of nowhere.
AI is still very much in its infancy. The tasks it can learn to do are mostly tightly circumscribed. This will not be the case in a few years. We discount its effects at our peril.
Containerization of shipping increased efficiency. Trucking was de-regulated in 1980 and a whole new segment called truckload appeared, which was not unionized, and which hurt the business of the unionized railroads. Since 1980 transportation's share of GDP has steadily decreased as the cost to move goods around the world has decreased. In the Seventies unions were seen as corrupt (Jimmy Hoffa) and obstructionist. Stevedores fought containerization. Unions saddled railroads, who had to compete with the new truckload carries, with extra cost from featherbedding and work rules. Companies, and eventually society, will move around obstructionism to get the economic benefit of better productivity. They build robots, hire other workers, or sell different products. Wealth is created...but for whom? And for how many? This is where the political process broke down. Policies, Republican policies, had no interest in sharing the wealth across society. Why? Because the right wing intellectual theory was (and is) that the masses have no moral right to economic well-being. Only the rich are justified in eyes of God. It sounds crazy, but this is what the Kochs and their ilk believe. So now it is time for a reset. We have seen what 40 years without collective bargaining and without governmental policies to protect the workers (who have no power as individuals to bargain) looks like. Only government can restore the balance between worker and employer.
I have nothing against unions per se, nor do most Americans. The problem, methinks, is that during the heyday of unionization a number of industrial unions pushed too far in their demands for ridiculous work rules and benefits that made their industries less and less competitive. Railroads, tobacco, automotive, and similar industries immediately come to mind. I recall an uncle who worked for Phillip Morris telling me how he was in charge of maintaining machinery, and if the floor desperately needed sweeping or a lightbulb blew out, he was not allowed to pick up a broom or change the bulb because it was someone else's job. So he sat doing nothing until a machine broke down while the floor went unswept and the light remained out. Not my job! Please.
This is a wonderful, long overdue piece. Thank you, Paul, for reminding your readers that wages have stagnated for decades--long before robots were even a discussion topic. Republicans have succeeded in discrediting and weakening workers' primary tool for combatting employer power. But, we have to admit, workers "fell for it". It's high time they fought back.
Robots may not be the historical explanation for low wages.
However, artificial intelligence and robotic automation will be one future explanation that ranks alongside globalisation and free trade agreements that have thus far been primarily responsible for creating an environment in which everyone is racing to compete with the bottom dollar price for everything, labour included.
Two quotes from Krugman's article:
"Coal production almost doubled between 1950 and 2000 (it only began falling a few years ago), yet the number of coal miners fell from 470,000 to fewer than 80,000."
"Or consider freight containerization. Longshoremen used to be a big part of the scene in major port cities. But while global trade has soared since the 1970s, the share of U.S. workers engaged in “marine cargo handling” has fallen by two-thirds."
Are these not examples of robots taking over tasks once performed by people? Machines dig coal, load trucks and trains - jobs once done by people. Computers also translate typewritten material into type faces used in publications, and machinery turns the computerized articles into printing plates, bypassing typesetters, photolithographers, platemakers and so on. Yes, machines have taken over many of the jobs once done by people; the question is, who should benefit. As Krugman points out, the benefits of the greater productivity have all gone to the owners of the means of production. The solution may well be to provide - at least during a transition period - for the miners and longshoremen - and many others - whose jobs have disappeared.
Dr. Krugman argument aboout th role of politics in the widening of income inequality is persuasive. However his argument does not address the future role of robotics and AI in the reduction of demand for labor. More and more goods and services will be provided with fewer and fewer workers needed.
One thing we should look atg is the rate of absorption and dispersion of new technology. One report I read several years ago said that industry has only incorporated about 20% of the new technology available. Specifically what is damming the flow and what will happen if and when the floodgates open? Looking backwards does not answer that question.
Unions were the only organized political voice for the middle class. There are all sorts of business groups doing lobbying, etc that effectively represent the interests of the wealthy, but none of these exist for the middle class. It is no wonder that the destruction of the private-sector unions has resulted in continuing shrinkage of the middle.
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I always found that the rank-and-file knew much better how to get the work done than did supervisors. Yet the supervisors got the big salaries and the extra perks while the ones doing the actual work had to listen to messages from the ones without a clue.
Which is the reason I favor the Guild method employed in many European countries. Workers and management sit on advisory boards who plan company policy in a cooperative environment. Income disparity is far less and the buy-in by workers toward the product of their work makes for a bump in quality.
When management and ownership form connections with workers, the profits are less but the productivity is greater. Which is the reason Wall Street would never tolerate such a system -- I can hear the 'socialism' cries now.
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Re: trucking. Wait until driverless technology puts most of the 2 million or so truck drivers out of business. You won’t have to wait long...
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I don't know. I supported the democrats for two terms and I now think I'm working in a Peter Singer lab experiment. This is not fun.
http://ccare.stanford.edu/research/compassion-database/business/
“Nike workers in Vietnam earned between $0.61 and $0.89 per hour in 2016, based on a working week of 48 hours. However, as the group pointed out, the effects of inflation and an increased cost of living in Vietnam since the 1990s means that this increase in the nominal hourly wage is not as significant in real terms, and may not be that high even in nominal terms, after one accounts for forced overtime, an illegal practice documented by the Worker Rights Consortium in a 2016 report.”
How much is Lebron James, Nike contract worth?
https://www.si.com/nba/2016/05/17/lebron-james-nike-deal-contract-one-billion
Disclaimer: Neither the female employees in Viet Nam, nor LeBron James are robots.
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Mr. Krugman discovers robots - but fails to see the global settings
1. Germany has twice as many robots per 10 000 than the US, higher wages, and a thriving manufacturing sector. So it can't be robots per se
2. Unions withered in the US, when Nafta was passed. Endorsed by Paul Krugman, who called the consequences trivial . Nafta allowed factory owners to respond to demand for wage increases by moving the factory to Mexico . That killed Union power in the US Read "Becoming a steel worker liberated her, then her job moved to Mexico" on how Shannon Mulcahy lost her job.
No leading economist did more damage to Union power than Paul Krugman, who celebrated globalization . Let me quote how responded 4 years after Nafta was signed, to complains by those who lost their jobs in the US to low wage countries and wrote him bitter letters
" I should have expected that this comment would generate letters along the lines of, “Well, if you lose your comfortable position as an American professor you can always find another job–as long as you are 12 years old and willing to work for 40 cents an hour.”
Such moral outrage is common among the opponents of globalization–of the transfer of technology and capital from high-wage to low-wage countries and the resulting growth of labor-intensive Third World exports"
Paul Krugman: In praise of cheap labor
https://slate.com/business/1997/03/in-praise-of-cheap-labor.html
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It's easy to forget that having less work to do is a good thing. Instead of humans lifting, pushing, and pulling heavy freight for hours every day, robots are doing that now and it's a good thing. The problem is not having less work to do, its societies inability to adapt to that reality. In the future we'll need innovative ways to shrink the workforce. We can remove teenagers from that number encouraging them to stay in school and study. We can subsidize stay at home parents and reduce hours to allow working parents more time with family. A mid-career sabbatical would give workers a chance to return to school for updating or a change of careers. Subsidizing careers in the arts improve the quality of life for all. Though there will fewer jobs, there will be an increase in wealth and the availability of goods. We'll have to realize that our morality is not linked to the amount of work we do. There is more to life.
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The low wages started with the Great Recession when corporate owners figured they could do with way less, buy cheap Chinese equipment rather than pay IT workers and avoid hiring anyone with 15 year or more experience.
That's what they've done for the last ten plus years. Those among us who are in their 50's now who got laid off in 08=09 and didn't get rehired by 2012 are a part of what Paul Krugman very briefly wrote about: the lost generation. Those are the workers who've lost everything to a recession that, for them, is ongoing. The robots didn't rob them of their jobs. Greed did.
But the robots will come not too long from now and they will rob our kids' and grandkids' jobs. There is nothing wrong with that, AS LONG AS we have UBI in place.
We can have a society full of productive people who don't necessarily work in a corporate environment; people who build things, invent things, or just make music and write books. Profits don't have to be both limitless and at the expense of the many.
We are in a hypercapitalist phase now. It'll pass. The question is whether it will be replaced with vision, compassion, and fairness? I hope my daughter's generation doesn't end up living a version of The Expanse. Increasingly, however, it looks like it's where we are headed as a planet.
---
Things Trump Did While You Weren’t Looking [2019]
https://wp.me/p2KJ3H-3h2
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@Rima Regas Nice post. I hope you are right that this hypercapitalist phase will pass. That will only happen if enough younger people mobilize and vote. The forces of capital will do everything they can to resist. The concentration of wealth and therefore political power sickens me. Will be interesting to watch the fight around removing the tax break for carried interest. That is the low hanging fruit.
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@Rima Regas
The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens who will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
@Bob S
Illegal workers didn't take my husband's IT or my friends' engineering jobs. H1B visas did.
Mexican and Philipino women take care of our elderly as nurses and LVNs.
Manufacturing went to the Far East. Blame that.
2
Robots need us far more than we need them; we use them to solve problems. At the most fundamental level, humans have capacities of decisiveness and creativity, of the ability to imagine and produce what is beyond immediate system boundaries, and of understanding the human/worldly outcomes, given certain actions. We are capable of improvisation, to improve or re-design outside of prior QC limits, beyond measured tolerances, thus extending product descriptions, or re-imagining the value chain. We are capable of engaging machines to change their operating parameters ad lib, from A with set boundaries, to B with set boundaries, with cascading effects on downstream actions. All this is based on judgement and experience, and on creative inspiration - these are not commonly found in machines.
So an efficient use of human capacity is in designing such productive machines, in monitoring outputs, in fitting inventions to human/social/environmental needs, in being inspired by disparate inputs to solve a problem. Being creative, we have to sweat the hard stuff. Technology, being a tool, is not the end, but can be the means. All we have to do is to delineate operating parameters and acceptable results, and can enjoy other expressions of our creativity.
Yes, but isn't it possible than increasing computerization is helping to concentrate control, thus power and money, into the hands of fewer and fewer people, which distorts our political process and puts ordinary people at a disadvantage?
https://www.yesmagazine.org/issues/the-end-of-poverty/why-are-bmw-and-mercedes-so-rich
“...there is a constitutional amendment in Germany that forces corporate executives to listen to labor unions. The Works Constitution Act requires every factory to set up a works council that gives representatives of the workers a seat at the table in every decision-making process at the factory. That is the democratization of capitalism, expanding the decision-making process to not just the corporate elite but the entirety of the company, from the bottom up...
1
Contrast? German unions for example---they sit on corporate boards and have input to policy.
It's called 'Co-Determination'--- 'the right of workers to participate in management of the companies they work for."
What a concept! Too radical in the USA. Our news media ignores the word unions in all its 24/7 coverage, and never ever talks about other countries' better policies.
Our media and Mr. Krugman of course, might publicize this as a contrast.
Germany high schools also combine with corporations to train youth for job skills, while they also take their academic subjects. So when they graduate they can start making some money. Here they flounder, then get exploited by for- profit colleges, etc.
Germany also has a concept called 'kurz-arbeit' or short work, where government subsidises the wages of workers put on reduced hours during temporary downturns in the economy.
This prevents reduced pay, and layoffs, and keeps the skills of workers up, so they're ready to resume full time after the recession ends.
Sounds like a sensible and humane modern society. Is it UnAmerican?
Here, during recessions, and with offshoring of our jobs to low wage countries, US workers can simply lose their jobs, pay, medical care and pensions, ruining family security.
Our elected officials have not protected the citizens who vote for them, but let them be subjected to disaster.
Then our congress shares in the loot from higher corporate profits, with legalized campaign donations.
1
Management of all sectors has been applying divide-and-conquer techniques. Union dues are demonized worse than taxes, instead of the insurance of a safe, secure, good paying job, which is what they actually represent. I bumped into an old 8th grade student at the store the other day. He'd been an under performer, but lacked educational talent, as well. That being said, I always enjoyed him and his positive attitude. I was very happy for him, when he said he was working for UPS, making nearly $20/hr. I was surprised, when he complained about having to pay union dues. I used it as a teaching moment, explaining that he had his benefits and good pay, thanks to the work and efforts of the union. I think it sunk in.
What also happened in the 80s was the top marginal tax rate began to plummet, from 70% to under 40%. Higher income became more valuable, so high earners began to demand more of the pie.
That left the rest of us with less income.
1
Producvity is growing but that growth is slowing down, especially after 2008. This trend has been obvious since 1974.
https://thenextrecession.files.wordpress.com/2019/03/neo-2.jpg
Corporations don’t invest enough in R&D. Their profits go into finance. If it was profitable to invest in technology innovation, they’d would do it.
While I agree that the decline of unions, abetted by conservative politicians, has been devastating to the middle class, the threat of increasing automation taking away vast numbers of existing jobs is real. McKinsey, the global consultancy, believes that 50% of current jobs could be affected by current technologies and that new technologies like AI could displace vast numbers of knowledge workers by 2025-2030. Imagine all of the people in NYC alone that drive taxis and Uber that could lose their jobs to autonomous vehicles. See https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages
"And robots in that sense have been transforming our economy literally for centuries."
I was reminded of one of the greatest inventions of all time. In 1804, Joseph Marie Jacquard invented the Jacquard Loom. It revolutionized the textile industry. It also created a ton of jobs.
Here is the link to the wikipedia article on it. https://en.wikipedia.org/wiki/Jacquard_loom
Remember to look at the picture in the top right corner. This was literally generated by a Jacquard loom in 1839 with a deck of 24,000 cards.
1
Great article.
It's annoying when the TV media (especially CNN, Fox, and the BBC) assert without any evidence that wages are stagnant due to machines replacing workers.
1
A big part of what has undercut unions is ***too much*** immigration. A flood of low/no-skilled workers greatly weakened unions.
You--Dr. Krugman--wrote about that in 2006, as did your colleague, Nicholas Kristof. But it seems to have become politically incorrect at the NYT to say anything that questions the wisdom of admitting well over a million legal immigrants annually.
But as you wrote in 2006, this is a big part of what has enabled reducing the wages--in real terms--of low/no-skilled American workers.
https://www.nytimes.com/2006/03/27/opinion/north-of-the-border.html
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@David Holzman Great post. Would love to see how the Krugman of today would respond to the Krugman of 2006. He was right about one thing. In 2006 it was already a big and growing political problem and because we were unable to do anything about it, it helped elect the worst anti -immigrant demagogue in modern US history.
1
@David Holzman what weakened unions were the Republicans drive to emasculate and destroy unions through the right-to-work laws. They have been very effective in doing this and reducing the standard of living of working class americans.
Denial of this is purely Republican propaganda for the gullible.
@Ironmike
Indeed. But the oversupply of cheap labor from mass immigration made it a lot easier.
1
As usual, I agree with Dr. Krugman but I think he hasn't addressed a cause of the decline in working people's power. True, it is political, but it is the younger generations anti-union mindset that has empowered the anti-worker efforts of the Republicans. They are eating what they have sown. It is hard to be too upset by this because all of the union busting political action was put in place by people who benefited, or would have benefited, from unions.
Until the 1970s, the trucking industry was very profitable in general, but that was because it had captured federal regulators. A few lucky companies made tons of money, and everyone else was on the outside looking in. When the trucking industry was deregulated, in brought in much more competition. Of course wages in the industry fell. But so did the prices of trucked goods.
I have a friend who is a long-distance trucker. He makes about $70,000 per year. If he were trying to be a trucker in the 1970s, it would have been harder for him to get a job, and he certainly could not have just entered the industry on his own. You had to have government permission to do that.
Dr. Krugman, I very much enjoy your column on a regular basis. But in the case, I think that the Chicago Boys had it right--the trucking and airline industries had "captured" government regulators. That was great for them, but was it not bad for the economy as a whole?
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@David Bullock: "I think that the Chicago Boys had it right--the trucking and airline industries had "captured" government regulators. That was great for them, but was it not bad for the economy as a whole?"
Concur totally. Below is a link to an epic interview of Milton Friedman by Phil Donohue that discusses this very topic (among others):
https://www.youtube.com/watch?v=1EwaLys3Zak
Hello Mr. Krugman, I have a question.
If politics and an anti-worker bias are to explain wage stagnation, what do we make of the 150% increase in worker productivity over that same time?
Doesn't that support a position that the market forces, as applied to individual jobs, also directly bear in the increase in productivity, perhaps in a way unionized labor would not?
Said another way...what if a unionized employee is not incentivized to be more productive due to their job security...while a results-oriented position (exposed to competitive market forces) is?
I guess the question is...would we still have the 150% increase in worker productivity with a more unionized labor force?
This is a genuine question, by the way...and I welcome your (or others') insightful replies.
Thank you!
It's a far cry from the the water mills that were replaced by electricity. Workers moved to another town where there was other factory work. They also flooded into towns from farms. NYC long shore men were taken care of by their unions. Where will truck drivers go? Those lucky enough to be Teamsters might get a good deal but how many are there 30 million? Are they going to write code? What about when AI learns to write code?
I can see when the self described Socialist take power. Like their European brethren they will offer a guaranteed income slightly above poverty level, public housing and medical care. The "Socialist" of Europe and the USA think that's all people want as they grab more for themselves. Could you live in a 200 sq ft apartment with no way of escaping the government preordained minimum.
Ever think what great and just economic system a really smart computer could come up? Something out of a Douglas Adams novel. We wouldn't need economist then would we.
Union numbers in Canada’s private sector have declined more or less in line with the U.S. However, Canadian public sector unions are thriving. Krugman’s statement that Canada’s union participation rate is that of the U.S. in 1973 may be correct, but doesn’t present a true picture. Believe me, having very strong public sector unions is not a picnic. They make it very difficult to weed out the incompetent and those who have engaged in malfeasance are often protected.
My past job for an airline was not unionized, but similar jobs in other airlines were, as were other airline jobs. This raised standards of pay/benefits for most non union workers. This is how norms were set, for a more secure working and middle class.
We got used to pay raises, vac time, adequate sick time, paid family leave, good medical benefits, and secure retirement pensions. And time and 1/2 over 40 hours.
When in past generations 1/3 of all workers were in unions, Americans generally had rising living standards, job security, apprenticeship training, pensions and benefits. This extended to treating workers with basic respect. That extended to politics, so that voters were treated with more respect. That's called a political and social 'norm'.
But then the congress we elect let jobs be off shored, factories close, pensions be xxld, and a gig economy flourish. The congress was paid well for its efforts---by mega donors.
Today, voters who were once given good representation for their taxation, are simply manipulated and marketed to, with billionaire financed political advertising on our media.
Meanwhile We the People choose the lesser of evils, and hope for the best lining up to vote.
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Dr. Krugman's comment about containerization reminded me of how the ILWU under Harry Bridges (who was hated and hunted by the owners and by the FBI under Hoover) was able to fight for job retention, retraining, and reskilling when the Pacific Maritime Assoc tried to push the switch to containers comming with huge job losses. it took a strike of some length (my uncle was a longshoreman and strong ILWU member from the 30s onwards).
Then there was a lot of support from other unions and the ILWU was successful. And the press was capable of reporting labor issues fairly accurately. contrast that with the PMA lockout of the ILWU in the early 2000's. The television news folks seemed to not be able to grasp the difference between a lockout and a strike, even going so far as to claim the "striking longshoremen" (sic) were going to hurt Christmas for kids (e.g., fewer toys imported). they couldn't even bother to report that the union was more than willing to load ships for Alaska and Hawaii so that those folks would not go without necessities, etc.
Similarly, few seem to be able to report accurately, if at all, on labor issues today. although they do seem to be able to quote the owners, bosses, and antiunuion politicians accurately as they lie.
As a huge Krugman fan, I think he’s off-base here for a few reasons.
1) Union workers are now competing with robots, not non-union workers. Factories are already complaining about a “shortage of workers”, which actually just means they don’t want to pay the necessary wages. If they paid enough, they could get workers. Instead of paying wages which workers would accept, they are turning to automation of assembly lines.
2) He’s not seeing how rapid the acceleration of AI will be. I’m in solar and few outside the industry thought it would ever get cheaper than coal. Now that it’s (significantly) cheaper, none of the electric systems are ready for the massive change that’s occurring. Likewise, at some point AI will hit a point where it can replace common human tasks. Once it does, there will be huge job loss. Not “all” the jobs, but enough to cause massive upheaval.
3) What he’s proposing is a cultural change. That’s a massive ask and politicians are much better at following culture than leading it. A UBI is the common fix for the robot apocalypse, and it’s something many conservatives are on-board with. Why fight the tide?
Yes, the white working-classes voted away their standard of living when they elected Ronald Reagan in 1980, and as the last election made clear, they have no regrets. The only people who do are progressives and liberal intellectuals. The historical record makes clear that economics is rarely a factor in determining the course of world events. As long as everyone has a job, nobody cares about it. Economic interpretations of history may be interesting, but they are wrong, both at the micro level (thank you Kohneman and Twersky) and at the macro level (sorry Karl!)
Psychology rules. Working behind a counter will never replace working on an assembly line, and the reasons have nothing to do with wages or health insurance. Economists refuse to understand this, and as long as they continue to have an outsize influence on public policy, we are going to see more Ronald Reagans and Donald Trumps. We’d be better off bringing back the astrologers.
Congratulations to Krugman --- he mentions unions in his column, and international comparisons to highlight our problems. A departure from our media norm, even for a liberal with a conscience. Now the rw FOX/GOP machine will really bash him.
Of course the political power of the US citizen majority has been badly weakened. It's reflected in wages, pensions, job security, job offshoring, HC and education costs, etc.
The politicians we stand in long lines to elect haven't done their duty in a democracy to give us Representation For Our Taxation.
The corporate mega donors to our elections have less taxation and outsized representation.
Seems now that Hillary isn't running anymore, the new progressives in the Dem party are setting a higher standard of political norms and our columnists are responding.
What fills our political messaging is DIVERSION from the truth--- from the primacy of private profit as highest priority over the public good, and equating this with American Freedom from Big Govt.
It's time our media, so proud of it's 1st Amendment exposed this to the public.
See Princeton's Gilens and Page study of congress showing most laws are passed per the preferences of the big donors, not the citizen majority. See them on Jon Stewart video also.
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Republicans are totally in the bag for management and owners. They have been very effective at destroying unions, principally through right-to-work laws and at convincing blue collar workers that this is in their self-interest.
This has had the effect of moving most of the wealth into a few hands and substantially increasing the cost of living for the rest of the population.
This makes people desperate and they reach out to anyone who promises solutions and puts the blame on the others--people like Trump.
Our nation is in deep trouble.
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If a robot does a job that was once done by a human, the robot does not earn an income and no income tax, SS or Medicare tax is collected. As artificial intelligence and automation take hold of the economy and replace the need for human workers, what is going to happen to Social Security and Medicare? As Krugman points out, the politicians could care less. The Trump tax cuts and budget proposal which cuts spending on Medicare and other programs and increases military spending is exactly the wrong approach.
Labor is it's own worst enemy. For some reason the American worker hates to see anyone do well. Hardly a day goes by that I don't see a complaint about the over paid union worker or government worker or someone with a pension. When the government or large corporation outsources labor to a contractor who then cuts wages and pockets the profits -- everyone cheers. The American worker hates laborers that are doing well. They love Billionaires for some reason and keep defending their rights to their profits and tax breaks.
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This would've been a good time for Krugman to call for workers to benefit from any advances in robotic technology, but he's a good little pro-business liberal who would never anger corporate America like that.
In fact, the single factor most important in declining employment and wages has been the use of sweatshop labor - something Krugman has written fondly of.
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Paul Krugman is right. Blaming technology for low wages is as old as the beginning of the Industrial Revolution. The Luddites destroyed early industrial devices in protest. Karl Marx warned of the danger of worker exploitation in the industrial age.
But even Marx could not predict that technology actually increases, not decreases human ingenuity. Consider the cyber revolution. Computers were thought to pose a danger for employment. In fact, computerization has generated an enormous number of new jobs. Consider the IT department today, which didn't exist in 1970.
The union movement was the great bulwark against the decline of worker benefits. Workers have had to increase their skills to maintain meaningful employment, but the rapacious desire of oligarchs and large corporations to squeeze ever more productivity from workers for lower and lower wages has created economic imbalance. Suppressing unions as a result of billionaire influence in our political system has been the guarantee that the rich would always get richer at the expense of workers.
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@William O, Beeman And, the word sabotage came from displaced workers throwing wooden shoes into machines that eliminated their jobs. A sabot was a wooden shoe worn by peasants.
I have, in my lifetime, worked in a non-union setting, a semi-unionized setting, and a unionized setting.
In a non-union setting, we had employers doing the same work, but making different pay.
It was because of those 'performance setting reviews', a supervisor could decide if one was warranted a salary increase or not.
Heaven forbid if you weren't liked by that supervisor.
Also, with those jobs, it was forbidden that one could talk about their salaries with co-workers or risk being written up or fired.
With those semi-union deals, one could get a raise, but sometimes during those reviews, one would/could be put thru a probationary period with those raises contingent on what a supervisor/office manager feels is an adequate waiting period.
With the union job, everyone was on the same level.
Of course one wouldn't be making the same as someone who had been there for years, but every year one worked, they got a raise at that person's anniversary.
After working so many years, say ten to twelve years everyone would have maxed out and got raises based on stipulations within in a union contract including, cost of living raises.
One the payday/period a raise is given, everybody got it.
There is a reason many jobs now don't want unions because contracts would be the medium used to determine pay and dismissals/firings as well as terms of employment.
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Prof. Krugman might have taken a longer view when he wrote, "much of what used to be coal country has never recovered."
A clearer view would be to say that coal mining brings populations to camps where mines were dug, and then, when mines play out, the populations move once again. Arguably, that is recovery. But there's no need to quarrel over the term. The point is that there's no need to "develop" every single physical place.
Have a look at a satellite view of Helvetia, Pennsylvania. I assure you that it used to be a coal mining town: my mom's family lived there in the 1930s.
@Joe Ryan
Paul Krugman is wrong. The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
I was raised in a heavy equipment family. My grandfather hired mule skinners to drive a team of mules or horses who pulled a plow like tool that dug up the earth, moved it someplace else, and soon a road was built.
He even kept them working on snow days shoveling the manure in the barns.
My father, returned from the war, bought a robot in the form of a bulldozer and productivity soared. So did wages. The workforce remained the same but the skill level increased as did wages. We ran a union shop. Didn't need to really, but the skill sets of union operators was better than those of non union operators.
If we were to see a real investment in infrastructure we would see a lot of skilled labor being used to drive those robots.
Too much work still needs to be done by humans with skills. The reason wages are low, as Krugman points out, the bosses want it that way. The bosses have always know that if they can get the white working stiff to hate and fear the black and brown working stiffs they will have an easier time stealing from both.
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@Bob Laughlin
Paul Krugman is wrong. The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
And yes many white Americans are against non white Americans. Some day these white Americans will start to understand that the problem is white Americans who will used illegal aliens instead of Americans.
The period in which this started, the 1970s, is also the same time Republicans rediscovered the magic in racial dog-whistle politics. This did two things. As the black population was rising in public visibility (civil rights, Black Power, sports, entertainment), the Republican wedge drove the racial divide wider by casting blacks as the new face of those on welfare but 'not like us.' White Appalachian poverty was due to circumstances; black poverty was because of laziness.
Meanwhile, the suburban white population continued to grow, raising a more conscious sense of separate but superior, and baby boomers were finding more opportunity in white collar employment, fostering a sense of economic ascendancy and growing identification with corporate management. The egalitarianism of the factory floor was on the way out and (as the saying goes) people became more interested in protecting their right to get rich than deal with the fact that they aren't and won't be.
The second effect was the well-known 'Southern Strategy' which led the South to eventually takeover the party, bringing their particular brand of politics - i.e., plantation plutocracy, regressive economic policy, and belief that the Constitution, with its emphasis on property rights, was designed to protect the privileges of the wealthy, not the rights of the hoi polloi.
Americans have always found it easier to buy into our myths than doing the heavy lifting required by reality.
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@RMS
Paul Krugman is wrong and so is you. The problem did not start in 1970's.
The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
Econ 101 on US wages
US wages are low for those in the US exposed to global competition. By Econ 101, in free global trade MUST move to the global average. That is down in the US, up in China
Mr. Krugman has denied this elementary fact throughout his career. From "specialization will save us" to "data on the content distribution are not fine grained enough to be sure" he has used angle to deny that he got the distributive effects of his trade theories wrong.
Very wrong
Add to this that his outsourcing that he celebrated" in praise of cheap labour" destroyed Union power in the US. Rather than responding to Union demands for higher wages, companies moved to Mexico.
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@Woof
Every large company is not having the problems of stagnant wages so this can not be a global problem.
The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
There is a place for a moderate basic income. It gives people bargaining power without the market distortions of unions, among many other benefits.
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@Bub
There is no need for a moderate basic income.
The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
Send business owners who use illegal aliens to jail and there would be no problem.
By the way almost all of other nations send business owners to jail for using illegal aliens.
This is such an important social and political question, I wish the real experts like Paul Krugman, Joseph Stiglitz, and Robert Reich would do something more concrete about it.
Why doesn't Krugman, Reich and their buddies in the world of economic theory make a pie chart which ascribes a percentage of blame to each factor contributing to American wage stagnation since 1979 (union losses, automation, outsourcing to foreign countries, political misdirections, Board of Director philosophies etc.), then put it on the front page of the NYT for ten years?
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@Gustav
Paul Krugman is wrong. The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
Send business owners who use illegal aliens to jail and there would be no problem.
By the way almost all of other nations send business owners to jail for using illegal aliens.
Thank you, Dr. Krugman, for another fresh dose of reality. You have once again confirmed Mark Twain's observation that ignorance accounts for fewer of our serious problems than our susceptibility to knowing things that are not so.
@Kirk Bready
Paul Krugman is wrong. The problem of stagnant American wages is over 20 years of business using tens of million of illegal aliens.
20 years of business using tens of million of illegal aliens has made it impossible to obtain a decent wages. If you do not like the wage there are illegal aliens will take the low wages. There will also be Americans that will take low wages since there has been so many years of low wages.
Without American companies using illegal aliens there would not be low wages.
But people like Paul Krugman want to pretend that there is not tens of millions of illegal aliens that are now doing the jobs that used to be the jobs of Americans.
Send business owners who use illegal aliens to jail and there would be no problem.
By the way almost all of other nations send business owners to jail for using illegal aliens.
Ignorance is not understanding that having tens of millions of illegal aliens taking the the jobs of Americans is not good for Americans.
@Kirk Bready: ... above all, what God thinks about the human condition.
Seems like the essay could use more detail explaining the respective role of robots and policy in the big examples cited. So, is there a policy we could have adopted to keep all those coal jobs? Is there a policy to keep all the cargo handling jobs? Really, unions would have solved that? At some point, with so much labor saving and so many more new workers born over decades, it seems to me the picture needs more clarity, development, and evidence. Seems like we need a lot more "work," so we define more and more things as "work" and aggressively keep more and more people in the infinitely expandable categories: teacher, student, prisoner, prison guard.
I hope that at some point Prof. Krugman clearly explains why the capitalist system -- based on monopoly power and not free markets -- is a very destructive force.
@benjamin ben-baruch: The "capitalist system" rewards the time value of a fiat currency with interest and/or dividends when invested in financial institutions (like banks) and corporations conducting businesses. It is quite universal. A public sector taxes and spends to regulate the time value of money through fiscal policy.
The so-called "Right to Work" referendums have successfully misrepresented that they are pro-workers. Scott Walker, former governor of Wisconsin, took a number of steps to crush unions. Here in Indiana, Pence and Holcombe have tried to do the same.
Talk about raising the minimum wage in Indiana is suppressed.
It's still the same as the federal minimum wage - $7.25/hour.
But Pence and now Governor Holcombe claim we are a "world-class" state. For employers. Some employers like UPS and FedEx have raised hourly wages, so the state will leave it up to the companies to give working class people a chance to work two jobs instead of three. Just to make ends meet. There is no getting ahead.
Teachers salaries here are also very low.
The truth is wages/salaries have only increased for a few,
just like tax cuts were only for the wealthy and corporate America.
But Trump and his gang are really selling a hot economy.
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@SCZ
The wage at the bottom sets the wage for everyone above. It’s why many new graduates are working for what minimum wage should be, had it kept pace.
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@SCZ: Even the names these folks give to their legislation are psychopathological. Maybe it follows from the US establishment of liberty to enslave in its original Constitution.
The bigger problem which is rarely mentioned is the growth of monopolies.Walmart and Amazon,for instance,have no competition.If someone doesn’ like working for Walmart,where can they go.I have a manufacturing business in a rural community and lure employees away from Walmart and McDonalds by offering them a higher wage....considerably higher.but this situation rarely exists in small rural towns like we live in.Breaking up monopolies would increase competition for employees.
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Amazon and Walmart employ about 2 million people of the 157 million employed in the US. My grade school math tells me they have 155 million other jobs to choose besides working for those 2 firms.
@Iamcynic1: "The bigger problem which is rarely mentioned is the growth of monopolies. Walmart and Amazon,for instance,have no competition."
Before Walmart was K-Mart, which grew big enough to threaten Sears, then the country's biggest retailer - where are either of them now? The sad truth is that no one forces you to buy at Amazon, have a Facebook account or the latest smartphone from Apple or Samsung. There is not a Walmart around every corner, and there are alternatives to Amazon for online shopping. They get my business when I choose to give it to them.
You want to break up a monopoly? Quit buying stuff from them. Or start a business that doesn't offer what they do. Or start a business that offers better deals on stuff they do sell. But you should never send in government to do it.
People who are middle class or upwardly mobile seldom feel proud of the fact that they are members of unions like farm workers, metal miners or factory workers. Here in Canada we get around this by the judicious use of language. Many in the middle class here belong instead to Alliances, Institutes, Federations and so on, euphemisms for organizations of people involved in good old honest toil. Though there are many other compelling reasons for favoring unions, it contributes to their support here, why we are so highly 'unionized'.
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Consider also that physical labor, especially the strenuous kind that used to be done by longshoremen and coal miners, leaves a worker worn out by 50 or so, and leads to all the back and joint ailments that have been treated with opioids lately.
Let the robots do the lifting, and let the humans do the thinking.
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I recommend a recent book by Louis Hyman, "Temp: How American Work, American Business and the American Dream Became Temporary."
The change in corporations and our economy from pursuing long-term business planning and valuing job-generation and stability to the fiction "shareholder value" and short-term profits led to the decline in "workers" sharing the benefits of business. The culture of corporations shifted to favor, and pay, the few while cutting jobs and employee wages and benefits--where we are today.
Sears, an old-economy powerhouse, once had 200,000 employees (jobs). Google, vastly larger corporation, has 55,000. Amazon, the worldwide Sears of today, relies upon low-paying, contract labor...making Jeff Bezos wealthy while average workers make hourly wages.
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My first job out of college was as a bank teller. When ATM machines were first installed my manager flat out told me your job will be replaced by these machines. My thought was, no too many tasks of a bank teller are not just dispensing money. Bank teller jobs still exist.
Technology of course changes jobs. I saw the implications in my field of accounting with my first use of a computer in an office setting. In 1985 firms needed many more accountants to get the job done than are needed in 2019.
I agree nothing like a good diversion tactic to avoid talking about Unions, CEO compensations, Corporate stock buy backs and the systematic attack on the middle class.
I always wonder how Corporate America managed to exempt so many of us from overtime. In 1988, I could just barely afford to support myself, but was exempt, sure could have used overtime for all those extra hours. Before you ask, no I was not a member of management, just fell under the “professional” office classification. But then I didn’t have a union protecting my interests and negotiating for overtime benefits.
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Krugman has replaced one popular claim that runs contrary to standard economics with another. And he lets a second myth slide. Actually:
(1) raising the minimum wage usually won't work.
Like it or not, here is the prima facie theory of wages, Econ 1B, Microeconomics: Robots raise productivity, thus raising the marginal product of labor, MPL; the wage rises since it equals the marginal product of labor.
Exceptions: There are factors that can drive wages below the MPL. If they obtain, one has a very strong case for raising wages.
(2) Raising wages is dangerous:
The progressive claim: higher wages mean higher workers' earnings, which means higher demand for goods, which increases production, which raises employment.
No, usually. It only works in deep depression, the 1930s. Otherwise, it is false, and a formula for inflation. This is a prima facie rule. Cf. 1966-1980.
Whether they like them or not, it is the duty of trained economists to make clear that received theory implies the two rules above: (1) the MPL/wage analysis, (2) the inverted macroeconomics of Depression vis-s-vis Normalcy.
It is the duty of dissenting analysts to justify their dissent, to justify rejecting the catechism. This calls for a strong, very strong, argument.
Progressives! You need to explain occasionally: Why wouldn't the MPL theory work? Why wouldn't increasing demand in Normalcy lead to inflation?
PS. I'm a Lefty. I like my socialism straight, not based on sleight of hand.
@alyosha Why mention these theories without explaining them? Or do you think you're addressing Krugman? I doubt he has time to read comments -- he has his own blog -- & communication with the author is not what these comment pages are for.
@a.h. (1) Millions learn these principles in introductory Econ, not just Krugman. So, one can appeal "hey, remember what you learned back in..." (2) The concepts are not theoretical niceties. Popular ignorance of them has led and will lead to economic disaster. Like trying to deal with your checkbook without knowing arithmetic. (3) 1500 words means use compact reasoning.
The best counter argument is in the fast food sector. The introduction of the higher minimum wage has directly led to the introduction of more kiosk order taking, as the owners have found that the higher cost of labor made the machines more cost effective. By reducing the number of jobs, the supply of workers exceeds the demand for them and thereby lowers the per unit cost to the employer for workers.
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What was astoundingly short sighted with last year's tax cut for corporations was the dearth of any teeth to force companies to build infrastructure and capacity here in the United States before they could participate in the favorable tax treatment the 2018 law provided them.
Instead, middle class factory jobs remain offshore. Take a trip to China to see how many brand new factories there are; see how many people are now employed there doing jobs that could be had here with the right incentives and enough time to implement them.
Our Republican 'friends' in Congress and the Oval Office did nothing to cause companies to abandon their overseas capacity, but allowed tremendous tax breaks to ... buy back their stock and little else. How could they have simply abandoned America?
It is unconscionable!
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Paul, brave article and on the mark. I believe the answer to your riddle is that because the wealthy elite and the political class that they own would prefer the public debate be about robots and have shaped the conversation to be so because they control the conversation in news media. Those same business leaders that have decimated unions and created a generation of Reagan Democrats and Clinton Republicans don't want the focus on declining earnings of the working class, executive compensation that are disproportionate and their insatiable lust for the vile maxim. If they did, we'd see Noam Chomsky on ABC, NBC, ABC, Fox News and MSNBC more often. The elitism that crushed the working class in this country dominates BOTH sides of the aisle in Washington DC.
My father was a union member, even when he ran his own construction business. It is why he was able to put food on the table, a roof over our heads, decent health insurance, and five kids through college. It also helped support his retirement. Yet, some of my siblings think unions are a big problem that should be eliminated in the name of the "free market." I'm constantly amazed at how quickly the more fortunate forget or ignore what made our good fortune possible, including our parents' unions. What's even more puzzling is that many workers have bought the right wing nonsense that unions are not in their best interest. Technology indeed changed my father's trade, but as Mr. Krugman observes, the increases in productivity enabling smaller numbers of workers to do more were not shared. Today, contractors and builders treat workers like a commodity to be purchased at the lowest cost and used up. My father's trade is now almost entirely dominated by non-union companies paying very low wages, and offering no heatlh insurance or retirement plans. I doubt there is any way my father could have repeated his success in this generation.
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Once again off the mark. Why do Government employees, who are employed by the entity that actually enforces labor laws of all stripes need a union???
They now make more than their private sector counterparts, have much better, more lucrative pensions.
Oh wait, it is so they will be beholding to the government and vote accordingly. Now I get it.
Thanks for the clarification.
@JJS They do make more than the private sector? That is news to me. I saw all those government employees going to food banks and crying about not making their rent during the shutdown. Some government employees have nice jobs and others live paycheck to paycheck depending on education, skills, connections, and experience.
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@JJS: Government employees have a union, and make more, and have better benefits than those without unions. So, why do they need a union?
Think that through a couple more times. I have an umbrella. My hair isn't getting wet. So, why do I need an umbrella?
My wife and I will soon be moving and we have to fly to get there. We have two medium size dogs that will be in crates that are 4' x 3' x 2'. Additionally, we will have two suitcases each and a carry on bag. My wife discovered that there are no longer any skycaps at LAX, except for first class travelers. It seems that the advent of rolling luggage, has decreased the demand for skycaps. Also, skycaps quickly quit since they work only for tips. I'm this case, technology and the lack of a union has created a less civil society. Also, if a person is handicapped, it can be a problem.
1
What's important is the most singular difference between a robot and a person. If you don't give a machine the power it needs to run, there's no argument about it. It won't run. It does not matter if it's water over a wheel, steam, petroleum or electricity. But a person, that is completely different. Unlike a machine, a person will struggle and give its very best effort to still perform when they've not been given what they need to perform the work given them. They have to or they die. Employers exploit this difference knowing they can get something for nothing from humans that they can't from machines.
So they push humans in ways they could never get away with from humans stuck with the dilemma of having to make a living or perish. This is purely political. In economic terms the decisions are harsh. Treat your machinery properly or it won't work at all, but you can treat humans like garbage and they still will perform as little as they can get away with.
Business banks on the difference between the 0 it will get from machines not powered and what it can squeeze from humans not powered.
So, no it's not robots that are the threat even in the future. It's that people are at the most basic level exploited in ways machines cannot be.
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@no one special
Well said! The common thread for all life on this planet is the will to survive. Employers exploit that element of human nature, making working conditions more and more difficult. People continue to adapt to the poor conditions simply because they want to live. Their inherent survival mechanism and the desire to protect their children keep them going. But eventually, there comes a breaking point. The question is when that will happen again ...
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@Blue Moon: Desperation motivation is taken for granted in the US.
6
@no one special How true! A friend of mine broke out in shingles from the pressure of trying to make quota in his warehoise. Would a machine do that?
5
The biggest reform to combat income inequality would be to make union membership mandatory. The historic social balance between Big Business, Big Government and Big Labor has been broken by corporate money buying political opposition to workers' ability to form unions and bargain collectively for a living wage. This inevitably creates social unrest including crime, drugs, and workplace violence like the many gun massacres. It's time for progressive Democrats to reconnect with their historic base--workers who need not a handout like a raise in the minimum wage, but unions that will fight against corporate greed. Income inequality is the biggest domestic problem we have and a strong labor movement is the best way to cope with it.
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@Paul Wortman Mandatory union membership is equivalent to a tax on everyone. The union will not be motivate to do anything, with guaranteed income. China has a national union, it was co-opted by the state.
The main argument is, to bargain a larger share of the earning to the worker, while keeping the price to the consumer steady. To do that, the worker must gain more market power, but they can't, because they are competing against others around the world, and robots. More intervention from the govt will simply fasten the replacement.
Some worker in certain service industries have more bargaining power thanks to proximity to the customer. If the service is critical and not easily competed, they do see much higher wages. (E.g. health care, high-tech).
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@H.Tran
Not sure China is the best example of the impact unions have in a democratic country.
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@H.Tran I had to join a union when I was a faculty member at Stony Brook University, and the benefits I received and still receive in retirement were well worth the dues. The union did not sit around, but worked extremely hard in a very complex and difficult political environment to protect our wages by bargaining collectively as well as our health benefits. America needs unions to combat wage stagnation, and crony capitalism between Big Business and Big Government. And union do work for their members,
36
There can be seen a direct correlation between the decline of unions and the decline in real wages. Unions not only provided good wages and benefits for their members but was helpful in keeping the non-union workers with a better wage. We blue collar workers brought in on our selves by supporting anti-union politicians because they stoked fears and hatred of others less fortunate, now many of us have joined the ranks of the less fortunate. Even after all the Republicans have done to destroy unions many union members still have voted for them. Unions have been involved with bad people and abuses in power have occurred at times because they are composed of people. It’s funny how people don’t mind executives making unbelievably high incomes while their workers are having a hard time getting by, but let other workers make a decent wage and it becomes intolerable. The Republicans have done a remarkable job of pitting Americans against each other and have created so much confusion that many Americans don’t even bother to vote. Corporations can spend an unlimited amount of money to influence the elections and have ruined our democracy. When you look at the abuses being inflicted on many Americans with our healthcare system and the erosion of social safety nets along with a very unequal educational situation, along with deregulations designed to protect people and our economy, it seems as though a dystopian situation is unfolding.
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Excellent.
Almost all of the wage stagnation and inequality we're suffering stems from very specific legislative actions. The capital gains tax give-away, the low minimum wage, the low inheritance tax, etc, etc.
My fellow liberals have a bad habit of coming up with new ideas, which always give a lot of people agita. They should be explaining HOW the system got rigged and repealing those laws and rules, instead. Much easier for the voting public to swallow. Also, the effort at repeal would bring out the special interests who have benefited so much. It would help us to have an identifiable opponent, especially if they're filthy rich and whining about their money and how unfair life is.
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@laurence
Interesting idea: to go back to the tried and true policies of the good old days! This deserves some serious thought.
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@laurence
Great idea
2
Presidential candidates should take a look at this Ted Kennedy's 2007 speech on the floor of the Senate after five days of Republican opposition and obstruction to raising the federal minimum wage from $5.15 to $7.25 per hour. The raise was merely to restore the purchasing power of those on the bottom. (Note that minimum wage is still $7.25.) Most workers earn minimum wage because big box stores like Walmart dominate the job market, gorge on profits, and sit fatly on wages. Ted Kennedy didn't pull punches. He did not say the problem was "politics" or our "political leaders" as Paul Krugman puts it. Senator Kennedy blamed Republican leadership, and Democrats should, too. It's not just Trump, either, it's Republicans in Congress. Convince voters that something has gone terribly off the rails, because it has. David Brooks says raising the minimum wage is a "horrible" idea and you know Fox News says so, too, so Democratic candidates will have to turn up the volume, and turn up the outrage, otherwise voters won't believe it's outrageous. You have the podiums and the microphones and the megaphones for the next couple of years. Use them.
https://www.youtube.com/watch?v=SicFn8rqPPE
1
Now that union power has significantly declined the myth of unions of the past as solely providing wonderful benefits for workers has arisen. Sure unions provided some worker benefits, particularly in the early to mid 1900s. But over time unions abused their power by insisting upon all kinds of work restrictions that vastly decreased efficiency while providing many cushy jobs for union members as well as often getting involved with organized crime. Thus, the decline of union power did not happen in a vacuum. Instead, people's views on unions grew increasingly negative for such valid reasons and because while increased global competition required unions to become more flexible on efficiency factors, unions generally were unwilling to do so. Also, unions often became impediments to equal access to jobs by minorities. So if increased union power is needed today, then to succeed unions must first learn to be much more constructive than in the past.
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@Gail: There were always some problems with unions, but your version of "vastly decreased efficiency" is unrealistic. The decline in union power didn't happen in a vacuum, true, but the context was relentless anti-union efforts by the corporations, including very expensive opposition to organizing campaigns, massive lobbying efforts, generously funded right-wing think-tanks, and so on...
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So now that Sherrod Brown has decided not to run, which of the Democratic candidates is talking about supporting workers. Not just increasing the minimum wage, but also advocating policies that will encourage workers to organize unions and negotiate better working conditions and wages?
You're absolutely right Paul, the reason that the working and middle class have seen their wealth drained and their annual income go backwards while the rich have seen their wealth skyrocket is directly due to political decisions. Robots per se, aren't killing them, but the political decisions that allow companies to employ robots to make huge profits while not being made to pay to help transition their displaced workers into new careers, are responsible.
Sadly, maddeningly, it's not just the Republicans who were behind these decisions, the Democrats helped, if not always overtly, then by their sitting on the sidelines and not fighting for their former base. And ironically, unions helped seal their own doom too, driven by the same greed as the politicians.
But however it happened, it now needs to stop. If the majority of America, the 99%, wish to return to the well being they used to have 40 years ago, unions need to be revived. Even those who didn't belong to a union enjoyed the prosperity won by them - better pay, job security, 40 hour week, health care, pensions - all due to collective bargaining, and yes including managers.
But unions also need to have oversight to ensure that the excesses and corruption that led to their demise don't re-surface. And having them own equity in companies so they have a vested interest in company, as well as well as worker, well being, would be helpful too.
Without unions to protect them, individual workers are powerless.
Some things are really hard to explain. I have a friend who was a driver for a major trucking company. He was able to retire, fairly comfortably, in his late 50s. He continually complains about unions.
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While it is true that machines are not now the reason for income decline, they certainly will be in the near future, as technology keeps improving.
For instance, computers are already better than radiologists at interpreting medical data.
This needs to be discussed so that solutions can be found before it becomes catastrophic.
And even today, there are repercussions. If Trump could magically make manufacturers bring back production to the U.S., in most cases they would use machines instead of people (cheaper here, more expensive in China).
This is not a very useful argument, I would argue.
Sure the GOP is the problem (along with all the Republicans in the Democratic Party, too.) Sure the problem is political.
But, the argument that robots are taking jobs away can be a good reason for convincing the general public to embrace some liberal (progressive) ideas (which NEEDS to happen).
What's wrong with a guaranteed income, Paul? Maybe, Paul, you don't hang out with the bozos I do in this Trumpian sector of a blue state that I live in. These folks can understand ROBOTS better than they can understand "trickle down".
So why are you making the fuss? Just to be right? That's wrong.
I don't blame the political leaders, I blame the people who elect them, the very people who are suffering at the hands of the people they elect. They drink the cool aid that unions are bad, and then wonder why they get left in the dust with stagnant wages. Instead of blaming others, they need to look in the mirror.
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Tax cuts for the rich and corporations! Then borrow to pay for it - insult to injury, and repeat the same "trickle down economy" ruse. Then complain that we have a deficit and a growing debt and need to pay for it by cutting social services ("Social Security is going bankrupt" scare), education, infrastructure investments. Then when faced with the logic and reason of the opposition and constituents, relent and borrow yet more to pay for those essential investments.
We must claw back tax cuts for business and the wealthy starting with at least the Bush W. 'temporary' cuts that Obama was suckered into making permanent.
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I don't blame robots for low wages, I blame Republicans who have somehow convinced their blue collar supporters that unions are bad and they would be much better off as rugged individuals -- albeit lower paid ones.
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Yes, blame the robots, millions of jobs have been lost in the last fifty years and millions of people have been born or migrated into the labor pool. And unions have been attacked at every level.
Trump promised workers especially coal miners and farmers that he would take care of them and won election. But Trump being Trump it was all part of the scam he sold them, and continues to sell.
Unions would have been weakened even without political "right to work" laws. The bipartisan neoliberal globalization of industry shipped good manufacturing jobs offshore and there was nothing unions could do about it unless they agreed to match the equivalent low wages Chinese and Bangladeshi laborers receive. And it wasn't just the steel manufacturers that were affected: the fabric, clothing, and carpet mills packed up there yarns and disappeared. On that I agree with this president but tariffs, especially hostile tariffs on our allies, are not the answer.
As PK has reminded us over the years, we can thank unions and their power of negotiations that brought about the end of child labor, the launch of the 5-day work week, the 8-hour work day, better pay, work-safety regulations, ...
Unfortunately, the conservative movement (started during Reagan's watch), launched massive increases in executive compensation, unbelievably massive payouts to failed executives, uncontrolled mergers and acquisitions that killed competition while betraying American consumers and workers — and all connected to former Fed Chairman Alan Greenspan and his impassioned deregulation of nearly every industry in America. And much of this new philosophy of rewarding greedlings at the expense of working Americans can be placed at the feet of MBA programs throughout collegs and universities in America.
The lack of standing, and the right-wing/Fox-induced revulsion for organized labor (which represents fairness in wages, benefits and worker safety) has been a dovetail mating of politics and greed.
During the 1980s and '90s, CEO's held their gatherings at luxury resorts to discuss how to make things better for themselves. Creating linkage with Wall Street investment bankers and those mirky analysts who promoted certain stocks for their own bonuses became bedrock for the stock market. This created backchannel deals for executives and bankers that ultimately helped to create The Great Recession. The political will to make things right became obsolete.
~3.5M truckers may have experienced a decline in wages, but they are about to experience getting laid off.
As computer technology and robotic technology advances, the areas of work in which a person can outperform a machine decrease. Sometimes this happens through straight-out replacement, such as with toll booth attendants and bank tellers. Sometimes it happens through the effect of multipliers, such as when a surgeon with a particular expertise in NYC can remotely operate on a man in LA. Or H&R Block can rely upon computers to complete 90% of your tax return, only to have an individual look at them for the remaining 10%.
Yesteryear, machines learned how to sell sodas and dispense currency. Today, they are learning how to drive cars, trucks, buses and trains, and pilot ships and planes. They are also learning how to produce tax returns, identify the best product to market to a customer, cook, clean, and even have sex.
Tomorrow's machines will be smarter, stronger, faster, cheaper, more efficient, cleaner, quieter, smaller, and in all other regards more capable than the comparable machines of today. To think that such machines will not find additional opportunities to perform the work currently being done by humans is naive at best.
The only employment roles that will remain relatively safe will be those that are either too costly to teach a machine how to do, or those for which the use of a machine would not be deemed socially acceptable (such as POTUS).
I'm usually a fan, but not this time. Krugman blames machines (see the first 1/3 of the article), not robots. I fail to see the difference between gas-driven machines, electro-mechanical machines, and digital machines.
If Krugman's only point is that this process began with machines (consider improvements in agriculture in the 1870-1890 era with self-propelled reapers). if so, his argument is trivial. Robots are just the same. Economically, they are each capital investments that increase production output relative to labor inputs, and all the benefits initially go to the owners and less to the workers. (The robots don't need fringe benefits, rest breaks, vacations, medical care or retirement. Plus, they depreciate while workers just get more expensive.) Just like other machines.
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@Robert Poyourow
[continued] I worked in a Crown-Zellerbach shopping bag-making factory City of Commerce in east Los Angeles during the summers while in college. Machine improvements lead to fewer workers and rotating shifts, since the machines should never sit idle). Lie workers were replaced by mechanics, but the net result was the same: more production, less labor.
Historically, the surviving unionized workers got bountiful raises (See, Harry Braverman's theses in the '50s and '60s re; the steel and mining industries - while the work force numbers decline). But that union relationship no longer exists, either. So why does the professor exonerate robots and not reapers and threshers, etc.
The better defense is to show that robots increase labor needs elsewhere - and then what kind of labor that would be (skilled, trained, educated, or non of the above). But the net effect cannot be higher production costs - for costs are the enemy - else the owners wouldn't commission robots for the work.
So, no, he didn't nail it for me. But why did he overlook the new reality - that productivity increases reduce labor at the job site (which he admits), and employment over all (which he doesn't address?) Is he fastened on productivity increases as some form of solution but doesn't want to acknowledge that such relationships no longer work in our economy?
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Mr Krugman makes a series of sound points . There is another glaring reason for disappearing jobs in America. That reason is the effective subsidy embedded in the US corporate tax code which incentivises US companies to export jobs and factories abroad by shielding profits allocated abroad to those foreign hosts ( an accounting decision) from US federal taxation for as long as those profits are not repatriated to the US. This corporate tax boondoggle amounts to a bi-partisan betrayal of the American workingman and taxpayers which remains in place despite the recent misrepresented "tax reform" touted by President Trump. Isn't it enough that corporations pay much cheaper wages in host countries without there being a US tax incentive to ship jobs out the US? It is a scandalous betrayal.
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Professor, I do think you are underestimating the effect of automation. I think that automation AND the political environment feed on each other.
I put myself through school in the 1970's working as a union grocery store bagger. It paid well and helped me and my widowed mother. There was serious competition for those jobs as they paid so well for young kids. We also had to work our butts of as we had a shop steward that cracked the whip. He used to say the reason we can barging for better wages is that we were the most productive workers we could find. If we did not work hard we would be gone.
Flash ahead a decade or more. I am out of UC and working in transportation in the San Francisco area. I am taking with head of the local transportation workers union. I ask him in all seriousness how may union cards has he bulled in the last 20 years to clear out the dead wood. His answer was none.
Unions are their own worst enemy. Granted they can do great things when they are unions and not protection rackets.
The problem with automation is that it is affecting the very bottom jobs that are needed to go to school and get a better education. Of course now that they are affecting good jobs there may be some pushback.
Doctors here in California are seeing "the Doctor in the box" at Kaiser and they are delivering news via a robot computer screen telling people they will die. One doctor, a dozen hospitals. Perhaps their will be some push back on automation now?
Daleks are not robots, dude, any more than tanks or armored knights are.
I mean, I know that's not what this is about, but sheesh.
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Automation of some type or another has been a fact of life since the domestication of animals.
"When Skynet becomes Self Aware" !
This is a far more realistic threat than trying to blame robots for low wages.
We are already adding to the toll from Artificial Intelligence.
As Dr. Krugman points out how robots do not need to look like C3PO - "just anything which is automated to produce work" - like the robots who fill all of our Amazon orders.
AI does not have to have a "voice or personality" like HAL - it is just a computer program doing something that humans used to do . . .
LIKE -
Control the Jet Flight Attitude as an Autopilot software AD-ON which is probably responsible for the recent downing of two 737 Max 8's !
We can all expect some more detrimental results from AI running things for us, and of course, AI and software programming "is" the functional operating means for all automation.
Robots, on their "own" are NOT responsible for taking jobs.
Well, yes, they do take a lot of menial low-paying repetitive jobs which are by definition - "dead-end-jobs" - but;
Robots Create far better jobs than those they replace.
The Designers, the engineers, the builders, and the programmers of robots are all better jobs.
The real underlying cause for low wages is the direct result of wealthy employers having no true respect for their workers and certainly no loyalty.
If an employer can find someone to do your job cheaper - "You're Gone" !
The best path to a better job is with education and training.
And we all know which "party" does not want this !
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Talk about AI fuels this as well.
Krugman is in denial.
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Everything is a mechanism. Wind-up alarm clocks, internal combustion engines, microprocessors - and yes, homo sapiens.
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This is a mechanistic universe. Everything in it is a mechanism: hydrogen atoms, solar systems, amoebas, and homo sapiens - including their cerebrums.
.
We are the robots.
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Here is a prescription and a “spoonful of sugar” to keep the briefs, boxers, and panties from uproar, but, it had been better for all (kids included) had the two best jobs in town not ended up in the same house. But, one must tread lightly on that subject.
Jobs are not moving from the US to Mexico to be done by Robots. Low wages is mostly caused by Globalization facilitated by Technological advancement. High speed fiber made it possible to ship Programming jobs to Eastern Europe and India. The opinion pieces of the NY Times with a pro globalization bias is always ignoring this obvious fact.
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America has only 1 governing principle: free contract.
As such bargaining power is everything. What you earn is a function of it.
The GOP has 1 governing principle: the ever greater concentration of wealth & power on behalf of the wealthy & powerful.
To do that they undermine the agency of other groups bargaining power (unions=working class, affordable ed=middle class, ACORN=poor) while enhancing the agency of the rich (Ltd liability corporation - an ownership collective 80% owned by the 1% - [Citizens United]).
How did Unions lose power?
Univ of Michigan Economist Robert Axelrod’s seminal book “The Evolution of Cooperation” says that between 2 parties (egoists) cooperation is the best strategy (unions & management). The 2nd best strategy? “Tit-for-Tat:” I punch u in the nose, u punch me back. When we get tired of sore noses then we evolve into cooperation. That theory implies that COOPERATION ONLY OCCURS W/ A CREDIBLE THREAT OF VOILENCE.
The median wage has been flat since 1972. Before that it grew in lock step with GNP. This is an overwhelming inflection point. What could have caused it? What happened around 1972?
Was it the RICO statutes?
Unions used to be associated with organized crime. If an exec threatened to move a factory a brick might fly thru his living room window. Once the mob was broken unions lost their credible threat of voilence. Execs were free to export jobs.
Japan has evolved past this: tenured employees w/ company unions forcing cooperation.
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@Tim Kane: Yes, the US operates under the law of contracts, and whoever has the gold holds the pen to write them.
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Amazon effect..price increases are toxic to the consumer
The consumer dictates what they will pay
Companies must adapt or perish
Pure Darwinism
The law of nature...not man nor god
@Brewster: Nature is indifferent to man, and God is a projection of human nature onto it.
I wish that Krugman would stick to economics in his columns, as he is an interesting and insightful economist. When he and his readers fall for the fallacy that because he's smart in one area (economics), therefore, he's smart in another (politics), well, it just doesn't work out so well. Krugman the economist - worth reading. Krugman the political commentator, not so much.
@Jason McDonald
Amen to that.
@Jason McDonald: What is "politics" to you?
To me, it is the only lawful way to negotiate the social contract.
You don’t think this column is about economics?😳
A significant blow to organized labor was delivered by Ronald Reagan when he destroyed the Air Traffic Controllers union in 1981. His encouragement for hiring "scabs" was the death knell of powerful labor unions. Reagan's action can be tied to Caterpillar's destruction of the UAW in Peoria, IL
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@Phil: Reagan was vindictive like Trump is. Many of the strikers could not get re-hired in the profession.
all workers should be treated with respect and equitably from the top to the bottom of a business whether unionized or not. And between algorithms and machines and bots Krugman is wrong....this trio techno will make most humans leisure machines some day in the future.
“What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.” Mark Twain
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Thank you Paul by your almost invariably sage analysis.
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When unions and socialism were denigrated the Democrats stood by silently. They did not have enough backbone to represent the people that helped to elect them. To support unions and have at least an honest debate about socialism and unions was and still is a taboo. The pundits ask the candidates are you a capitalist, implying, if you are not a capitalist pure you are out.
So Democrats don't dare admit to having socialistic thoughts in their black socialistic hearts.
Never mind the success of social democratic societies, that would be unamerican.
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No ccomment at The man who changed the constitution.
Why ?
The year was 1980....
Well said, PK!
When the 99% do not revolt, it is their own fault. Losers all of them. Their grandfathers got beat up in the picket lines so their good for nothing grandkids can "occupy wall street"?
So because there are no national strikes to shake the oligarch americans who own everything...it is all meh.
I love Krugman’s writing, but I don’t think he meant to channel Yogi Bera with this one:
“Predictions are hard, especially about the future”
“ . . . the fault lies . . . in our political leaders.”
Mr. Krugman, the fault lies in the U.S. economic system which is, as you say, a “system[that] is rigged against workers.” You fault political leaders, who, actually, constitute our government — these same so-called political leaders who are, in turn, bought and paid for by the very people who profit from this corrupt system. You are late at arriving at this conclusion. Many, long before you, who stood up and spoke out about the inequalities of this “rigged” system, have been ignored or knocked down and out by the war profiteers, corporate thieves and bank fraudsters who control it, and the mainstream media who support it.
Big Bill Haywood and the IWW had it right. Workers of the world should have united against the violent global tsunami against the income and lives of all workers. Long before Bernie Sanders stood up and spoke out, many were aware of the manipulation by our “political leaders” and wrote about it: George Orwell, Upton Sinclair, Sinclair Lewis, Richard Wright, James Baldwin to name a few; and I cannot leave out a contemporary, Thomas Geoghegan, who has often written about unionism, its decline, and the hope for workers that it holds.
Mr. Krugman, you arrive late to the party. And you offer neither hope nor suggestions.
I dreamed I saw Joe Hill last night...
Union is good for the workers.
That is why the pro athletes in NBA, NFL, MLB are in the unions. Boss dislike unions.
I admire Mr. Krugman's take on the union factor, but I do believe he is ignoring the lack of education which forbids many of the unemployed workers to attain technical jobs on which our society depends more and more. So the focus, I think, should also be on retraining workers.
And while I agree that union busting has been hugely detrimental to the workers, I am not sure how that accounts for the lack of employment opportunities. Did I miss something? Could Mr. Krugman be underestimating the role technology plays?
retraining workers implies they have already done and lost a job, now possibly obsolete, and that presupposes they are no longer young and daisy fresh, which means that for those tech jobs, they are themselves obsolete. no amount of retraining will make an 8 track appealing in a 5G world.
We just do an incredibly poor job of worker management. In particular re-education is poorly supported and organized. The workforce is constantly changing. It brings to mind William Shakespeare's monologue how all the world's a stage and all the men and women merely players with their entrances and exits. Technological advances and disruptions. One leads to increased worker productivity and the other towards unemployment. We welcome the advances yet don't really know how we should deal with the disruption that it brings. In the past we just expected people to find another job even if it lead to re-location in another part of the country but what do you do when jobs disappear? Whatever happened to data entry clerks, main frame operators, COBOL, Fortran, RPG & programmers? They enjoyed a nice run then things changed. It wasn't a matter of re-location but re-education that mattered. Who pays for it? The student, business or the government? Or do they reach an arrangement to share the expense? Education is not simply a necessity but an on-going experience that may demand our return to training or school. Has anybody bothered to address the problem?
@Daedalus: Perhaps one should graduate when one has become proficient at self-education.
I'm white collar looking for a job. I have a part-time job which has union support. The pay is low, but I can participate in the retirement contribution, and I keep my dignity; I cannot be fired for no reason or required to give up my legal rights.
Now, I've been looking for a full time position. I got an offer from a company, but when I read the offer I noticed that this job, while paying well, put me at a lot of disadvantage. For instance, you have work-at-will which really means fire at will for any reason (small or big). Moreover, if I take the job, I have to go through their arbitration (I lose all my legal rights)
take the job, then steal. you will probably earn a promotion.
I -partially- agree with this piece. Whether it is tools, Robots or AI human productivity has been increasing since the dawn of time. At baseline this means that there either needs to be an ever increasing demand for whatever you produce or an ever decreasing unit price.
Our powerful tools also make it easier to create ever more powerful new tools. This is the big driver of falling living standards for someone doing the SAME thing for many years.
When Unions stop that from happening they are creating an unsustainable bubble. When Unions keep the compensation of the worker growing in line with their productivity they are a force for the individual good. The dream is that they manage to keep the productivity of the workforce growing AND applied to new challenges.
So in conclusion, I would be happy to see Unions thriving if they were constantly trying to get their members moving onto bigger and better things outside the Union.
We might want to add the concerted attack on workers positions in the global south through coups, "structural adjustment", debt enforcement and dispute settlement procedures that favor investors over democratically elected governments. See The Divide by Jason Hickel
@Chris Martin: Investors typically rubber-stamp the Board's slate of directors in proxy solicitations. If they don't like it, they sell the stock.
Unions can bring value to workers and more fairness to the workplace.
On the other hand, unions promoting very strict work rules and that are unconcerned about the financial viability of their employers are at risk of bankrupting them, and reducing the workforce they are supposed to protect. Unfortunately, it is too easy for organizations to paint union leaders as parasitic, not symbiotic.
This is true not only in the corporate sphere, but in public unions. Fire and police captains have gamed their union-negotiated pension systems to obtain outrageous lifetime sinecures (I knew a 50 year old ex-fire captain who retired on $200K/year (in 10 year-ago dollars) plus benefits - which seems a little high to me).
Of course, union leaders have a point if extreme executive compensation is part of the employer culture. A CEO who earns more than 400 times the average worker salary really ought not have a lot of bargaining power.
I don't buy into the Conservative rhetoric, but I am disturbed by the apparent synergy between unions and organized crime. Maybe that's talking apples and oranges, but I can't help being a little skeptical of the fundamental goodness of unions, even though I am basically a supporter.
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The way we compute productivity (roughly, the value of product produced per worker hour) can cause unexpected results.
Example: Ten tax preparers working for a CPA firm produce $1,000 an hour in billings, each. The firm buys new software and lays one preparer off. The remaining nine still produce $10,000 an hour in billings. National productivity goes up.
But what happens next is odd. If the laid-off preparer remains unemployed, national productivity at the higher level remains unchanged. If instead she finds a job waiting tables and produces $100 an hour of retail value services, productivity at the national level goes down.
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You left out trade. Very few workers have stories about how a robot took their job. Many workers can tell you where overseas their factory went when it closed, and in many cases they had to travel there to train their replacements in order to get severance.
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I guess my first liveable income job was back in the mid-'70s. I worked for a super company. It was a national company headquartered in Kansas City, MO. Other than dividend income the CEO and Chairman of the Board earned $250,000/yr. The highest paid employee earned $400,000+. These upper management salaries of today have become ridiculous and are the result of avarice and hubris. The right income tax structure would correct a lot of that. Someone said Socialism is where the government takes over corporations. What we have in America are Corporations that have taken over the government.
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I think your column is the premise of many on the left who want more equality and are called socialist. So a clear proof of a political cause of where we are socially - what to do about it? That is the real question.
Continue demonizing the likes of Bernie Sanders and many others or make a fruitful change? Let's see in the next election.
The issue is where is machinery, automation or technological change is replacing a human worker and robots are just one part of the overall problem. What does the replaced worker do for a living? They have to learn another task that will allow them to be employed. However, much automation and robots replace more than one human worker at a time so there is not a one to one correspondence. The core issue is not existing workers, but the workers of the future. A high school graduate should expect to continue their education beyond high school for the jobs of tomorrow, whether trade school, apprenticeships, technical school or college. The decline of unions led to many lost apprenticeships. The jobs of tomorrow are technical in nature and high schools just cannot provide all the education needed for those jobs. Second, someone has to build and maintain those robots and automation.
Unionization is rather like vaccination. If enough of the working population is unionized, you get a sort of herd vaccination and wages tend to be higher even for non-unionized workers. If unionization rates fall below a certain point, even unionized workers will face downward pressure on wages and benefits (partly hidden because people often compare dollar figures over time, where inflation has caused the value of the dollar to decline relative to its old value). As Dr. Krugman says, union busting is an ongoing problem. The Republican Party, which has never been union-friendly, has worked hard against it, and still is working hard against government employee unions, among the last unions whose members are likely to have meaningful benefits. Oh, and does anyone notice all the talk about unfunded pension plans (a real problem), that never seems to suggest that perhaps the plans could be funded, only that pension benefits must be cut?
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I agree that "robots" have always come for our jobs - and they are supposed to come for our jobs. If a "job" can be done faster and cheeper by a machine, we as a society should welcome that. It means that things can be made cheeper and that people can be freed up to do more important things. If a car can be made with much fever hours of labor involved, it should be possible to acquire (purchase) it for what corresponds to much fewer hours of labor (salary). We deal with things in terms of money, but that is just a simple and convenient way of bartering specialized hours of labor for other peoples specialized hours of labor (and basic resources). Our problem comes from having allowed certain peoples hours of labor to be absurdly undervalued and other peoples absurdly overvalued (within a complicated and rigged system of bartering work for work).
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As a boomer who entered the work-world in th mid 70's, as a Unionist of the Building Trades, Unions in general were, at th time, among th most vilified and despised organizations in th country. Just about everyone, even unionists, blamed all of the problems of everyday and every week on Unions and all of their supposed "abuse of power." When Reagan took over in 1981 and directly busted PATCO, the air-traffic controllers, becoming th first US president to ever do so, he received atta-boyz and accolades from EVERYBODY not just business leaders. Some Union leaders tried, failingly, to fight back but th cultural tidal wave was just too powerful and, except for a few victories in th late 90's, were never able to recover.
Older America deserves what we now receive. I'd like to apologize to those under 40 who now have to deal with all of this, but many of us did try to thwart this assault but our numbers and certainly our money power was just too mousy compared to everything else we were up against. Including th NewsMedia!
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The problem is Democrats have been at least as anti-labor at worse and apathetic at best. You just have to look at President Obama spending huge political capital for Obamacare when a better choice would have been to enhance and enforce current labor laws that encourage unionization. Higher wages, employer-sponsored healthcare, and no new government bureaucracy would have sold better and done more for working peoples wages and healthcare than what Obamacare tried to accomplish.
But, from a Democratic president, supermajority democratic house and senate, unions were ignored. In fact, they taxed their healthcare plans to help pay for Obamacare. Don't just blame Republicans, Democrats hands are filthy dirty with corporate money and are just as much there captured poodles.
@Veritas Odit Moras, agree completely. The timing was right becasue the capitalist vultures had just destroyed the economy, and then picked the bones clean leaving nothing to the plebes. When Obama became president he should also have pivoted away from his "these wall street guys are the smartest people I know" plans and been willing to take them all on, or down if needed, FDR style. The new wunder-kid Beto scares me as much as Obama did. Their shared flaw: being callow.
I am surprised that 300 million people in china wanting manufacturing jobs for $1 an hour wasn’t considered a larger factor
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To the dwindling ranks of the unions of workers; before you disappear after lacking success at collective bargaining, fan out as campaign canvassers to help elect leaders that won't be biased in favor of union busting Corporate leaders. You can overwhelm the corrupt leaders supported by campaign money from union busters by electioneering a win.
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Krugman writes many fine pieces. But as a mythbuster, this one is among his best.
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@Big Ten Grad
Actually, this column is a bust. Krugman is applying economics to a problem of basic physics. The entropy of most system increases over time, but there are localized reductions of entropy that last for some time - seconds, minutes, hours, days, weeks, centuries, millenia, millions - even billions of years. An example: place a tray of water in the freezer compartment of your refrigerator. After 20 minutes, the water turns to ice. That is the phyical equivalent to what happens with jobs. Over a transient period of time, the number of jobs to fulfill a function
decreases.
.
Just the same, the global entropy increases. But that does not result in more jobs - just more random structure.
The decline in the value of labor, in the main, is equal to the success of the Republican party's willingness and ability to divide the American worker into two camps. In the case of labor if you do not have a union or a pension or a fair wage and decent working conditions and your life is miserable Republicans have convinced you that it is unfair that union members are getting all the benefits and you are not. Therefore unions are your enemy.
This effort to divide is glaringly obvious when it comes to civil servants who are perennially pointed to by Republicans as living well off of your high taxes. Works every time.
And then there are the Democrats. The champions of labor who gave us job killing NAFTA and but for Trump would have given us a similar job killing trade pact for SE Asia. With friends like Democrats labor doesn't need enemies, robots or Republicans.
Despite the disruptions that robots may cause in the workplace, it is a robot that will lead humans out of the despair they have suffered for centuries. It is a program of the human mind that will set us free.
In the near future, we will program the human mind in the computer based on a "survival" algorithm, which will provide irrefutable proof as to how we trick the mind with our ridiculous beliefs about what is supposed to survive - producing minds programmed de facto for destruction. These minds would see the survival of a particular group of people or a belief as more important than the survival of all. When we understand all this, we will begin the long trek back to reason and sanity.
See RevolutionOfReason.com
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Selling a load of baloney to the commoners has been the most effective tool of the Republicans over the last 40 years. Over and over and over they villainized the unions and pushed "right to work" legislation. Their success in making ordinary workers think up was down, and black was white was breathtaking. We can see the results, right in front of our eyes; the working class has been broken.
Why are people so gullible? I wish I knew.
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You never completely escape poverty in the United States. If you are formerly poor, creditors will hunt you down and harass you in an attempt to collect debts from those you know remaining in poverty. And the harassment triggers memories of the desperation, shame, insecurity, and fear that you experienced when poor. I liken it to PTSD.
Republican policies solve the never-completely-escape problem in very Trumpian fashion. Their policies ensure the poor remain poor - it is that simple. And some creative Republican think-tank will mashup the skills gap theory and the robot theory to explain why the poor and the soon-to-be-poor are solely responsible for their plight.
My background does not include economics and I suggest Prof. Krugman’s background is similarly devoid of AI. Yes, machines have replaced humans for many centuries. At the start of the 20th century worker’s demanding an 8 hour day were replaced by machines, and I suggest it was due to a breakdown in the ‘free market’ where monopolies were dominant as they are again today despite Teddy Roosevelt’s efforts to right the ship.
If the discussion includes overarching models to account for our very complex socioeconomic circumstances might I suggest a model for technological history proposed by Ray Kurzweil. Technological evolution can be characterized as a continuum of “s” curves (resulting in exponential change). The curve starts with rapid changes (e.g. the personal computer), then slows (perhaps as it is absorbed into the system) and followed by another spurt in technological change. The so-called Moore’s law seems to support this for chip capacities.
Using such argument, can we now conclude that we are still absorbing these technological changes, and they will soon be replaced with even greater “machine efficiencies”. Kurzweil suggests a Singularity of man and machine may be upon us by 2045.
And yes, all of this is taking place in renewed distortions in the marketplace. That’s why, in part, Senator Warren’s proposals seem to address an accommodation of these conflicts.
It's the people who own the robots who are the problem. Society needs to tax their income heavily to help out the people their robots put out of work.
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There are thee main drivers of lower wages. Automation is one; the need to ship cheaper goods to compete in global markets is another; and the cost of health care as a percentage of wages is a third.
Technology does drive down wages, when automation replaces the union jobs and leaves people with lower paying service jobs. This has been true for decades. People have less collective power when they can be replaced.
Coal miners have lost jobs to the Bagger 288 which can strip off a mountain top with just 5 workers. Underground tunneling is automated as well. Those former miners definitely experienced a loss of higher wages from the mines.
Global competition also drives wages down. It's not just that we import cheaper goods, but we need to export cheaper goods, or manufacture them at a lower cost closer to the global end markets. Automation produces the goods cheaper in the US; local foreign labor is cheaper in poor countries.
Health care costs have stagnated other wage growth. It can cost a company an additional $5 -$10 per hour to insure a person or family. As a result, companies jettison older (and highly paid) workers to reduce health costs. Those people are replaced by lower paid people; and they themselves often find that new jobs pay a fraction of the old. Wage loss.
All of these can be addressed by policy. But the reality is that global markets will drive prices that don't reflect American lifestyles - including unions and healthcare.
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Regarding your last observation: the costs of employee health care are borne by THE COMPANY/EMPLOYER. For the life of me I cannot understand why employers ARE NOT SCREAMING FOR universal health care. Employee health care costs would be lifted from the employer.
The South has always been a poor region because it never embraced unions and still don't. Just a plain ole dirty word. Over the years this firm stance has hurt the rest of the country's workers.
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I was dumbfounded when Reagan got away with firing all the striking air traffic controllers. They really were struggling with obsolete equipment in a high stress job.
Solidarity is for never in the US.
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All this is finally political, not to mention the dismantlement of the progressive tax structure of the New deal...
Liberal is a better word than progressive. Krugman's blog was called The Conscience of a Liberal. Just call democrats liberals. Embrace the term.
Many union workers voted for Reagan. Sure, strong unions would make workers lives better, but union workers need to vote for unions and leaders who support unions. Any working person not voting democrat is helping to destroy their own well being. We have been talking about this for decades, the workers voting against their own best interests. Is it that they are unintelligent or are they brainwashed? Perhaps they are masochists. I have yet to find anyone who knows why they keep hitting themselves in the face with hammers, but they do.
We certainly lack leaders who care one bit about workers. The leaders we have were elected by working people.
"the fault lies not in our robots, but in our political leaders."
... referring to union-hating conservatives elected by the same people who are most harmed (and exploited).
It sounds like it's in the best interest of the workers to unionize again, but they're not. How come?
One can also add: It's in the best interest of the workers not to vote charlatans like Trump into office, but they have. How come?
The answers may have to do with lack of good leadership at all levels, lack of education, ethnocentrism and nationalism replacing rational thinking...hate media replacing good, informative journalism...
Given, I’ve seen both parties with enough power to change the federal minimum wage, the wage all wages are based on, I would agree with blaming the political parties. But, who blames robots for low wages? I blame them for unemployment, especially in the lower ranks. Imagine the rich man building a robot to cover his expenses for the poor man? Who would’ve thunk it! When I head to my local Wally World and see fifteen self-checkouts where fifteen young girls or uneducated moms used to stand, I blame automation. Or, remember the guy who used to appear (ding,ding) pump your gas and ask if you wanted the oil checked. Then, he washed your windshield.
When you come right down to it, people are pretty good robots, at least when their minds are on their jobs.
The Boeing crash is the darker side of a robotic future. A human pilot fighting with a robot in the cockpit of a plane.
I think people deserve a second look. We should give ourselves a second look.
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Yesterday I was at the Whitney Museum to take in the Andy Warhol Exhibition. It was not possible not to notice all the Whitney personnel standing around throughout the exhibit, at the entrance, both inside and outside dealing with the large, for a Thursday morning, diverse visitors of every age and description. After reading your article Mr. Krugman, I found an advertisement published by the Whitney for those jobs. Part time positions and the list of qualifications ended with “B.A. preferred, but not required.” !
Oh, Paulie K...how hast thou cast off your usual insights for to replace them with short-sight and denial? There is no, repeat no, alternative to the 'robots' taking most of the jobs. What you are really asking about and thinking about is a form of the question 'what happens next right now?' When you write about people being replaced by machines, which, exactly, people are you talking about? There are 7 billion people so far on the planet, where are the 'jobs' for these people and their/our progeny going to come from? As the investment institutions like to say, 'Past performance is not a guarantee of future performance.' While we do need to take historical data into account, we also have to realize that there is a 'velocity curve' in terms of technological change for humans. From arrowheads and the atlatl, to the steam engine to silicon chips. Can the human brain, and by that I mean the average human brain, take in that velocity curve? Just curious. Could the study of economics benefit from a bit of neuroscience? It would be cool if you could talk to Daniel Levitin from McGill about something like this, especially given your acute interest in music!
Paul, u are making the same mistakes as the rest of other economists and that is
1) indeed we cannot stop technological progress and robotics and AI will dominate
2) there will be high paying jobs to design, build and maintain these robots and computer jobs for AI
3) BUT there will be less jobs as robots replace majority of blue collar work and AI white collar work
4) between choosing paying wages ie workers with investing in capital expenditures, where capital is cheap today, wealth creators will choose capex than blood and sweat , ie robots and AI over monthly payroll with tax breaks in capex and payroll taxes provided incentives and disincentives into the mix
5) there will be wrenching structural changes with massive job displacements
I am a globalist and liberal but u guys gave misleading advice to policy makers who in turn ignored the working class creating the populist, nationalist, isolationist and anti globalists that politically divide our country
not trying to stop progress but stating the obvious
we need the right policies to keep pace with technological change that will transform our societies, we have history to learn from
from stone to bronze age, from horse and cart to internal combustion engine and the industrial revolution and then globalisation
each technological progress will whittle away the working class and if that is what the majority desires (as in a democracy) then policy makers have to come out with the right ideas, maybe UBI
*Sigh*...Paul, it's not either/or. It's but/and. Only difference is, while politics and power have already done most the damage they can do, automation, AI, and machine learning have only just begun. In 2005, you said the internet's effect on the economy would be no greater than the fax machine. And now this...
Truck drivers were doing better when Jimmy Hoffa led their union. Corporations are cold and nasty--union leaders need to be the same. Sorry--and yes--this truth hurts.
This robot and ai hype is the next snake oil being peddled by MBA types. Every since Reagan they've been ascendant, and have ruined the social, moral and educational fabric of America. And they're still at it - witness the last two "business executive" presidents for starters. No educated person should fall for the nonsense spouted within business schools.
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"Predictions are hard, especially about the future..."
Once again Paul hits the bullseye! Predictions about the PAST are so much easier.
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“Predictions are hard, especially about the future . . . “ Yup, those are the hardest.
The real problem is that the GOP has convinced white working class voters that people of color are to blame their stagnant wages rather than corporate greed. By demonizing people of color, the GOP distracts white working class people from how hostile the party is to the needs of working people. It helps that the GOP’s political base is in the South where racism is a natural part of life.
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If the loss of jobs in American manufacturing were about robots, then proponents of that stupid idea need to explain why 12% of American GDP comes from manufacturing but it’s 25% of German GDP. Why aren’t the Germans losing all their jobs to robots? Because it sure ain’t about robots.
I have been a dues paying member of the AFL-CIO IAFF Firefighters for over 50 years. 1968 we worked long hours,short money and poor working conditions and equipment. Everyone had a used car,a modest house if you could get a mortgage and a stay home wife with the kids. Today ? Thanks to insane credit everyone has a brand new SUV and all the latest mind numbing electronic distractions the world has known. Two income families are the norm.
Because of this "prosperity" Union members actually think they have a seat at Mar A Lago in some perverse way. They don't realize the Republican party they support actually looks at them as the enemy and hope fervently to have them replace the immigrants they strive to keep out.
Thank you for your intelligent article Professor Krugman. I am happy that you are focusing on topics that are hugely important for the nation and are within your range of expertise.
My question is the following: given what you are describing and analyzing, which is very much in line with Gordon Lafer’s One Percent, Solution, how do you justify your support of center right politicians rather than progressives?
The union issue for example, the decline from 25 to 6 percent in the private sector (and percentagewise a comparable decline in the public sector thanks to statewide GOP onslaught) is real and will be addressed not by the Clintons (both husband and wife) and Obamas of the world but with the Sanderses and Warrens. Same with the minimum wage (not inflation adjusted since Reagan — so Clinton and Obama did not help as I suggested) issue you mention.
So, who do you support in 2020? Answer that please. The sooner the better. If you want to be take. seriously by progressives. Not just as a brilliant Nobel prize winning economist who is searching for the moral compass in a deep closet. Thank you again in advance.
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I have lived in a black neighborhood for 10yrs, (but I am white.)
Nearly every male over 40 is on "disability." One would not notice this condition, but he can explain it. Besides his disability, he prolly has an informal job, messing about in old houses, frinstance. In my dwelling, there is an illegal bar, and on the other side, an unlicensed barber shop. Across the hall, there are occasional hoe parties featuring perhaps two females and half a dozen males. So it goes, all over town. Ppl collect benefits, then augment with hustles and rackets. City hall has no incentive to bust up the party because the system promotes order. If a gent gets involved with the cops, like sitting around smoking on the porch of an abandoned house,(true example) he gets hauled in and fined, maybe $250. That $250 comes out of his next benefit check. You might say they are paid to behave through the ever-present benefit checks. Up the street is a "bumfeed," where a guy can pick up a lot of groceries eat some, and trade the rest for more interesting stuff, say money or liquor. Not everyone lives this way. Some have jobs at city hall or driving buses. Those with jobs buy contraband from the others. And so it goes, In saecula saeculorum.
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Companies are being run by bean counters who consider their employees as liabilities instead their most important assets.
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Articles on automation always talk about male jobs lost. They never mention the female telephone operators jobs lost. Or the ability of children to support their families in the textile industry.
Key sentence..."Workers declining bargaining power"
That's it, don't need to say more.
First, I've been a Democrat since 1970 when I first voted, and remain so. The current "progressive" Democrats on the presidential clown car are saying everything that will cause us to lose the Presidency - again. This may seem tangential to what Krugman is saying, but it is not. We just can't seem to say what most Americans want to hear, and I'm not talking just about the angry white voters who will vote for Trump or his GOP clone forever. I'm talking about all of us in the center, whether center-right or center-left. I'm happy that the 20-somethings and Millennials are finally paying attention, but the goal here is to win, and it won't be one of the progressive candidates currently riding the clown car. Democrats fearing and articulating that fear to the public that robotics will destroy our jobs, or what's left of them is only one of those subjects that will be another chink in the armor of Democrats with will cause us to lose.
The U.S. has only 1 governing principle: free contract.
In such a system bargaining power is everything. What 1 earns is a function of it.
The GOP has 1 prime directive: the ever greater concentration of wealth&power on behalf of the wealthy&powerful.
They do that by undermining other groups agency of bargaining power (unions=workers, affordable higher ed=middle class, ACORN=poorest) and enhancing the agency of the rich (Ltd liablity corp, 80% owned by 1% see Citizens United).
Before 1972 Wages grew with GNP. Since 72 wages have been flat. That’s an overwhelming inflection point. What happened in 1972? How did unions lose power?
Univ of Michigan Economist Robert Axelrod’s seminal book “The Evolution of Cooperation” says where there are 2 parties (egos) the best strategy is Cooperation. The 2nd best strategy? “Tit-for-Tat” - I punch u in the nose, you punch me back. When we both get tired of sore noses we evolve to cooperation. That means cooperation occurs only where THERE’S A CREDIBLE THREAT OF VOILENCE for both parties.
How did unions lose power after 72? What happened?
Could it be the RICO statutes?
Unions used to have ties to the mob. If an exec threatened to move a factory he might get a brick thrown thru his living room window. After 1972 execs were free to off-shore factories.
Japan has evolved past this w/ tenure+company unions which balances collectivism for owners with that of workers & forces both execs & workers to cooperate as they sink or swim together.
Paul Krugman and David Brooks, the old guard now, seem to be trying to learn and change... maybe in order to keep their jobs. If that's the case, then maybe they have something to say to the working class, afterall.
The people failures (inequities, lack of empowerment, lack of suitability, lack of control, lack of security, etc. - I could go on) are not the fault of technology. I am confident of this.
Sure one can draw a technical line to connect a "dot" of technological introduction to a "dot" of social discomfort. And that connection may have validity in a pure technical sense. But it would be NOT the fault of the technological introduction.
By an analogy let me try to justify this view: let's say we introduced x-rays to diagnostic medicine; the incidence of cancer rises; one technically accurately connects the dots between x-rays and these cancers.
So x-rays are at fault right? Of course technically they may cause the cancers but even so are they the root cause?
NO! The root causes were really the lack of rigor in introduction, willful lack of knowledge, lack of concern for workers and patients, lack of controls and enforcement of such, and/or greed.
X-rays - innately a plus to medical effectiveness/efficiency and thus to lives of people - was cast into a villain's role because of defects in our social institutions/systems/priorities.
Fact of the matter: the pain we had, have, and will suffer because of technology could and should be attributed to "political" forces.
Technology ball growing and rolling faster. A fact of life. The GOP has no notion nor inclination to do the hard social work necessary to prepare/protect us. If you do not see that you are delusional.
The greedy hoarding oligarchs preach STEM curricula for the Have-Nots while reserving the spoils of the Ivy League "meritocracy" for themselves. Thanks to the FBI's exposure of massive fraud in two-tiered higher education, one more of their sorry excuses has deservedly bitten the dust.
And how about those faulty computer systems flying airplanes while many pilots are so poorly paid that they have to go on food stamps? Robotics are only as good as the humans who invent them. Once again we've been reminded that capitalism thrives on profit over human safety.
Technology took another public relations hit with news this week that a robotic doctor (actually a computer screen on wheels) had entered the ICU room of a patient to inform him that his condition was terminal. It still took human nurses to comfort the family of the patient when he died.
Economists Viktor Mayer-Schönberg and Thomas Ramge suggest that we reinvent and redefine capital as it pertains to Big Data as well as money. Since wages are not keeping pace with the cost of living, how about we get compensated for our data, which the tech industry sucks up from each and every one of us, each and every day, without our permission and too often without our knowledge? Elizabeth Warren thinks we should break up Google and Amazon and Facebook. They, and Netflix and Twitter and Apple have hoarded enormous profits while employing relatively few people.
Tax the thieves at 90% and provide a guaranteed income to everybody.
Why are so many Americans thick.
There is no "demand" for Americans when there are so many illegal aliens in "supply" that will work at very low wages instead of Americans who would get a higher wage.
Supply and demand has created the 18 years of stagnant wages for Americans.
Thank the party that likes low wages, and thank the other party that thinks illegal aliens are okay.
The United States has become the strangest county in the world.
Putting business owners in jail for using illegal aliens will deal with the problems of stagnant wages for Americans.
Business owners will stop using illegal aliens and will have to revert back to using Americans at a higher wage.
There is no reason to arrest illegal aliens. Without work in the US the tens of millions of illegal aliens will leave the country. The problems is not illegal aliens but the business owners that use illegal aliens.
In one simple law of the United States there will be tens of millions of new jobs for American.
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The main reason for the decline of union representation in American industry is the rise of the Sunbelt. That region of the country has for well over a century relied on in anti-labor, low-wage political structure to purloin entire industries from more innovative parts of the country. This is a direct result, of course, of the country's federal organization, and is therefore a structural feature that will be very hard to correct.
@KC: These manufacturers started moving out of the US after Reagan came into office.
I recently shared a story with my students about a pizza delivery company in Silicon Valley. They started out a few years ago with a new idea.
The pizzas were prepared in a warehouse environment and partially cooked. When an order arrived, the pizza was put in an oven in the delivery truck and finished cooking there. So, when it was delivered it had just come out of the oven.
Last year, a follow up story explained that the human preparers had been replaced with machines. Sauce, cheese and toppings were added by robots.
The company, however, sent their employees back to school to learn the tech skills necessary to program, manage and maintain the technology.
This should be the model for industry, replace human involvement with robots, computers and such, but train people to move up to the higher level positions created.
Paul argues that the decline in the US of labor unions and their bargaining power is primarily responsible for lower wage gains in recent decades. He contrasts that with Canada and Nordic countries in Europe, where union participation remained strong.
However the wage data does not support his thesis. Data from https://tradingeconomics.com/country/wages (country= Canada, Sweden etc.) reveals that wage rises over the last ten years are comparable : US 27%, Canada 29%, Germany 26% and Sweden 27%. I suspect other factors than labor union participation is the cause, most likely globalization and trade competition.
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So it is politics that is responsible for wage growth decline. Yet, Prof.Krugman alludes to the positive politics of other countries towards labor; nonetheless these countries also seem to be impacted by the same issue of lower upward mobility and higher unemployment. It seems to me that overall, the value of human labor has declined for workers in declining marginalized businesses, while at the same time, the majority of well paying jobs have increased in those businesses that have been highly successful. It seems that these businesses, more and more require workers who fall to the left of the bell curve and are able to engage in the education necessary to fullfill those positions.
To reiterate Paul Krugman's concluding point:
"And progressives, above all, shouldn’t fall for this facile fatalism. American workers can and should be getting a much better deal than they are. And to the extent that they aren’t, the fault lies not in our robots, but in our political leaders."
There are many tangential issues, but what are we going to do about our political leadership? Not enough, if we allow ourselves to fall for distractions.
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Mr. Krugman is arguing that the problem is declining wages for those employed which he attributes to conservative politics and the decline of Union bargaining power. This is probably an accurate assessment of the reason for decline in real wages but I believe that what most fear about robots is the loss of the number of jobs per se not only compensation for the remaining jobs. He argues that the mechanization of the long shore industry caused much dislocation but sees that as temporary. Of course all dislocation is temporary. It affects the generations most immediately caught in the process. Its is temporary, however, because the children of those dislocated move on to other kinds of work rather than stagnating in jobs that their fathers did as Bruce Springsteen sings in the River " I was raised to do what my daddy done". However, while the children have a chance the older generation doesn't have the education or skill set to make those kinds of changes and thus suffer the pain of a lost generation.
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Missing from the discussion of robots, unions and labor displacement is the most dangerous, pernicious alternative to human labor. Bots, those faceless or computer generated icon offering chat sessions are one example we all see as we navigate online. Those bots are powered by artificial intelligence (AI) and work ceaselessly and without pay or benefits handling more interactions in an hour than the disappearing and the displaced worker can in a week.
For businesses and corporations, this is a no-brainer as they plan for the future (next quarter and the fiscal years to follow). The lower-hanging the fruit (retail workers, banking assistants, tier one technical support advisors), the more likely the elimination of their jobs. We are left with the prospect of tens of millions of workers with no skills and few prospects to survive economically.
For those who despise government "handouts," the coming guaranteed minimum living allowance (pay for nothing coupled with meaningless jobs and useless training) will be the ultimate Nightmare on Main Street.
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But what as American workers can we do when politicians are tethered to the moneyed people and now wth Citizens United to moneyed companies? The major campaign issue for 2020 should be campaign finance reform, it isn't even on most politicians radar. So we have the wolves guarding the hen house. What can we do to force their hand.
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I started with a GED and nothing else. I am blessed with the right to start my own business and did so. Now 48 years later I have returned to school, not just to learn but teach as well.
Learning as well as teaching is what makes a workforce viable with a long history of apprenticeship programs, both union and open shop.
Professiona liecnse requirments mandate continuing education as technology changes, remember Moore's law. No longer can a worker expect the same job task their entire working lives.
Knowledge is the key to better wages and when we pay our teachers the same as the CEO's who for the most part vastly overcompensated for their contributions to society the resulting surge in education will once again overcome the technological challenge we face.
If we could put humans on other planets, we should be able to figure this one out. It is rocket science, or whatever science you choose. Whale oil lamps were high tech not too long ago as was the rotary dial phone. Evolution has given us solutions if we pay attention.
1
Wouldn't more unions force firms to hire less workers/demand less hours because of the increase in costs? If not can someone explain this to me?
Over the last 40 years our economy has transferred wealth to the upper 1-3%. This in undeniable.
In a similar manner executives salaries and bonuses have increased to a far greater extent that average workers. Look at the ratio of executive compensation to the average let’s say 75% of workers at a company. I looked but couldn’t find the study I am referencing. But this is also undeniable.
The people in charge are giving themselves a greater share of he pie. This includes the boards who set the tone for salary/bonus.
Costs don’t have to increase if more of the pie was shared. But given the decline of unions that bargaining power has decreased.
The belief is that you need to pay large amounts to executives to retain that talent. In some cases yes, in most I believe no. Very few executives are game changers. They just are lucky to be in the right spot at right time and talk a good game.
Remember the banking executives in charge during the financial crisis that got stay bonuses? The argument was their experience was needed to see their way through the crisis. I would suggest otherwise given they were in charge pre-crisis.
The reality is that the people in charge have created a culture of higher compensation regardless of success or failure. They are unable to break out of that model for fear of not recruiting and retaining perceived talent.
So it comes to how much a company values their employees. Some do, most don’t if you look at their compensation models.
The slow erosion of jobs may have been aided by the creation and expansion of easy credit: like credit cards.
As wages stagnated the new lines of credit were a wonder drug for millions, many of who failed to fully understand the pitfalls of borrowing money.
How many workers who's woes stemmed from lagging wages at work borrowed to cover this increasing wage gap? Millions who didn't borrow may have been households where the wife exchanged her apron for a desk and a card punch job. And when it became clearer that more and more people weren't keeping up with the Jones's... how many times did we hear it was those people's fault for "overspending" and "living beyond their means"?
There seemed like a tipping point occurred during this period Paul talks about where capital investments became more about money making money off money than it previously had about money investing into labor to produce consumer goods - the type of investments that completed the virtuous cycle we always learned about in school.
2
The productivity curve does appear to be leveling out. And that is a puzzle. Maybe higher skilled workers, when displaced by technology, find lower skilled jobs where they can't be as productive? Example: a former machinist, displaced by a CNG machine, now drives a forklift unloading semis?
2
@Charles Tiege - yesterday stopped into a corner store for a lunch time sub sandwich, it was a brand name sub store but it was also a stored that was a post office, gas stations, mini mart, and liquor store.
Two girls were the entire staff. And while one was taking care of several customer's postal needs (and we all know how long each of those "transactions" can take) the other girl was trying to make subs. End result was that two long waiting lines at the registers.
Two of the sub customers eventually got tired of waiting and left. Others just endured standing in line for 15-20 minutes.
Question is, would a good store owner (if they were on the premises) have their light bulb go on and suddenly realize they needed to hire a third person?
The number of unionized workers also is correlated to the number of people still in these roles and to the number of factories still employing people in this country. With containerization and better infrastructure in China and other countries, distant factories with the same or better ttechnology out compete US companies.Countries such as China aid this process of deindustrializing the US by stealing our technology and producing products with this stolen technoloolgy. Hard for US manufacturers to pay wages which will force thenm to sell at a loss.
Paul I agree the loss of our unions has been a hugely disruptive contributor to the failing of our Middle Class but I would also suggest that globalization has contributed as much or more to the problem as those “ robots” in whatever form, along with everything else are manufactured at the cheapest possible point. We’re all of the advanced technologies along with the rest of our goods still made in America we would not be facing the problems we are today. Our problems aren’t robots our problems are greed on the part of the manufacturers and their shareholders and a political system that has allowed this. It’s globalization to benefit the one percent in America and their greed that has also allowed the rise of nationalism in many of its sometimes ugly forms and the only thing that’s going to correct the rise of nationalism and ultimately fascism is putting greed and the globalization genie back in the bottle, a tall order but not doing so will be so much worse.
3
Wasn't it robots with design flaws that crashed two Boeing 737 Max airplanes lately? At least they're the main suspects.
Apparently robots are remarkably good at repetitive tasks but equally bad at adapting to anything that happens that wasn't anticipated by their owners. Supervising robots is a job for the future.
Still I agree with Mr. Krugman's main point, that lack of collective bargaining power is a major force working against rank and file workers. We need an effective countervailing force to the greed and control wielded by corporate managers, and unions are it.
The right wing has dominated the agenda by demonizing any effort of ordinary people to work together as communism or socialism. It's OK for them to organize at Davos and CPAC, but if we do it, we're clearly a bunch of commies.
2
another way to look at it: prior to 1970, what percentage of the American workforce was engaged in finance (exclusive of the clerks in retail branch banking)? how many MBAs were being loosed upon an unsuspecting world? our economy has transformed from an industrial economy not to a service economy, as was once widely predicted, but to a financial economy, with many people unproductively pushing around money and earning a lot, and fewer and fewer creating actual value, and making less and less for their trouble. a good job may once have been a stevedore on the Brooklyn docks, but now it is figuring out how to artifically boost stock value by laying people off.
1
"the fault lies not in our robots, but in our political leaders."
and in their assumption, largely unquestioned, that the fruits of enterprise belong to owners rather than labor or society at large. That's why it's called capitalism. The way from here to there (a regulated market economy) is through redefining the corporation universally in federal law., limiting its ability to participate directly in politics, and mandating a more fair distribution of "the cookies."
3
My understanding is that labor (usually unionized) is integrated into management at companies in Germany.
Even Ford realized-- despite his flaws-- that workers needed a living wage to buy his products.
3
I completely agree that workers have suffered from a decline in unionization, and support expanded opportunities for collective bargaining. Having said that, I think that Dr. Krugman’s argument would be strengthened if it addressed how capital investments figure into workers salaries. It might be argued by some (no names!) that robotization requires capital, raising the question: “Under what conditions should the return on capital investment be shared with the (remaining) workers?” This seems to be an important issue to consider when asking why workers salaries don’t keep up with production. Perhaps answering this question requires consideration of the capital that supports mechanization, in particular, the role played by labor in generating it.
1
Workers pay their taxes, corporations dodge taxes, so it is obvious that the political leaders should strengthen workers rights and unions.
1
Paul, you are on the mark.
In the late 70's I worked for an industrial robot manufacturer. I helped design robot installations in manufacturing companies. In every case I knew of, adding the robots significantly increased employment at the facilities.
As an example when the spot welding robots got added to a Chrysler assembly plant, the output of the factory went from 30 cars per hour to over 50 cars per hour. This meant that they had to hire more people in other areas of the plant, such as in upholstery, or interior trim, or paint shop, or inspection etc.
The unions were initially afraid of the robots taking away jobs, but the historical evidence showed the opposite.
It is the old story of the Luddites. They thought automation would eliminate their jobs. Instead it just led to increased output of textiles that benefited everyone including the textile workers.
1
Just look at the number of billionaires, most of whom have never produced anything in their lives. They take huge amounts of money out of the production system and instead speculate with it in order to increase their wealth. People like Andrew Carnegie may have exploited millions, but they actually produced and created wealth while doing so...
1
An article explaining how 500,000 people in just two fields were put out of work by robots/technological innovation might not be the most convincing venue to suggest it doesn’t matter. Not to mention the white collars jobs that have been lost to automation since the 80s.
Sure, other things matter too, like policy. We could choose to greatly mitigate the impact of job loss, but we don’t.
I think what’s different now is that everyone know ‘retraining’ is a cruel joke. There’s nothing to retrain for. Once your industry goes away, it’s service jobs or nothing.
1
Businesses have learned to "optimize" employee compensation. Even in tech, where salaries are considerably higher, those at the top, such as Zuckerberg or Bezos, have still managed to keep the lion's share of profit for themselves.
Actually whether it's automation or politics is effectively irrelevant. Either way labor is left with nothing crumbs falling of the table. The end of labors influence and ability to improve it's position can be explained in 2 words "Labor Arbitration". Whether it is take the pay cut or we ship the jobs to Mexico (We took the pay cut they shipped the jobs to Mexico anyway) or being forced to train your H1B replacement. (Which I have also done). Labor has no seat at the table no influence anymore with BOTH political parties abandoning them. For example Free trade agreements! How exactly is an American worker with the cost of living here supposed to be competitive with the wages of workers in Costa Rica, or Mexico for example. Private sector Unions are moribund at best which both parties knew would happen has a result. For those who point that these treaties have codicils covering labor and unions. One simple question, have these codicils EVER been enforced??? And at this point the results are no more reversible then the law of gravity. Private are dead or soon will be. And public unions? well they'll follow soon enough. Probably about the time all those pensions cities and states have promised that can't be paid come due. Organized labor has a political force or even has much of an influence is irrevocably dead. With a nod and a wink to the big donors by both parties.
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Krugman dismisses techological advancement as a contributor to wage stagnation, inequality, and unemployment; he instead lays the blame on the decline in worker bargaining power, on the weaking of unions.
This is like blaming the lack of an umbrella for getting you wet, rather than the rain that fell on you. The decline of collective bargaining power is inextricably linked, as such periods always have been under capitalism, with advancement in labor productivity through technology. This is because, unsurprisingly, technological advancement cheapens the social value of labor by making it cheaper and faster to make things. That the political class creates an environment hostile to unionization during periods of technological advancement is a function of this very phenomenon. Why would the political class be inclined to break up unions and depress the minimum wage unless those things were getting in the way maximal accumulation through the most efficient use of new technologies?
Krugman is right: technology has been a disruptive force in capitalism since its inception in roughly the 17th century. But each cyclical period of advancement has been accompanied by increased inequality, wage stagnation, and unemployment (as well as the weakening of labor's bargaining power). Krugman is wrong to suggest that technological changes are not to "blame." You don't need to read Marx to see why (although it helps).
Unimpressed with Krugman today.
So are you arguing that everything was just peachy-keen during the Middle Ages, and that before the Industrial Revolution, everybody was equal to everybody else? That doesn't fit with the accounts I have read.
Keeping in mind your determination that political leraders are ultimately responsible, then those leaders should know that as they fight and reduce union and worker strength, they lose valuable tax revenue for the treasury as workers wages are held down.
@PATRICK
Workers pay their taxes, corporations dodge taxes, so it is obvious that the political leaders should strengthen workers rights and unions.
but the economy is supposed to be booming! a major difference is that wage workers mostly can't get out of pay taxes, while the richest among us have many ways to avoid paying; labor works pretty much at the pleasure of management, meaning they are tools to inflate share value, while management has enforceable contracts with golden parachutes. something is rotten, and has often been pointed out, it isn't in Denmark.
This opinion piece does hit on one fact - robots haven't yet advanced sufficiently to permit mass displacement of workers across a broad range of sectors. If you go to the International Federation of Robotics site (ifr.org), stats are available showing that industrial robotics are mostly concentrated in automobile and electronics. Metal and machinery, and chemicals and plastics are in distant third and fourth places. And, the largest market is Asia, with the highest "densities" (units installed per 10,000 employees) being in Korea and Singapore; and then its Germany and Japan. So the US isn't exactly at the forefront of trends here.
Very good to keep this in mind, about unions, and workers sharing the benefits of increased productivity. Those are vital concerns as we move into the technological future. And it's valid to point out that technology has been changing the nature of work for centuries. The change itself is nothing new. But the change is still real, and it's a big part of what unions and politicians concerned with the lives of the 99% have to be thinking about.
I disagree with the facile dismissal to concern with technology as "diversionary". Maybe some of it is "diversionary", if it comes from someone trying to divert the conversation for fair compensation. But it is often mentioned (by me, for instance) as an alternative to blaming immigrants and globalization for all the problems of American workers. In that context, it seems valid to point out the changing nature of work due to technology.
When we went from an industrial economy to a service economy, we allowed our systemic bias against physical work play out its magic. You can trace the bias against physical work back to Jamestown. There is evidence Jamestown suffered because most of them felt above the physical work needed to keep it going. In our lifetime, unions had stood up for physical labor, found a foothold, and successfully negotiated comfortable living wage salaries. When we went to a service economy we allowed the old bias against physical work to dominate and down went the pay scale. If we recognized work as work which we say as a society we value, we would have given service workers a living wage allowing manufacturing workers to successfully migrate to service work. On top of this, a layer of racism further allowed us to conflate several ideas to make service work beneath us in our culture. It would be a different world had we done this. Ironically, conservatives who verbally hype self reliance and work as essential to a good life, do everything to deny honest people who do honest physical work a living wage.
2
Wow. This is eye-opening. I don't read Paul Krugman often enough. I am retired from a career in information technology and my impression has always been the the unions are why American industry was slow to automate. Perhaps it was management and politics all along that allowed the USA to fall behind in productivity.
I had become aware that top management is now overpaid compared to workers but I did not know workers were absorbing the slack.
2
Let's face it, our country is run by elites for elites. Elites make the rules, bust the unions, create conditions that favor themselves above others. Krugman describes just one aspect of how elites manage to control the income potential of the middle and working classes. The tax laws are another great example of how the elites skew the system in their favor, but that's another opinion piece in and of itself.
I think Mr. Krugman's analysis is correct for the time we're living in. Union busting is a precursor to what the working class will be facing decades from now, and with the advancement of technology, in particular, A.I., we are rapidly advancing to an entire 'useless class' as Yuval Noah Harari describes in his book "21 Lessons for the 21st Century". Younger people better keep their eye on society's trajectory of how A.I. will shape and influence our government, education, and productivity lest they find themselves part of that 'useless class', and unions, most certainly, will be a thing of the past once and for all.
I completely agree with Paul K. on this topic.
Back in 1980, while still in school, I earned $15.72 an hour with full benefits as a union supermarket clerk. That same nonunion job today pays $9.00 to $12.00 per hour in my region with no benefits what so ever. Does anybody out there remember company sponsored holiday parties or family outings?
In my memory, the company and union worked as a team with the ultimate goal being to support the strength of the company through well compensated labor. A win/win!
The working conditions bargained for by the unions gave people the dignity that translated to the humanity and a sense of well being that doesn't exist in the workplace today.
Most of the middle class people I see today that have comfortable retirements were either unionized workers, successful business owners or other well paid professionals.
Sadly, we live in a workforce climate today, where employers are able to exploit employees. This condition contributes to a loss of dignity as well as productivity.
How do we get our groove back?
7
As AI begins to challenge the necessity of white collar professions we may see a shift in how unions are perceived.
Accountants, lawyers, programmers, doctors, auditors, retailers, procurers, supply chain managers - all perform (or employ people to perform) tasks that are being targeted for elimination through robotic process automation (RPA). RPA scripts automate various tasks like filling out online forms, checking online documents, examining X-rays, completing online orders, and even the construction of software that have been performed by people over the last couple decades.
These software robots are expected to be just as disruptive to professional and back office jobs as the introduction of physical robots into manufacturing plants was for blue collar jobs.
It would be naive to assume that automation only impacts workers in the manufacturing and transportation sectors.
1
Great perspective, Paul! Every economist should stand atop a strip-mined mountain and scream your message far and wide!
And let's ban the R word as part of this discussion. As you explain, it's not about new developments in robotics. It's about new developments in politics that deprive workers of fair wages and stable working conditions.
1
Paul, I think you are missing one important factor: Businesses have built their models around using the minimum amount of minimally skilled labor since Ray Kroc set the example at his first McDonalds that obviated the need for skilled short order cooks and counter wait staff in favor of a simplified and codified product of burgers. The same can be said for Walmart where small stores with sales staffs were displaced by huge stores with very few staff relative to the sales volume. As these jobs became many people’s only option the power balance was tipped to the employers who rightly minimize their labor costs.
Things will improve when conservatives realize because wages are so low the Gov’t is subsiding these large businesses through SNAP, Medicaid and housing assistance.
2
We are making people faster than we're making jobs, and automation just adds to the drip, drip, drip of job loss, even if there are other factors. Labor has become a global commodity and unions can't stem the flow of jobs to low-wage East Asia.
2
@ David that’s why we need government policy that discourages the “make it over there / sell it over here” business model. Tariffs seem like a good way to do this.
It seems that John Kenneth Galbraith wrote and talked about a concept he labeled 'countervailing power'; and that seems to be what you are writing about Professor Krugman.
For years, Republicans and many Democrats bought into the notion that markets will fairly lift all boats and bashed the notion of needing a countervailing force to employers. Now (hopefully not too late to do anything to correct the inequality strewn by an unfair market), we see how unfair and unequal an unregulated or biased market can be.
Elizabeth Warren is correct when she says an unregulated market is thievery.
2
I have noticed on a few employment applications that employers are requesting an explanation for any gaps in employment. This seems to be a recent thing, as I don’t recall seeing this prior to the Great Recession. I feel like this question is an attempt by employers to conspire against workers. An unexplained gap in employment might suggest that the applicant wasn’t loyal to a previous employer or wasn’t willing to accept the wage they were offered. I have also noticed that some employers expect applicants to agree to a certain salary prior to the interview. This is prevalent in the IT industry and happened to me. If the applicant doesn’t agree to a lower salary than they were earning before, then the interview won’t be granted. In my view, this is a way for employers to strip workers of bargaining power and to keep wages low.
5
the gap could as well be an inquiry into whether or not you had any possibly costly medical issues or served time in the hoosegow... without coming right out and asking, which may be illegal in some places.
But the solution is not to bring back unions. That ship has sailed, for various reasons. The answer is to develop and implement new economic theories that effectively blend the opportunities of capitalism with the justice of socialism. The current and rising hyperbole in Capitalism vs Socialism underscores this.
1
In what sense has that ship sailed? Countries with good safety nets also tend to have strong unions. One does not replace the other: they are culturally wed and probably inseperable.
1
@ CPK I really dislike it when people say things like “this ship has sailed” because it is intellectually lazy. This ship has not sailed. Please provide a reason why we can’t bring back strong unions?
Point taken. I didn’t mean to dismiss some role for organized labor, which I certainly did with my own hyperbole. Krugman points to a demise in bargaining power, the decline of unions and the need for political change. I agree.
I've been saying, for years, that the average worker was suffering from the de-unionization of the work force. What political party is most responsible for "union-busting"? The Republicans (although the abandonment of union support by the Democrats didn't help) beginning with Ronald Reagan and the Air-Traffic Controllers. "Right to Work" laws are aimed squarely at the remaining unions and the new, conservative Supreme Court will do its part to further degrade the power (such as it is) of the Teacher's unions in particular. "Wage slaves" has taken on a new meaning in the post-Reagan era.
1
The Midwest meat packing industry has eliminated unions and now relies on immigrant labor, documented and otherwise. Those jobs were once respected because they offered decent wages, now they are not. Meat has not gotten appreciably cheaper but the people working in those plants now are virtually untouchables in the new employment caste system.
3
Another opinion about Unions....As a liberal Democrat, I was an executive in an organization employing 350 people. We paid a great deal of attention to wages, benefits and working conditions in order to be fair to our employees - and to prevent the need for Union organization.
There is a history of negatives attached to Unions - things like strikes that disrupt the lives of a lot of people, financial corruption in big Union leadership, and irresponsible demands regarding pensions in some places, and instances of violence.
Maybe if there was employee representation on corporate boards and in management there wouldn't be a need for union organization.
Employee representation on boards does not replace unionization. In fact, the latter may be a prerequisite to the former.
But Paul, your words lead to the conclusion that while political forces have successfully lowered wages for workers, technological forces (the robots) have even more successfully reduced the need for workers.
Even if wages rose greatly, there would still be many fewer workers than in years past, with the effect that the damaging macro effects across the country would persist.
My father was a labor negotiator for General Motors after getting his degree in labor relations following WWII. I remember one day, coming home from high school the same time as my father, who had spent the entire night negotiating with the union. I asked him why they would do something like that all-nighter, it seemed wrong to me, seeing how tired he was. He replied that unions fulfilled a necessary function in society and the workplace.
He told me that the company had most of the power as they paid the wages and had control over the money. Individual workers could not compete with that power, they had to band together in unions to add the small power each individual worker had into something that came close to matching the company’s power. And when they did it right, we all benefit. Later in life, I became Vice President of my local teachers union, and I believe he would have been proud of me for standing up for my co-workers and enforcing the contract, even though he had been solidly management in his career.
We lost a lot during the Reagan (and subsequent) years with the decline of the unions, and the vast majority of Americans are poorer due to that decline. We need to reestablish more of a parity between workers and management if we really wish to see this country become great again.
7
Reagan broke the air traffic controllers’ union. That started the deluge that swept away the unions.
Why did companies stop paying wages and benefits that would support a working family? Because they discovered they could pay less and be congratulated by their stockholders.
2
If you cannot clearly see the difference between assembly line workers and teachers, there’s no explaining it to you now. While Trade Guilds might be be more appropriate for a skill like teaching that requires a substantial investment (4 or more years; $100-250k), there’s absolutely no justification for the organized conspiracy that is the auto workers unions. How much should you be able to make when you haven’t invested the six figures I noted for teachers? When you’re bolting seats in minivans and putting wheels on F-150s, everything you need to know is taught to you while you’re “on the clock.” That is not to mention that the job you feel entitled to make $24 (with health insurance AND vacations AND overtime AND pensions) doing only nets workers doing the same south of the border $6.
Paul, please reread your column of March 27, 2006 which states in part:
"immigration reduces the wages of domestic workers who compete with immigrants. That’s just supply and demand: we’re talking about large increases in the number of low-skill workers relative to other inputs into production, so it’s inevitable that this means a fall in wages"
This is anathema to progressives and contrary to what is normally espoused by the NY Times (which I read every day for "relatively" unbiased reporting).
I am not Nobel-prize-in-Economics material by any means, but the aforementioned 2006 column supports my own on-the-ground observations from immersion in the American working environment.
It appears to me the large increase in the low-skill working population due to immigration has destroyed the bargaining power of the domestic low-skill American worker.
As you so clearly stated in the 2006 column, this is just supply and demand economics. It would be interesting to parse out wage growth of the skilled from that of the low-skill and use that to draw conclusions on what is holding back overall wage growth.
This may be one of the progressive movements dirty little secrets, but, if we want to rectify the problem, let light shine on truth. I encourage everyone to read Paul's 2006 column.
1
IT pros and teachers and any number of other worker pools are not competing with fruit pickers and meat packers.
What is not mentioned is that unions also contributed to their own demise. The strike is a very crude tool that often disrupts the lives of others (e.g. transit riders). Unions came across as narrowly protectionist, racist, and anti-environment. Early in the 20th century Lenin wrote that if unions focus on "narrow economism" rather than social transformation, they will lose the battle for power. But too often they did just that--focus on narrow economism and thus weakened their grip on political power. Lenin "What is to be Done"
3
Good article, Paul. But an easier way to make your point would have been to simply point out, that over the course of the previous presidency and the current one, unemployment has gone down as robotification (wow, spelchek says that's actually a real word) has gone up.
This is 100% right on the money.
It really began when blue-collar workers, by the millions, chose dog-whistle racism over solidarity and elected Ronald Reagan in 1980. He was a pleasant-sounding man who in reality represented only the interests of the wealthiest individuals and largest corporations, and who eviscerated unions and bargaining power for workers.
The Republicans have been doing more of the same ever since, with the complicity of the workers themselves. We saw it all again in the election of Trump, a billionaire whose history (and now policies) prove he couldn’t care less about working people.
2
There's a paradox in this. With robots, cost of production per unit is lower, the final product in a "competitive market" should be lower, ergo: the purchasing power of the salaries should improve, making the real salaries higher not lower.
Then? Are we in front of billionaires magician that get the rabbit out of the hat, and pocket all the savings?
Oh! I forgot that we live not in "monopoly competition, but in modern oligopolies.
1
We know that high costs drive businesses and jobs offshore. Not all unionized businesses are high cost. Maybe we need to know how much of the union participation decrease is the result of businesses or industries that have gone offshore. We do know robotics takes union and non-union jobs. We also know that the market sets wage rates. There is no direct connection between robots and wage rates.
Voters who support universal healthcare and low cost tuition (student debt is canceling out the benefits of education!) must take the next step to develop a real model of the US political economy and recognize future markets. Or what we have seen in Detroit, in many parts of rural America (globally, England, China) will be the harbinger of a economic implosion, similar to Japan's long miasma.
Two opportunities overlooked by current candidates are the global market for green energy and the global market for food safety and security. Global/domestic urbanization is rapidly increasing, but urban efficiencies make big demands on energy and food. 31 cities are megacities (10M+), 512 have 1M+.
Energy efficiency will command premium wages, based on demand; innovation will lead to higher--not lower--wages! Shanghai cannot afford its size without sunshine, wind. Green infrastructure will be deployed for underdeveloped Africa/Asia; these regions will not run power lines. Major opportunities, small (individual solar panels for cell phones, etc.) and large (giant wind farms), are where US innovation could take leadership.
With urbanization, food security becomes important. The US heartland could become the global breadbasket, combining harvests and logistics, keeping costs down while increasing wages. The work force for food security is on our borders! The Republican-led xenophobia has blinded the nation to ways to leverage this available/able workforce!
Think ahead!
2
What is also at fault is the corporate value system that believes that the workers should work to increase profits for its shareholders and workers are not classified as shareholders. In today’s world, the reward for hard work is more work. Who benefited from the Trump tax reduction for corporations? The corporations and shareholders, not the employees. You are right, Paul, the reality is the workers have no power - they are just pawns to the bottom line. They can just be discarded when profits need to increase. So my question is: how do workers get back their power? By striking?
2
I remember when unions fought against subcontracting and against automation. Those fights were huge and largely resulted in the unions being demonized as against progress. But they did, at first, save many good paying jobs. Then came globalization. It has always been legal for a company to shut down in the face of unionization. Now they just close one factory and open another overseas. Just look at what the car companies are doing in Mexico and China. There is no threat value in a strike if the company is going to close the factory anyway. If the Republicans really wanted to help the workers of this country they would make it either illegal or really expensive to move work overseas. But they are too committed to corporate America to do that. And so we are headed in the direction of Venezuela, where our economy depends on other countries to provide goods other than our increasingly limited products, now "services" instead of manufactured goods. The "easy to win" tariff wars shows how dependent we have become.
2
I propose this rule for corporations who move production overseas: corporate bosses are required to be permanent residents where the production is done. They must apply for a visa for every visit back to the US. Their US citizenship will be replaced by the foreign country.
You are also asking the man who struggles to save for his own retirement to pay for, not only Mitch McConnell’s handsome retirement, but his wife’s, as well? (See., more of the two best incomes in one home.) And, there are more taking advantage of this double dipping perk. And wages mandate both parents working, yet the powers that be don’t provide daycare, so they bring on the grandmas, because this is the only pool left to draw from? Someone needs to figure out how to pay grandmas who have stepped in for daycare full retirement benefits.
1
I suggest you go visit the BMW plant in South Carolina that produces all of BMW's all wheel drive vehicles for world wide consumption.
Yes there are underpaid workers. Most of the formerly skilled work in US auto factories is done by robots.
My own little company has 5 employees, all work at home, no office commuting, secretarial staff, janitors. We make transactions all over the world with a click of a mouse. There is a downstream reality to that.
Farmers no longer have to drive combines.
20 years ago I worked in an office in NYC. We had as many employees punching cards for our IBM main frame as we did executives and secretarial staff. Those jobs no longe exist.
In our factories, formerly mechanical machines were replaced by servo-driven electronic machines. Less machines, a couple of electricians and the reduction in staffing was enormous.
If you don't think auto-driving trucks and cars won't eliminate truckers, you're kidding yourself. Electronic cars will also eliminate transmissions and lots of moving parts coming from lots of suppliers.
There will be new jobs. The entire point of technology is to make labor more productive or eliminate it entirely. Ignore it at your own peril.
The flip side which I agree with, this makes unions and workers rights more important not less important. We need to take care of our citizens in a world where labor has less value.
2
"yet the number of coal miners fell from 470,000 to fewer than 80,000."
Surely Oxycontin/heroin production and distribution, and the drug related increases in law enforcement and treatment could not have picked up a significant portion of the 390,000 coal mine jobs that disappeared.
I think the rapid advancements in AI and digital technology will give employers many more options for replacing well paid workers with unpaid contraptions. And the owners of capital will demand it. More business for China.
When I was growing up my father, who was a small business owner, explained to me that the Republican Party is the party of capital, whereas the Democratic Party is the party of labor. The first part remains true, in fact truer than ever. The second part wavered starting in the 80s. Only now that we see the impact of extreme wealth concentration are Democrats starting to get their mojo back. Hopefully not too late, but Reagan's Cadillac Queen is alive and well - on Fox.
1
Seems like the 150% increase productivity would directly correlate with a one-third reduction in wages, since those low skill, low wage workers now need even less skill and or even presence for equal production.....
Why should employers pay people, who are doing less, even more money??
Saying that that we need stronger unions, so these low skill people who do less can be given more, is just a private sector implementation of a Universal Basic Income, is it not?
Might as well just implement it through the fed as a true UBI and avoid all the union/employer bartering and corruption that comes with it eh?????
Robots will definitely come for many jobs, that doesn’t mean that the remaining workers should not equally benefit from the productivity gains. A universal base income will eventually be the only solution to quell social unrest unless you don’t mind capitalism or democracy being toppled.
Ask the Police, Firemen,Teachers Government workers about unions. Just look at the recent Teachers strikes.
But it is also an education and for this I subscribe to a decent Community College and German type trade schools.
2
Received wisdom is often the impediment to clear, creative thinking. It, in itself, is somewhat robotic (sorry).
Reagan, Reagan, Reagan … a friend to all workers, really got the ball rolling on union busting.
I agree with your point of political indifference, if not animus towards workers, being a profound problem. But, I do believe there’s another aspect that’s rarely discussed, the doubling of the population within the last 60 years. I believe there has to be a rethinking of the “social contract”, in light of this. New pressures are brought to bear as a result of tremendous growth, that have not been previously figured into policy considerations. I’d love to hear your thoughts on this.
1
As we’re talking about major factors that lower wages, another one is the trend within industries toward greater concentration. Put straightforwardly, within most industries, there are more monopolies over time. NYT David Leonhardt has a great chart showing this trend: https://www.nytimes.com/2018/11/25/opinion/monopolies-in-the-us.html
Not only do monopolies reject labor unions, their huge economic power allows them to set wages. Workers who would like to switch employers get stuck with the monopolist, who has taken over and merged with former competitors. Workers’ industry expertise becomes less of a tradeable asset when the competition is reduced, or eliminated. Funally, there are non-competes, which employees must sign to be hired; these limit the ability of employees to switch jobs. Certainly, growing market power of companies has made non- competes more prevalent and made it harder for employees to fight them. This is because individuals employees lack resources for the fight.
Future discussions of wage inequality should at least mention there is an important wage-suppressing role being played by monopolies, and oligarchies.
Since it doesn't appear that unions will be making a comeback in the US anytime soon, those interested in increasing wages for the working class should support a government-backed job guarantee. This would ensure full employment, support wages and provide jobs during economic downturns.
"The fault, dear Brutus, is not in our stars, But in ourselves"
1
Question - if Canada has not seen the decrease in unions that the US has, have they not experienced the same rise in inequality?
According to OECD data, the Gini index for Canada has declined from 0.321 in 2004 to 0.307 in 2016. During the same period, the Gini index in the US climbed from 0.36 to 0.391. The Gini index is a meaure of inequality with 0 being perfectly equal and 1 all the wealth concentrated in a single pocket. So, Canada and the US are heading in opposite directions with regard to inequality. Source: https://stats.oecd.org/index.aspx?DataSetCode=IDD
Basically, the answer is really democracy. We the people have political leaders who have failed to make government for the people. But we the people have also failed in making our government of and by the people. The cure must start with us, we must learn the skills of democracy.
1
"We do have a big problem — but it has very little to do with technology" Technology isn't just robotics although it may be shortsighted to not envision how robotics and A.I. will over time have a increasing impact on the need for low-skilled labor. Technology in the form of high speed communications technology, global networks, and integrated enterprise-wide business software are what have enabled globalization and the ability to move manufacturing to wherever labor is the cheapest. The impacts of technology are evident through our global supply chains right now. We don't have to wait for robotics.
1
The fall of the union is a tragedy for the worker but that fact goes hand in hand with the rise of republicans who ARE NOT for the working man and who are the culprits of the declining Union good paying jobs that have dignity. They were the architects of NAFTA (even though Clinton signed it for political points) it was Bush 41 and his republicans who Champion it. It was the republicans who turned a blind eye to tax give away a to corporations allowing them to easily move over seas which of course they used to strong arm the unions into bad contracts. It was 8 years of Bush 43 who lead the country to the brink of a second depression easing the label to a Great Recession. We only Survived thanks to Obama who help save millions of good paying union jobs in the auto industry!The fall of the working man is tied to the rise of the republicans and the odd thing is many of the working class vote themselves out of a job by voting for republicans which is right now on full display in the farming Industry. Go figure.
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But Paul, if robots have replaced workers in numerous jobs, like you admit, it would seem that supply and demand would drive down wages. For example if an assembly line needs 10% of the workers required 50 years ago, that would imply there are 10 workers applying for each remaining job. This would hold down wages regardless of politics, wouldn't it?
1
Where the unions have failed is that in addition to better wages and benefits (a good thing) they have made corporations hold onto jobs that are unnecessary. Unions need to help workers train for the jobs of the future not just improve wages and benefits.
Think about the brakeman for trains or the 20/mile or so workers needed for subway improvement in NYC when only 6 are required in London or Paris.
Unions need to adapt for the for the future as well.
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Interesting that I read one word I have not seen in a long, long time ("longshoremen") and thought of a second ("teamster"). PK is right on target--again.
1
But the drive to replace people, where they have been replaced, is based a lot on the cost of health care. If we paid for healthcare on a single-payer universal basis, cash wages would be more, and the marginal cost of employment would be less.
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I never expect to criticize a Krugman article, but this one seems a somewhat dangerous oversimplification. The comment on trucking is an example. On one hand it finally debunks all the articles talking about great opportunities from the undersupply of truckers, but on the other hand it never mentions that deregulation was at least as significant as deunionization in the decline of the profession. Even more to the point is that there is no mention of globalization.
Return of unions would be a great thing, but there is no silver bullet here. Just as we shouldn’t assume automation is THE problem, we shouldn’t assume we know it won’t be worse this time. And even though it has been very convenient to blame all kinds of self-inflicted wounds on globalization, we will still have to work hard to deal with its consequences. We can’t assume it away or think we can fix it with tariffs.
One of the things I worry about as the Democrats hopefully take control is that we will be too glib about answers. Even on climate change, it’s great that we finally have something going, but thus far Green New Deal is no substitute for a real plan.
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Agreed on the politics; a very serious problem. But please see Andrew Yang's research and policy positions on AI, automation and robotics. Of jobs lost in the last 10 years, 4 million were lost to automation/robotics. That is not inconsequential.
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As an engineer, I have seen 80% of the manufacturing jobs disappear during my career of 40 years. In a similar way, I have seen engineering jobs disappear. It's not that we didn't need the engineers and technicians. It's that some bright, arrogant, business manager thought the labor was unnecessary. I mean, if it isn't directly connected with making a product why keep it --- right? Wrong.
We in engineering saw it differently. We saw the advanced tools as a way to do thing efficiently; to explore additional improvements. Instead, our labor was cut to the bone. Management doesn't realize that improvements still require human interaction and analysis. Other countries got this: not in the US.
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A column purporting to dive beneath the surface to get the real story pulls up short of the fundamental issue of mass immigration's affect on supply and demand in the labor market.
The column says, "[I]n the Nordic nations unions cover two-thirds of the work force."
Well, isn't a crucial difference between the Nordic nations and the US. since 1970 their vastly different levels of immigration?
It's time to remember that there is a progressive argument for moderating, not eliminating, immigration in the interest of the majority of workers of all ethnicities, especially disadvantaged citizens with no education beyond high school.
If Mr. Krugman thinks the impact of immigration is irrelevant, he should say so and explain why.
3
If Mr. Krugman is willing to address immigration issues, it would be particularly interesting to know his view of NAS data (https://www.nap.edu/catalog/23550/the-economic-and-fiscal-consequences-of-immigration) showing that immigration-related wage depression in the US currently transfers almost half a trillion dollars a year from the bottom to the top of our society.
Why should this continue? How can it stop unless immigration is moderated?
Dean Baker (http://cepr.net/blogs/beat-the-press/) has been pointing out for many years that the robots-are-coming story is incompatible with the actual reduced productivity growth (and I have mentioned it myself in comments). The contradiction with the story of demographic doom is especially absurd - will we have too many workers, or too few? The demographic-doom story is also phony, since the fraction of working-age people in the US will be about the same in 2050 as it was in 1900 or 1965:
http://www.skeptometrics.org/RealDemographics.html
That story is often promoted in a deliberate attempt to force cuts in Social Security and other programs.
1
This article is so true! Strong unions are not only good for workers, they are also good for customers and probably for the most part even for shareholders. Senior managers at most companies is looking to juice the stock price from quarter to quarter but they are not usually concerned about the long term. They want their bonus now. A union provides a necessary counterbalance. Front-line workers care about the customers and the product because they need a long-term job. They will never be able to get a seven-figure severance package if the company goes under. The union fights not just for short-term wages and working conditions but also for the long-term health of the company and its customers and community.
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"Predictions are hard, especially about the future..."
Well, yes, and this stands in stark contrast to predictions about the past.
Dr. Krugman says: "Still, is [replacement of workers with robots] accelerating? Not according to the data. If robots really were replacing workers en masse, we’d expect to see the amount of stuff produced by each remaining worker — labor productivity — soaring."
Apparently Krugman gets his food in a different way then I do. Virtually every supermarket and every chain restaurant that I purchase from now uses self-ordering and self checkout. That's a whole lot of lost jobs. With more to come. And the unskilled workers being replaced are getting jobs where?
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@Yo
You missed his point. The point is not that jobs have not been eliminated by robots. The point is one concerning wages: that wages are not stagnant or dropping because of robots, but because of lack of worker negotiating power. His argument is NOT about the number of jobs, but about poor wage conditions.
@Donn Olsen You really don't see a connection? If there are no jobs, "workers" don't have any bargaining power.
One impact of growing automation and use of robots is not mentioned here. Rising investment and higher cost of production for small and medium scale farmers and other businessmen, which also crate most jobs in the country, while the most of the benefits from such higher investment are going to the big companies that make the technology or costly inputs and sell those to the farmers or such small/medium scale businesses.
Farming sector is a great example. There are many new technological innovations like GPS enabled combined harvester, new type of seeds and so on. An average farmer in any country, from USA to India, now have to invest, preferably expand land and so on, to get the required income to maintain same quality of life, i.e. same income after inflation adjustment. He takes most of the risks of the higher investment but the remuneration is not proportional. Those big companies selling the high-tech equipment and other farm inputs (seed, pesticides etc.) benefit more.
It's not any coincidence that most farmers in any country are almost desperate to leave farming if they get slightest opportunity and suicide among farmers are far higher than even war veterans- in almost every country- from USA, to France, to India.
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Supply and demand. Automation has gradually worked its way up the labor tree, replacing human workers first in the less skilled jobs, then as technology advanced, more skilled jobs. In order to compete human workers must develop the skills that are difficult for automation to replicate. Then they must compete with each other for jobs. The higher skilled, drug free workers will have the advantage. When there are shortages wages will go up. There is an economic breaking point as to when certain jobs get automated, and it has to do with the cost of replacing a human worker and the quality of the work that can be done. Paul Krugman is correct in one regard, politics. As a society we are diverting resources away from our educational systems that prepare people for the jobs of the future to include skilled trades. And, I mean the educational side of our educational institutions, not the obscene amount of money squandered on sports and sports complexes. Legislators at all levels keep cutting funding for higher education in line with more tax breaks for the uber rich.
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Good column. I would also add that the huge growth in monopoly power by corporations in many of the nation's industries has led to monoposony power in those same industries putting additional downward pressure on wages for workers.
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Mr. Krugman fails to acknowledge the impact of global competition on U S wages. Soaring imports of apparel, consumer electronics, autos, appliances, steel, et. al. all from low wage countries have wreaked havoc on US counter parts and tamped down wages. We compete in more global economy than ever before. Simply raising the minimum wage is not going to make us more competitive. A more noble effort would be persuasion and direction for workers to pursue job training and skills programs focused on our knowledge based economy. Income support from the federal government could help individuals manage the transition.
Robots and automation, generally, are going to continue to displace jobs of a repetitive nature. Increasing the wages of those jobs will only accelerate the displacement.
3
Business executives are responsible for shipping jobs overseas and replacing workers with technology, which may make sense in capitalist economic terms, but is morally questionable. So let's point the finger at the real culprits -- big business and their allies in government. Just because something is possible and can be done doesn't mean that it should be done.
3
I feel I need to stress this again. Our consumer culture, and consumer ethics contributed greatly to the destruction of unions. If we want everything cheap and quick and disposable, we are placing high value on efficiency. Unions place value on the worker. Higher cost workers equal higher costs of goods. If having everything on the cheap is what we worship, then we reject the value of workers with our purchase choices. There would be no Amazon, no Forever21, no Uber, no Walmart - none of this if it were not the case. Progressives need to look inward. Efficiency makes for profits. But it makes for cheap. And we love that.
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I worked for a company offering ocean transportation for 20 years. The company was so burdened by the extortion and the extortionate rule making by the International Longshoreman's Association (and later, the maritime unions), it ultimately failed.
I started my own company and refused to work with these unions.
There are two sides to this story.
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Aside from providing a living wage, safer working conditions, sick leave , as well as decent medical and retirement plans and many other benefits that we now take for granted, the unions also provided excellent training/apprenticeship programs to provide the skilled workers needed to serve our communities. My father did not graduate from high school. However, thanks to evening programs manged by the labor unions in conjunction with the local high schools who were kept open late into the night in those days, he was able to become a certified pipe fitter/welder first class. Sadly, with the demise of the labor unions, these programs have vanished. I blame the right-to-work laws that have been enacted largely at the behest of big business and the Republican Party for the decline of labor unions, the best friend that the working person ever had. I would like to see the Democratic Party re-establish its roots with the labor unions so that both can work closely together to benefit all working people. That would be the best way to Make America Great Again!!
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Mr. Krugman correctly points out that the war on unions had a huge cost for Americans works, but there is no dichotomy.
Unfortunately we are not playing checkers, we are playing chess. The capital side has global markets and production, automation, direct access to the government power (lobbies) and international alliances at their side.
Workers side have votes, but it was already demonstrated how we easily get divided by blame shift, misleading tactics and divide and conquer strategies, even more with the consent of part of the press.
It is a very unbalanced game we are playing.
I recommend everyone to read Bruce Rozenblit testimony. For his critics, I ask you to look at numbers instead of general aspects.
Yes, automation also create jobs, but the shift is far from 1:1. A company specialized on creating software for accounting, or process optimization, or engineering fields with, perhaps, 50 employees, will allow a large number of companies to "dispense" the service of many professionals, many orders of magnitude larger than the 50 created.
Also, unions on all places have their bargain power deflated, as high automated lines that depends on a low number of workers are more easily relocated.
I should note that I'm not against automation as it free us from many tedious, wearing and dangerous activities.
Anyway, we, as society, must strive to achieve balance on power. Failing to accomplish it has dire consequences, as demonstrated by countless episodes of history.
Yes working people are greatly benefited by Unions, and that is why employers spend billions of dollars destroying Unions. However, the loss of coal miners and longshoremen mentioned by Paul demonstrates that robots are ALSO a problem. "Universal basic income" is worth examining and Unions might even help in securing such a policy.
My father was a unionized (ILA) longshoreman. With a lot of overtime (and an annual "container check" he got though a union negotiation), he put me through Colgate (with a small amount of financial aid) and Cornell Law School (no aid) in the 1970s. I doubt that would be possible today--aside from falling wages, total cost of a year at Colgate has risen from around $5,000 in 1971 to more than $70,000, far more than the rate of inflation. (BTW, containerization was already pretty much universal by the '70s; I once had a summer job in college on a container ship. It had cut jobs and, along with other factors, forced my father to move from the dying Manhattan docks to Port Newark in NJ. I once saw him work on a pre-container ship in Manhattan around 1960; he stood by the hatch and directed the crane with hand signals. I was seven or eight and thought he had the greatest job in the world.)
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I am not sure I have ever heard the argument that robots or mechanization is the reason for low wages. What I have heard often, is that robots are causing a reduction in the workforce. In fact, I have been so captured by this argument, that I read the headline of the piece as such.
While reading the article, I thought Mr. Krugman was working against the thesis of the piece until I went back and read the headline!
One impact of growing automation and use of robots is not mentioned here. Rising investment and higher cost of production for small and medium scale farmers and other businessmen, which also crate most jobs in the country, while the most of the benefits from such higher investment are going to the big companies that make the technology or costly inputs and sell those to the farmers or such small/medium scale businesses.
Farming sector is a great example.
1
Here's a bit of robot automation we can all relate to: the automation of word processing and printing. All those stenography and typist jobs are gone. Now we produce more and often better documents than ever. Except, of course, when we have IT and printer repair issues. Time to establish the union of robot repairers...
Economics is about the production, consumption, and distribution of wealth created by society. Production is typically a technical issue involving labor and machines whether robots or computers or using electricity or the wheel. As the factors of production, including the humble worker, become more productive as enabled by technology, we produce greater output, generating profit and wealth, sometimes on an enormous scale. The issue of who gets what, however, is a political one. It's obvious who has gamed the political system to capture out-sized gains. How else do you explain anti-worker policies like attacking health care, tax cuts for the rich, gutting consumer protection, the increase in income and wealth inequality, and so on. There's a major political party in the U.S. dedicated to advancing just these policies.
1
Amen, brother. I entered the workforce in the mid-seventies. The longest I have worked for a company is 7 1/2 years. I have never received anything but positive work evaluations, but have had my progress repeatedly upset by lay-offs, company buy-outs, company closings, etc. I have started over many times and completely changed careers four times. While I have managed to stay employed, I emptied my savings and retirement accounts to make adjustments for the decreased starting wages. Now, at 61, I can only hope to continue working into my seventies and pray that the Republicans are prevented from decimating SS and Medicare. But, the way my luck has gone I won’t be surprised if I’m still working full-time when I die.
In all these years I had only one union job, but the economy was so bad that I couldn’t stay continuously employed through it. Gave up for full-time employment at much lower pay. The job I had the longest was with one of the big-six insurance companies. I started in an entry position at $6.50 an hour and the year I was laid-off I had earned $45,000.00 (left in October). The lay-off was due to re-engineering...remember that wave? We were done in by the very consultants that invented the term. How I long for the days when companies looked to long term results and workers could count on a single career, based on hard work and meritorious service. I can’t remember the last time I needed to resolve an issue with a company and had it efficiently handled.
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@MDH Your story is a heartbreaker. I hope you can find some hope in all that you have survived and yet you continue putting it out there and not given up or opted out. Yours is the story of what America has become for ordinary people. If government cannot provide any help or sustenance for people having to change careers four times for reduced wages, said people should also not have to pay any income taxes. They are being taxed without being represented. Your story should spark a revolution not toward socialism, but toward true representative democracy instead of plutocracy masquerading as democracy. I guess this is Krugman's point.
@MDH — and all of those sleepless nights when I worry about what happens if I get laid off again, or this employer goes out of business, before I reach max SS level at 70...I read. Recently finished a book by Wiley Cash titled “The Last Ballad.” It’s a novel about Ella May Wiggins - a southern textile worker who died fighting for the establishment of the textile worker’s union. I highly recommend it. Much of my formative years were spent in rural East Tennessee and Central Alabama and I still see the poverty Wiggins fought to overcome. Nothing new under the sun.
Wages are a social relationship between capital and labor. The political balance of forces between the two is reflected in wages and benefits. Technology is a social relationship also, not a thing in itself. The questions are who owns the technology, how do they organize it, and for what purpose. Communications, computer systems, energy, transportation, health technology and military tech are all owned and controlled by capitalists. That's what makes them capitalists. Income inequality, environmental destruction --- let's be clear where these problems come from.
1
I think this is poorly argued. Labor costs are a supply and demand phenomena. We can see that in rising wages today in places where demand is high, whether unionized or not.
The US has sought a large excess of unskilled labor. When historically labor has become tight we open up the immigration floodgates, both legal and illegal. Business owners, including our current President, were all too ready to break the law to lower costs by using illegal workers.
The other source businesses use to fill low cost unskilled jobs is moving overseas. We do not have enough workers to make everything we demand so it is inevitable some jobs will be overseas. The only alternative would be a truly massive increase in immigrants, and we have neither the stomach nor the ability to assimilate that influx. In my mind it is better to let them do their work in their countries rather than here. In fact I would cut unskilled immigration totally off and encourage a bigger trade deficit.
I worked in a union shop, and never saw the major benefits Krugman claims. What I saw was unions strongly opposing productivity gains, and most of union leaders’ time spent defending belligerent unproductive workers who everyone I knew wished had gotten fired. It was a good old boy club that had lost any reason to be. That’s why it died. Good riddance.
And Krugman knows that robots do kill lots of what were good paying union jobs. That’s not some false story.
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Surely it is too simple to make this about politics. All the technical advances you speak of always had a singular purpose and effect. The goal is efficiency. Efficiency invariably reduces the number of people needed to reach ever higher levels of production. The winners are the twofold. Those running the show see bigger profits. Consumers see cheaper goods. The more these cycles go along, obviously workers lose their bargaining ability. When the pyramids can build themselves you don't even need slaves.
The worship of efficiency, convenience and cheap goods means people are of ever more marginal use in the system. So a union cannot really do much in many cases, because they fly in the face of the consumer. If the consumer demands cheap airfare, cheap cab rides, cheap socks, fast fashion and so forth. The consumer, and that would be us, are the ones leading the charge to driverless, people less, worker less future. So progressives need to look at consumer habits and consumer ethics if we want to preserve the dignity of work versus a hand out.
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Absolutely. Great points.
Now, how to get the membership rates of the unions up?
Perhaps by requiring employers to deduct the amount that union membership would cost from non-member empolyees' salaries - so that workers could choose between donating these sums either to their employer or to their union?
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I think the relevant fact about trends in robotics is something a little different -- robots now threaten the livelihoods of those who traditionally held privilege. The disruption caused to coal miners and ports workers might now affect not only truckers but also future investment managers and lawyers. Fear that the "paths to success" might not be available to their children, has led many in the top 10%to hunker down, trying to protect what they have or can still attain for their own progeny. The ramifications are profound and affect not only resistance to even modestly higher taxes (nothing exemplifies this more in my mind than the refusal of the very rich to concede the carried interest loophole) but perhaps even causing ordinarily upstanding people to do unethical and criminal acts like procuring their children admission to elite institutions via fraud. Change will surely continue to be slow and painful.
1
The central economic fact of our age is that wages have been stagnate if not falling across a broad spectrum of the economy. Robots, immigration, globalization,china, women in the work force, lack of unionization and poor education have all been used as convenient scapegoats, the truth is the current mechanisms for the distribution of wealth are just...inefficient.
What we must consider is how a modern economy can become more efficient at distributing the wealth it generates. It is also true that the distribution of wealth need not be focused on wages only. Free education , medicare for all, augmented social security, investment in mass transit, subsidized housing along with nutritional assistance could create a substantial economic floor below which no american would be allow to fall.
The main fear to modernizing wealth distribution is taxes and so the political will to modernized the distribution of wealth finds substantial headwinds and opponents, in fact they use fear of wage loss as wedges to push for the politics of anti immigration. It is not just the wages that need improving but rather the entire wealth economy must be modernized to reflect the fact that the old means of the distribution of wealth is no longer working for the vast majority of the american people. It can only be hoped that in the coming elections that this will become a part of the debate and discussion rather than looking for convenient scapegoats!
1
The distribution of wealth, on the contrary, is extremely efficient at what it does: route productivity gains to the owners of capital.
Other countries also live in the global economy and have not experienced American wage stagnation.
So it’s not “inefficiency” or random convenient bogeymen. It is union policy, tax policy — especially how executives are compensated and taxed — and globalization. The infection point for wage stagnation is 1979. That coincides exactly with China opening its economy. That might explain why a refrigerator today costs about what it did during the Carter administration.
Thank you Paul Krugman for stating here what I say loudly to my radio in morning every time this topic comes up. It is not only a diversion but also an excuse by those in power who do not want to admit that power, who do not want you to understand that power and who want to appear helpless as technology takes away your job and changes every other facet of your life.
However, people do have power. Politicians have power. Companies have power. Federal, State and local agencies have power. They can use that power to reduce income disparities and improve working conditions. They can even use that power to regulate technology and enhance the positive and reduce the negative qualities that technological disruption has and will continue to have on our lives. Unfortunately, they have been using that power over the last 30 years to take away your money, your quality of life and your power. It has been transferred to a smaller and smaller number of people every year by way of removing unions, taxes, regulations, and convincing us that is for the better and will make us freer.
They have the power to make a difference and none of this is inevitable. Tell them with your vote, your phone calls, your letters, your dollars what you expect them to for you.
Mr. Krugman, I'm always glad to see more input on the topic of changes in our economy. I have three questions I'd like to see you respond to:
Looking at the past 50 years of technological change seems like a valid way to make a prediction about the future, but is it also valid to suggest the next 15 years will be a different animal, with the capability of technology advancing at a far greater rate?
If workers gain more power to demand higher wages (through unionization) wouldn't that press employers to seek cost-cutting measures such as switching to robots, or relocating some jobs to less expensive locations (potentially outside the US)?
What about systems where employees participate in ownership of a company? The union vs. employer model still pits the two sides as adversaries.
As the population of the earth grows from 7.6 billion to over 9 billion by year 2150, automation will reduce world wide jobs from about 4 billion to 2 billion, climate disruption will decrease historically arable land and fresh water and populations will migrate and fight to survive.
The severity of the looming consequences of over population, coupled with the disruption caused by a changing earth climate, will depend on how much of the wealth generated by technology, (robotics), is shared and how well human reproduction is reduced.
Six billion out of work humans will not remain docile and immobile while their children die and a walled off one thousandth of one percent own the world.
The politics, borders, gated communities and armies of the past will not work in the new world that is fast approaching, nor should it.
1
Well, by the time corporations pay the CEOs and other top managers several million bucks each, there is not as much left to pay the grunts who do most of the work.
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Paul, what I hear you saying is that the conventional narrative is purposely aimed at perpetuating the perennial myths that this great country was founded on, like “rugged individualism” and “keep the government off my back.” While Dems have done their part, too, in accelerating income and wealth inequality (cozying up to Wall Street and Big Pharma, e.g.), the usual suspects are Republicans, since at least the Reagan era. If there’s one thing they’re good at, it’s the messaging; and a key element is appealing to deep-seated emotions to coax their followers into blind obedience. Perhaps the best example of this is “Right to Work” laws, advertised as freedom for laborers to work whenever and wherever they want. The part they leave out is, “and whenever and wherever that is, rest assured it’ll be at poverty wages.”
1
I think the reason for wage stagnation is fairly simple. There are 7.5 billion people on the planet, and international trade has given every country the chance to compete. The supply of humans is overwhelming compared to the demand, so wages stagnate. Anything we do to drive up wages for unskilled workers in the US drives work to countries with lower wage demands, or adds to the influx of illegal immigrants here.
2
I accept Prof K's analysis, but would add a few additional points to consider.
Rather than look solely at wage growth, we should look at the growth in the total cost of employment. As a small (60 employees) business owner, I would say that whilst wage growth has been pretty stagnant, total employment cost has grown pretty much in line with annual GDP growth.
How so? Well for most employers who provide health insurance to workers, the cost of that health insurance has increased by about 8% p.a. You can google the words "health costs leveraged trend" for a full explanation. As an employer we call it the annual insurance renewal. An 8% increase in health insurance premiums in my business equates to about a 2% increase in total employment cost. So instead of giving employees a pay rise in their pockets, I pass their "notional" 2% pay increase directly to a health insurance company. I suspect if you redraw the definition of wages to include health care insurance, then wages are increasing broadly in line with inflation
2
But what about people in middle-management in white collar jobs? Those jobs were never unionized, yet these employees are treated like cogs in the wheel and also paid barely-subsistence wages. I believe this would be true regardless of whether the workplace was unionized or not. I worked in the hotel business in NYC, and some of the staff were "hourly" and belonged to a union, while others (including receptionists and secretaries) were "managers" and therefore not unionized. You then had a situation where the doorman was bringing in six figures, including tips, while the secretaries were just above the poverty line.
2
I remember in the late 1950’s and 1960’s the fear and cry out against factory automation. This is just the next phase.
People don’t recall the prior switch over to the automation of factories. Today this is called robotics, it was previously called automation. Theses changes have been occurring since the industrial revolution. Do people want to go back to individually crafted products, which would be prohibitively expensive?
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Many thanks Mr Krugman for addressing the fallacy of robots and the decline of wages. Enter any hospital, bank, Doctor's office, school, , retail store, restaurant, nursing home, Amazon warehouse what their hourly wage is and asked yourself could you survive on that amount? Everyone depends on people that keep the gears going in society, they just don't feel they are important enough for a living wage.
Illegal Immigration surely has a role in keeping certain jobs low paying. Its basic economics.
If an employee can find a person to work for $X or $X- chances are if the job can be done by either, the employer will pay the person to do the same job for less.
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The fear of the loss of jobs doesnt just come from better hardware or technology...it comes from new generations of AI Software in combination with that technology. Now white collar and even executive level employees can slowly be (largely) replaced with AI algorithms. You only cited blue collar jobs. Also, soaring health care costs, HR lawsuits, etc...can be stemmed with more robots, so if you're a CEO, it makes sense to fire people, automate as much as you can, including top jobs, and keep that stock price up. The solution is not just universal income, but the expansion of the shareholder class to include most or all employees working for a publicly traded company
Paul, I agree with you that this is largely a policy issue. What is largely overlooked in policy discussions is how tax policy generally subsidizes investment in displacing equipment; investment tax credit schemes, accelerated depreciation, and so on. Classic example: my friend from high school back in the Midwest still farms. He used to have two full time hired hands. Then came the tax schemes, 100% investment tax CREDIT for new equipment, and accelerated depreciation on it. He went from 8 to 24 row equipment paid for by Uncle Sam. Guess what, he no longer needed the two workers, they could have worked for free and it still would have made no sense to keep them.
Tax policies link health insurance to jobs decreases worker mobility, I can’t switch jobs to get a 5% pay increase, because I have preexisting medical condition.
Workers aren’t competing with machines they are competing with tax policies and by and large tax policies are designed to increase the return on investment not wages.
I would argue that Unions in large part are the cause of low wages rather than the opposite. The real problem is that as Americans we don't realize that you can't pay an American more to do a job than a Chinese or African person would get to do the same job. Unions do a great job of raising wages in the short term. In the long term, high labor costs cause employers to look for cheaper labor overseas or to automate. Many of the heavily unionized industries have already moved overseas (like steel and manufacturing). Jobs which can't move are automated (like coal mining), requiring less labor. If you want to keep jobs in this country, we have to think of other ways to supplement the incomes of people who can't compete with low overseas wages or robots, like expansion of the earned income tax credit.
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The GOP, backed by their billionaire donors, have been attacking organized labor, including teachers(!) very effectively for a long time. Somehow these soulless tricksters played up the whole "acres of diamonds"-style line that if you work harder you'll get your reward someday. If you pull yourself up by your bootstraps and stoically struggle mightily you'll be a success.
Corporations are not doing anything to help workers these days. More mergers, fewer jobs, more pressure on the workers that are left, and the implicit message "you're lucky to have a job, so just shut up and work."
Mechanization and robotization are tools used to reinforce those thoughts, whether they are objective facts or not. So, while these things may not directly contribute to the destruction of an organized, empowered workforce, they are used that way by those that benefit.
The dirty work of coal mining, steel production, longshoremen, etc. required brawn. Men, mostly, not only got fair wages, but had the self-esteem of doing stuff only a "strong" man could do. Today much of the work is in the back office, filling out forms for tax and regulatory requirements and that was "woman's" work, but now is more secure and pays better. In the early 1900's a large number of people lived in the country on farms, ranches and small towns and were independent of the city life, but they moved to the cities for more money, giving up the independence of their rural life. Their brawn was needed and the pay was good going up. Labor costs and advanced tech mean fewer bodies and more minds are needed. But you can't go back to the farm, its gone. Now we are mostly dependent on city work which is controlled beyond our comprehension. Are we not now indentured?
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The desirability of having unions is a complex issue; but in the end comes to the fact that they are a necessary evil, like chemo. The culture of management is to be in charge, to make the decisions that improve profitability, etc.; unions put the brakes on such free wheeling. They impose work conditions, wages, and benefits that counter profitability and slow productivity advances. On the other hand they counter a (ruthless) management that is bent on driving wages to subsistence, that is bent on increasing profitability at all costs. Such management is the father of unions.
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There's an interesting article on TheDrive today about Toyota's assembly plants in Takaoka, Japan. One of the points made in the article is that there are still jobs that robots cannot do as well as humans. At least, for now
If one wants to understand the limits of robots in taking human jobs, one just needs to follow the exploits of Tesla and their Model 3 production story. A humanless production line was the priority, but it failed miserably as the company learned when it scrapped a billion dollars of robots and hired humans to finally scale up production.
"America never was America to me"
Yeah, the fall of Labor brings us back to the gilded age before the reasons for it were lost. Similar to the success of regulation leading to the repeal of regulation since the problem it solved no longer exists. Thank the scientific weaponization of propaganda for the victims blaming their would be saviors.
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I think a missing part of this article is that automation has facilitated the fall of unions. As workers moved from old industries to new, from "male", unionized industries to "female" non-unionized ones (service sector), unionization fell. I agree that it wasn't inevitable. If the political climate was right, those new industries could have unionized. But the relationship is more complex than the article implies.
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@Mae Manufacturing used to be an easy industry to impact through unions. The profits and wages were relatively high. Costs were justifiable. That is until manufacturing profits started to plunge. The industry I am in has seen decades of price erosion and this isn’t unusual any more. The service industry typically has lower profit levels which isn’t as conducive to unionization as the potential impact is generally low. You can’t squeeze $5,000 out of a company that only makes $2,500 in profit per employee.
Thank you for this piece! I am the 66-year-old daughter of a union truck driver and a mom who worked outside the home. Both parents worked very hard to give their two daughters opportunities they never had. If truckers were paid 30% less then, it would not have been possible for them to provide us with the education that opened those opportunities to us. We need more voices that clear away the distractions and empower working people.
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Professor Krugman omits to mention trade or immigration. Don't those have some sort of effect on wages?
For example, this 2017 New York Times story cited a study which estimated that NAFTA eliminated 1.9 million agricultural jobs in Mexico, spurring the now-jobless to migrate to the United States.
https://www.nytimes.com/2017/01/04/world/americas/mexico-donald-trump-nafta.html
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Bravo Mr Krugman,
Commentators in the media have been reluctant to state this boldly, in a country where banks, industrial giants and Wall Street have come to dominate the economy. Labor unions have been deliberately eliminated over the years.
The coming election will give us a chance to overturn this process.
Choose your candidate wisely.
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I wonder, has the Harvard Business School, Wharton School of Business, or University of Chicago Business School ever had a course that expressed even modest support for better treatment and pay for labor?
I doubt it.
All major Universities engage in systematic exploitation of labor by limiting "tenure" and hiring "adjunct" faculty at substandard wages and benefits to teach paying students in many courses. A good rule of thumb is "the more prestigious the name of the university, the lower the pay."
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As usual, an interesting and timely piece about political economy from Krugman. He rightly notes that unions have lost influence and power because of the antiunion onslaught begun under Reagan and continuing since (via laws and court decisions that have clipped the wings of union power). However, also as usual with Krugman, he neglects to note how wages and employment have been affected by outsourcing of jobs--an integral part of Krugman's beloved so-called "free trade" ideology (which he never fails to defend). Since the beginning of NAFTA and continuing with China's entrance into the WTO, millions of American manufacturing jobs have been lost through factory outsourcing to low-wage countries. Free trade proponents claim that these jobs have been replaced by even more U.S. jobs, but they fail to mention that many (if not most) of these jobs are lesser-paying jobs in the service economy. They will also claim that imposing tariffs and using other tactics to force manufacturing to come back to the U.S. will hurt American consumers by raising prices (but perhaps higher prices are worth paying if they add to the workforce). I praise Mr. K for keeping the pressure on politicians to allow unions to organize. But I also sincerely ask him to give his free trade religion another deep look to see if perhaps it might be the biggest job killer of them all.
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The problem isn't free trade, Germany can still export manufactured products. The difference is the Germans have a plan while we are slaves to the mythical free market. Faith = Ignorance.
Don't overlook the power and influence former members of government, from Congress members, to heads of various agencies moving over to private corporations to lobby on their behalf. Companies have made it their business to have people in their employ that have friends and can influence people. Unions mistake was not to do the same. Businesses know that its who you know and what they can do for you that gets things done.
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Paul, I understand your point that politics, not robots, are causing the loss of jobs in many sectors of the economy, but what about the GOP robots in Congress and the White House? It’s true they are throwbacks to the 18th/19th century quackery that brought us the worthless violet ray machine, magnetos, and the electric belt, but a certain segment of our population continues to believe these robots are the answer to, not the cause of, all our problems. So, yes, the problem is political, but let’s give the GOP robots their due.
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this article looks at 2 aspects:
- the # of workers doing hard, manual labor jobs in a field (coal mining, dockyard work)
- how much they get paid
Typically, increased productivity leads to higher wages, where productivity is output per worker. But what we have here is increased productivity with a BIG decline in the number of workers.
This suggests worker oversupply, resulting in downward pressure on wages. A lot of the increase in productivity is from better machines such as huge, capital-intensive mining equipment, investment in container shipping. Not from higher worker skills. This isn't a political conspiracy against workers.
It would be worth checking to see if wages in those industries in other countries have fallen (in real terms), similarly to the US.
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The rise and fall of unions track neatly with the rise and fall of Communism. When the leaders of industry thought that the country could turn far worse than labor unions, they allowed them as a way to vent pressure. The threat of Communism wan't a threat to workers. It was a threat to owners. Nick Hanauer talks about the pitchforks are coming, but the problem is that we don't have a threatening ideology to rally behind. AOC and others are bringing up Northern European Socialism as that threat and it's working a bit. The right is threatened by that, but not terrified like with Communism.
The problem is that each example given (coal mining, trucking, longshoremen) never recovered in those communities. Sure, the internet has given me a good job, but how does that help rural Appalachia? Is a 50 year old trucker going to learn web design? No, but he'll move in with his son who is a web designer and economists will point out that no net jobs were lost in the transition. Luddites didn't break the machines because they were ignorant and unskilled. They broke them because they were highly skilled craftsmen being replaced by low paying sweat labor.
Eventually a con artist will come along and say to all the truck drivers, coal miners, longshoremen, factory workers who are living with their kids or working at Home Depot "I'm gonna make America great again!"
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Being forced to compete with Chinese workers on wages was patently unfair to begin with. Even if only a fraction of a given industry makes the move overseas, wages here are immediately capped and often decline.
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Technology has actually diversified the number of jobs available to workers. In many ways, as we can see with our really low unemployment numbers, technology has increased the number of jobs. There are some fields impacted as has been the natural cycle for as long as there has been jobs. The big issue is in what it takes to get a good job. The answer to that is education. Before anyone jumps back to the prestigious college bribe scam, you don’t have to attend a top level college to get a good job. Less than 5 % of college graduates live in poverty. The recent unemployment rate for college graduates is 2.5%. The average earnings difference between a high school graduate and a person with a bachelors degree is $23,972 per year.
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Sadly the story here is less about the Republican Party than it is about the Democratic Party. Republicans/fiscal conservatives have wanted to kill unions forever. The Democrats after Reagan have been Wall Street Democrats. Clinton did more damage to unions than he did good and people in the Midwest remembered that when his wife came hunting for votes in 2016. Obama had a super majority and never pushed for any union sponsored legislation. Democrats have seemed to forget that they are there for the little guy and that all of the social change that they want to see can't happen when people feel left out and angry.
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? I thought you were the one who always mentioned automation/robots being significantly responsible for job loss. Anyway, what automation clearly has done is take away "warm body" jobs. For all of history, there was pretty much always a spot for a person with no skills but a strong back and willingness to follow instructions. Lift this, carry that, put the boxes over there kind of thing. Those are the jobs that have disappeared, and this is to the detriment of the large number of people who for often understandable reasons have not acquired more advanced, specific skills. It's just more demanding to be part of the workforce today, and I don't see that reversing. At least as long as modern civilization remains intact. If we fragment like some countries have started to in parts of Africa, Latin America and the Middle East, unskilled labor will return.
progressive taxes - on earned and unearned income - integrated with a serious revision of compensation that puts our money where our humanity is (caregivers, teachers, artists) and where our future is at risk (environmental destruction) would help everyone make a transition to a world that should also be nudged toward environmental sustainability.
I still believe that a major factor in the decline of real wages in the "laboring class" is the tolerance of undocumented workers by both political parties: the Republican "capitalists" like the cheap labor and the Democrat "progressives" think they're being great humanitarians. It is this that led to this disastrous presidency we're now enduring.
At this point, I'm not saying we can deport everyone that's already here, nor am I saying we have to reject every request for asylum, but we could have reasonable border control in the future and also sanction employers that utilize undocumented labor.
We are still a long way from being able to say that "open borders" will not harm the majority of residents of the United States. Our country has almost always controlled immigration and should try to do a better job of it. But wasting money on a demagogue's wall is not the way to do it.
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@Bob Allen: I understand your argument, and agree that undocumented workers have had an impact. But I do not believe they are the biggest problem behind stagnant wages. I agree with Mr, Krugman that low wages are built into our current political system. And yet I also think the outsourcing of service jobs to countries with good English-speaking workers such as India and the Philippines has had a decidedly negative impact. I’ve personally seen this outsourcing take away many decent paying jobs. It is not a simple problem, but I think it is well within the abilities of our business and political leaders to do better for our country.
"Workers will fall for anything". Workers demand for various benefits rose and became entrenched, so employers fought back with "We are just going to have to look elsewhere for workers- China, Mexico, and Vietnam, to name a few. Or "Do you want healthcare or higher wages, you can't have both". Then "Defined benefit pensions are no longer affordable. You have to do most of the saving". Then employers realized they fell for all that, why increase their pay? It's the economy that is at fault. So......now that workers have accepted every argument and all the rewards for productivity they demanded have been taken away, employers are looking for another way to say to workers "We'd love to give you more, but our hands are tied". And then workers sit back and watch as employer taxes are cut and workers are given some token reward and employers put the new wealth back in their own coffers. And as executive compensation goes through the roof, the mantra heard universally is " We have to pay that much to get the very best." The song is old, tired, and sad. And the bottom line is this... when you live in a society where the people work hard and are not rewarded and they turn to social programs to try and pick up the slack and they are not helped, where do you turn? And the answer, I am afraid, is drugs, alcohol, and guns. And the blame for that is Mexico and Central America. And many fall for that too.
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"But we will have to lay off workers if the pay goes up!" Has been the cry every time wage increases have been discussed. The irony is if wages go up, buying power increases and everybody benefits, the owners, the workers and the buyers in our economy. What's the problem? Greed at the top. The bottom line has become the gold standard.
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Keep these columns coming Paul! As we start entering the Presidential election season, your writing becomes so important as there are real policy prescriptions to be put out there.
Secondly, please continue referencing the experience of other countries. In America, our policy discussions always take place in a theoretical vacuum. But, the empirical evidence is all around us! Just look to other countries for solutions. Let's not be ashamed to copy them!
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This time I must disagree with the columnist. He is using broad assumptions and also missing the virtual robots. And let's add that we have already taken away the better manufacturing jobs. So the focus now may not be on hard robots so much as virtual humans. Think of how one orders on Amazon - on line. In the 1990s it would have been by a call on an 800 line answered by a person (and to a catalog merchant). Or how do you schedule a routine maintenance visit for your car? My dealer has an online system that I use most of the time.
I agree policy plays a large part, but the business world is now sweeping up the remaining jobs and getting rid of even most of them - automation (whether by Robbie the robot or Hal).
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Dr Krugman is correct in his analysis of the past 50 years, but I think he is forgetting the cautionary mantra of investing, "past results are no guarantee of future returns". As humans we naturally look backwards to help us make predictions of the future, because in many cases that has been the correct thing to do. We have had a long history of technology replacing some jobs and humans then switching to other jobs. But we can now visualize a time where robots can do all the things that humans can do and do them better. That changes everything. Yes, that time is still a little ways off, but not so far as many assume and not so far that we should not be planning for it now. I do not agree that this is just a distraction. I think the distraction is what Dr Krugman is doing, saying that this change is the same as before and thus we can deal with it the same as we have before. My experience is that Dr Krugman's position is the prevailing one and thus my concern is not that we are talking about the age of robots too much but rather that we are not talking about it enough.
I think Dr Krugmans point was that the politics that overshadow the workforce are the more pertinent, higher priority issue-- in that the issue is immediately here and has been so and that it has been minimized and shunned by the same or similar forces that made it a problem to begin with.
Automation is not the most prominent cause for worker dissatisfaction with the labor market. Deunionization and the lack of synergy between the trends in wages and inflation are the things we can handle now, while we all consider the coming future of automation at scale.
Ironically, many of those displaced and dispirited by the decline of the once mighty labor unions, are responsible for their own demise, having voted in politicians who promoted "right-to-work" laws (which actually function as "right-to-work-for-less" laws). Sold a bill of goods about how taxes need to be low so when they made their first million they could keep more of it, and how they would have more money in their pockets if they didn't have to pay those union dues, they voted against self-interest, and now in their anger and despair, raising the cry that everyone from those on welfare to public sector union members should learn to stand on their own two feet, they deliver us the guy known by his signature line: "you're fired". You just can't make this stuff up.
2
The ironic part of this story is that, by going down this path, the Republicans as a political party have cut their own throat. No longer a sane political party, they have morphed into radicals owned by Trump. And he is anything but Conservative.
Much of the automation is driven by the tax code. We underwrite the automation.
1
Sure, American workers should be a getting a better deal. But in many industries, computers have turned American workers into American NON-workers.
And the diversion you refer to, is not just about statistics and stagnant wages; it's saying things like change is never easy, winners and losers, and other such nonsense. The kids who work in my neighorhood supermarket are unionized and get suprisingly good wages and benefits. So their jobs and hours have been cut by 75%. How is this possible? Barcode readers.
This change, 40 years, coincides very well with the rise of Reagen and Thatcher and the economic philosophy associated with those two. It is well beyond time to return to policies which create more benefit for more people. Yesterday, in the UK, it was announced that the Head of Shell now makes 143 times the salary of the average worked in Britain. A disgrace.
1
American workers have been getting the boot with little abatement since Reagan. Every President has allowed and encouraged business leaders to take over the functions of government until there is now no need for a revolving door.
In truth the governance of our nation has never been one that is of, by and for the people so much as one which has supported those who are chosen by the ruling class. Mr Trump and his coterie have, by design, arrogance and simple stupidity, brought it all out of the closet.
Perhaps many, if not most, are OK with our system, but the excuses for hunger, lousy education and wealth disparity which have always been with us are as worn as the cries for change heard accompanying every election cycle.
The war on education, long fought by those who rule behind the curtain is working, we are on the ever widening road leading to third world status.
Hope the kids who were not admitted to the university of their choice as a result of others' bribery or those who will remain traumatized by school, church. mall and theater shootings get it, cause their elders sure don't.
1
I mean, yeah, this is still obvious now. Low wages are always scapegoated, either using robots, immigrants, or foreign labor. Whatever seems useful at the time.
Like, you hear politicians say they want to bring back jobs from foreign nations, but then when someone suggests we increase wages, suddenly it's too expensive to consider because of a loss in, what are the usual buzzwords? Innovation? Investment? It's all garbage. Bringing back jobs from overseas is just as expensive, but it's a good talking point for those politicians.
1
Yes, well, what exactly do we say about equality, inequality, inequity? This is the scourge of modern life, brought on by us all, including economists that say little about it.
Are billionaires bad? Yes. Concentration of wealth, income, property and power create unhealthy democracies. I see it here and all over this world. We are complicit and purposely silent on the issue. Why? Because greed is sold as motivation. Acquiring much material wealth is seen as success. Being wealthy is seen as better (except on Sundays, when the possessionless Jesus is held up as guide).
No, we are bad, mad for money. Forget robots; find our souls.
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Firstly..."Predictions are hard, especially about the future..."
Cute.
Predictions should be easy when the long game is wage reduction and union busting coupled with the disappearing middle-class tax deductions. Remember when you could deduct consumer interest? I do. These things didn't happen by accident.
Remember, "Only the little people pay taxes"?
Leona Helmsley told us to our faces what the score was.
What did we do about it?
I'm 60 now and have to say that 40 and 50 years ago the 60 year olds back then said what I say now, I've never seen it so bad. But they also told me that the generation before said the same thing.
Yes Paul, we're too distracted by boarders, abortion, religion, guns, false economic theories, and you know what? That's exactly how the folk who pull the strings of those political leaders like it.
You can't discuss the loss of labor bargaining power without also discussing the flood of illegal workers from the mid-nineties onward. American workers are competing directly with workers who will take lower wages, who do not know what overtime is, who will sleep five to a bedroom just to maintain a toehold and send money back home so their family can a business or buy a small plot of land.
And before you brand me a right wing zealot, what really is going on is that employers are talking out of both sides of their mouths on this issue. They scream bloody murder about illegal immigration and vote Republican, but they desperately want these workers here and working for them because they work for less and are docile due to their legal status. Employers want illegal workers to remain illegal.
So if workers want to share in productivity gains, they should stop supporting the anti-immigrant GOP, who surely must think Trump supporters are fools (Trump's companies hire these workers!) and start supporting immigration amnesty for those who wish to stay here and have a life. The business class will never support mass deportation, so it will never happen. The only way to have real labor gains is to have a level playing field for all workers. The employer class has set up an environment where illegal workers steal the lunch of the working class and employers' businesses profit from it, and that has to stop.
2
Sorry, Dr. Krugman I have to disagree. An 1821 comparison of the pre-industrial era to the post-industrial era is not a good analogy. Not only have entire classes of employment become scarce in the last 50 years: elevator operators, telephone operators, bookkeepers, draftsmen, assembly workers, multiple crafts and so many clerical workers but the de-industrialization of America has not only decimated industrial unions but the concentrated political clout these workers once had. The classes of employment that seem less threatened by automation: entrepreneur, celebrity, technocrat, medical worker have requirements that people at or below the median skill level do not possess. Once common fall-back jobs like public worker and police have become more scare or highly competitive. You are correct that politics powers these directions, but behind the politics is the bottom line. As my former boss used to tell me: "Don't hire more people, buy machines."
2
I was a union member nearly all my working life. However, a goodly number of my union brothers insisted that they could never vote Democratic. Such things as guns, abortion, bigotry made them blind to the fact that they owed their middle class life style to liberal government. A government that was pro-union. I stayed in the union, voted Democrat and ignored the distractions of the conservatives. Now I have good health insurance, a pension that is more than ample for my needs, and I have a clear understanding as to which side my bread is buttered on. It is not merely coincidence that the decline of the working man's salary matches up with the rise in conservatism.
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@Lee Elliott
I stopped voting Democrat and changed to independent, not because of guns, abortion, or bigotry but because Democrats stop voting for me and my union rights. Where were Obama and his super majority in the house and senate? Did it use that political power to enhances and enforce current labor laws to encourage and expand unions? To expand healthcare through employer-sponsored plans and raise wages through increased and expanded unionization. No. They wasted it on another free stuff bureaucratic corporate written healthcare boondoggle to which they levied a tax on union healthcare plans to help pay for it. Good grief!
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We need to call out this fiction every time it appears. President Obama never had a super majority in either house of Congress while he was President. He did have a bare majority - for three months!
There are many legitimate criticisms to make of Obama's time in office, but failure to use an imaginary supermajority is not one of them.
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@Lee Elliottp
Unfortunately, not all were given such an opportunity, but voted the same way, nonetheless.
5
My thought is that robots do not replace workers. People--human beings--replace workers with robots. By "people" I mean the owners and managers of corporations, a select few pressured in turn by a highly peculiar economic structure, global capitalism. The issue ultimately is not technology but power and ownership: economic structures, private property, or simply this question. Who owns America?
2
Great Article. I am a union member and when I was hired at age 28 I didn't understand the value of a union. I grew up during the Reagan era of union busting and the message was unions are full of fat cats and are lazy while the rest of the working world gets a bad deal. So the result was lower the bar and take away the rights of workers to fight for wages and good working conditions. Companies and corporations laughed all the way to the bank and workers' wages stagnated. Everyone was afraid to speak up for fear of being demonized as a union fat cat.
I now have a very different view. Unions don't negotiate for unreasonable wages and conditions. They negotiate for fairness. Forcing the company to negotiate a fair deal is a good thing and is now sadly a thing of the past in the private sector. People shouldn't be afraid to stand up for themselves and their families. Unions give them that voice and bargaining power. Workers need to vote on their behalf and stop listening to the lies of poiticians who would advocate for workers to simply suffer because they are made to feel less then deserving of fair treatment. Unions are not getting people rich. They are working for families to live a good and well earned middle class life.
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@Laura Sadly I too was duped for a while that unions were a problem. I live in a rural area after living in NYC and see teachers and cops making so much more than private sector people or those working in truly difficult environments (like city cops/teachers) that I became a prime target for the resentment sold by many in the media (particularly Fox and NY Post). I have come to a different viewpoint over the years. Now I don't resent these public employees, I want those rights too, for myself and everyone. I just want the public union employees to stop bragging about their good fortune (I hear that a lot!); that doesn't help the perception.
25
@Eileen You touch on an important point. Fifty years ago, public sector jobs, in general, paid less than private sector jobs. However, they carried job security and solid benefits (especially retirement), so, while they were considered less desirable than good private sector jobs, they were acceptable alternatives. Fast forward fifty years and the average private sector job has been significantly downgraded. Inflation-adjusted wages have declined and benefits have been reduced and, in many cases, simply eliminated. Thus, private sector workers now look at public sector employees as having the best jobs. The reality is that public sector employees have not gotten a great deal either but at least they have been partially successful in defending their benefits. And, on top of it all, private employers, and the politicians that they have bought and paid for, are happy to drive that wedge between public sector and private sector employees. The reality is that both sectors’ employees are worse off than fifty years ago, it is just that the private sector has inflicted so much more pain on its workers that the public sector employees look well off in comparison.
48
@Laura I totally sympathize with your sense of what unions represent. I do believe however, that consumer culture and the push for ever cheaper goods drives much of this. A company owner has an ethical obligation I believe to be fair to the workers that make their business happen. But if the consumer rejects the goods in the end as too expensive, then the business simply shutters. Perhaps we need to recalibrate our consumer expectations to accept paying more for ethically produced goods that may cost a little more. If such a thing is even possible. I don't know.
15
"And the decline of unions has made a huge difference. "
What many people don't understand is that unions facilitate improved pay and working condition for those not in unions as well as those that are in unions. Employers will pay close to union scale wages to retain their employees and keep unions out.
And not only for blue collar workers, but for white collar workers, too - what accountant or engineer will stand for a situation where a union worker on the shop floor has a pension and health insurance and they don't.
Nevertheless, the conservative media has succeeded in portraying union workers as greedy and lazy - and wanting a bureaucratic working relationship that protects incompetence. Until the media changes - and not just FOX, et. al., we are likely to see declining real wages and growing inequality.
466
@yeti00
Amen. It is indeed a systemic problem. Labor history isn't taught even union programs. And many unions have gotten too complacent, and greedy,in the sense that they just want to protect their particular realms.
17
How much more can inequality grow before people are working for nothing? The wage/wealth gap has already passed gilded age levels. Many Americans are practically serfs already.
29
@yeti00 -- I worked at a Ford plant in the mid-'70s after finishing my MBA. The Auto Workers Union did in fact have a better medical plan and retirement plan than the white collar workers did and it was a constant source of irritation. It's important to note that the white collar workers did not have the power to force Ford to provide the same health and retirement benefits to them as Ford provided under the collective bargaining agreement to UAW members -- which is exactly Prof. Krugman's point.
21
Automation is a double edged sword. As a small business owner, here's how it has impacted me.
I own a small CNC router that allows me to make front panels for my equipment. The previous supplier has now lost my business.
I'm about to get a laser attachment that will allow me to do etching and engraving. No need to hire that out.
I can do my own website. No need to hire that out.
I have written and published several books. Did all the technical illustrations myself and laid out the book. No need to hire that out. The quality was good enough.
I take my own photos. No need for a photographer. The quality is good enough for my market. No film processing.
There are easy to use printed circuit board programs that I can use. No need to hire that out.
In short, technology and automation has allowed me to do so much more and stay in business. Twenty years ago, I had to pay for these services.
My productivity has skyrocketed. Not only that, technology has created assemblies and parts that I can use which are very affordable. I can get low quantity transformers at what used to be high quantity prices.
That's what the robots have done for me. What is missing here is that the worker of today and especially tomorrow has to able to use the robots. And that is the problem we face.
The jobs of yesterday are gone and they will not return. Our leaders need to understand that and provide accordingly. State schools anyone?
419
@JP Absolutely right! It is not that work has disappeared (yet) but has shifted, requiring more schooling, and different schooling. Most of the skills you just described require college education, beyond the reach of some due to poverty or their own failed public education. And as the divisions continue to expand those with access will leave those without further and further behind. Is it any wonder that it is mostly the white under-educated that are also suffering the most from opioids and suicide? What they had in the 70's is truly long gone indeed no matter what our president* says nor the regulations they undercut or the environment they destroy or the national parks they roll back, or the tariffs they levy OR the wall that they build (though maybe this latter might keep out people determined to build themselves up rather than gripe about being a victim... NOT).
26
@Bruce Rozenblit
You and two commenters (JP and David Greenspan) are writing as if you hadn't read Krugman's article. You're arguing that people need more education to adjust to automation, after Krugman has just given arguments and data showing that the problem isn't automation or education at all. And none of you have addressed Krugman's points.
42
@Sandy T
I don't think Krugman, in this column, showed education isn't the problem. He focussed on automation and politics. I do think other articles show that education isn't going to help much, because the mid-level jobs for educated people are disappearing.
18
The displaced coal miners and displaced longshoreman are the core of Donald Trump's base... Betrayed by their employers and the unions who would supposedly protect their jobs they are angry at the government that let it happen and ESPECIALLY at the unionized government employees whose jobs, wages, and benefits are funded by their tax dollars.
And their anger against the government has been fueled by the GOP who defined government as the problem decades ago and now claim that business is the solution. But the "system" they are railing against is a construct that puts shareholders ahead of workers and the biggest shareholders with the deepest pockets are happy to sustain that anger. Consequently they are willing to tolerate a divisive POTUS who diverts attention away from the true source of workers wage stagnation, under-employment, and declining quality of life by blaming everything wrong with the economy on immigrants, regulations, and "socialism".
1
It isn't either, or Paul.
Robots really are coming for our jobs.
And unions are better for workers and have been systematically decimated by conservative politicians for 40 years.
One of the most astounding things that the Republican Party has accomplished over the past 40 years is to convince working class people to vote for the party that has basically castrated their bargaining power, sent their jobs overseas, and rendered them useless in a modern economy by convincing them that marginal issues like abortion, gay marriage and guns are more important than the size of their paycheck and the amount of political and economic power they have.
866
@Enigma Variation You are spot on: "...the Republican Party has...rendered them useless in a modern economy by convincing them that marginal issues like abortion, gay marriage and guns are more important than the size of their paycheck and the amount of political and economic power they have." This has been the Republican Party's "Big Con," and they have received a lot of support from various religious groups that have disregarded the importance of economic justice for all made impossible by the greed of the few.
118
@Enigma Variation
If robots were really beginning to take our jobs, why are so many items sold in the US still produced in China? Are their robots cheaper to use than ours in the US? I don't think so.
28
@Enigma Variation: I like to say the Republican party has given ground on the social agenda while tightening their grip on the economy. All that new social freedom will ring hollow when you can't earn a decent living.
15
I agree with the political arguments but I think when a robot replaces workers, the employer should have to continue to pay the social security and Medicare burden of the displaced workers. The workers generally move to lower paying jobs and there isn’t the political will to raise SS and Medicare rates to ensure the funds remain solvent.
1
This is the Paul Krugman of Nobel fame.
Don't blame the robots for low wages and take the next step-don't blame the tax payers either. There is no blame.
Unions, progressives, conservatives or elites cannot and will not stop technology advances. The educational and vocational system needs to be adjusted for the new economy/jobs. Think if we blamed the anyone for the demise of the buggy whip business.
Krugman simply throws away a vastly more complex analysis with "productivity should be soaring". This is a completely backward look without no intellectual rigor and presented by someone wishing only to reinforce his progressive views. He may be correct, but there are some highly trouble signs.
Growing earnings gap between educated class and others - In 1980, there was a 15% gap between HS and college grads. There is now >100% gap and rapidly growing. During this time, the number of people who start college grew from 40% of eligible population to ~67% . But it has peaked. There is a strong argument that above 70% is not possible due to basic capability issues resulting in a permanent 30% working class (only ~60% of those that start finish college in 6 years). We are no long upgrading "skills" we are demanding capabilities which will leave behind a material portion of the country and where automation can substitute for this labor
1
Paul, I think that you are correct about automation not having the impact that people assume it has - not today, anyway. However, advances in software and pilot programs to test expert systems (not A.I., everyone please stop calling these rules-driven programs artificial intelligence when they are absolutely not) mean that we are approaching a tipping point. When an expert system is introduced to my wife's workplace in the near future, it will begin as assistance to her and the other radiologists in reading diagnostic images. then the hospital will begin to reduce staff, whether justified by real results and improvement in quality or not.
We will see a cascade of workers edged out of white collar jobs that will be lost through both attrition as workers retire and are not replaced, but also as people lose jobs across all industries, most heavily in those that deal with information.
I agree that hostility to workers collective bargaining by government and corporate Masters are the real problem today, but unless we set the rules for introducing expert systems and removing workers from jobs now, when that tipping-point occurs it will be too late.
2
Krugman, you talk about productivity increases happened up into the mid-2000s. That’s like 2015, right? Yeah, exactly. This is when most of the current automation was put in place. Look at the number of people on “disability” and who have stopped looking for work along with those who turned to opioids instead of seeking to redeploy their skills in a new way. Technology and “robots” have had a profound effect and have dramatically reduced the unit of labor needed to produce goods. And there will be another wave as self driving vehicles become mainstream.
You don’t need to disparage or dispute that to make the point you make. With the increased productivity and profits, corporations could certainly share more with workers. Instead they line the pockets of senior management and reward shareholders. It’s a greedy short term viewpoint.
@ERIC Skubish Yes, Productivity growth has doubled under Trump versus President Obama. This means workers are making more services and products for the same effort. This shows how GOP is exploiting workers so that consumers have lower prices and companies have higher profits. Let's make lowering productivity to President Obama era levels a Progressive priority.
Dr. Krugman is only partly correct in his assessment. The bargaining power of unions, either explicitly or implicitly, slowed the investment in and introduction of technological change. Often, even as technology was introduced, the represented workforce was compensated as if not displaced. Now, change is largely unbounded and, driven by Moore’s Law and associated forces, is accelerating exponentially. There is no historical precedent. Tech driven unemployment is projected to approach 40% to 50% of the workforce by 2030. Economists must stop the dissembling and focus their talents on helping our society cope with and profit from exponential change.
4
@Scott Heekin-Canedy
You imply that Moore's Law applies indefinitely. There are a number of reasons to think there was a good bit of stagnation starting several years ago: https://www.technologyreview.com/s/601441/moores-law-is-dead-now-what/ ("Moore’s Law Is Dead. Now What?," MIT Technology Review, Maiy 2016).
The problems associated with the decline of organized labor have been recognized for some time ( https://www.forbes.com/sites/mikecollins/2015/03/19/the-decline-of-unions-is-a-middle-class-problem/#3cf4baaf7f2d ). This has been happening for four decades. I just do not usually see this tied to a discussion of the impact of robotics.
I'm sure Krugman is right, retrospectively -- technological change is a minor factor in the loss of income and job security over the past 40-50 years. But the real question is the future -- the anticipated impact of robotics and AI over the next decade or two. Business experts predict that AI will eliminate 40-50 million jobs, approximately a third of the US labor force, in the foreseeable future. Should we take this warning seriously, or not? Should we prepare to put 40 or 50 million people on the dole, or should we try to retrain 40 or 50 million people for jobs in other fields? What jobs? Who will take responsibility for coping with the impact of such large-scale economic change? Can we see a show of hands?
6
I would like see more discussion of the role of corporate stock buy backs and how this has affected wage stagnation. To my way of thinking,companies have amassed billions in part because they don’t pay very well or in the case of pharmaceuticals,charge too much. Rather than share profits with employees, corporate boards buy back stock simply to bolster shareholders value.
4
@Vincent
Good point. Now, think of this math. If you stipped corporate tax cuts, capital gains tax rate reduction (see US deficit) buybacks and the attendant reduction in aggregate stock supply being traded, and applied current revenue from these same traded stocks you be trading at price to earnings rate higher than the dot-com bubble. Behind the veneer, there is real rot.
2
Eyes on the ball:
Productivity and gains have risen = more money.
Wages have declined = less money for the average Joe.
Where's the rest of the money? In the 0,01%'s pockets.
A much fairer distribution of produced wealth should be the next mission of politics and any civilized society.
12
It is human nature to blame other things for their own incapability to find alternative choice. When robots take over jobs that they used to have, of course they will blame robots. I think the government should prepare alternatives for those workers who lost their jobs to face the future. It is part of the functions that government should have and implement it.
3
It’s not the role of the government in the United States to retrain workers for new jobs. The government can provide temporary safety net support, but ultimately it’s up to the worker to redeploy their production. And that’s easier said than done. Yeah, life is tough sometimes.
It seems only natural that government subsidizes investment whose costs are up front but payback is long, particularly when the investment has large societal benefits. That’s why government builds roads and ports. Education generally and job training specifically falls neatly into this category.
1
@ERIC Skubish Wasn't in 2008 financial crisis, federal government stepped in to help banks without questions asked? Thus, the banking and financial industry can regroup and stand by its own. It took more than 10 years. We are no capitalistic country any more since "private profits & public debt" prevails.
And yet those very same workers most harmed by the rights war on workers continue to vote again and again for republicans that then enact policies that hurt them.
Getting through to these voters is the key to fixing the problem. If not everyone else who gets is just collateral damage in the republicans war on workers.
19
The loss of unions is an important part of the loss of Bargaining power of the average worker.
There is another I want you to consider.
Economists after the great depression of the 1930s saw one of the reasons for that economic calamity and its length that the fed did not increase the money supply and bail out the banks and wall street. When the great Recession hit in 2008 the economists were ready. The governments, particularly in the USA bailed out wall street, the banks and printed a lot of money called QE.
The result was no depression, the finincial class did relatively very well compared to the average person. Big bonuses appeared a couple of years into the great recession. Unfortunately the creative destruction of the financial class did not occur. The financial class came out stronger than ever. The folks that ran wall street, the banks etc survived and came out financially stronger than ever. The workers lost their homes, their little investments etc..
Back to the drawing boards Paul and all you great economists.
4
@Martin
Bingo!
This is an honest question. Do workers themselves have something to do with the decline in membership in unions? We all know that business has been extremely hostile to union organizing forever and have encouraged both Republican politicians and Democratic politicians to develop policies harmful to union organizers. Are the workers themselves against organizing? Have they absorbed the message of business that unions discourage jobs, that they only are interested in member's fees, or other negative messaging? Is this another example of middle class people and working class people succumbing to deceptive propaganda and abandoning their own best interests? If so, does anyone have a plan to combat the problem?
6
I’ll be the odd progressive out and say I don’t think unions are the solution. Two reasons:
1) These days jobs can easily be shipped abroad so unions are much easier to bypass than, say, 40 years ago
2) Deals stricken by unions often lead to inefficient deployment of capital and resources, and I’m surprised that a column written by an economist didn’t explore that...
I think progressives should instead be talking about a minimum income and heavy investment in retraining programs.
4
@Anywhere New Yorker
You can't outsource healthcare, food serves workers, truck driver, cleaning workers, teachers, police officers, etc. There are hundreds of jobs and professions that can't be outsourced. Classic comparative advantage models likely wouldn't work as well if America enforced stricter trading practices that don't allow partners to artificially manipulate currency and "externalizing cost" to humans and the environment.
Are you saying paying exorbitant compensation to CEO's (outsource that) and stock buybacks efficient long term deployment of capital and resources?
6
It is all of they above as to what is hurting the modern worker. I would add that corporations are incentivized to care only about share holder wealth and short term quarterly returns. Its essentially baked into the system. The wealth and well being of workers are typically the first things to be cut in order to improve profit margins.
27
Wage degradation is caused by income inequality. All I really know on the topic is from reading Capital in the 21st century by Thomas Piketty. AI and robotics are a whole different issue. They simply eliminate jobs. I agree that they do not reduce wages. They just make it harder to make the low wages.
3
There's a concomitant political force that's inversely correlated to the decline of workers’ bargaining power. Which is the soaring political power of the wealthy and corporations. Through constant litigation, and the support of a plutocrat-loving majority on the Supreme Court, even modest efforts to rein in the role of money in politics, like McCain-Feingold, have been eviscerated. The Republican SCOTUS went further, ruling in Citizen's United and McCutcheon that campaign financing is a free-for-all for the wealthy and corporations. The entire Republican party, and a good portion of Democrats, are owned lock, stock and barrel by the banking, pharma, manufacturing and fossil fuel industries. The interests of workers have been lost in the deluge of influence-peddling dollars...
27
Part of the blame for loss of pay and benefits for workers may well be political, but I think there's been a very disturbing trend in corporate management to avoid paying their employees a decent wage.
It's become a modern paradigm to cut wages to workers in an effort to boost profits and, of course, the all important stock price. Never mind that a little generosity might go a long way to boost productivity, which just might, in turn, boost profit as well. The other side of the coin goes to the trickle downers, if business owners actually paid better wages, their employees will spend it, effectively building the economy far more robustly than stock prices can.
To my original point, business management needs to understand and acknowledge the importance of paying their employees well.
3
Labor has also been decimated by the efforts of dark money liberterian groups run by the likes of the Koch brothers and Mercer's. They want zero regulations, of any kind, over labor, the environment, finances and they pay substantial sums to GOP officals to ensure labor gets no toehold.
12
Paul is at least half right, but I think he's mistaken to claim technology is not a part of the reduction in salaries and inequitable wealth distribution in this country. It is happaneing globally, including in countries with very strong union protection and pro-labor governments.
This is a pretty good rebuttal of Paul's analysis, because it shows that the decline in wealth of salary workers is occurring in Scandinavian countries and Germany.
https://hbr.org/2015/06/the-great-decoupling
3
I don’t view this as a union issue. Technology moves forward. Every elevator used to have a person who personally operated it. But then automated controls were invented and a passenger needed only to push a button to get to his floor. We then no longer needed elevator operators. Nobody suggested we should keep them on the payroll to sit there and do nothing.
The issue is that positions requiring little formal education are rapidly disappearing, and have been for years. There are other jobs, but they require different education, retraining or relocation. If a textile plant in rural South Carolina closes, that person may have to move to get another comparable paying job. Often he and his family don’t want to do that, understandably.
Things change. Technology changes. Consumer tastes change. Markets change. Stomping one’s feet and demanding that we go back to some earlier time does not work. (Read: Coal) We need to adjust and adapt. Part of that means trying to manage change responsibly rather than have it foisted on us all at once, while another part is helping people to become retrained, retooled and re-educated for the new reality. From a policy and legislative perspective, our leaders can do this much better.
5
@Jack Sonville
Though what you say is mostly sensible, none of it precludes unions being a useful partner in decisions and decision-making. Krugman doesn't fill in the history of why unions have been a necessary balancing dynamic to crass capitalism only motivated by short-term profits but it has been an absolutely vital part of America's 20th century prosperity. One has only to look at other nations where unions are still partners in the boardroom to see that a very high standard of living for everyone is possible while still maintaining healthy economies. Germany, for example.
But your conclusion rather stuns me, Jack: on what recent historical basis, can you reach the conclusion that our 'leaders' will make better decisions by only debating amongst themselves? Ever since Reagan successfully led the charge against unions, civic government, and a compassionate society (actions, not words), our political leaders have pretty much only been considering ideas & strategies bought & paid for by industry/business lobbyists & Koch-funded think tanks. And the result of all that 'informed' decision-making has been terrific at increasing inequality and polarizing Americans - not especially helpful or desirable if you weren't already in the top few percent of income and assets. The union POV needs to be a part of the conversation or we are doomed to become more and dysfunctional as a society and as a democracy.
The jobs decline you speak of is a direct result of where we are in a long K-wave, 50-60 years in total. Automation is a form of commoditization that happens at the end of a disruptive innovation as the innovation becomes just another part of the economy instead of its primary driver. The solution is initiation of a new wave. We’re ending the age if information and telecommunications and embarking on the age of sustainability. The good working class jobs are to be found there in things like solar panel installer and wind turbine technician according to the BLS. Sustainability is the disruption that will sideline trillions of investment dollars in fossil fuels and consequently it is being resisted by those old school billionaires.
6
Paul, why do you make the assumption that it is one or the other? The jobs in the U.S. with highest wages and best unions tend to have lost a huge percentage of workers relative to productivity due to technological innovation.
My son just got a very high paying job without union protection because his skills have higher demand than available workers, so even without unions the professional class tends to be flourishing.
It is low skilled workers that have always needed unions, but when companies can replace them with "robots" they need them even more.
Now technology is replacing more and more high skilled workers- my son says he needs to keep developing new skills to stay ahead of AI and that ten years from now computers will be doing his current job.
Every time technology replaces a job more money goes into the pockets of investors and out of the pockets of salaried workers.
https://www.technologyreview.com/s/515926/how-technology-is-destroying-jobs/
3
The union theme is just a sop to liberal ideology. The fact is this nation’s greatest accomplishments came without unions. The Transcontinental railroad, the Panama Canal, the manufacturing successes of industrial efforts to win WWII all succeeded because they weren’t constrained by labor rules.
2
@From Where I Sit And what were the human costs? Thousands and thousands of people died digging the Panama Canal. Chinese people were conscripted to build the railroad. Women worked in the factories during WWII and we know how women have been treated throughout the centuries. People can be treated decently and humanely without sacrificing a superior product. Unions are needed where workers are not seen as human beings.
2
@From Where I Sit right. And how many workers were killed during the construction of the transcontinental railroad? Not to mention that most of those workers were immigrants.
@From Where I Sit
and don't forget the pyramids! When you can literally work your labor force to death- then enslave more when they die- the profit margin is AWESOME!
On a less snarky note, the largest total economic growth in the USA was in the post-WW2 era, ayt the time of the highest percentage of unionized workers in our history. Feudalism fail....
Why do many workers agree with this anti-union ideology?
From where does this ideology/religion about the self-made person, extreme individualism (especially among Libertarians), competition and level playing fields (even in the face of exposed fraudulent college admissions), and beliefs about the corruption of organized labor arise?
As a college student many years ago, working in a department store, I innocently asked some fellow workers why they did not have a union. My supervisor quickly advised me to keep such ideas to myself -- we were a "family" and that's that. That sort of mind-numbing threat and family talk has long been around. But workers were not so easily persuaded and there was a chance for them to resist.
Then came the right-wing think tanks, attacks on literature, anthropology, sociology, and history as being not practical, The well-funded then imposed their version of our past, humanity, extreme individualism, and the sins of worker, community, & identity organizing.
William Lederer in 1961 wrote A Nation of Sheep about the passivity of Americans -- these think tanks had a good base on which to build. And once they marginalized alternative voices -- calling them "socialist" and associating them with Cold War enemies -- the way was cleared for them to flood the media with views supporting their interests.
Students learning vocational skills and STEM, without intellectual resources with which to resist, were, and are, easy targets. Blinded sheep.
11
Sometimes it is so important to state the obvious. The reason for low wages is bosses paying low wages and workers with less power to fight back. This greatly accelerated with Reagan. To stretch the historical line back even further, it is part of the ongoing legacy of slavery. When you build a nation on stolen labor, it is hard to break a pattern that says there that there are entire categories of people, and entire categories of work that exist only for exploitation. The idea that work should pay enough to live ought to be a basic principle.
13
Paul, you are right about wage stagnation being caused by lessening bargaining power. However, latest technology is rendering many jobs obsolete. People with no jobs make 0 wages. I'd be interested to read about the net gain in jobs and wages caused by Amazon. All I read and heard about in their national auction was how many jobs they'd create. How many jobs have they eradicated?
3
But Paul, it's not just the "robots"; it's the technology focus in most high-paying jobs. It's the tech-meritocracy. I know it sounds mean -- indeed it is a little cruel -- but software shops just don't hire 100 IQs. With all due respect to Joe Sixpack, Joe doesn't write great code. There is, and there will continue to be, less and less for normal, regular people to do -- at least in high-cost-of-living economies where manufacturing jobs no longer make sense. Why doesn't Amazon just go and create a Cinderella story for some middle-America town in desperate need of revitalizing? Because there's no one there who can work at Amazon, that's why. Believe me, this is not the world I, or most other technologists, want to live in. But it's the one that's happening. And, um, those learn-how-to-use-Excel retraining programs won't put a dent in this problem, either. Robots aren't operated by calloused hands on levers; they're run by code. And it's worse than Huxley imagined. Soma, to make the ennui more manageably blissful? Please. There won't even be food, for those on the wrong side of it. If only all these trumpers were smart enough to see it coming at them... but there's the paradox, I guess. And it couldn't happen to a nicer bunch of folks. It'd be nice if they were the only ones, but they're not.
4
Ding ding ding ding ding. Bingo! Paul Krugman you nailed it. Six year ago, I convened a panel of experts on the causes of income inequality in the US at the law school in New Jersey sponsored by the law journal where I was editor in chief. We convened experts in corporate governance, labor law and history, wealth management and a conservative commentator expressing his views on income inequality. What became abundantly clear from the panel discussion and the Q&A was that although outsourcing and technology contributed to the loss of jobs in the US, the overwhelming reason for the decline in wage growth and income inequality was the decline of bargaining power of workers through unions and other related means. Changes in tax policy certainly contribute and can compensate on the margin for the problem after the fact. But what became abundantly clear from the discussions was the overwhelming cause was a lack of political power of workers to influence the political process through primarily union service and although other union-related political means. At the time of this conference, this was a surprising conclusion for those attending as no one really truly had a sense beforehand at that time what was causing income inequality, although many had their various different theories including that it was automation. Your article in contrasts is a perfect statement and short of the underlying cause of income inequality in the US for all to see. Bravo.
13
The idea that technology will replace workers some things and that workers will get jobs doing other things is very a very old one. What is often overlooked is that "workers getting job doing other things" is talking about workers statistically. The prospects for individual workers who get replaced is not so rosy. For example, it seems unlikely that a truck driver in his late forties by a self-driving truck will be able to find a job that pays as well. It was and is very difficult for a coal miner replaced by technology to find an equally well paying job without moving to another part of the country. People have been paying lip service to "retraining" for decades, but for many that simply doesn't work. Sharing productivity changes from technology doesn't come automatically. Unions are not going to be sufficient because the displaced workers will not necessarily get a union job. We are going to need solutions that are more like straight up income redistribution.
3
"automation just isn’t a big part of the story of what happened to American workers over the past 40 years"
This is so refreshing, and long overdue. Thanks.
Automation and robots are just increases in worker productivity. It isn't zero sum. We needn't cut back on workers for the same production. We can instead produce more, pay better, and share it out to more people. That is political choice, not necessity of robotics.
We don't need a Luddite solution. We need a Progressive political solution.
13
@Mark Thomason
I sincerely respect your opinion but I believe many little but important details of how a business is run, are missing in your points.
1. Automation doesn't come for free. One has to invest in it and the returns come up after several years. It is a capital expense and so one cannot simply exclude it from the equation.
2. With automation and fewer employees, marginal costs that is saved, frees up assets for either expansion, R&D or in a new venture. Any business which is content with its size is a doomed business. Paying back the savings back to employees for doing less work would lead to nowhere.
3. Every company has to be profitable in order to pay back the capital costs of shareholders. The faster it is paid, the higher the growth and more investment it attracts.
4. In a hyper-competitive world, each new dollar invested on the same product gives diminishing returns, and hence every dollar saved counts. In order to have better returns, one has to spend big on research to remain competitive.
5. Producing more means nothing if it remains on the racks for months with no customers. Let us say a market has a demand of only 20 cars, making 21st car is simply wastage of resources.
6. Lastly, every company has to go through bottlenecks and rough patches. Stock buybacks and profits are the only mechanisms to hedge the bets against future uncertainties. Profits can either be used for creating a rainy fund or re-investment in R&D to improve competitiveness.
3
Couple of points:
1) We don't measure productivity accurately. If Google doubled its productivity there would be very little effect. However, everyone that uses Google gains productivity through the product. Apple brings out a new smart phone and it doesn't move the needle but it makes everyone else more productive.
2) Everywhere we look in the US we see rent seeking taking from workers. Stock buybacks benefit less than 1% of the US population. Yet it's 83% of CEO pay. Patent manipulation like Epipen who has been gaming their patent for 45 years.
When you value labor it pays quite well. Germany is a good example of such a society. If is sad and ironic that most conservative governance have caused their supporters share of wealth to fall.
4
When we look at what has changed, the demise of unions is certainly one of them, and it coincides with the rise of corporate power throughout the same period.
The decline in unions is staggering ( go here: https://www.npr.org/sections/money/2015/02/23/385843576/50-years-of-shrinking-union-membership-in-one-map),
and Red States have basically led the way, using the "Right to Work" model to undercut unions as much as possible. What we need to acknowledge is that corporations had a lot of help from State government, and unions and the worker had little or none.
Where is Jimmy Hoffa when you need him? There is good and bad in unionization, and there is no doubt that corporations that did not deal effectively with their union, compromised the organization as a whole. The auto industry, in one situation I recall, was one of those, in that a worker, if laid off, would continue to receive their salary and could apply for unemployment insurance and receive it at the same time. Not bad! What eventually evolved, however, is the exact opposite, where the worker has little or no power at all, now.
To me, the worker will never make progress unless the government intervenes, and this is not likely to happen any time soon. It sounds prejudicial to say that the government is in bed with big business, but if we just look at the legislation and the policies our government has been cranking out over the several decades, very little has been directed at improving the workers status.
2
Krugman's opinion in this essay is hardly an expression of careful evaluation, or earnest debate, on developments in a transitioning era for human work in market-based activity.
There are inequities in the present market system for the role and compensation of labor. Perhaps there is some ordained divvy in the percent of national income due labor. And decline in collective bargaining along with failure of public policy on minimum wage can account for the declining share to labor from increases in productivity.
But what of the loose leap that somehow reference to robots, or technology, are merely contrived to divert attention from present labor ails? Is this scholarship? Nobel-class insight?
Are the scholars that have reported diverse displacement impact assessments to be ignored? Why grudge the transition to an era in which humans are spared a lifetime on a "job description"? Why not upgrade human development through increasing opportunities for development of inherent, natural, abilities? Why must industry jobs determine how individuals realize their aspirations? Why not champion robots and their diverse tech. partners for giving industry what it needs and enabling individuals to pursue their own desires?
If Krugman is worth that Nobel Prize let him set his sights on how to achieve the benefits for humanity from a modern framework for human work in the workings of society. Shame his talent is diverted to the merits of minimum wage and collective bargaining.
1
@Wolfgang Price Of course, Wolfgang. He should switch switch from specific challenges to your incomprehensible global, fantastic ambitions. I doubt you know what you are suggesting yourself. What is a "modern framework for human work...."? You have a better idea than a union?
Extortion is wrong regardless of whether it is practiced in a form that can be prosecuted or in a manner that liberals approve of. Demanding a certain wage and conditions from an employer, under the threat of walking away and damaging that business is WRONG whether it is threatened individually or collectively.
1
@From Where I Sit - In case you haven't noticed, every big business practices "extortion"--as you call it--on the communities where they exist--and on the employees who reside there--by threatening (in overt or subtle ways) to go elsewhere--where there are lower environmental and labor regulations--if they don't get the deal at the terms they demand.
5
@freeassociate
I would say the extortion from corporates can be easily fixed by strengthening the right to private property. In principle, for a given community, it can be the local environment, the air we breathe and the water we drink. One cannot fault the corporates for driving a hard bargain, when the monopoly of force lies entirely with the government, which can arbitrarily decide on which side it should come down upon, at any arbitrary time. For instance, recently the city of Seattle was pondering on levying employee tax just because it's disastrous policies have led to homelessness.
It seems like there is a lot of backing for the state-sponsored extortion but everyone is unequivocally against it, if it comes from private bodies. Either one can be completely against it as a principle, or for it. There is no good evil.
@From Where I Sit
Every time an employer asked a person applying for a job what they earn from their current or former employer that's business acting in concert to artificially suppress labor cost. When labor is a major source of profits and costs it has and continues to be job #1 to artificially suppress it.
Even the government is involved with their "Occupational Outlook Handbook" which clearly "sets" a wage range for occupation. No, supply and demand are not the overarching methodologies in wages setting. Workers only want the same rights as employers to act in concert.
2
One of the financial websites write about the three most likely causes of the next economic downturn. Far and away, the most likely cause was logistics and supply chains. The increasing difficulty of moving goods, it was said, would damage the economy. With a shortage of drivers, a lot of product works never make it into warehouses and stores and the remainder that does will be a greatly increased cost. If such a series of events is on the horizon, in transportation and/or other industries, we need to create a career assessment and assignment system to match students with jobs based on business needs lest we all suffer at the hands of a few who fail to take these essential jobs.
@From Where I Sit
Your solution highlights the veneer of supply and demand economics. It only takes a few weeks to gain a commercial drivers license and 10s of thousands do every year. But the retention rates in less than 5% after 3 years and 60% leave the industry after 12 months in 5 years 95% leaves the industry. It's a low paying lousy job.
BUT, if the rules of supply and demand worked then trucking companies would just raise wages and incentive until lines form for the job and workers stayed to enjoy its long term benefits. That's not happening because as the gross amount of carries have gone out of business and workers have few choices. They must choose from these "cartels" carriers "acting in concert" to artificially suppress wages. The trucking industry is a classic example of the illusion of "free market" supply and demand economics and " self-correcting" mechanism. This can be said about many other industries who are allowed to union bust and violate labor laws and act in formal and informal cartels.
2
@Veritas Odit Moras
First, as I pointed out, increased labor costs could weigh heavily on the economy. A nation of over 300 million shouldn’t be financially captive to the wants of 3.5 million truck drivers.
Second, the economy that values labor as equal to capital is communism which has failed every time it has been tried.
I think the comparison between politics hostile to employee bargaining and robots is apples and oranges. They both contribute to the problem. As someone who has been in automation for nearly 40 years, including producing software and hardware (and, yes, including physical, mobile robots), I have watched automation replace workers at a steady clip. Automation is cheaper. Those jobs aren't coming back. The early web page designers is a perfect example: The web was new, lots of people realized they had enough computer skills to offer services as web page designers, and made good money, for a while... then web page design software became available and those jobs vanished. As automation becomes more sophisticated (now being marketed as "AI") more jobs go away. They simply aren't there to bargain for. Couple that with toxic political ideology and policies promoting wealth inequality, and you have the developing disaster we are now living through. It's not a good comparison. robots, decline in employee bargaining power, bad political policy, and wealth inequality are part of a larger toxic gestalt.
6
@Mike exactly. In the next 10-20 years jobs in areas such as banking, finance, insurance, haulage, transport, warehousing, translating, journalism and a whole host of other industries will plummet due to AI. That’s why it’s a hot topic. Krugman here is confusing explanations of the past with predictions of the future. They can both be true.
1
I don't see why talk of a "skills gap" couldn't also be a way to turn attention to good policies (investment in education...) that fight unemployment.
1
The jobs that robots replace are low wage, repetitive, labor intensive and lower paying jobs and a job policy that tries to protect these jobs is doomed to fail.
Protection of workers is more important than protection of jobs and the way forward is better education as well job-retraining.
It is people that build and design the machines and programming that robots consist of.
Paul, I would actually like to see the numbers, i.e., the total number of displace workers because of the use of technology and robots. My intuition it is larger than you suggest. But I do agree that a very large contribution is corporations moving their factories to where labor is cheaper, the US and global south, and the destruction of unions.
3
The social costs of the union busting are almost as evident as the financial. The role of the union and union hall in the community is now a void. And the role was more than socially gathering for a beer. The union and their families were wound together in a fabric of distinct community. Beyond an understanding that a family member would always get a job, the injured and sick - as well as their families - was of community concern and subsequent action.
That social safety net is gone and the emptiness has been filled by many of the diseases of despair. All traded for bigger dividends.
2
Done right, automation should mean that everyone has to work less and less while earning more and more. Because we basically get an army of automated slaves who work very efficiently, don't eat or need to pay their rent or go to the movies, and don't mind at all being exploited because they're not alive.
Automation should be a huge blessing for everybody. That it isn't, is purely a political failure.
3
One of the things that worries me most about robots is not that they will replace some jobs, as other jobs will come in place. What worries me is when robots will become completely autonomous, meaning it will then be possible to use robots as strike busting tools. This would remove employees' ultimate bargaining chip: the possibility to lay down work in protest over wage conditions. But then maybe employees won't have to work anymore, and the whole discourse will switch from wages to subsistance allowances.
1
Why is Krugman starting his "robot arithmetic" now and using eras of many lost jobs to automation as "evidence" that things have been changing for years but not due to automation??
His essay is nuts.
The lost coal joins, increased efficiency, etc. have been a centuries long march of automation. We are where we are because of it. And even if it continues in some rough version as before without accelerating, we're in big trouble as we have no plans to deal with massive, societal unemployment.
He calls it euphemistically "technological change." Let's call it what it is: disappearance of the need for human labor, physical or mental. There is no "sharing" of the fruits in terms of work when the work disappears.
That is why people are looking at guaranteed income. Because simple extrapolations show that from labor to medicine to writing news reports and legal briefs, the robots are coming and the jobs are going.
If we don't deal with the fact that no "adapting" by traditional labor approaches can deal with a disappearing need for labor, we're in major societal trouble.
5
The author mentions wage stagnation being caused by a lack of bargaining power which is caused by lack of unions.
Have white collar/professional workers (whose wages have paced with inflation) needed unions for bargaining power historically?
No, those workers have retained their bargaining power because they are not easily replaceable. In my experience there are several reasons why:
1) The jobs require more experience and qualifications so there is less competition.
2) It takes a long time to ramp up for these jobs (6 months to a year typically till the employee is competent/efficient) so you do not want to risk losing them.
3) It is harder to replace them with a machine or an overseas worker (although more and more companies are trying to offshore or automate white collar jobs too).
In a perfect utopia, businesses would do the right thing and forgo higher profits but since that is highly unlikely I agree politicians will have to get involved.
In my opinion the most helpful thing they can do to give bargaining power back to lower wage workers is to make it more expensive to replace a human with a machine or an overseas worker (through tax penalties).
The author also ignores the other side of income inequality which is the people at the very top whose incomes have outpaced inflation many times over. That can (and should) also be addressed by our politicians but no space here to go into that.
4
@LL - protectionism, which is what you advocate, in the long run does not work. Besides, the direct effect would be that the cost of "protected" goods sheltered from external competition would increase, so any gains to the "local/human" workers would be largely offset by the additional costs.
1
I think you underestimate the current and accelerating effects of robotics and artificial intelligence. Coupled with a neoliberal business and political world, the prospects for others not in the techno-financial elites is dim indeed.
Robotic systems have a ways to go before they dislocate human workers en masse. The recent Boeing 737 Max 8 crashes, if due to malfunctioning Angle of Attack sensors feeding erroneous data to the maneuvering characteristics augmentation system (MCAS), are tragic reminders of the limitations of what is in effect a robotic system.
Until artificial intelligence (AI) can be truly intelligent, the jobs robots would take over will remain in human hands. And just like past technology created new jobs when it was introduced into society, it's highly likely robotic systems, especially those run by sophisticated AI will do the same, even if we don't know what they are now. Nevertheless, we should be trying to forecast the rate of development of competent robotic systems so we can manage employments dislocation. We should also evaluate our educational systems at all levels to ensure that they are in synch with the change.
One example might be an addition to the adage: "reading is fundamental, so is coding."
Finally, the day the robots can do everything humans do now is the day capitalism dies because robots won't have any need to "buy" the stuff they make or the services they provide. 24th Century here we come.
1
When you look at the percentages of how corporations "spend" their profits, the amount reinvested in employees has been decreasing for decades.
As executives take more of their income in shares for (legal) tax avoidance, we find that they also direct larger percentages of corporate profit to stock buy-backs which increase their share values. A win-win if you happen to be the executive.
Combine that with right-to-work laws (which actually mean your employer has the "right" to fire you without cause) along with the decline of unions, and guess who loses out?
5
@Rob I agree. When I went to live in Texas, one of my first conversations was with a labor lawyer, who pointed out that Texas was a "work-at-will" state. That sounded very good to me... until, as you mention. it became clear that the will is that of the employer, not the job seeker's...
1
@andrea
andrea, legislators can be so clever in their allegiance to big business. I guess it's clear (at least) who's working for whom and who's being conned.
1
Things change. Robotics may not have accounted for a large part of job losses in the past - but its cousins computerization and Internet have, and robotics may in the future.
Computers put a lot of accountants and accounting clerks out of work in past decades. Large corporations would be virtually impossible without computers just to do the accounting and logistics of ordering, sales processing and inventory control. Note that early, expensive, vacuum tube computers had limited impact but the invention of integrated circuits and the impact of Moore's Law on costs pushed them into many new applications, a trend that is still continuing.
The Internet contributed greatly to enabling long distance supply chains and exporting manufacturing jobs by making communications faster and easier. It also fuels a massive retrenching with online purchasing that results in fewer jobs in retailing and distribution with a net savings that results in lower cost.
Mr. Krugman identified many jobs already lost to robotics. As the pace of technology change increases, so will job losses. Artificial intelligence and nanotechnology are in their infancy and as they mature the effect on jobs will be astonishing.
As more and more production - including the provision of services - is handled by machines, more jobs will be lost and a larger share of national income will go the asset owners.
We already prop up weak demand with heavy government stimulation, what happens in the future?
3
There used to be a pretty tight correlation between worker productivity and wages. Bretton Woods cancellation in 1971 ended all that - the curves began to diverge and the ravenous, never-to-be-satisfied rich took all the gains for themselves.
7
Paul:
The dust settled on the disruption caused by the Industrial Revolution after immense social and political upheaval during the XIX and XX centuries. This included the disappearance of dynasties and empires, revolutions, two world wars and the appearance of Communism and Fascism.
It is ahistorical and simplistic to believe that the Automation Revolution will not overturn the apple cart in a way even more massive and possibly more bloody.
2
Henry Ford responded to investors that complained about the high wages he pays for his workers: (I am paraphrasing here), If i didn't pay them I wouldn't have enough customers that are able to purchase my cars. That is exactly applicable to our situation. Nowadays workers can't pay for what they produce which in other words means that wages didn't follow productivity. That means that we need more buying power by the workers. That also means that profits should be distributed more fairly between workers and share holders or the top executives. That means also that if workers make more money, they would be able to consume more so that companies would be able to produce more. Right now - consumption should be a virtuous cycle to generate growth that would generate more profits which if distributed fairly should increase workers wages even more.
4
@Ben
Unless it is a state induced monopoly, a worker can always move to another job for better wages. The wages are always determined by market price, and if someone intends to artificially decrease or increase it, the feedback mechanism corrects it. For instance, if the wages are depressed artificially then a potential competitor can attract all the bright workers by simply increasing the wages marginally. On the other hand, if one wants to artificially increase the wages of workers by reducing from top-level management, unless there is a state monopoly, nothing prevents the exodus of top management to leave for a better salary. Let us say, instead of reducing salary, profits are cut. then shareholders would do a mass sell-off and invest in better venues. By the way, shareholders are the ones who sacrifice their present for the future. Sometimes they risk their entire life earnings for ventures which might never be profitable. This is unlike any paid worker who receives a fixed negotiated salary without sacrificing anything. Reducing profits would also affect the company's future prospects and longevity by making it less competitive as there would be less money to invest in R&D or expand. In the age of hyper-competitiveness with diminishing returns on each dollar invested, it would be simply suicide. So it is just not a simple matter of simply increasing the wages, if the market doesn't support it.
2
If our politicians--and of course I'm thinking of mostly Republican politicians--could see the situation clearly and without ideology, it might occur to them that a better living wage, lower medical costs, widely accessible higher education, and decent housing would benefit the wealthy and powerful as well as the rest of us. Yet their priorities seem to be cutting taxes and slashing the safety nets that hold citizens above the poverty line. I don't have children, but I don't begrudge paying school taxes, because a well-educated population is good for the country--and I would argue that affordable healthcare and housing would benefit us all, as well. When the right-wing politicians criticize and make fun of "socialistic" and "idealistic" left-wing proposals, I have to wonder why they believe their "get all you can get and leave it to the kids" goal is going to be good for anyone, including their heirs.
5
@carrobin
"Cutting taxes" means giving one's own money back which the government doesn't own and "slashing the safety nets" means removing entitlement programs which should not have been in the first place, as no one is entitled to someone's labor by force but only by voluntary transactions. If you do not begrudge paying taxes, you can write a cheque back to IRS, giving back the extra tax cuts which you received. And so can all your "socialistic" and "idealistic" left-wing comrades. The US economy is already sitting on trillions of debt, and the coming generations can thank you and all the credit fed boomers like Mr. Krugman for leaving with the mess they are going to face, because of generations of failed welfare and redistributive policies. Well at least that is what you would be leaving for the kids.
4
If you think fast food clerks deserve $15/hr, bump their pay with a tip at the time of service. Don’t pick my pockets because you don’t have the fortitude to accept the realities of capitalism.
One noteworthy difference between now and the past is machine learning. Before, machines were highly specialized. An innovation that helped you mine coal more productively didn't mean a lot if you weren't mining anything. So the job losses in one industry could be offset by gains elsewhere.
Machine learning is not like that. It lets a computer acquire general skills like object recognition and natural language understanding. It's easy to imagine the same AI eliminating both current professions and newly-emerging professions all at once.
It's mostly a question of how far machine learning can go and how fast it can get there. The current hype is ridiculous and unjustified; computers are not ready to replace humans in general yet. But if research progresses at the same blistering pace it did in the last decade (not a sure bet at all!) we very well may need to confront this in our lifetimes.
Anyone trying to pin any present-day problems, like wage stagnation, on robots is simply wrong. But the problems people are trying to blame on AI are the right problems to worry about. Just not now and probably not for another couple of decades at the least.
2
I don't blame robots. I blame big government. Wages/GDP have fallen with the rise of government spending. The correlation is almost perfectly negative.
https://fred.stlouisfed.org/graph/?g=dDVV
I'd still like to see some of the Progressives who ostensibly care more about the workers than making rich people in the DC area even richer address this.
@FreddyB
The reduction in wage and salary's share of GPD reflects pension contributions, insurance premiums such as health insurance, and an increasing portion of payroll taxes to fund Medicare and Social Security. This reflect the cost of these programs as the US population is aging.
Blame big Government? Those are social safety nets that would otherwise force the elderly to suffer in pain and die horrible deaths. You should be thanking Big Government. Taxes are what we are forced to pay to have a society. Don't want to pay taxes? Then we would all be thrown back to the Stone Age. No thanks.
1
Laurie,
Would you care to explain how Switzerland and Singapore have avoided being "thrown back to the stone age" if that is the consequence of smaller government?
@Laurie
I do not think anyone apart from physically and mentally disabled need any help. The old generation spent more than they earned, fuelled by their addiction for cheap credit. If someone is not saving enough for his or her own old age, they are to blame for it. No one is entitled to someone's else labor unless one worked for it. The community should come forward in helping those in need, not the government. Every private individual is more than capable of making the decision of how his or her money should be spent than the government, one of the reasons purely because of efficiency. One does not care about splurging money if he did not have to work for it. Grandpa Sanders can be a millionaire and have multiple villas on tax-payers money, but can lecture everyone about how the rich are to blame, many of whom had to work their butts off to be in the position they are today. Anyway just count the days when this social security mess explodes in the face as the debt skyrockets. The projection is 2025-2040. And then be ready for the austerity measures and living in actual stone age.
3
Paul says, essentially, it's not the automation; it's the loss of union-power, which is causing the worker's wage stagnation and loss of job-security.
But the automation wave between the 1980s and the mid 2000s (it slowed after the mid 2000s, according to Paul) is one of the main REASONS for the loss of union-power which is now causing so much trouble for the workers. The automation wave has caused this in two ways: first, directly (more automation means fewer workers which means weaker unions) and indirectly: more automation makes unions seem to the public to be less necessary, less essential to life in general, so politicians and policies favorable to union power lose public support.
1
What? Progressives aren't falling for the robotics/A.I. arguments! For years, we've had to endure the various forms of "... and those jobs ain't coming back" pearls of wisdom. For years, we've been trying to tell establishment democrats that it's a Red Herring. Probably the largest demographic change in the history of humankind is well underway in China, from rural, agricultural areas toward urban, industrial ones - and their not all designing robots.
1
Robots don't lower wages - corporate executives do out of greed & the lack of any governmental restraints. Robots (especially as robotic vision becomes better) do replace human jobs. So does cybernetics (think the shop foreman & manager). AI is just starting to show what the future holds as far as eliminating the need for most human-performed work. A recent study in China using MRIs from 600,000 people showed that skilled neurologists could make correct diagnoses about 80% of the time while computers with AI systems were 95% correct. When I consulted to Mayo Clinic recently, they were experimenting with AI diagnosis systems. Medical students are taught that, when diagnosing symptoms, if you hear hoofbeats behind you, don't think immediately of zebras. AI never forgets that there could be, on occasion, a "zebra" diagnosis. It also never mis-diagnoses a difficult disease because it just never happened to read a journal article about it.
The real problem falls into your and other economists' court. As the need for human labor drastically decreases, we need newer economic systems that don't use labor & its value as the primary determinant of how to split up the total pie. We are religiously committed to antiquated economic theories (The Wealth of Nations was written in 1776 for a very different economy). Economists could better spend their time thinking about radical new economic systems to meet 21st & 22nd century realities.
6
@Beartooth
I agree with most of what you said. But I disagree with the greed of corporates part slightly. Everyone wants to guarantee their future, however, no one can predict it. Profits are a way of creating a rainy day fund, in order to avoid any sudden apocalyptic scenario. If one traces the history of any company, no matter how big or small, each company had to go through rough patches once in a while, sometimes for a very long time, and sometimes which inevitably led to their extinction. The only certainty is change. Google and Apple who have saved money equal to the GDP of some mid-sized nations would also fall someday or at least have to go through a rough patch.
Coming to the change in economy policy, I think basics still remain the same. Economy is interaction between humans instead of well defined particles, however unlike Physics it is not a Science, as no one can predict human action precisely. So there is no mathematical model which can predict anything accurately.
When computers burst into the scene, it created a demand for people who could operate the machines. So our education system created computer engineers and IT professionals to meet the demand. If technology advancements outrun the advancement in human mental capacity, all that would happen is we would have more people without a job. So I would put money on increasing the pace of the human capacity so that more people are adept to upcoming jobs.
Loss of unions and bargaining power is just a symptom. The cause is mega consolidation of industries which push out competition (bargaining power) and lock the status quo by using their outsize resources to buy the body politic and distract from the actual issue of monopolies and money in government. Big difference in foreign democratic countries is they don’t have the same degree of mega corporations.
5
Automation continues to chip away at manufacturing jobs, many of which were monotonous and some that were downright unsafe even though these jobs once paid respectable salaries thanks in large part to union prowess. Globalization has also driven wages down along with the number of American jobs. Whether US companies set up shop in countries with far cheaper labor costs or remain in the US, the drive to remain profitable while competing in global markets puts enormous pressure on companies to contain both labor and material costs. Globalization and dramatically lower costs of living in countries like China, Mexico and India complicate US wage growth, especially as worker skill levels rise in those countries while living costs remain much lower than US levels. US Political policy might be able to achieve some temporary incremental equilibrium in labor costs among competing countries but as globalization expands and technological innovations evolve disparately among countries and within industires, solid wage growth becomes less of a certainty for not only US workers but abroad as well. Will there ever be a completely level business and manufacturing playing field or even a remotely level one between the US and China, for instance? Verification and measurement between nations is fraught with its own challenges. And tariff wars create lots of messy, unintended consequences for companies and their workers. There is a lot of complicated blame to go around for wage stagnation.
3
@Jeff you didn't bother reading what Krugman had to say did you? Try rereading it before you just throw down what you thought ahead of time.
A robot is a glorified tool. Tools are neither bad nor good. They are either effective and efficient or they are not. Humans make tools to serve human interests and values.
2
@Blackmamba - reminds me of a story I learned as an undergrad in the late 1960s. Two unemployed men are sitting on the edge of a giant quarry, watching a monster steam shovel (run by one man) filling a massive dump truck (driven by one man). One observer turns to the other and says bitterly, if it weren't for those machines, there would be jobs here for 1,000 workers with shovels. The other responds, if it weren't for shovels, there'd be work here for 100,000 workers with tablespoons.
Most human work is going to become redundant in the next 20 to 30 years. Even those who do continue to work will have so many new AI & robotic assists that far fewer of them will be needed in most fields.
Will maintaining a need to have work for people to survive slow down what could be a leap into a primarily leisure society? Cybernetics expert Dr. Alice Mary Hilton lectured to my college class 50 years ago that we were already on the technological verge of that kind of leap forward. She cited a well-known manufacturer of cakes. They outfitted a factory with automation, eliminating 600 jobs. Mgt jobs were eliminated by computer cybernetics. To run 3 shifts a day, it only took one worker sitting at a control board looking at lights that would indicate a machine failure. Today we don't even need that as AI can diagnose breakdowns, & even predict them in advance & notify repair crews. BTW, the cakes were still just as tasty.
2
Thanks for a thought provoking column Prof. Krugman.
One question that occurs to me is whether countries like France or Sweden (maybe Japan?) which do not have the same level of purported greedy capitalists have done better than the USA, which is what your argument would imply.
4
And what happens, 20 years ahead in artificial intelligence, when the robots become the political leaders? Will they play chess instead of waging war? Or should we humans head for Saturn? Wait, I think we already saw this movie, at least the elites who could afford a ticket, if not the popcorn.
1
If robots were taking our jobs or hurting our pay...
1. Real median household income wouldn't have set an all-time record in 2016 and continued in record territory in 2017, north of $60,000 adjusted for inflation. We'll get 2018 data in September, but it'll be another record most likely.
2. Unemployment wouldn't be 3.8%, near full employment.
3. Job creation wouldn't be around 200,000 jobs/month, not quite as good in Trump's first 25 months as Obama's last 25 months, but still solid.
With the top 1% owning about $40 trillion in wealth (about a 40% share vs. 25% pre-Reagan), our problem is in our willingness to tax them, plain and simple, and shift that money back to the bottom 99% who earned it. About $1 trillion a year in stock buybacks is the primary upward transfer mechanism; we should restrict them.
The ACA for example taxed the average top 1% family about $20,000/year and shifted about $600 to the average bottom 40% family via subsidies.
We'll need about 10-15x that amount of redistribution to level the playing field. No need to defend the top 1%; they can purchase their own Congressmen and Senators. Vote in your own interests for a change.
30
@David Doney - that's because we can't even begin to employ robotics & AI to any great degree as long as we have an economy that requires human labor to earn one's living. That's been holding us back for half a century already. We continue to need to provide income-producing jobs for people who could otherwise be freed from the need to work by new technologies. Let's come back in 20 years & see how your arguments hold up. BTW, Only when we look at solutions like a universal base net income drawn directly from the GDP along with government revenues will we be able to stop working in the salt mines & enjoy the freedom of leisure. Those who want more money will always have ways work & invest - to tap the GDP over and above what we need for individuals & the society in general. You are still thinking in 18th century capitalist models.
2
Unions are fundamentally incompatible with service sector and high-tech jobs. Automation poses an unprecedented threat to jobs because most workers don’t have enough skills to move up the value chain. Education is the key not unionizations.
3
@Robert
In Japan workers are protected by tenure and company unions. Because of this, it is harder to fire enough workers to effect company performance than it is to fire executives. This cause companies to be run in worker’s interests.
(Both America and Japan use the shareholder primacy rule - share holders interest comes first - but in practice neither do, in U.S. execs interest prevails, in Japan workers).
What do workers want? Job security. How does that translate into business strategy: the long term pursuit of market share growth. Turns out stock markets highly value market share - so for long term shareholders workers might be better proxies than executive management.
This model has shown incredible flexibility while protecting interests of workers and shareholders. It may welll be that America’s executives are the class that are destroying America. Notice that rich executives are coming out of the wood work to oppose the progressive movement. There’s a reason for that - they have the most to lose.
6
Assume for a moment that automation has been responsible for zero job losses in the past. Would that fact excuse the complete failure of leaders everywhere, at all levels, to prepare for a the economic dislocation that will occur when every vehicle on the road drives itself? Or to consider the cultural impact of that?
3
Krugman isn't addressing the robot part quite as rigorously as it it should be. He is fundamentally correct that wealth inequality is completely independent from technology and is strictly in the political and moral realm. Wealth inequality should be addressed in fundamental new ways.
Krugman and others note the coincidence of the fall in union membership with the decline in overall worker incomes in the US. They often recommend re-invigorating unions. That wage decline is often assumed to be causal and it probably is, with the important caveat: within our particular "flavor" of capitalism. I suggest the real problem to be addressed is Our particular system of capitalism.
The examples he gives of technology displacing jobs speak to what is coming. Robots and AI together will be capable of replacing vast swaths of work now done by humans. The actual practical limit of that displacement right now is energy to run all the robots. That is likely to change in the next 30-50 years. Massive amounts of human work will be replaced by robots. The promise of capitalism has always been, in the end, that everyone will be relieved of daily toil. That day is visible from here now.
So , who owns the robots? Who benefits from them. Unions are irrelevant to that question. We have to address, ultimately, who owns the fruit of generations of labor. We have to rethink our abominable notions of ownership and wealth. We have to get to cooperation from our destructive system of competition.
4
Krugman is right about the imbalance of power creating an inequality gap which keeps growing. Thomas Piketty's book "Capital in the 21st Century" shows France's inequality gap occurring before ours. But, France still has many unionized workers who occasionally go on strike to make their power felt by their employers. They announce a one-day strike a week in advance to minimize inconvenience to the public. France's inequality is political - tax policies that favor the rich.
Our imbalance of power is not fewer unions - it is doubly political. Like France, our tax policies favor the rich. But, Republicans have harnessed the power of ex-union workers into reliable, resentful voters. Unions have been bastions of white blue collar privilege where sons are guaranteed union membership. At the height of its power in the 1970s, the UAW demanded that wages be above the national median income. It is absurd to pay auto workers more than their customers who cannot afford to buy a car. It is this mentality that still infects ex-union workers who can be manipulated by Republicans.
2
In classical economics labor is paid the value of its marginal product. The recent stagnantion in wages is entirely consistent with the observed flattening in productivity. Furthermore, wages should equilibrate across the world for comparable work, or else capital flows to regions where labor is cheaper. This also puts downward pressure on wages. I don't see how politicians can stem either of these.
1
Maybe blaming the robots is a diversionary tactic to avoid people noticing the changes in tax policy may be what is taking wages away from workers.
With higher income taxes on the top earners, it makes some sense to use labor as a corporate expense against the corporate tax liabilities.
Just a thought.
1
There is nothing new about this clear and present contempt for working people. Take teachers for instance. Robots don't teach school. I taught for a year in the 1980s during the Reagan administration. I remember the day my tax rate went went from 15% to 23% - or something. My take home pay went from a whopping $23,000 per annum to $21,300 - or something. And teachers were penalized for sick days over 5 I believe it was: $50 per day. Migraines cost me about $250 per week by the end of the school year. By way of contrast, my former mother-in-law, whose father founded a company with national name recognition (at least during the Bush era) in the 1930s was a true self made man. And because he'd actually worked - like really worked - he treated his employees like real people. On one occasion things were difficult. He had his wife sell the family silver so he could make payroll.
4
I believe that our fragmented federal system contributed greatly to the unfortunate decline in unions and their important political role in strengthening worker’s rights and compensation.
Employers in union states moved their operations to predominantly Southern anti union states and started the trend to lower wages. Our tax system allowed them to write off these moves and reduce their tax burdens. Over time globalization allowed them to move many jobs abroad and further reduce labor’s wages and weaken unions.
These corporations were rewarded with much higher profitability, stock prices and their executives with greatly inflated salaries and compensation. This eventually led to our current economic system with greater social and income inequality.
Most of the decisions were political and made possible by the inordinate power of anti union states in our politics and in the Republican Party.
If our political structure was more National and not Federal, I believe unions would have remained stronger and there would be much less inequality and higher labor reimbursement today.
5
You might check with James Madison or Thomas Jefferson or their writings on that direction. It is that way for a reason.
In Japan we are supposed to be facing labor shortage and yet the wages are stagnated (for maybe thirty years). And the employers are clamoring for taking in foreign laborers (for rather open exploitation). But most of the blame for this situation is laid on the fierce competition with foreign countries introduced by free trade agreements. This excuse is also used for suppressing labor unions. The robots are discussed but as a future problem.
De-unionization is a big problem. But how to solve it? Maybe we should start to revamp trade agreements for laborers?
13
It appears that Paul is impliedly blaming the worker for failing to unionise. In UK there was a similar removal of unions, continuing with action by PM Thatcher.
Yet there is notional full employment, where a large number of low skilled are paid, when employed, off contract, the so-called Gig economy. There is a increase in reliance upon food banks.
Yet there are employers in UK like the Germany company who builds the Mini which pays good wages.
Could the fault lie with employers who lack compassion as opposed to workers who fail to unionise?
3
It is terrific to see a prominent economist bag all the technological determinists - the list is long, from sociologist Daniel Bell to millions of economists who've wreaked havoc for 4 decades and before, in the 1930s Depression. And have never or rarely recanted. Also, I am glad Krugman bagged the Basic Income (BI) - this is where he (at last) could link to the MMT criticism of BI. It does not help all kinds of people unable to work - frail (too) young, and old, disabled and the carers of them, often women, who need special social payments to meet needs. Moreover, even the nicest, decent, non-warmongering state (where's that? yes Scandinavia and a few others) can never provide a decent untaxed Basic Income to the able-bodied. Governments need a taxable, decent-earning workforce to validate state-money by contributing to slowing down state-money inflation. Progressive taxes [at the top] are needed for reducing asset and bank-money inflation. What most places today desperately need is wage inflation; what the screechers below typically don't/won't do is to look at the lazy and whinging wealth owners.
4
"Robots a big part of the problem", I think the fear is not so distant future when medical diagnosis, lawyering i.e. paperwork, strategies ... are done by machine. We are at a time when machines can effectively play go, chess, and shogi better than people with a careful enumeration of the strategy space. There is no reason why AI can more effectively argue cases with sufficient study and suitable optimization. The fear of robots is that HIGH END WORKERS i.e. lawyers, doctors, and business management other professionals will be replaced by machine. Hence the fear by the very professionals which make be made more obsolete than Truck drivers. This is where a lot of this misplaced anxiety comes from.
1
The time is coming to tax robotic work output and robots in general. Economic systems must adjust to the need for humans to do work in existing systems.
1
It's important to also remember how large unions have destroyed corporations (think gm during the financial crisis, the airline industry bankruptcies and nyc's MTA). There's no denying that decreasing union power has led to slow wage growth, but keep in mind that wages are sticky. When a real crisis comes where the minimum wage is too high and stifling job growth, are you going to lower the minimum wage?
1
Paul Krugman, conditions for long haul truck drivers are surely no worse now than decades ago. And, by the way, not enough people are willing to do the job; there is a chronic shortage.
2
Good Evening! Once again it would actually be nice to have someone actually step out of the Big Apple and actually visit and speak to the individuals currently running many manufacturing operations throughout the US. The issue that you will find most surprising is a dearth of individuals willing and wanting to work in manufacturing. The current work force is not interested or motivated on many levels to work. Yes I would agree that many pay between $12-17 an hour . However, there a number of jobs that do pay well that are not filled because the people don’t like the work, i.e not air conditioned, off shifts, pressure and don’t want work the overtime. If it were not for the automation you would not enough people to work.
Also in your reference to the trucking industry one of biggest issues is finding qualified drivers who want the jobs. The trucking industry is in dire straights because of a lack willing and able bodies. The majority of the problem with job is that many people are unwilling to travel and be away from there home it has nothing to do with working conditions. If you can pass a drug test and physical and license in hand you will have a job.
In conclusion, yes there are a number of issues with some many low wage jobs but the bigger problem is more a lack of skills and motivation.
5
@Ian Gale I bet if truckers were paid more it’d offset the opportunity cost of not being home, and more people would be willing to get involved in that industry. Apparently, the current wages offered aren’t worth it.
4
Brilliant!
I am glad that you go to conferences and share your thoughts maybe this column and analysis will prompt a detailed analysis of the last 50 years to determine what the record shows in the specific policies enacted by our political system, e.g. the recent tax cut for the benefit of the 1%, that contributed to the trend toward continued income and wealth concentration.
As these political actions become better known and become part of the public and media discourse, it could have more impact than normal during the policy work-up for the 2020 elections.
It may be possible that the decline in unions could be replaced by informed voters and higher voter turnout that could result in policies to better supply certain services such as health and education, to better render politically acceptable income distribution and to invest public funds in economic commons like infrastructure that will broadly benefit people. E.g. more efficient, safer and more convenient transport, widely available communications, improved quality of air, water, and food, etc.
Importantly, use our political leadership to mobilize the global community to develop technology that will generate very cheap electricity from non-fossil fuels. The compelling existential threat to humankind posed by global warming is a perfect motivation for a new international framework for creating a better world and a better global market to enable a higher QOL for the projected 9 Billion population by mid-century.
4
Anti-union sentiment is part and parcel of anti-Socialist sentiment and the full on propaganda campaign launched against the "Communist menace" in the late 40s, of which McCarthy was only the tip of the iceberg. (Not to offer any support for an ideology which seems to have spawned mostly run of the mill dictatorships posing as "dictatorships of the proletariat.")
Anyway, voters seem to have fallen for all the right-wing double-speak.
But to the point, let's get to the basic issue of any productivity-enhancing technology. If done well, it can't be anything but good for everyone that work is done with less toll on our bodies and at less cost; however, I beg to differ with Krugman's point that the only problem is that the benefits have not been shared. The most important problem is a kind of structural failure of vision seemingly inherent in our economic system. As labor is freed by technology, the response should be neither greater leisure nor greater unemployment. The response should be the development of new sectors of the economy to absorb the excess labor.
4
Yes, the minimum wage should be higher. But that is an incentive for bosses to replace workers with robots.
In the old days, workers who were replaced by technological advancement manufactured more of the new product. Now, robots can make more robots, so the new jobs will be for managers and AI workers.
2
During deep recession of 2008, the regional fed chairman in Minnesota said, the high unemployment is due to skills gap. I wrote in nyt, the skills gap is among the policy decision makers. It is true than and it is true now.
11
What happened to the Unions? It is really very simple. The workers forgot they were workers, they were making good money with good benefits and they began to think of themselves above it all. They were driving big cars, living in nice houses, eating steak, and going out on their boats. They grew complacent and before they knew they were hung out to dry.
As technology and global affairs begin to change the landscape, NAFTA was born, the EU took shape, the WTO became a force, the Cold War ended and China entered the world manufacturing stage with more cheap labor than the eye could see. It has been all down hill for the last 4 decades starting with Regan's destruction of the Air Controllers Union.
Unions took Centuries to build and we are now where the Unions were over 100 years ago. It will be a long way back and it may never happen unless Unions truly become international like the Corporations that exploit cheap labor. There will be blood. Read the history of organized labor movement and open your eyes to the truth of the ruthlessness of Big Business for every drop of profit regardless of the collateral damage!
Today it seems that the teachers are taking the lead and show us that governments can/taxers can also be ruthless with their workers. Good luck, the future of America is on the shoulders of its working people!
27
@Ben
One thing the teachers have shown us is there is strength in numbers. We should be more like France: when one union strikes, all unions strike. Unions need to actually unite, nationally,regardless of the craft or skill. No more parochialism.
5
The argument that politics, not robots, are responsible for the fall in workers' wage may be right, but it isn't air-tight.
In the U.S. there has been a large-scale shift from heavy industrial work to service jobs like caregivers, hairdressers, and hamburger flippers. Robots haven't (yet) replaced them, so productivity in those jobs hasn't risen as fast as it has for coal miners and longshoremen. It's hard to think of a more efficient way to change bedpans.
Workers have been displaced from manufacturing to jobs in service industries. This is a possible explanation for the failure of overall productivity to continue rising.
But what was it that displaced them?
Robots.
5
@donnolo more likely offshoring. Use of robotics is overly concentrated in auto and electronics - see the International Federation of Robotics. Then there are a few other sectors. Otherwise, certain process manufacturing and flow manufacturing industries didn't require much in the way of labor relatively speaking. Then there may be even some improvements in processes (like Toyota achieved with Just in Time) ...
Last election data show that Hillary barely won the majority of union households (51-43) while Trump won non-union households by 48-46.
Maybe it's not the politicians but those who vote for them.
9
@sapere aude Say "socialized" and conservatives freak out. universal health care? SOCIALISM! Paid time off? SOCIALISM! Hike the minimum wage? SOCIALISM! Unions? SOCIALISM!
Feudal-style lords and serfs? Not socialism. Indentured servitude? Not socialism.
@sapere aude
Some unions' memberships voted more for iq45, in some cases 60 to 40 percent. Disgraceful.
1
"If robots really were replacing workers en masse, we’d expect to see the amount of stuff produced by each remaining worker — labor productivity — soaring." Not really; this confuses "labor productivity" with labor efficiency.
Labor productivity, as measured, is NOT "the amount of stuff" produced by each worker, but the VALUE of it. If robots took over half of all the labor in all of the goods-producing jobs, prices would just be cut in half, due to the lower cost of production. The same goods produced in half the time at half the price results in ZERO increase in "labor productivity."
Meanwhile, the usual effect of increased efficiency of SERVICE jobs is more direct, since the customer pays not for an object, but rather simply for an hour of service. If the job takes half the time, the customer gets charged half as much, end of story. Again, there is no increase in "labor productivity," even though efficiency is dramatically higher. Thus, the steady conversion of our economy from farming and then manufacturing to services means that "labor productivity" essentially cannot increase through improvements in efficiency.
So the "stagnant labor productivity" story is really an excuse for why we can't have nice things anymore. Even though half as many workers produce twice as many things. Actually, the reason we can't have nice things is that those who control the economy don't want us to, and the decline of unions is a big part of that.
5
@MRJ
Intuitively, the productivity arguments made by you make a lot of sense to me. Hope the author, @PaulKrugman can explain why the argument is flawed, if it is.