Rise of the machines to blame for the lacklustre US recovery

Roombas may look cute, but not when they're taking your job.

The Washington Post's Dylan Matthews highlights a new NBER working paper (£) by Duke University’s Nir Jaimovich and the University of British Columbia’s Henry E. Siu which examines why "jobless recoveries" have become the norm in the US after recent recessions. The short version is that it's all about the robots.

The history of the US labour market since the 1980s has been one of "job polarisation", the authors argue:

[E]mployment is becoming increasingly concentrated at the tails of the occupational skill distribution. This hollowing out of the middle has been linked to the disappearance of jobs focused on “routine” tasks – those activities that can be performed by following a well-defined set of procedures. Autor et al. (2003) and the subsequent literature demonstrates that job polarization is due to progress in technologies that substitute for labor in routine tasks.

At one end of the market are non-routine cognitive jobs, "such as physicians, public relations managers, financial analysts, computer programmers, and economists" (and, one would hope, journalists), while at the other end are non-routine manual occupations "including janitors, gardeners, manicurists, bartenders, and home health aides". Polarisation of the labour market comes from technological improvement replacing people in routine jobs, both manual and cognitive – "secretaries, bank tellers, retail salespeople … dressmakers, cement masons, and meat processing workers."

The classic victim of mechanisation is the factory worker, but it actually hits a far more varied cross-section of careers. Think about automated phone trees replacing secretaries, self-checkouts replacing retail workers, or Oyster cards obviating the need for ticket sales on the London Underground. In fact, according to the Council on Foreign Relations' Edward Alden, manufacturing itself has largely reached maximum automation already:

Manufacturing output in the United States is no longer growing as rapidly as it once was (and as you would expect if technology had simply been replacing workers in factories). Real manufacturing output grew just 15 percent in the 2000s, compared with more than 35 percent in each of the 1970s and 1980s and more than 50 percent in the 1990s.

In itself, this technological change is obviously not something to bemoan – it represents society getting more productivity out of fewer people. If we wanted to follow Keynes, we could literally give all of those people replaced by robots permanent paid holidays and the economy would be no worse off. In actual fact, of course, we realise that improvement not as an increase in leisure time, but as an increase in output: the freshly unemployed are sent out to find more employment, and technological growth results.

This would be relatively pain-free if it happened at a slow, background pace, but that's not the case. Instead, "the decline in routine occupations is concentrated in economic downturns":

Following the peak in 1990, per capita employment in these occupations fell 3.5% to the trough of the 1991 recession, and a further 1.8% during the subsequent jobless recovery. After a minor rebound, employment was essentially flat until the 2001 recession. In the two year window around the 2001 trough, this group shed 6.3% of its employment, before levelling off again. Routine employment has plummeted again in the Great Recession – 12.0% in the two year window around the trough – with no subsequent recovery.

The above chart shows routine employment in the US, with recessions overlaid in shaded pink – and the precipitous decline, and lack of recovery is clear to see.

Gradually, the people who did these routine jobs will filter up or down the skills ladder. The lucky, privileged or smart ones will up-skill and end up in non-routine cognitive work, while the rest will fight for the pool of non-routine manual jobs.

Employment will, eventually, rebound from this slump. As growth returns – helped by the new efficiencies of technological change – there will be more jobs at both the top and bottom of the skills ladder. But as technological progress continues, the safe niches of high- and low-skilled jobs may themselves come under attack.

In May, Martha Gill reported that robots are now writing business stories (which is totally fine), and in June, Rafael Behr wrote about the fear in Downing Street prompted by the rise of the robolawyers:

What happens when the same dynamic creeps up the skills ladder? What are the social and political consequences when white-collar, middle class jobs are increasingly outsourced or done by computers? Plenty of professionals who thought they were immune to the labour market pressures exerted by globalisation will suddenly start to feel very insecure. This is a change that could make itself felt easily within a decade.

What's strange about the whole thing is that, viewed from a macroeconomic point of view, this ought to be good news. If ever fewer people can create ever more "stuff" (be that widgets, legal documents, or business reports), then the potential is for everyone to be better off. The sad reality, of course, is that in the UK and US, the attitude is largely a laissez-faire rejection of the state's responsibility to smooth over the turbulence of structural shifts. But as ministers start to see people like them suffering the same changes that their constituents have for three decades now, there is the chance that real change may finally be possible. There have been attempts to tackle what such a change would mean, from nef's call for a 21 hour week, to the Green Party's suggestion of a Citizen's Income. Or maybe its just more, better targeted, and higher quality opportunities for, and support during, retraining which are needed.

Either way, we've got until the next recession to get some plans in order, or we will have to go through the same routine all over again. And when the robojournalists come for me, I want an exit strategy.

Update

A commenter is concerned about the fact that the above chart uses an unfamiliar y-axis.

The graph is presented as the log value of the employment rate for routine industries, defined in the paper as:

“Sales and related occupations”, “office and administrative support occupations”, “production occupations”, “transportation and material moving occupations”, “construction and extraction occupations”, and “installation, maintenance, and repair occupations”.

Employment rate rather than employment level is used so that the effect the authors are discussing is not masked by population increases. I've charted the sum of the routine employment level as well as the sum of the routine employment level divided by the working age population (roughly equivalent to employment rate), which ought to demonstrate why the latter is used.

As for taking the log value, rather than the absolute percentage, we do that because when comparing different percentages, the log rate evens out differences between changes at high percentages and changes at low percentages. The difference between 2% and 1% is one percentage point, and the difference between 20% and 10% is ten percentage points, but the difference between both log(20%) and log(10%), and log(2%) and log(1%), is 0.3.

A wannabe robojournalist. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until it has filed copy. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Jeremy Corbyn's fans must learn the art of compromise

On both sides of the Atlantic, democracy is threatened by a post-truth world. 

Twenty years ago, as a new and enthusiastic Labour MP, I wrote an article for The Observer in praise of spin. I argued that if citizens are to be properly informed and engaged in their democracy, politicians - and in particular governments - have a duty to craft their messages carefully and communicate them cogently. It was a controversial notion then but less so now that we have entered the era of post-truth politics. In the old days, we used to "manage" the truth. Now we have abandoned it. 

We’ve probably come further than we think, for when truth is discarded, reason generally follows. Without a general acceptance of the broad "facts" of any matter, there can be little basis for rational debate nor, therefore, for either the consensus or the respectful disagreement which should emerge from it. Without a commitment to truth, we are free to choose and believe in our own facts and to despise the facts of others. We are free too to place our faith in leaders who make the impossible seem possible. 

We condemn the dictatorships which deny their citizens the right to informed and open debate. But in our own societies, unreasoned and often irrational politics are entering the mainstream. 

The politics of unreason

In the UK, the Leave campaign blithely wedded brazen falsehood to the fantasy that Brexit would cure all ills – and millions of voters enthusiastically suspended their disbelief.  “We want our country back” was a potent slogan - but no less vacuous than the pledge to “make America great again” on which Donald Trump has founded his election campaign. On both sides of the Atlantic, people want to take back control they know they never had nor ever will.

Both campaigns have deliberately bypassed rational argument. They play instead to the emotional response of angry people for whom reason no longer makes sense. Since the time of Plato and Aristotle, democracy’s critics have warned of the ease with which reason can be subverted and citizens seduced by the false oratory of charismatic leaders. Trump is just the latest in a long line of the demagogues they feared. He may not make it to the White House, but he has come a long way on unreasoning rhetoric - and where he leads, millions faithfully follow. He has boasted that he could commit murder on Fifth Avenue without losing votes and he may well be right.

But if Trump is extreme, he is not exceptional. He is a phenomenon of a populism of both right and left which has once more begun to challenge the principles of parliamentary democracy.

Democracy in decline

All over Europe and the United States, consumer-citizens are exasperated by democracy’s failure to meet their demands as fully and as fast as they expect. If the market can guarantee next day delivery, why can’t government? The low esteem in which elected politicians are held is only partly the consequence of their failings and failures. It is also evidence of a growing disenchantment with representative democracy itself. We do not trust our politicians to reflect our priorities. Perhaps we never did. But now we’re no longer prepared to acknowledge their unenviable duty to arbitrate between competing political, social and economic imperatives, nor ours to accept the compromises they reach - at least until the next election.

We have become protesters against rather than participants in our politics and, emboldened by hearing our chosen facts and beliefs reverberating around cyber space, have become increasingly polarised and uncompromising in our protest. 

The Trumpy Corbynites

Which brings us to Labour. Despite the obvious political differences between Jeremy Corbyn and Donald Trump, there are striking similarities in the movements which have coalesced around them. For many of their supporters, they can simply do no wrong; each criticism provides further evidence of a corrupt establishment’s conspiracy against them; rivals, including those who share many of their beliefs, are anathematised; unbelievers are pursued across the internet; inconvenient facts are reinterpreted or ignored; rational, civil debate is shut down or drowned out. 

There are other similarities in these insurgencies: both mistake slogans for policies and mass rallies for popular support; both are overwhelming and quite possibly destroying their own parties – and both, ultimately, are movements without practical purpose.

Trump may give vivid expression to his followers’ grievances but, other than building a wall along the Mexican border, his plans for government are obscure. Similarly, while Corbyn and his supporters know what they’re against, they have not yet articulated a clear vision of what they’re for, much less how it can be achieved. For many of them, it is enough to be "anti-Blairite". 

But in disassociating themselves from a Labour prime minister’s mistakes, they are also dismissing their party’s achievements under his leadership. Their refusal to acknowledge the need for compromise may well enable them to avoid the pitfalls of government. But government’s potential to bring about at least some of the change they want does not come without pitfalls. In wanting it all, they are likely to end up with nothing.

The art of compromise

Democracy cannot be sustained simply by what passionate people oppose. And though movements such as Momentum have important roles to play in influencing political parties, they cannot replace them. Their supporters want to be right - and they often are. But they are rarely prepared to test their principles against the practical business of government. The members of political parties want, or should want, to govern and are prepared, albeit reluctantly, to compromise – with each other, with those they seek to represent, with events -  in order to do so. Parties should listen to movements. But movements, if they are to have any practical purpose, must acknowledge that, for all its limitations, the point of politics is power.

We have to trust that the majority of American voters will reject Donald Trump. But closer to home, if Labour is to have a future as a political force, Corbyn’s supporters must learn to respect the historic purpose of the Labour party at least as much as they admire the high  principles of its current leader. There isn’t long for that realisation to take hold.

In the UK as in the US and elsewhere, we need to rediscover the importance of common cause and the art of compromise in forging it. The alternative is a form of politics which is not only post-truth, post-reason and post-purpose, but also post-democratic. 

Peter Bradley is a former MP and director of Speakers' Corner Trust, a UK charity which promotes free speech, public debate and active citizenship.