December 12, 2018
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1 big thing: Economic juice
For more than a year, the U.S. jobless rate has hovered right around 4% — including the last three months, when it's been a mind-boggling 3.7%, a half-century low. Fast-growing companies desperate for workers have turned to accepting candidates with lesser skills, a history of drug use and felony records, dispensing with long-held hiring red lines.
Why it matters: If these trends continue, they may begin to whittle away at some of the nation's most stubborn problems — that millions of Americans have given up trying to find work after years of unemployment and a vast number of jobless people are lacking sufficient skills for the quickly advancing economy.
What's happening: For five years, the labor participation rate — the percentage of people aged 16 and up who are working or actively looking for work — has been below 63%, and it has been slowly declining.
- Historically speaking, the absolute number is not bad — it was even lower from 1948 to 1978.
- And many of those technically unemployed people were over 65 and retired.
- But in the four decades since, the rate has climbed as high as 67% — and economists have puzzled over how to get back to those bigger numbers.
The 9-year-old economic expansion has not budged the figure yet, but it has pulled hundreds of thousands of long-term unemployed people into jobs, often at companies where they learn transferable skills. Wages are up 3.1% this year, the first substantial gains in a decade.
Among the little-discussed spillover effects:
- These workers may be far more employable when they look to climb the economic ladder. "Just breaking a long spell of unemployment improves someone’s employment prospects going forward," says Oren Cass, author of "The Once and Future Worker."
- The 3.5% jobless rate for those with only a high school diploma is at its lowest in 18 years.
- In the aggregate, these numbers may juice the entire economy, creating the conditions for higher GDP growth and "a persistent, positive macroeconomic effect," says Jason Furman, former chief economist to Barack Obama and now a professor at Harvard.
"This is win-win for employees and the aggregate economy," says Darrell West, head of the Center for Technology Innovation at the Brookings Institution. "Over time, having a better trained workforce will boost productivity and improve national competitiveness."
Background: For years, one of the industry's biggest gripes has been a shortage of skilled workers, and economists have unflatteringly compared U.S. technical skills with those in Europe and Asia.
- The impact of training more of the unskilled workforce is to change the country's underlying structure: The entire country starts out at a greater level of competency.
But, but, but: Adam Posen, president of the Peterson Institute for International Economics, tells Axios that research is not clear yet on how much of a lift such conditions provide to workers or the economy.
- A boom from 1995 to 2000 pulled a lot of workers into the economy, but it "didn’t have as much lasting benefit of re-employability or staying in the workforce when the economy turned down as we expected," Posen says.
- "That may have been because the recession that eventually came was so large and abrupt."
- Rick Wartzman, head of the Center for a Functioning Society at the Drucker Institute, says he is skeptical about the long-term economic impact of the current expansion. "I don't want to confuse what might be happy momentarily with what has been going on for 30 years," he says.
2. What's the fuss about bigness?
Governments and workers on both sides of the Atlantic are decrying the outsized influence of big companies. Bill Gates, however, doesn't understand the fuss.
I don't see anyone that is really broken.— Gates, speaking with Axios' Caitlin Owens
Axios' Erica Pandey writes: Gates was in the trenches in 2000 when Microsoft was battling the U.S. government so as not to be broken up for alleged violations of antitrust laws. Now, with the microscope on his competition — Amazon, Google and Facebook — he cautions against what he suggests is a denunciation of bigness for bigness' sake.
- "I don't think attacking bigness in and of itself is the right thing. I think you have to look at competitive dynamics and say, 'OK, how can you unleash those dynamics,' and get into very specific policies," Gates told Caitlin.
What's happening: Regulators and thinkers in the U.S. and Europe are tying bigness to low wages and poor working conditions. They're saying Facebook's and Google's massive troves of data are threats to privacy, not to mention big elections. And they're questioning Amazon's practice of competing against the very small businesses that sell on its platform.
- Responds Gates: "Strangely, right now, the companies that are the most innovative are ending up having fairly high market shares. But there are ways that people may not anticipate that there will be a lot of competition."
The other side: We emailed Tim Wu, author of "The Curse of Bigness," for a counterpoint. He responded:
"That's a bit surprising, given that Microsoft spent so much time and money arguing that Google was illegally competing with Bing," says Wu, referring to Microsoft's 2011 antitrust complaint against Google's domination of search. "I think we're actually in an era of low-hanging fruit, antitrust-wise."
Meanwhile, Wu suggested whom the government should go after first: the Ticketmaster and Live Nation merger, the AT&T and Time Warner merger, and Big Pharma. In a post at Medium, he provided a more complete antitrust hit list.
3. E-scooters in the drink
The big e-scooter companies have unleashed about 1,000 two-wheelers in Oakland, California — but dozens of them have ended up at the bottom of Lake Merritt, the tidal lagoon in the center of the city, writes Erica.
Crazy stat: E-scooters are part of the electric revolution — meant to get people out of their fossil fuel-propelled cars. But cleanup crews fished 60 scooters out of the lake in just the month of October, reports Slate.
- No one seems to have put their finger on precisely why people are driven to dispose of the scooters this way: Some say it's ire that they are all over the place; others say it's run-of-the-mill vandalism.
- Whatever the case, it's an epidemic. Scooters have been pulled out of Spokane River in Spokane, Washington, the Trinity River in Dallas, and the Willamette River in Portland.
- Instagram is littered with videos showing scooters bobbing about in the Pacific Ocean off the coast of Venice Beach, including this account devoted to photos of the mayhem.
Why it matters: The Lake Merritt Institute says scooters are causing an environmental crisis in Oakland.
- The companies are losing, too. Their inventory can be destroyed by anyone at anytime, with zero repercussions. Erica has walked by several scooters in D.C. that have been torn apart or vandalized with spray paint. But "they just have to deal with it," says Axios scooter expert Kia Kokalitcheva. "It’s part of the vehicle attrition they have to account for."
4. Worthy of your time
Where are Greece's children? (Chico Harlan — WP)
Minimum wage hikes across the U.S. (Felix Salmon — Axios)
Attention as a measure of aliveness (Dan Nixon — Aeon) (h/t Azeem Azhar)
Future of fire: Raking, thinning, replanting (Hal Herring — High Country News)
The most-polluted major country is not China but India (The Economist)
5. 1 ancient thing: Imagining automata
Today is a golden age for automation, but it’s an old idea. Ford was the first to set up an automation department in the mid-20th century, writes Gizmodo's Brian Merchant.
Axios' Kaveh Waddell reports: The idea of an automaton — rooted in the ancient Greek word for "self" — appeared in Homer’s "Iliad," Merchant writes. Various other automata populated Greek myths in the form of handmaidens and warriors.
- "They’re meant to make the hard labors of a god much easier — which means they must be quite powerful," Kanta Dihal, University of Cambridge researcher, told Merchant.
- The first mentions of killer robots came from the Greeks, too: Talos was a figure forged from bronze to protect the island of Crete.
Moreover, Chinese and Indian myths may have featured bots, said Stanford classics scholar Adrienne Mayor — but many have been lost.
- Using a broad definition, tools like the bow and arrow partly "automated" hunting, said Antone Martinho-Truswell, a zoologist at the University of Sydney.
- The drive to automate is what makes us human, he argues.