Christopher Matthews
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43% of tech workers fear losing their jobs due to age

Nearly half of workers in the technology field fear losing their jobs because of their age, according to survey from Indeed.com. 18% of respondents "worry about it all the time."

  • A growing problem: 22.8% of employment-discrimination complaints filed to the EEOC in 2016 were age related, up from 19.6% twenty years ago. But age discrimination can be difficult to prove, and the Supreme Court made it more difficult in 2009 when it instituted a stricter standard for proving age discrimination than other types of workplace discrimination.
  • Who has it worst: Those facing the harshest economic effects of ageism may be the already unemployed and female. A recent study by economist David Neumark showed that female workers aged 64-66 who applied for an administrative role were 47% less likely to be called back than equally qualified applicants aged 29-31.
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Walmart to enlist Lord & Taylor in war against Amazon

Wal-Mart employees walk past a sign in the lobby at the Walmart.com office in California. (Photo: Jeff Chiu / AP)

Walmart is nearing a deal with Lord & Taylor, which would give the department store a dedicated space on Walmart.com, reports the Wall Street Journal, citing an unnamed source who says that the move "would be the first step in creating an online mall that shoppers could access from Walmart's website."

Why it matters: Walmart has swiftly grown its online business in recent quarters, and has convinced investors that the firm has the will and the way to take on Amazon in the battle to dominate American e-commerce. Traditional retailers like Lord & Taylor have taken notice, and now see Walmart as a potential distribution partner in a world where customers are eschewing the shopping mall for the online retail experience.

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Automation is raising pay before it cuts jobs

Boxed's Union City warehouse. Photo: Christopher Matthews / Axios

UNION CITY, NJ — Visit Boxed headquarters, and you'll find lighthearted employees working right alongside an automated picking machine that retrieves items without human help, two miles of conveyor belts that move items faster than people can, and other robotic devices. The online retailer, a competitor of Costco and Sam's Club, has attracted years of fawning publicity for carrying out all this automation at its warehouses without laying off a single employee. Plus, it is even raising salaries.

The cruel twist: Boxed is already shrinking the number of added workers required for expansion — one executive said that to triple business at the warehouse, he'll only need to hire 33% more labor. That aligns with an axiom of automation — that jobs offering the best chance of rising pay are usually in industries that are growing and adding labor-saving technologies at the same time, before the number of jobs eventually declines.

What the data say: In a study published in June, MIT economist David Autor looked at 19 countries over 35 years, and showed that automation doesn't kill overall employment, but reduces jobs within automating sectors.

  • Boxed CEO Chieh Huang tells Axios that his company is growing quickly enough that it must add both technology and workers in order to meet demand. And Boxed may end up being an outlier to the larger trends — after all, Amazon, too, is reporting big hiring plans even while automating aggressively.
  • But the bigger picture is a process that is disruptive to workers' lives. "We find that industry-level employment robustly falls as industry productivity rises, implying that technically progressive sectors tend to shrink," Autor writes.
A little-appreciated rule of automation: A little-appreciated rule of automation: Robots require people skills, but while the jobs working next to them may pay better, their numbers are fewer. One example is manufacturing, whose employment peaked back in the late 1970s, but has continued to set productivity records.
  • Jobs in the sector pay better than average, while often not requiring more than a high school degree — manufacturing jobs still pay 10.9% higher than those in the rest of the economy, when controlling for required education levels, according to the Economic Policy Institute.
  • And the appeal of manufacturing jobs goes further, like offering stable predictable schedules and involving making things rather than providing (sometimes demeaning ) services to others. The loss of manufacturing employment, therefore, has a broader, sociological impact.
  • For many years, the effect of automation in manufacturing was not that employment was being lost, but that no new jobs were being created on net, even as the industry sold more and more stuff.

But it's more complicated, too: Autor tells Axios that automation can only tell part of the story of the decline of American manufacturing employment. Trade plays a huge role in the plunge of manufacturing jobs, he says, with China's 2001 accession to the WTO a major factor in convincing American employers to move jobs there. "Although the predominant force that has slowly eroded manufacturing employment in the post-WWII era is productivity growth, that's not the right story for the 2000s," he writes in an email.

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Nordstrom and Sears lead retail's miserable day

Customers enter Nordstrom's downtown Seattle location. Photo: Ted S. Warren / AP

Though the S&P 500 was in the black on Monday, stocks of retail companies fell broadly, with shares of Nordstrom, Sears, and cosmetics vendor Ulta all losing favor with investors during trading hours.

  • Nordstrom shares lost more than 5% after the company announced it was suspending efforts to take itself private after struggling to find interested investors.
  • Sears tumbled nearly 12% on the news that Bruce Berkowitz, one of its largest investors and a close associate of CEO Eddie Lampert, would be leaving the board of directors.
  • Ulta lost 2.5% of its value, following a decision by Goldman Sachs to downgrade the stock — citing slowing growth in the beauty products space. Other analysts have warned that Amazon threatens cosmetics retailers like Ulta and Sephora.
Why it matters: Sears' struggles have been long-standing, but both Nordstrom and Ulta have been at various points cited as traditional retailers immune to Amazon's on-line power, and poised to avoid the struggles of the broader industry.
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Dollar stores thrive in rural America

A Dollar Tree in California. Photo: Lenny Ignelzi / AP

Bloomberg looked at the rise of dollar stores across rural America, which are replacing the mom-and-pop grocery stores of old and entering communities where big-box retailers like Walmart don't see an opportunity for profit.

Why it matters: The biggest dollar store chains like Dollar General, Dollar Tree, and Family Dollar all tend to operate in poorer, older, less-educated towns where residents are more likely to receive some sort of federal assistance. Their stores often are one of the only food options for rural residents who would otherwise have to travel miles to a supermarket.

Dollar General is implementing a $22 billion plan to open 1,000 new stores in poor, rural communities, across the U.S., calling the firm's yellow-and-black logo "the small-town corollary to Starbucks' two-tailed green mermaid."

  • Why it matters: Dollar General and Dollar Tree have more than 27,000 locations between the two of them, more than all the locations of CVS, Walgreens, and Rite Aid combined, and nearly three times the number of such stores open in 2007. Dollar General's success is attributable in part to its focus on towns too small for Walmart, where it sells staple items, in small quantities, at rock-bottom prices.
  • The dollar model's dark side: It's no coincidence that dollar stores have thrived in the wake of the recession, as income inequality has soared. As one analyst told Bloomberg, ""Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America. It's based on the concept that the jobs went away, and the jobs are never coming back, and that things aren't going to get better in any of these places."
  • What's next: The Internet might be the next big hope for rural food deserts as there's currently a federal pilot program to allow food assistance recipients to order their groceries online. Companies like Amazon and Walmart have signed up as suppliers, allowing them to avoid the overhead to setting up shop in a rural town.
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Amazon makes push into sportswear

Packages at an Amazon fulfillment center. Photo: Ross D. Franklin / AP

Amazon has contracted the largest sportswear manufacturers to produce for its own private-label brand of activewear, Bloomberg reports.

Why it matters: The news sent shares in Lululemon, Under Armour, and Nike tumbling in late trading Friday, though Nike stock recovered by day's end. Analysts say that Amazon's move is intended in part to create leverage in its negotiations with suppliers like Nike — which recently reversed a longstanding policy not to distribute directly through Amazon — and to fill gaps in inventory when competitor-suppliers like Nike are not offering what customers are looking for.

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Google's robotics division is dropping the ball

The Google logo is seen at the Vivatech, a gadgets show in Paris, France in June. (Photo: Thibault Camus / AP)

Several key roboticists have departed Google in recent months, an indication of the firm's failure to make good on several high-profile investments in the sector made back in 2013, Bloomberg Businessweek reports.

Why it matters: Rosanna Myer, CEO of the startup Carbon Robotics, told Businessweek that Google's acquisitions of companies like Boston Dynamics and Redwood Robotics "held the industry back more than moving it forward," by failing to materially advance or commercialize their inventions. Jeremy Conrad, a partner at hardware incubator Lemnos Labs voices similar complaints. "These were some of the most exciting robotics companies," he says "and they're just gone."

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The Republican tax plan retreads old, unflattering ground

Illustration: Rebecca Zisser / Axios

For generations, the Republican Party has pitched the cure of tax cuts for whatever ails the American economy, and 2017 is no different. In an era of unprecedented disunity within the GOP, the only thing the White House and Congress can seem to agree on is taxes. As President Trump puts it, "Our country and our economy cannot take off like they should unless we dramatically reform America's outdated, complex, and extremely burdensome tax code."

What history says: If tax cuts are what the country needs to generate plentiful jobs and higher wages, it's reasonable to wonder why they didn't have that result when George W. Bush used the same approach in the early 2000s, or in several similar efforts going back to Ronald Reagan. Neither did the cuts arrest troubling trends like expanding income inequality, middling wage growth, and the rising costs of housing, education and health care.

Behind the theory: Advocates link tax cuts with economic growth, calling their approach "supply-side economics," whose most famous proponent is Arthur Laffer, a Reagan administration economist. They argue that higher tax rates convince valuable workers not to put in extra hours, and companies not to invest in new projects and equipment.

Looking back at prior tax cuts

The George W. Bush Tax Cuts: Bush's tax agenda initially focused on cutting personal income taxes, fulfilling a 2000 campaign promise to return money to taxpayers in response to an early but growing federal surplus begun under Bill Clinton. That changed in 2003, when a second round cut capital gains and dividend taxes, in what was described as an effort to stimulate the economy.
  • History has not been kind to these cuts: The recovery following the 2001 recession was the slowest in history to that point in terms of recovering lost jobs.
  • More aggressive investment did not follow: Reductions in capital gains and dividends taxes didn't translate into capital spending by businesses. Corporate investment in equipment that typically boosts worker pay didn't grow faster in the years following the tax cuts, plus pay for workers in the bottom 60% of the income distribution actually fell between 2002 and 2012.
  • What tax cut advocates say today: Scott Greenberg, senior analyst with the Tax Foundation, asserts that the cuts were not about growing jobs and wages, but tax relief. To truly test the ability to turbocharge the economy, he tells Axios, Congress would have to enact much greater reduction in investment costs.
The Reagan tax cuts: Reagan's 1981 tax cut significantly increased the ability of businesses large and small to expense investments in capital and equipment. According to Greenberg, that made it the last true test of how American businesses large and small would respond to a consequential cut in taxes on their profits.
  • Yes, but: Many consider the '81 cut to be a political and economic disaster. To get those kind of benefits, the government had to forgo a king's ransom, and the deficit swelled, forcing Reagan to pare back some of the changes to expensing.
  • What tax cut advocates say today: Congressional Republicans want to do something similar this time around, allowing companies to fully expense capital investments. But the plan would cost as much as $2.2 trillion over ten years, which starts to look a lot like a rerun of the "yes, but" part of the Reagan cut.

Looking ahead to the current proposal

Voodoo economics? Because tax cuts big enough to make a splash cost so much money, proponents like to argue that their reforms will cause so much economic activity as to make the cut costless. This is Laffer's theory, explained in his famous "Laffer Curve," which posits that government revenue pours in after the elixir of a tax cut.
  • The administration is promoting this theory now — but there's little evidence to support Laffer. Even the Tax Foundation, which has long advocated lower business taxes, says that when taking into account economic growth, a "full expensing" measure would cost closer to $1.5 trillion over ten years, while adding 800,000 new jobs and raising wages by 3.6% in the long run.
Deficit debate: Either way, $1.5 trillion or $2.2 trillion is a lot of money.
  • But, maybe not enough to stop tax cut enthusiasts who don't want to fight over resources with advocates for universal health care and college tuition subsidies. The indications are that the Republicans will rerun the 2000s, and finance new tax cuts with deficit spending.
  • To be sure: Republican deficit hawks, like retiring Sen. Bob Corker, are likely to balk at a plan that would balloon the deficit.
The bottom line: The Bush record make it difficult for conservatives to argue that large new income tax cuts for the top bracket will do much for the broader economy. The evidence from the 1980s presents a stronger case for slashing business taxes, but even so, the benefits of tax cuts are uncertain, while the costs are known, and significant.
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Walmart stock soars on promised e-commerce growth

two Wal-Mart employees walk past a sign in the lobby at the Walmart.com office in California. (Photo: Jeff Chiu / AP)

Walmart stock rose roughly 4.5% on Tuesday morning, following an investor-day presentation in which it estimated that its e-commerce sales would grow by 40% in the fiscal year ending January 2019, while maintaining its current pace of profit growth.

Why it matters: The failure of traditional retailers to shift their businesses from the storefront online, without significantly shrinking profit margins, has crushed the stocks of well-known companies like Foot Locker, Macy's and Target in 2017. But Walmart has emerged as one Amazon competitor that is more gracefully transitioning to a world of e-commerce.

What Walmart has done right: Cowen analyst Oliver Chen writes in a note to clients that Walmart is:

  • Expanding its online selection;
  • Offering free two-day delivery on orders of $35 or more;
  • Expanding curbside grocery pickup to 900 stores nationwide;
  • and making shrewd acquisitions, like Walmart's recent takeover of Bonobos, that has helped it gain expertise in new categories.
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44% of retailers have cut prices due to online competition

An Amazon worker picks items for shipment. (Photo: Ross D. Franklin / AP)

Nearly half of retailers in the United States, Europe, and Japan have been forced to cut their prices in the face of online-only competition, according to a survey of retail executives by Applied Predictive Technologies.

Why it matters: It's more evidence explaining why investors have lost confidence in most major retailers outside of Amazon in recent months.

For context: Stocks in 14 out of 29 companies in the S&P 500 retailing industry group have fallen in value this year, a time when more than 70% of stocks in the S&P 500 overall have risen in value, according to S&P Capital IQ. Investors fear these companies' inability to raise prices without also losing market share to the likes of Amazon.