This morning's newsletter is coming to you from the greatest city in the world, Denver, Colorado. I'm in town for the National Association for Business Economics conference, so naturally I've been partying pretty hard. #YOLO #MidoriShots
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1 big thing: Automation to hit African Americans disproportionately
The employment outlook for African Americans will "worsen dramatically" as automation upends the workforce, according to a new McKinsey report provided first to Axios.
Why it matters: By 2030, African American workers stand to lose hundreds of thousands of jobs as a result of increased automation, widening the racial wealth gap and weighing down overall U.S. growth.
- The problem will be particularly acute for men, younger workers between 18–35, and those without a college degree, according to the report from Kelemwork Cook, Duwain Pinder, Shelley Stewart III, Amaka Uchegbu and Jason Wright.
The cost: Researchers have projected that closing the racial wealth gap could net the U.S. economy between $1.1 trillion and $1.5 trillion by 2028.
- The additional loss of jobs and buying power from African Americans could mean further opportunity cost losses.
Between the lines: Researchers found "more than 200 counties, largely concentrated in the US Southeast and Midwest, where a decline in African American net job growth could occur alongside an increase in job growth for white employees."
Details: African American workers are at risk of exceptional job losses for 3 key reasons.
- They are overrepresented in “support roles that are most likely to be affected by automation, such as truck drivers, food service workers, and office clerks."
- They have an unemployment rate that is double white workers, "even when controlling for education, duration of unemployment, and the cause of unemployment."
- They are underrepresented in 5 of the 6 parts of the country projected to grow the fastest and overrepresented in parts of the country that are on pace to see the slowest growth.
"African Americans in these distressed areas may disproportionately feel the negative effects of impending economic and technological changes, see fewer new opportunities, and face additional challenges in transitioning to the economy of the future," the report finds.
The bottom line: "These trends, if not addressed, could have a significant negative effect on the income generation, wealth, and stability of African American families."
2. Striking GM workers say talks took "a turn for the worse"
The United Auto Workers said in a letter Sunday that negotiations for a new 4-year labor contract between General Motors and its striking workers have "taken a turn for the worse" after the union rejected GM's latest proposal, according to Reuters.
What's happening: The UAW's GM members went on strike Sept. 16, demanding a new labor contract that would include higher wages, affordable health care, a great share of profits, job security, and a path for permanent positions for temporary employees.
Our thought bubble, from Axios' Joann Muller: A deal will likely remain elusive until GM agrees to shift some production from Mexico or offers some other form of job security for workers at 4 U.S. factories that are scheduled to close.
- GM produces 880,000 pickups and SUVs a year in Mexico — more than any other global auto manufacturer — 2/3 of which are exported to the United States.
- GM could build more vehicles here — it has about 1 million units of excess production capacity in the U.S., according to the Center for Automotive Research.
- But it would cost at least $1 billion to convert underutilized car plants to truck or SUV production, which must be balanced against the billions needed for investments in future technologies, like electric and autonomous vehicles.
At least talks are continuing, which is a good sign.
The last word: Terry Dittes, the UAW vice president in charge of the GM department, said in the letter that GM repeated a contract offer that the union had previously rejected.
- "We, in this union, could not be more disappointed with General Motors who refuse to recognize the experience and talent of our membership," per the letter.
3. The manufacturing jobs slump
Axios' Courtenay Brown and Alayna Treene write: American manufacturers rode a wave of optimism after President Trump took office, clinging to his promises to revive the industry and bring back jobs.
Yes, but: The politically important sector is being choked by his trade war with China, and business leaders tell Axios that the tariffs threaten to upend the economy if not addressed soon.
Driving the news: The manufacturing sector added 18,000 jobs in September of last year, following a steady rise in employment.
But just one year later, the pace of gains has slowed: Last month, the sector cut thousands of jobs for the 2nd time this year.
- A closely watched index that tracks the health of the industry also showed that manufacturing is in the worst shape since before President Trump took office — contracting for 2 straight months. The last time the sector contracted was in 2016.
The bottom line: U.S. Chamber of Commerce chief policy officer Neil Bradley, who has worked closely with the Office of the United States Trade Representative on the Trump administration's pending trade agreements, tells Axios he's been "concerned about the outlook for the manufacturing sector for some time now."
- "When businesses begin to decline, one of the first sectors to be impacted by that is manufacturing," Bradley said. "The next few months are critical. Either confidence [in the markets] is going to be restored, or that lack of confidence from the tariffs will continue to spread. And that's when you risk a recession."
4. Voluntary renewable energy purchases keep rising
Axios' Amy Harder writes: The amount of renewable electricity being bought voluntarily has increased nearly 300% since 2010, according to new data from the Energy Department’s National Renewable Energy Laboratory (NREL).
Why it matters: The trend reflects the increasing availability and affordability of wind and solar electricity, energy sources that have grown from almost nothing a decade ago to nearly 9% of all electricity today.
By the numbers: In 2018, 134 million megawatt hours of renewable electricity — mostly wind and solar — were purchased above and beyond state-level mandates. That's about 3% of all electricity sales in the U.S.
One level deeper: Companies, led by Big Tech firms, are the biggest buyers of the power, but 75% of all customers are actually individuals buying tiny amounts of electricity.
5. Quote of the day
"Thank you very much for this award. I don’t deserve it, but I’m not giving it back."
Who said it: Art Laffer, accepting his National Association for Business Economists' Adam Smith Award for "leadership in the profession and the application of economic principles and knowledge" on Sunday.
- Laffer also told the audience at the NABE conference that the cloth napkin currently on display at the Smithsonian National Museum of American History depicting a drawing of his Laffer curve is a fake.
Background: The Laffer Curve, which argues that higher taxes can actually lower government revenue, was drawn up on a paper napkin during a meeting with Dick Cheney and Donald Rumsfeld in 1974.
- “In truth, I did that one 2 years later,” Laffer said of the Smithsonian's napkin.