Mar 5, 2019

Axios Future

By Bryan Walsh
Bryan Walsh

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1 big thing: For struggling Americans, nowhere to go

On the way West, 1936. Photo: Bettman/Getty

For years, economists and other experts have been puzzled by a uniquely American anomaly: After centuries as probably the most restless place on the planet — its people shifting often thousands of miles around the country for a better life, moving by foot, horse, wagon and car — the U.S. has at once become much more stationary.

The explanations for all this stillness vary, but the most compelling are perhaps the simplest: People have dug in because there appears to be nowhere to go — no "promised land" of relatively high wages on which they can build greater dreams.

A much overlooked difference from the times of wagon trains and the Dust Bowl: The internet, which leaves very little mystery as to what lies at the other end of almost any road taken.

What's happening: In a paper, released last week, David Autor, a pioneering labor economist at MIT, said the geography of jobs has changed — cities, once the hope of people seeking a middle-class life, are now a symbol of the disappearance of well-paid, middle-skill work.

The culprits — automation and the shift of jobs abroad. And people know that it's the same story everywhere, so they are "acting rationally," Autor tells Axios, and staying home.

  • By the numbers: In a 2015 paper, economists from the Minneapolis Fed said American migration across state lines fell by 50% from 1991 to 2011. Such movement is at the lowest level since 1948, when the government began to track such figures.
  • Companies around the country are pleading for skilled workers. But they are looking for higher-level skills than those possessed by the men and women who ordinarily would be found in caravans, moving for better times.
  • What's largely left in the workforce are, on one end, jobs requiring only a high school education, and on the other, college graduates. Only 20% of jobs require just a high school education, said Anthony Carnevale, Georgetown University's Center on Education and the Workforce.

The internet is a key unspoken actor in this dynamic of motionlessness. According to the Minneapolis Fed report, people know much more what they are getting into, and they are seeing little romance in experiencing it for themselves. "There isn't this a sort of naive, 'I'm from northern Wisconsin, and I'm going [to California] for the Palm trees,'" Carnevale tells Axios.

I asked a string of other economists why Americans no longer move:

Joan Williams, UC Hastings: "Families now need two better jobs, not just one. And they have to be so much better that the family will all be better off even after paying for services they get at home for free, notably child and elder care."

Andrew Challenger, Challenger, Gray & Christmas: "When there is a very divided political and cultural moment, it could certainly keep some people from moving for opportunities."

Anthony Carnevale, Georgetown University: "From 1946 through the 1970s, you could be pretty fancy free. If you were able-bodied and had a good attitude, there was something for you out there. Even without a high school education, you could get a job. Then the boom was over, and everything changed. ... The Tom Joads are in trouble."

Mark Zandi, chief economist, Moody's Analytics: "Because people don’t need to move to the job, they can do the job where they already live."

Daniel Shoag, Case Western University: "The big action is on where people move, not so much a general decline in overall mobility. ... In terms of where people move, I think its mostly about out-of-control housing markets more than the internet."

2. A U.S. beachhead for Alibaba

Alibaba's Jack Ma at the NYSE. Photo: Andrew Burton/Getty

Alibaba, which seemed contained to China for the first two decades of its existence, is steadily buddying up with U.S. companies and making inroads into the American market.

Erica writes: In just the past 12 months, Alibaba has teamed up with Kroger and Tiffany, among other American companies, and has brought its payment system, Alipay, to thousands of U.S. stores. The latest partnership is with Office Depot — and the millions of small businesses that buy their office supplies there.

The big picture: It's increasingly difficult for small U.S. retailers to go up against giants like Amazon and Walmart, which have the cheapest prices and the fastest delivery. Amazon's competitors, Alibaba among them, have happily turned this into a business opportunity, selling logistics and manufacturing services to the smaller companies that want to battle the behemoth.

  • Through the new deal, the 10 million small businesses that buy supplies at Office Depot will be able to tap Alibaba to set them up with Asian factories and call on Office Depot to help them with deliveries — all to cut their costs. They'll also be able to sell on Alibaba's site, which has more than 600 million active users.

Office Depot, like many brick-and-mortar companies in the age of Amazon, is struggling. Its stock price has fallen from around $9.50 in March 2015 to $3.50 today, and its sales have shrunk from $15.5 billion in 2007 to $11 billion last year. The partnership with Alibaba is a play to stay relevant with a service offering for its customers as its traditional retailing business falters.

The bottom line: For Alibaba, a partnership with an old American brand is helpful at a time when U.S. tensions with China keep escalating. "We recognize that the brand that Office Depot has matters," John Caplan, head of Alibaba.com's U.S. arm tells Axios.

3. Staggering stat: Amazon's subsidies

Illustration: Aïda Amer/Axios

As we've been following, the backlash against Amazon HQ2 in New York City and the flawed deal Wisconsin struck with Foxconn has brought fresh scrutiny upon the massive tax breaks companies collect for bringing jobs to town.

Erica writes: Since its founding, Amazon has picked up about $2.4 billion in taxpayer-funded subsidies for its offices, data centers and warehouses, according to Good Jobs First, a group that tracks incentives. The stat was first reported by the New York Times.

Greg LeRoy, head of Good Jobs First, says, "The whole HQ2 episode, not just the NYC blowback, has prompted many Americans to ask: Why isn’t there a law against this?"

4. Worthy of your time

Illustration: Sarah Grillo/Axios

The lifespans of ancient civilizations (Luke Kemp — BBC)

A new driverless strategy: togetherness (Joann Muller — Axios)

The $180,000-a-year job as barber (Christopher Matthews, Rebecca Elliott — WSJ)

Measles, the quintessential political issue of our time (Masha Gessen — New Yorker)

Swimming with the whales (Richard Waters — FT)

5. 1 plant thing: 24 hours in a life
Courtesy Darryl Cheng, House Plant Journal

If you thought house plants were boring, think again.

Erica writes: In an incredible 24-hour time lapse of two potted plants sitting by a window — posted on Instagram by Darryl Cheng, proprietor of House Plant Journal — you can see just how busy a day in the life of a plant really is. The leaves are opening and closing, soaking up all the sun they can before nightfall.

It's a must-watch.

Bryan Walsh