Technological Obsolescence of Labor

Timothy Taylor writes,

when I run into people who are concerned that technology is about to decimate U.S. jobs, I sometimes bring up the 1964 report. The usual response is to dismiss the 1964 experience very quickly, on the grounds that the current combination of information and communications technology, along with advanced in robotics, represent a totally different situation than in 1964. It’s of course true that modern technologies differ from those of a half-century ago, but that isn’t the issue. The issue is how an economy and a workforce makes a transition when new technologies arrive. It is a fact that technological shocks have been happening for decades, and that the U.S. economy has been adapting to them. The adaptations have not involved a steadily rising upward trend of unemployment over the decades, but they have involved the dislocations of industries falling and rising in different locations, and a continual pressure for workers to have higher skill levels.

Suppose we make some simple assumptions:

1. Leisure is a normal good.
2. Skills are heterogeneous and adapt slowly to changes in technology.

The prediction I would make is that we would see a lot more leisure. For those whose skill adaptation is adequate, that leisure will take the form of earlier retirement, later entry into the work force, or shorter hours. For those whose skill adaptation is inadequate, that leisure will show up as unemployment or reluctant withdrawal from the labor force.

I think that if you look only at males in isolation, you will see this in the data. That is, men are working much less than they used to. For some men, this leisure is very welcome, but for others it is not. In that sense, I think that we should look at the fears of the early 1960s not as quaint errors but instead as fairly well borne out.

For women, the story since the 1960s is different. In the economy as a whole, the share of labor devoted to preparing food, washing clothes, and cleaning house has gone down. Also, a higher share of the remaining work in these areas is coming from the market, via restaurants and cleaning services, rather than from unpaid female labor. The upshot is that, from the 1960s to about 2000, we saw a continuation of the trend for women to increase their share of market work and reduce their non-market labor. So, while men were increasing their leisure, women were increasing their market work. Combining men and women, you would not see a decline in market work.

It seems that around 2000, the trend for more market work by women reached its peak, making the trend toward technological unemployment more visible. From now on, what was happening to men before will be what happens to the total labor force. That is, leisure will go up, and some of it will be less than voluntary.

I might suggest also that the distribution of leisure is becoming increasingly distorted by the welfare state. Some people have too much leisure, in part because implicit tax rates for low-skilled workers are high, and in part because we over-subsidize leisure among healthy seniors. Some people have less leisure than they might otherwise enjoy, in part because they are working to support those with too much leisure.

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5 Responses to Technological Obsolescence of Labor

  1. Lord says:

    While skills are slow to adjust, I consider the real problem to be slowness of the price structure to adjust, whether due to nominal rigidity or anti competitive property laws. Greater productivity should lead to falling prices and greater real incomes for workers who then spend on other and newer goods, but as these prices don’t fall, real incomes don’t rise, and instead we must wait on the chance of speculative investment to increase demand or on low inflation and expiration or circumvention of such limitations, or there is such growth but only in select low productivity areas such as education and healthcare that are as much cost as benefit which don’t create many jobs.

  2. Tom DeMeo says:

    Mr. Taylor is wrong because the rate of change is accelerating with no end in sight, and the human parts of the equation cannot possibly keep up. Can you have a technological obsolescence of labor without a technological obsolescence of markets?

  3. Handle says:

    Amazon’s warehouse robots. I don’t know about you, but the implications seem like a big deal, even to someone who has only done similar low-skill work in the summer as a teenager.

    The building is arranged for the sake of the robots, with maybe a few indulgent nods to OSHA regulations. The few humans are only left to do some “Moravec’s paradox” dextrous proprioceptive tasks – like manipulating boxes to scan bar codes. If universal RFID tagging gets cheaper, then they won’t even be needed for that, and the building won’t need to be lit or climate controlled either, except to the extent the products require it. Fixed R&D costs may be high, but scaling without labor is cheap because marginal costs are low and copying is cheap and fast.

    But back to Moravec. There are low-skill service tasks that are hard to automate and scale and thus can occupy every otherwise unemployed person at the right price. These include maid / cleaning service, nannying / child care, and security at all levels.

    In other words, ‘servants’.

    If there were neither welfare-state redistribution nor a minimum wage, then we would see a transition to a more updated version of the Downton Abbey manor/estate-based economy. You can still see wealthy people live in this way with plenty of servants in many third world countries like India, and even some wealthy ones, like oil-rich Gulf Arab states.

    What made this pattern of social life obsolete in the West was the gradual increase in the productivity and thus value of labor as a result of the industrial revolution, at least, relative to the traditional sources of income of the heirs of the landed gentry.

    But now we have passed some inflection point and the situation is reversing for a variety of reasons and the market-clearing price of low-skill labor is falling behind, relative to the incomes of those that might hire them as servants.

    The problem is that social norms, attitudes, and behavioral patterns adjust to new economic circumstances even slower than individual skills. There is an asymmetry to social order vs. entropy. Social pathologies and community breakdown takes less effort than building order and pro-social behaviors back up.

    So while many people – especially men – may have no other good job opportunity besides being a servant, they have not been brought up to be good, desirable servants, and no one would trust them in their homes or with their lives and want to hire them. And if they don’t need to reform themselves to survive, then they probably wont. Instead, they’ll probably find a way to mooch off various women in their lives, who are either receiving welfare or working as the servants of the rich.

    It’s not a pretty picture. At least if you share my preferences.

    • Steve Sailer says:

      Being a golf caddie to a touring pro is a servant job. It used to be mostly lower class guys with some moxie, maybe half black. The pros expected they’d every so many years have to bail their caddie out of jail on a drunk and disorderly charge.

      Now there are practically no black caddies left and tour caddies tend to be old buddies from the college golf team: i.e., upper middle class just like the players. Contemporary people are more comfortable around servants from the same class background.

      For example, Obama’s chief servant (“body man”) is a ski bum and caddie who caddies for the President when he needs a caddie, but plays in the President’s foursome more than anybody else, too.

      This relationship wouldn’t have made much sense to Dwight Eisenhower but weird as it is it kind of makes sense to me.

      • Handle says:

        Yes, it’s an interesting phenomenon that could use more study.

        Of course, there will be competition amongst servants as with anything else, and if the labor market is pretty loose, then as usual employers will get their pick of the best and brightest in the pool. And paying more for a reliable and trustworthy servant is a worthwhile expenditure, in terms of insurance, if nothing else.

        You would also expect to see servants fill multiple personal-service purposes, to take up all their workdays. They have to earn a full-time income to make it, and they have to perform all these other functions to be worth that cost.

        And today we have what are essentially bro-servants, friend-sycophants-personal assistant-bodyguard-chauffeur-wingman combos; like in Entourage. I was going to add driver / chauffeur to my original list of tasks, but a combination of Uber, self-driving cars, and a change in preferences of the wealthy (if they own a fancy car, they prefer to drive it themselves), probably mean only a very limited impact on employment.

        Some high-ranking Generals have aides which are highly competent, well-paid executive assistants (usually Captains or Majors, sometimes GS13+ bureaucrats), as well as a driver / cook / bodyguard combo man. The higher ranking, the more likely he has more people, with a single individuals or teams dedicated to performing each of these tasks.

        One issue is that as the labor-market for servants hit it’s nadir before starting to recover, the preferences of the wealthy also shifted. People like their privacy more these days. And wealthy people tend to have to do a lot of in-person coordination and social interaction in their day-jobs, and they see their homes as a refuge, and don’t want to continue dealing with people. They also live in bubbles of other elite people, and don’t have much in common and haven’t interacted much, and maybe don’t really enjoy mixing with, servant-class types. These attitude shifts are also asymmetric – easy and quick to change one way, and hard and slow to reverse.

        Real estate is not built with ‘servants quarters’ and transportation back and forth from servant portions of town to rich employers is perhaps more difficult, time-consuming, or costly.

        Also, in the past, one of the prime duties of the otherwise unemployed lady of house was to supervise and manage the servants. But today, assortative marriage means that it is much more likely that both husband and wife both have high-paying professional jobs.

        The problem is that when you run the numbers, the second income minus taxes (at a higher bracket), and then minus what must be paid to unsupervised servants is really at a very low net hourly-rate of compensation. With the assistance of labor-saving gadgets, even a highly-paid working wife has a big incentive to drop out of the labor force and concentrate on home production, which wastes a lot of investment in her human capital. Or else, whatever net income she brings home ends up in the Two Income Trap and diverted to bidding up the price of good-neighborhood real estate.

        This is a big enough problem that I predict that the Republicans will propose a generous tax deduction or for personal servant salaries, in the name of equality and helping these women stay on their career paths.

        The demographic angle needs more research. It seems in the US that there has been an important transition in the ethnic composition of those performing certain servant-like tasks, with many fewer blacks. They have largely been displaced by many more Hispanics. But it seems a lot of them are new arrivals and not born and raised in the US.

        The past assumption seems to be that servant jobs would be filled by a steady flow of hungry immigrants, with their kids experiencing upward social mobility. But it seems that the kids of servants are not experiencing upward mobility these days, and that something about being raised in the US makes them poorly suited for servant work, and so instead they and their descendants fall into and tend to remain in underclass patterns of life. That’s a recipe for big trouble down the road.

        There is a famous portion of Tom Wolfe’s Radical Chic:

        …and uniformed servants serving drinks and Roquefort cheese morsels rolled in crushed nuts—But it’s all right. They’re white servants, not Claude and Maude, but white South Americans. Lenny and Felicia are geniuses. After a while, it all comes down to servants. They are the cutting edge in Radical Chic. Obviously, if you are giving a party for the Black Panthers, as Lenny and Felicia are this evening, or as Sidney and Gail Lumet did last week, or as John Simon of Random House and Richard Baron, the publisher, did before that; or for the Chicago Eight, such as the party Jean vanden Heuvel gave; or for the grape workers or Bernadette Devlin, such as the parties Andrew Stein gave; or for the Young Lords, such as the party Ellie Guggenheimer is giving next week in her Park Avenue duplex; or for the Indians or the SDS or the G.I. Coffee Shops or even for the Friends of the Earth—well, then, obviously you can’t have a Negro butler and maid, Claude and Maude, in uniform, circulating through the living room, the library and the main hall serving drinks and canapés. Plenty of people have tried to think it out. They try to picture the Panthers or whoever walking in bristling with electric hair and Cuban shades and leather pieces and the rest of it, and they try to picture Claude and Maude with the black uniforms coming up and saying, “Would you care for a drink, sir?” They close their eyes and try to picture it some way, but there is no way. One simply cannot see that moment. So the current wave of Radical Chic has touched off the most desperate search for white servants. Carter and Amanda Burden have white servants. Sidney Lumet and his wife Gail, who is Lena Horne’s daughter, have three white servants, including a Scottish nurse. Everybody has white servants. And Lenny and Felicia—they had it worked out before Radical Chic even started. Felicia grew up in Chile. Her father, Roy Elwood Cohn, an engineer from San Francisco, worked for the American Smelting and Refining Co. in Santiago. As Felicia Montealegre (her mother’s maiden name), she became an actress in New York and won the Motion Picture Daily critics’ award as the best new television actress of 1949. Anyway, they have a house staff of three white South American servants, including a Chilean cook, plus Lenny’s English chauffeur and dresser, who is also white, of course. Can one comprehend how perfect that is, given . . . the times? Well, many of their friends can, and they ring up the Bernsteins and ask them to get South American servants for them, and the Bernsteins are so generous about it, so obliging, that people refer to them, good-naturedly and gratefully, as “the Spic and Span Employment Agency,” with an easygoing ethnic humor, of course.

        The only other thing to do is what Ellie Guggenheimer is doing next week with her party for the Young Lords in her duplex on Park Avenue at 89th Street, just 10 blocks up from Lenny and Felicia. She is giving her party on a Sunday, which is the day off for the maid and the cleaning woman. “Two friends of mine”—she confides on the telephone—“two friends of mine who happen to be . . . not white—that’s what I hate about the times we live in, the terms—well, they’ve agreed to be butler and maid . . . and I’m going to be a maid myself!”

        Just at this point some well-meaning soul is going to say, Why not do without servants altogether if the matter creates such unbearable tension and one truly believes in equality? Well, even to raise the question is to reveal the most fundamental ignorance of life in the great co-ops and townhouses of the East Side in the age of Radical Chic. Why, my God! servants are not a mere convenience, they’re an absolute psychological necessity. Once one is into that life, truly into it, with the morning workout on the velvet swings at Kounovsky’s and the late mornings on the telephone, and lunch at the Running Footman, which is now regarded as really better than La Grenouille, Lutèce, Lafayette, La Caravelle and the rest of the general Frog Pond, less ostentatious, more of the David Hicks feeling, less of the Parish-Hadley look, and then—well, then, the idea of not having servants is unthinkable. But even that does not say it all. It makes it sound like a matter of convenience, when actually it is a sheer and fundamental matter of—having servants. Does one comprehend?

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