Christopher Matthews

Volkswagen quickens job cuts with an eye on electrics, self-driving

VW's e-Golf [AP/Jens Meyer

Volkswagen is moving faster to cut up to 23,000 jobs and shift the savings to electric and self-driving car technology, Reuters reports. The company plans to create 9,000 new positions in advanced batteries and mobility services.

Volkswagen isn't alone among carmakers cutting jobs — GM and Ford have both announced significant layoffs, also with an eye toward increasing their focus on electric-car and self-driving technologies. Last month, Ford abruptly fired CEO Mark Fields and replaced him with Jim Hackett, head of its automated-vehicle division.

Why it matters: The U.S. car market peaked last year, but these cuts are about more than the ebb and flow of auto sales. The globe's top auto executives see an existential threat in the form of upstart electric and self-driving car technologies. They know that winning the next five or ten years won't be about building a better internal combustion engine or creating the best marketing campaign, but the next-generation of automotive technologies.


These truckers are helping Silicon Valley to automate their jobs

Starsky Robotics

Bloomberg Businessweek profiles startup Starsky Robotics, which is using machine learning to train its semi-trailer trucks to one day be completely self-driving. Starsky is earning revenue hauling loads while it tests its self-driving technology, but because its vehicles are still in beta, they are manned by a truck driver and an AI specialist for safety and research purposes.

The arrangement makes for strange bedfellows, as the folks who drive trucks and those in cutting-edge computer science tend to live worlds apart, culturally speaking. But apart from being a sociologically revealing portrait of America in 2017, Starsky's staff might also foreshadow changes to the workplace that will arrive in other industries in the years to come.

  1. Though long-haul employment is plentiful — there are 3.5 million trucker jobs in the U.S. — it's grueling and low-paid work, contributing to turnover rates of 71% a year, according to American Trucking Associations.
  2. Starsky is training drivers to operate trucks remotely, with software that enables monitoring of up to three trailers at a time.
  3. This makes it economical to pay above-market wages for the most reliable workers.
But more efficiency means there won't be room to train every would-be truck driver to monitor the algorithms doing their old job. What's more, labor-backed campaigns to stop companies from adopting and governments from funding self-driving car technologies have begun to sprout in recent months.

Study: $13 minimum wage didn't cause Seattle job losses

Elaine Thompson / AP

Seattle has been the vanguard of the newly energized minimum wage movement, hiking its pay floor from $8.55 in 2010 to between $11 and $15 in 2017. Other cities have followed suits — in all, nine big cities and eight states have passed minimum wages between $12 to $15, depending on the size of the employer and other factors.

Berkeley's Institute for Research on Labor and Employment is out with a new study on the effects of Seattle's wage policies, and found that there was no job loss as a result of the mandate.

How did they do it? They uses an algorithm that tests combinations of different counties across the U.S. to create a "synthetic" Seattle, mirroring its employment and wage characteristics for six years. The only difference is that these counties did not increase their minimum wage.

What they found: There was no negative effect on employment, even up to a wage floor of $13, a much higher level than previous research has studied.

Not so fast: The authors of the study admit that their synthetic Seattle may be failing to reflect important qualities about the real Seattle that could be preventing job loss. The IRLE plans to conduct similar studies in Chicago, Oakland, San Francisco, San Jose and New York City, and elsewhere, which will help respond to this critique.


Trump trade rep threatens WTO on China market status

U.S. Trade Representative Robert Lighthizer Cliff Owen/AP

U.S. Trade Representative Robert Lighthizer testified Wednesday before Congress that it would be a "cataclysmic" mistake for the WTO to grant China market economy status — as the Chinese believe it is required to do this year.

  • What's market economy status? A designation recognizing a country's commitment to free market policies. If China wins this label, it would make it more difficult for the U.S. to win cases it brings against China for violations like selling steel below cost of production.
  • Why it matters for workers: There's good evidence that allowing China's accession to the WTO fifteen years ago was the trade policy decision that most led to joblessness and stagnant incomes, specifically in the manufacturing sector.
  • The Trump Administration has taken a dismissive stand toward the WTO, even saying that it may ignore its rulings. But the Trump trade policy has been all bark and no bite, and there's no reason to believe that revoking the privileges China receives for its membership would bring back lost manufacturing jobs.


Labor shortages plague midwest manufacturing towns

AJ Mast / AP

While economists and futurists are rightly concerned about the possibility of mass unemployment precipitated by automation technology, right now the U.S. economy is experiencing one of the tightest labor markets in a generation.

The immigration paradox: It's rural counties in midwest states like Indiana that have the lowest unemployment rates in America, and could therefore benefit from a bit more immigrant labor. In all, 73 U.S. counties have 2% joblessness or lower, according to government statistics.

Take, for example, Indiana' Kosciusko County, home to a third of global orthopedic device production. The Washington Post reports that manufacturers there are struggling to find workers for dozens of open positions, as the county's unemployment rate sits at a minuscule 2%.

And while the population in a lot of the former manufacturing towns of the Midwest has shrunk, many rural counties have seen it tick up. The population of the northern Indiana town of Warsaw, for instance, has gone over 14,000, from just over 12,500 in 2000, the Post reports.

But these are also the places that are culturally averse to immigration — a 2015 UCLA study pegged Indiana as the fourth most-inhospitable state to undocumented immigration.

The Fed's quandary: The U.S. central bank is raising interest rates under the presumption that such labor shortages will soon cause steep wage increases, and lead to inflation. We aren't seeing those effects just yet, and left-leaning economists argue that the Fed needs to embrace tight labor markets to help raise pay for the working class.


Average yearly income of top 1% in America: $1.3 million

The jobs market is humming these days, but income inequality continues to grow. Torsten Slok, Chief International Economist with Deustche Bank Securities, sent the following chart to clients on Tuesday, drawn on the most recent work by inequality researchers Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. Pikkety is the author of the much-discussed 2014 book, Capital in the 21st Century.

Why it matters: The yawning gap between U.S. haves and have nots is only growing more severe, and there are no signs that the trend will slow on its own. These are the numbers Bernie Sanders that has studied before wagering that the Democratic Party's path to electoral success is through aggressive economic populism.

Data: Deutsche Bank Research; Chart: Andrew Witherspoon / Axios

The future of work will make this worse: Some economists argue that rising income inequality can be blamed on an unprecedented, rapid decline in the price of automation technology since the early 1980s. As machines become cheaper, the argument goes, business owners can simply replace workers with capital investments and reap more profits for themselves.

If this theory is correct, we should expect income inequality to rise ever-more quickly, as applications for artificial intelligence increase and the amount of computing power per dollar available rises exponentially.


Ford will import Focus from China, not Mexico

Chris O'Meara/AP

Ford announced plans Tuesday to import its compact Focus model from China, after scrapping a proposal earlier this year to expand a plant in Mexico. The planned Mexico facility had been roundly criticized by President Trump during last year's campaign, and the economics of the Mexico plant have been called into question as the Trump administration considers changes to NAFTA that could eliminate the advantage of producing in Mexico relative to China.

A blow to U.S. auto workers: Profit margins for sales of compact cars in the U.S. are thin, so it makes little sense for Ford to expand production of the Focus in the U.S. But when such cars are built in Mexico rather than China, they are typically sourced with American-made auto parts, supporting at least some domestic employment. The vast majority of parts for Chinese-built cars are made in China.


Trump supporters: Manufacturing jobs dangerous, low-paying

President Trump won the White House by promising to bring back manufacturing jobs that companies sent overseas to take advantage of cheap labor. But actual Trump supporters say the issue is that manufacturing jobs in the U.S. today for blue-collar workers are dangerous or low-paying.

  • Reuters interviewed workers in the manufacturing hub of Elkhart, Indiana, where voters supported Donald Trump by a 2-to-1 margin in November.
  • The unemployment rate in Elkhart sits at just 1.9%, but the manufacturing jobs there that pay well are so physically demanding that many workers cannot stay for long before medical issues force them to accept lower-paying jobs elsewhere.
  • Why it matters: Offshoring and immigration aren't to blame for the lack of high-paying but low-skilled jobs in manufacturing as much as automation technology, which has left for humans tasks that are either low-value, high-skilled, or dangerous.

Regulators not convinced by 3D-printed titanium airplane parts

Major parts suppliers for airplane manufacturers like Boeing are ready to use cutting-edge 3-D printing technology, but regulators like the U.S. Federal Aviation Administration have yet to sign off.

  • Boeing subcontractor Spirit AeroSystems Holdings is ready to produce thousands of its parts 30% more cheaply by using 3-D printing technology, The Wall Street Journal reports, whereby titanium is melted and then precision-deposited, layer-by-layer, to build the final part.
  • The Journal reports the FAA isn't ready to certify the technology as "reliable enough to ensure identical strength and other properties from batch to batch," and the approval process could take until 2018.
  • Why it matters: Technology is advancing more quickly than regulators are keeping up. In the case of aerospace manufacturing, this dynamic is about ensuring passenger safety. But for other technologies like self-driving cars, regulators will be concerned about other effects like job loss.

Jack Ma recruits U.S. small businesses to sell to China

Evan Vucci / AP

Alibaba CEO Jack Ma has pledged that the e-commerce giant will create 1 million U.S. jobs within 5 years. That plan means increasingly bringing U.S. businesses onto its platform, enabling higher sales to China's rapidly growing consumer base, and Ma is trying to recruit U.S. vendors this week at Alibaba's Gateway conference in Detroit.

But for mom and pop stores around the country, selling to Chinese consumers won't be as easy as it was catering to Americans using online platforms like Amazon, as Bloomberg reports.

Reasons for skepticism: U.S. businesses are hungry to reach the half-billion shoppers on Alibaba sites, but hurdles like language, regulations and consumer understanding remain. University of California business professor Christopher Tang tells Bloomberg, "The market for goods is already saturated," and that domestic Chinese business are more than able to meet growing local consumer demand.