People in highly digitized jobs earn more, report finds - Axios
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People in highly digitized jobs earn more, report finds

The more your job is digitizing, the more you are earning and the greater the chances you will get a raise, according to a new report. In a counter-intuitive finding, there is also slightly greater protection from being automated out of a job.

Why it matters: The report released today by the Brookings Institution dramatizes the financial gulf between those working jobs that have undergone heavy computerization, and those that have not, and adds nuance to the story of income stagnation.

Data: Brookings "Digitalization and the American workforce" report; Interactive: Lazaro Gamio / Axios

The chart: Each arrow tracks workers in an occupation and what they earned on average between 2002 and 2016. Big arrows represent occupations where there are a lot of workers (fast food workers, nurses, accountants) and small arrows show more specialized occupations (tour guides, embalmers, astronomers). The colors reflect how digitized the occupation was in 2016. If an arrow is pointing up and to the right (general and operations managers), that means the number of workers in the occupation grew and wages rose. For some low-digital occupations, the arrows are pointing up and to the left. That means more people are working those jobs and earning less over the year.

The background: Brookings' Mark Muro, Sifan Liu, Jacob Whiton and Siddharth Kulkarni looked at 545 occupations that comprise 90% of the U.S. work force, relying on data from the Bureau of Labor Statistics. Here are the mean wages last year:

  • $72,896 for workers in highly digital occupations, such as financial managers and software developers;
  • $48,274 in middle-level digital jobs, such as nurses and mechanics; and
  • $30,393 in low-digital positions, such as personal care aides and construction workers.

And the gulf is growing: In 2002, a 1-point increase in a job's digitalization score, as measured by Brookings, predicted a $166.20 rise in annual income in 2016 dollars. By last year, the number had almost doubled to $292.80.

Read these factoids: The incomes of people in highly digitized occupations grew more than 0.8% a year from 2010 to 2016. Middle-digitization meant 0.3% higher pay. But the income of people in low-digitized jobs actually shrunk by 0.2% a year.

Worse news for lesser-digitized jobholders: Nearly 60% of the tasks in such jobs appear to be susceptible to automation, compared to only around 30% in high-digitized occupations, Brookings said.

  • Digitalization scores have significant and positive effects on real annual wages even when controlling for education level. And the effect is growing. In 2002, a one-point increase in digitalization score predicted a $166.20 (in 2016 dollars) increase in real annual average wages for occupations with the same education requirements. By 2016 this wage premium had almost doubled to $292.80.

Another view: In another new survey, Deloitte found that as time goes on, artificial intelligence will cost more jobs.

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Apartment landlord invests $200 million in Airbnb venture

Airbnb co-founder and CEO Brian Chesky. Photo: Jeff Chiu / AP

Brookfield Property Partners, one of the largest commercial real estate companies, has agreed to invest up to $200 million into Airbnb's home-sharing real estate venture, Airbnb announced Monday.

Why it matters: Even though multi-family housing makes up to half of Airbnb's listings in some major cities, apartment landlords have complained that their tenants' short-term rental activities have caused them to lose control over who is staying in their properties. Airbnb is trying to resolve some of that tension by enlisting Brookfield, which will get a 25% cut of the revenue from each apartment subleased on Airbnb.

Details: Niido, which is partnering with Airbnb to develop the multi-family housing, will build as many as six apartment complexes in Florida cities where tenants can rent their units through Airbnb for nearly half the year. Silverpeak Real Estate Partners is also committing $20 million to the project.

Millennial factor: Millennials make up a large share of renters, and they are more likely to embrace home-sharing than other cohorts. A survey by the National Multifamily Housing Council and Kingsley Associates found that 49% of renters under the age of 25 are interested in generating extra income through home-sharing.

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Women severely hit by retail industry downturn: study

A holiday sale display greets shoppers entering a JCPenney store. Photo: Elaine Thompson / AP

As U.S. retailers saw 129,000 jobs lost over the past year, women are experiencing the brunt of the downturn, losing about 161,000 positions in the year ended in October, according to data analysis by the Institute for Women's Policy Research, Bloomberg reports. On the other hand, men gained 88,000 jobs in retail.

Why it matters: Heidi Hartmann, president of the IWPR, told Bloomberg that it's unclear why the trend for women reversed this past year. It could be that they are moving to higher-paying job opportunities or that men are doing better because sales are booming in the retail sectors where they tend to work, like cars and appliances.

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Scoop: Virgin Hyperloop One raises $50 million, Branson becomes chair

Richard Branson. Photo by John Lamparski/Getty Images

Futuristic transportation startup Virgin Hyperloop One has agreed to raise $50 million in new private funding, Axios has learned. It also plans to name Richard Branson as chairman.

Why it matters: The Los Angeles-based company was running very low on cash, threatening the employment of around 300 people.

Backstory: Founded in 2014 as Hyperloop One, the company's technology is based on plans for a high-speed, tube-based transportation system released by Elon Musk the prior year. This past summer it announced two successful tests, although they still only reached a fraction of the near-700 miles per hour it eventually hopes to achieve.

  • In the summer of 2016, the company parted ways with one of its co-founders and a few other employees after a dispute led to a legal battle.
  • A number of other startups, including Musk's Boring Company, also are working on hyperloop.

The company rebranded as Virgin Hyperloop One following a recent investment from Virgin Group, through which Richard Branson took a regular board seat. Branson's new agreement to become chairman was key to obtaining the financing, per a source. One of the co-chairs he replaces is Shervin Pishevar, who resigned from the board following sexual harassment allegations unrelated to the company.

The new money comes from two existing investors: Russia's Caspian Venture Capital and Dubai's DP World. Not only does the deal let Virgin Hyperloop One stay afloat, but it also helps the company maintain ties in two geographic regions — Russia and the middle East — where it would like to sign contracts in 2018.

Virgin Hyperloop One did not return requests for comment.

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Battery exec leaves Dyson two years after $90 million buyout

Michigan entrepreneur Ann Marie Sastry has left vacuum-maker Dyson, two years after it acquired her controverial lithium-ion battery company, Axios has learned. The $90 million all-cash buyout remains one of the richest lithium-ion deals ever.

Quick take: Sources with knowledge of the situation were not certain of the circumstances of Sastry's departure. But it comes eight months after Dyson relinquished Sakti3's core battery patents, and doubts remain in the field regarding her main claim, asserted repeatedly — that she was on the verge of commercializing much-sought-after solid state battery technology.

Why it matters: For the last two years, Dyson founder James Dyson has spoken of ambitious plans to spend $1 billion to $3 billion to revolutionize batteries and electric cars. He has said said his electric car will ready for the road by 2020. At the time, Dyson's October 2015 purchase of Sakti3 was the spearpoint of the mission, and Sastry's departure suggests more internal turmoil than he has let on.

  • Sastry's Linkedin page says she left Dyson last month. She identifies herself as the founder and CEO of a company called Amesite, which a source said is involved with artificial intelligence and education.

In September, Dyson told Bloomberg that he had created two competing battery teams—Sakti3, plus another that was attempting a different approach to solid state. One explanation for Sastry's departure was that the other team won. In an interview with the Guardian, Dyson said the company's batteries were already more efficient than those in commercial electric vehicles.

At the time of the October 2015 deal and since, numerous leading U.S. battery researchers told me they wondered why Dyson had bought Sakti3. Despite Sastry's robust claims of the company's progress with solid state, she had revealed very little publicly and, since no one else had made much progress, the deep suspicion was that she was exaggerating. Indeed, in reporting for a story at the time of the buyout, former Sakti3 executives told me that the doubters were correct—the company's technology was rudimentary and nowhere near commercial.

Dyson said Sastry is no longer with the company but declined to comment further. Sastry could not be reached.

Dan Primack contributed to this story.

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Costco continues to hold its own against Amazon

Shares in Costco rose in after-hours trading, following the company's announcement of better-than-expected profits, combined with its 14th-straight month of same-store sales growth.

Costco's secret sauce is a mix of low prices, well-trained staff, and an ever-changing, but limited assortment of products, which have all kept Americans flocking to Costco outlets when other retailers have lost business to the Internet.

The most important number in Thursday's report was a 43.5% increase in e-commerce sales year-over year.

  • Though Costco stock is up more than 18% this year, it has lagged competitors like Amazon and Walmart over fears that the company is clinging too tightly to its profitable retail warehouses—these numbers will assuage some of those concerns.
  • During a call with analysts Thursday, CFO Richard Galanti stressed that Costco is experimenting with e-commerce "in our own way," and also, "pretty cheaply," using experiments like buy online and pick-up in store, which has the added benefit of driving traffic to its warehouses.
  • It's a delicate balancing act that, so far, investors are cheering.
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AI advances at detecting cancer — but it can't see you now

Illustration: Rebecca Zisser / Axios

Medicine is poised to be one place where AI makes a mark. In a study published this week, researchers report that a machine algorithm was as good — or better — than pathologists at detecting the spread of a type of breast cancer.

For all the talk about the promise of AI radically changing medicine, this is one of the first peer-reviewed studies to back claims that algorithms can detect abnormalities in pathology slides, says Eric Topol from the Scripps Research Institute.

The bottom line: Radiologists and pathologists are likely to be the first in medicine affected by AI. But researchers working on the technologies don't see them replacing doctors, and instead aiding them. And even that role will require more data about the impact on the medical profession and whether AIs are accurate enough to diagnose patients.

“It is the early days,” Aidoc CEO Elad Walach says. “There’s not enough research at this point. Deep learning has been commoditized generally but it hasn’t been commoditized for the medical domain. The algorithms out there aren’t good enough as is. We need a lot of R&D to make AI work in this space. It is not just plug and play.”

What’s new: Babak Ehteshami Bejnordi and his colleagues from Radboud University Medical Center in the Netherlands evaluated algorithms submitted in a competition to analyze tissue samples from the lymph nodes of breast cancer patients. (Cancer cells are most likely to spread to these nearby areas first so they're involved in determining a patient's prognosis.) They then compared the accuracy of AI diagnoses with those of pathologists in two different situations where the researchers had a gold-standard test to check both:

  1. A panel of 11 pathologists had two hours to review 129 digitized images of samples from patients who had already received a diagnosis from a pathologist.
  2. One pathologist was given unlimited time to review all the cases. (The expert took 30 hours.)

The result: The top seven algorithms — all deep learning methods, which have lately seen progress in image and pattern recognition — performed better than the pathologists in identifying the metastases, but were on par with the pathologist whose time wasn’t restricted.

Keep in mind: The time constraints put — or not — on the pathologists in the study aren't the reality in which they practice. And, the AIs detected just one type of breast cancer. "We need to see it borne out across lots of other pathologies not just lymph nodes for breast cancers," says Topol. "This is the most impressive paper yet. But there are limitations. This is done in silico and is not a real world validation."

More opinions

PathAI: Andy Beck, whose team won the AI competition in the new study and who is now CEO of PathAI, says AI’s arrival to pathology will be a transformation rather than a disruption.

Seeing it as the latter “betrays a lack of understanding of how these fields operate. There are so many things physicians do. Typically an AI does one specific thing very well. We aren’t even close to doing the whole breadth of what a physician does.”

Aidoc: This Israeli startup is developing technology that can detect visual abnormalities — whether it be a cancer, stroke, bleeding or an edema — in head and neck CT scans. Their focus right now, says Walach, is on optimizing radiologists’ workflow from the current practice of reviewing cases in order received to getting AI to flag urgent ones first.

They’re currently testing their technology in 5 U.S. sites. Early, unpublished results at one hospital found that the AI could spot an abnormal scan with 98% sensitivity compared to what clinicians call the "ground truth" (in this study, the diagnosis by three radiologists working without AI), says Walach. They will look to publish their findings soon.

Walach says, “There is a need for peer reviewed publications about the outcomes not just the accuracy of these systems, and leading companies should invest time and resources in publishing clinical evidence.”

A big challenge: Like other cancer tests, there is a risk of detecting — and then treating — a cancer that isn't there. That isn't unique to machines but "algorithms are tuned to perform at maximum sensitivity, meaning there may be false positives," says Stanford University's Daniel Rubin, who develops imaging tools for radiology. “As we introduce these technologies, if people don’t improve accuracy and there are more false positives, it will increase the cost of health care.”

Go deeper: We asked four medical experts whether AI might help their profession

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Walmart will start giving salary advances to 1.4 million workers

A worker helps a customer at a Walmart store. Photo: Julio Cortez / AP

Walmart announced Wednesday that it will start allowing its workers to claim already-earned wages before their scheduled payday, in order to help its associates meet unexpected expenses. It's working with FinTech firms Even and PayActiv to offer workers a suite of financial services, including the ability to take advances on pay up to 8 times per year.

Don't get too excited: Walmart has been investing in higher hourly pay for workers, but its starting wage of $9 per hour still trails that of rivals Target and Costco, and labor advocates say that allowing advances is little help for those who simply don't earn enough money.

Walmart tells the New York Times that the move will reduce financial stress for workers, which will make them happier and more productive, but critics are dubious.

  • "“It sounds like this may be a useful service but it doesn’t tackle the fundamental problem Walmart workers suffer,” said Paul Sonn, general counsel of the National Employment Law Project, tells the paper. “Their paychecks are too small.”
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Zara's shrinking profit margins spooks investors

A Zara store in an upscale Istanbul neighbourhood in November 2017. Photo: Lefteris Pitarakis / AP

Inditex, the Spanish owner of Zara and largest apparel retailer in the world, announced a healthy 6% increase in net income for the first 9 months of 2017, but also a continued decline in profit margins — a measure that has been steadily falling since 2013.

  • Investors have bid the stock down the stock more than 2% during trading Thursday.

Why it matters: There is debate over whether the company can blame its profitability struggles on a strong Euro, but the 5% drop in Inditex stock this year shows that Wall Street's love affair with Inditex may be ending.

A best-in-class retailer: Despite the 2017 decline in Inditex's stock price, the firm has shown outstanding performance during the prior decade.

  • Since 2007, the firm has grown from roughly 3,100 stores to more than 7,500 today, on the strength of its decentralized supply chain and horizontally organized design team, which enables the firm to react to fashion trends faster than its peers.

Go deeper: Read the Wall Street Journal's piece.

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AI pioneer Andrew Ng wants to modernize manufacturing

Ng says he likes being ahead of the curve. Photo: Eric Risberg / AP

After helping Google and Baidu kickstart their artificial intelligence efforts, Andrew Ng wants to see AI transform more than just tech companies. His new startup, Landing.ai, aims to help manufacturing companies tap AI to automate routine tasks, like inspecting products for defects.

The particulars: Ng says the new company is based in Palo Alto and has a couple dozen employees, but he wouldn't talk about funding or investors. It has a couple early customers, but the only one it is publicly talking about is electronics manufacturing giant Foxconn.

The back story: Ng ran Google's early AI effort, Google Brain, before helping China's Baidu ratchet up its AI effort. Ng told reporters that he likes being early to a space before it's conventional wisdom.

"I feel like in my life I've often done a lot of things before it was obvious it was a good thing to do," he said.

My thought bubble: Ng's chops in the field are second to none, but it's a bit unclear how a small team can effectively work with a large number of companies given how massive such operations tend to be. Ng says that while Landing.ai does custom work for each client, there are reusable elements. He says the company will be bigger a year from now than it is today.

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Slow rebuild after the Great Recession killed economic equality

Apple's new campus in September. Photo: Marcio Jose Sanchez / AP

"Seattle is among a fistful of cities that have flourished in the 10 years since the Great Recession officially began in December 2007, even while most other large cities — and sizable swaths of rural America — have managed only modest recoveries," per AP Economics Writer Christopher Rugaber:

Why it matters: The rebound has "failed to narrow the country's deep regional economic disparities and in fact has worsened them."

More from the report:

  • "A few cities have grown much richer, thanks to their grip on an outsize share of lucrative tech jobs and soaring home prices. Others have thrived because of surging oil and gas production."
  • "In Las Vegas, half-finished housing developments, relics of the housing boom, pockmark the surrounding desert. Families there earn nearly 20 percent less, adjusted for inflation, than in 2007."
  • "[M]any Southern and Midwestern cities — from Greensboro, North Carolina, to Janesville, Wisconsin — have yet to recover from the loss of manufacturing jobs that have been automated out of existence or lost to competition from China."