How Safe Is Your Job? A New Freakonomics Radio Podcast

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PC Creative Destruction

Economists preach the gospel of “creative destruction,” whereby new industries — and jobs — replace the old ones. But in this era of technological wonder, has creative destruction become too destructive?

That’s the question we ask in our latest podcast, “How Safe Is Your Job?” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

It’s an expansive conversation with economists, historians, a roboticist-turned-cartoonist, and a special guest who is not quite human. You will hear from:

+ David Autor, an MIT labor economist who has written well on employment growth and technological change. While acknowledging that a lot of middle-class jobs are vanishing, and that most job growth is among low-wage workers, Autor is generally an optimist: “[T]he interactions by which technological changes lead to changes in employment are really rich and complex,” he tells us, “and it’s not simply a matter of, you know, a machine does the job, therefore the worker doesn’t do the job, therefore there are fewer workers needed.”

+ John Komlos, a retired professor of economics from the University of Munich who has written a working paper called  Has Creative Destruction Become More Destructive?”. His answer to that question is a resounding “yes.” Unlike Autor, Komlos believes that the current technological revolution, unlike past revolutions, is a net job destroyer — and worse. “Innovation is not going to give us nirvana or a just society or a good economy,” he says. “The ‘selfie moment’ destroyed Kodak, which at its peak employed 145,000 people. And these were mostly middle-class jobs, you see. Apple is employing 47,000 people and that is an iconic company today. And it’s not going to be a job creator in the next foreseeable future. Facebook is employing 7,000 people. That’s it!”

+ Randall Munroe, creator of the webcomic xkcd and author of What If?: Serious Scientific Answers to Absurd Hypothetical QuestionsMunroe, who used to work in a NASA robotics lab, entertains our question about the likelihood of a robot apocalypse. (Good news: it’s unlikely.)

(courtesy Randall Munroe)

(courtesy Randall Munroe)

You’ll also hear the story of the rise and fall of the piano industry, a story that is relevant in many ways to our current economic patterns. It’s told by the historian Richard Lieberman and the N.Y. Times reporter James Barron, each of whom has written a book about the Steinway piano company. Lieberman’s is called Steinway and Sons; Barron’s is Piano: The Making of a Steinway Concert Grand.

Not that anyone cares, but David Autor assures me that my job — writer, podcaster, etc. — is perfectly safe. But a pesky interloper named Jasmine (who has visited our podcast before) disagrees.


Ty Holland

I just saw a more pessimistic youtube video on this topic dubbed "Humans need not apply" so I found the contrast here interesting.

Far more time was spent on the "not a big concern" side of the argument, but I don't think the first guest fully comprehends the damage done by automation.

Check this primer out first:

https://www.youtube.com/watch?v=7Pq-S557XQU

Now I think that guy is a bit too pessimistic about certain fields like creativity and entertainment, I don't expect robots to take that over anytime soon. But the points about mechanical muscles vs mechanical minds were frightening. Some automation focuses more on augmenting the capabilities of human workers, but we are building machines that are getting better and better at THINKING and performing more complex tasks.

Look at the number of people employed in different fields, then look at the at jobs at greater risk from automation. There are plenty of people employed in transportation, it's relatively low skilled labor, and we already see active efforts to completely supplant human drivers there. I think it's inevitable, so we need to find alternative models of fulfillment and income that does not rely so heavily on having 100% of the population going to college to get a degree for some advanced field.

The MIT economists is undoubtedly extremely fulfilled with his work life, but that is just not an option for many people. The middle tier and lower tier jobs will become easier to automate, and declaring that the rest of the population that was not so gifted with intelligence should "work harder" ignores the fact that even if they DO work harder, they will not be able to compete at the same cost as the machines that are coming online.

People still believe outcomes are primarily a function of how hard you work and what you put into things. They are after a certain baseline of intelligence and aptitude, below those thresholds you are often more constrained by the lottery of nature. A lottery that did not used to be so cruel to people not smart enough to be professors at MIT, or write the code that commands the robots of the future.

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momosgarage

"Hard work" and "Boot Strapping" is no longer a part of the "leisure classes" typical career development paths, BUT they still preach the need for "Hard work" and "Boot Strapping" despite getting loans from relatives to start high tech businesses founded on Venture Capital type deals.

Before Junior High School I lived in a low income city, but went to a good Catholic school, where poor kids had informed, supportive parents and received a good educational foundation. When I was in Junior High school my mother got remarried and I then attended an excellent public high school, with rich kids that had informed and supportive parents, with a similar educational foundation, as the one I had in the Catholic School in the poor neighborhood (NOTE: the richest kids were at the public school purely for exposure in Athletics because because the local private schools, at the time, were all in small divisions at and playing on those small league teams would have affected their chances of getting into division I college sports).

Here is what I have concluded based on that experience:

When I look at the Forbes 400, I see 350+ people whom came from wealthy families. Note, some of them certainly acquired more wealth than their parents had given them to begin with, but VERY FEW, if any, came from what I would consider a Lower Middle class backgrounds or less. I would even ague that to get on the Forbes 400 list, coming from “at least” an Upper Middle class family is the BARE minimum requirement.

I typically use four well known examples, where, being from the Upper Middle class, was a base requirement to enter a particularly new and burgeoning industry, with even an inklings chance for financial success:

1) Bill Gates had access to a mainframe computer, housed at his High School in 1969. My parents of same age didn’t use or see a computer until the early 1980′s and even then, it was something they only experienced and got trained to use at their jobs. Is it really that surprising that Bill Gates was able to enter that market before many others and make money?

2) Mark Zuckerberg got his first computer around 12 years old and at some point his father hired someone to tutor him in computer programing. That computer adjusted for inflation would probably be worth close to $3,000-$4,000 today, not including tutoring costs. To put things into perspective my father had a computer in the early 1990′s, in his home office, that cost him about $3,000 and I was not allowed to touch it, EVER. My used car in high school cost less than half that, at the time, to buy. Is it really that surprising that Mark Zuckerberg was able to enter that market before many others and make money?

3) Jeff Bezos claims he paid for college on his own dime and at some point, started Amazon with his own money. HOWEVER, he admits there was a point where he needed financial help, in the form of a loan, to keep the business afloat. Eventually he went to his parents who then loaned him $300,000, after taking out a second mortgage on their home. How many parents posting comments here, would give their children a $300,000 loan, leveraged against their previously paid off home, for a questionable start-up business? Is it really that surprising that Jeff Bezos was able to enter that market before many others and make money?

3) Donald Trump, well what do I need to say here, he inherited his fathers $40 million dollar real estate business and got to learn the business under the guidance of his highly experienced father. Its certainly not surprising that he was able to enter that market before many others and make money?

Now don’t get me wrong, I’m not saying any of the above people were not smart, efficient workers, whom to date, have not earned their “keep”, but lets also not also fool ourselves about the financial FOUNDATION they came from.

If ANY of the above people had come from a lower class background than they actually did, their greatest achievements in life would have been inversely diminished because their “spring boards” would also have been lower.

The people you see today talking about "how to make money" ALL started out on third base, but for some reason are credited with Home Runs today, in hind sight.

Bill Gates, at best, would be a 6 figure VP or President at a software company today, Mark Z would be a 6 figure star programmer at Google or Riot games etc, Jeff Bezos would be a top Costco regional or retail district manager pulling in 6 figures and Donald Trump would be a small time developer working with much less capital.

I’ve seen this play out many times in life, you can’t be a dummy and turn inherited wealth into more wealth; but doing smart, "boot strapping", in turn, also won’t allow to you to rub two nickels together, with no family connections, nor any financial support, therein, turning those two nickels into a multi-million dollar company, in some number of years. Certainly not circa 1999-2013.

Now, I do believe a person certainly could have done the above after the war in 1945, but that was a TOTALLY different world in terms of codes, regulations and financial polices. We don’t live in that world anymore. If you want to see how money is actually made today, look up how the “Riot Games” founders got their first $1 million via venture capitalist investor. I’ll give you a hint, it was just like the way Bill Gates, Mark Zuckerberg Donald Trump way and Jeff B did it, via family help.

If a rich kid has one lick of ambition and knows how to work, MODERATELY hard, they can achieve almost anything they want, with the way the current economy is set up. Starting from nothing today means something very different than it meant 20+ years ago. If you come from a family that does not have anything, circa 2015, you're likely not going nowhere fast and no amount of ambition is going to change that.

What all this means, is that there is a clearly defined age range, where family wealth has a greater influence over a persons ability to become a millionaire later in life, DUE to the increasing costs of starting up a successful modern business. If a Boomer, for example, started a hardware sales operation in the 1970's, that persona had a MUCH greater chance of becoming a millionaire, 30+ years later by 2014, than say an X'er starting a similar business in the 1990's or Millennial starting one in 2015.

In fact, Bank of America has published a white paper outlining EXACTLY what I have described. So even though the report is generated by a corrupt corporation, you can guarantee it has a certain degree of accuracy, due to the type of customers they are targeting with the message it contains. Its highly doubtful, that Bank of America would do poor research on one of their target, high income, customer demographics, most likely to generate profits and buy shares.

The studies title is:

"2013 U.S. TRUST INSIGHTS ON WEALTH AND WORTH Annual survey of high net worth and ultra high net worth Americans"

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HCR

Devoted followers of this podcast always hear, "incentives matter", or "look for the incentive." This episode got me thinking about a time waaaay into the future when technology becomes so advanced that the marginal cost of the next want or need becomes so small that humans could have any need fulfilled in an instant for a cost of nothing. What happens then? What incentives will exist? The cost and access to geography, food, medicine, amusement, etc. is not only cheap (because technology has made it so) but the human mind has no need to cope with the time it takes to consumption (because again technology has made any and everything instantly accessible). I am sure minds much greater than mine have thought about this and have an answer...maybe new levels of Maslo's hierarchy will be generated and people will agonize over something ridiculous that I couldn't even imagine.

What jobs will there be? Will there even be an incentive for a human to have a job? What will fulfillment mean or look like in this u(di)stopia?

I would love for this to be explored in a future podcast!!

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momosgarage

There won't be any jobs because the "owners of capital" that create and possess the machines won't need the labor of the lower classes. The machines will make and do, everything they desire. There will be no incentive for the "owners of capital" to do away with fiat currency or the current labor-for-hire model, so what jobs will be left are going to be highly specialized and very expensive to get trained in. Essentially only the children of the wealthy will be able to enter these professions. I guess its possible that some kind of mandatory "base welfare" will be introduced, but that still won't alter the fact that the "owners of capital" won't need regular people anymore

Ryan

At around 13mins or so David Autor says that we cannot give computers a cookbook to do difficult tasks or tasks which we don't know how to describe.
However, we know how to set programs up to learn in a way that is similar to how we learn. And if that is the case then it is fair to think that many many more jobs will be effected by this kind of programming.

Much more detail by a much smarter person: https://www.ted.com/talks/jeremy_howard_the_wonderful_and_terrifying_implications_of_computers_that_can_learn?language=ar

Sylvain

This episode could have used some marxism. It all comes down to capital, as in ownership of the mean of production vs labour. In a society, where machines do most of the work and labour is hardly needed, all the wealth will go to owners of the machines. How is the rest of us supposed to make a living? The minimum revenue thing was interesting and I liked the fact that Steven tackled work as a moral value, but I thought he should've gone deeper into it.

Seth

How will the owners of those machines make a living if the rest of us don't create value to buy the services of their machines?

Sylvain

Of course this works both way.

Blackoncampus

I'd love to get the name of the wonderful jazz piece place around the 9th minute of the podcast.

Blackoncampus

Never mind! I found it! Thanks.

jindublin

What is it?? Not nice to leave us hanging like that! :)

momosgarage

I will begin with the usual assertion I hear in regards to the impact of the soon to be real, “future-tech jobs", which contrary to the beliefs of some, includes the traditional trades. Which in the future will certainly have related "proprietary tech" that will not be repairable, only "replaceable by a certified/licensed tech".

But many will say, “Someone has to get paid to fix the robots!”

I often hear this above noted rebuttal to mass automation in the workplace.

Many people generally do not bother to ask themselves, because they have no first hand experience, whom would future robotics consulting companies prefer to hire? Low work-experienced graduates, whom have demonstrated HANDS-ON, non-professional robotics experience, in the form of a “hobby portfolio”; OR graduates with no “hobby portfolio” experience, whom worked hard to graduate with a difficult major, but didn’t have as much free time to develop skills specifically related to their major and instead have a long list of work experience, flipping burgers etc, unrelated to their major.

I’m seeing this already happening in many different engineering fields, where the young workers being hired today are mostly from wealthy families and great colleges, while at the same time are being trained by older folks whom were NOT as privileged in their youth, but got through school the old fashioned way and were trained on the job, while paid, over long periods of time. Paid on the job training is certainly is no longer an option in 2014 and beyond, because companies would prefer to churn experienced staff from other companies, rather than train fresh graduates in-house.

My point being, these future “robot repair jobs” are going to require smart kids, with desire to advance, whom also went to good schools, had lots of spare time and money to play with the tech outside of school AND got their jobs offered at dinner parties, some of which will be non-paying internships at first. That means only highly educated "rich kids" will have a chance to get these open positions. These jobs will not be gotten by sending out blind jobs applications or online job boards, as was done in the 20th century. Basically what these "techs" will be doing in the near future is more like what a plumber or electrician of today does, EXCEPT you won’t get trained on the job, in a low-pay apprenticeship when at “entry level”. In fact to even be considered for these “future-tech jobs” in the first place you’ll need to have a good academic pedigree, lots of unpaid hobby time and 1+ years of unpaid internships.

Keeping up with the basics in terms of education and on-the-job work skills won’t be enough for jobs requiring future tech skill-sets (i.e. robot repair). The poor and even the middle class (not the upper middle class) will simply NOT be able to keep up with the skill demands for future employment, REQUIRED CERTIFICATIONS, STATE LICENSING, etc, while earning wages AND keeping a roof over their heads. In the future these very high costs skills needed to stay “relevant” in ALL labor markets, will only be affordable to the rich, or at the very least, to VERY far forward thinking middle class families, willing to sacrifice everything financially to keep their offspring competitive in the larger job market.

I believe “rich kid job mobility" is going to be a bigger problem for regular folks, beyond even what the previous "rich kid" pedigree typically brought in the 20th century. This unfettered access to endless money and time to “explore” academics, doing hands-on work, with NO consequences, is going to END job mobility of any kind for the lower and middle classes, even those whom have met the typical required higher education and work experience standards. Its going to be a superstar only job market, with no room for middle of road folks.

This is a huge issue for people "earning their own way" through college and not on their parents dollar. They simply can not compete with rich kids anymore, no matter how you slice it. Employers these days "prefer" this kind of graduate, so there is a HUGE public policy issue brewing on the horizon for the 99% population, that can't send their kid to MIT and then pay their living expenses for 2 years after graduation, while they do a string of unpaid internships, just so they can get a CHANCE at an entry level job.

When my parents were in school in the 1950's and 60's they were told: no one would have to work in the future, that everything would be done by robots and they would, in turn, have increased free time used for creating, making art, learning and helping others...

Robotics, the singularity and AI are essentially the same lie, told to our parents, rehashed for a 21st century audience. I think its funny when regular people get excited about future tech like the Singularity, AI, Robotics, etc. Do people really think when these thing finally become real, functioning, working designs, applicable to industry, that we the "peons", will somehow ALL get a Data from Start Trek or a C-3PO from Star Wars, to help us at home, at the job site or in the office, etc?

In reality we are going to get a David 8 from movie Prometheus/Aliens or the Robot Probation officer seen in the film Elysium. They are going to take away jobs and make unethical policing and policy enforcement, both easier and cheaper, for the true "Owners of Capital". They won't be paying a salary to the robot worker, so the savings will instead be pumped into legal fees and political lobbying, altering laws to favor tech over people, resulting in an overall savings for the corporations/governments and a full blown, loss of liberty, for everyone else.

Whom goes to jail when an AI robot or Mind Clone pulls your arm out of the socket? Will it be considered "negligence by the human that lost the arm", a "civil suit", "not a criminal act", etc, etc, etc, in court/arbitration? I personally at this point are willing to live with 1980's +/- era tech, if it means, I am free and can continue to earn money to live off.

In the words of the fictional David 8 android: “I can do almost anything that could possibly be asked of me, including things that my human counterparts might find distressing or unethical”

Sounds swell, don't it!

First, AI and other related future tech is going to make us jobless
Second, it is going to steal our liberty and freedoms
Third, it will make human life valueless to the true "Owners of Capital"

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Robin

On the podcast it was pointed out that real wages have not increased in about 10 years, I would suggest. That this is not do to the innovative of technology but do to the myth that upper management has sold the workers that there is no money to increase wages with and too large a work force to then consider increasing wages. The increase in earnings from increased productivity has mainly gone to executives, also the increased earnings has not been distributed to the common share holder of the company.

Here is a career specific example, biomeds (the techs that repair hospital equipment) have not had a wage range shift in over 20 years, more then 50% of the biomeds are within 15 years of retiring. You would expect this would create an upward pressure on wages, it is not.

Jess C

Interesting article. I like how it's mentioned that these technological changes aren't static "Robot does X, Robot replaces workers who do X," etc. A lot of times these innovations involve the intrinsic utilization of technology in ways humans don't even initially intend.

A cool example I've experienced is a Professor using Google Glass to give feedback to his students. Video on that here: https://www.youtube.com/watch?v=jsLWbX1PVV4

jindublin

As the conversation was going on about how quickly technology is changing things and the extent to which the destruction part of "creative destruction" is having a greater impact I found myself getting this tingle that indicated something was being missed. While the technology itself clearly has been a major impactor on the rate of change, I think there is something else which is a contributor to the destruction of so much of the traditional middle class jobs base. Actually there are two interrelated factors:
1) The struggle that the US economy went through in the 70s as Japan became the first of the Asian manufacturing powers. That sense that we could not compete and the start of that message that the US was no longer a place to manufacture.
2) When Regan became President he (along with Congress) made dramatic changes to the way we taxed capital gains and the way in which banking operated. These changes continued through the Clinton years on the basis that they were critical elements of overcoming the failures that led of the 7os.

The growth that the US experienced in the 90s and the first half of the 00s was directly related to how the US changed the way we did business to stimulate growth. That is the good part of the story. But I sense the bad part of that story is what we are experiencing now:
1) Since the 70s, America (and Western Europe, except Germany) have never fully accepted that we can manufacture and that our failures to compete are not just a matter of too much labor cost. So the message has been if you want to make something (i.e. manufacture) in the west then everybody needs to get paid less (at least in real terms after inflation).
2) The changes to banking and tax laws, while critical for the growth and dynamism of the 90s and early 00s has now turned to a negative because they have essentially created a subsidized financial industry (banking, venture capital) that can take large risk with little (comparatively speaking) downside. Yes Lehman went under, but how many banks/financial institutions survived because the "too big to fail" label. This allows for aggressive investing which in turn leads to dramatic increase in the rate of change.

The upshot of the very high rate of change with the cost of this aggressive investment policy rewarding a smaller pool of private investors. In turn the risk cost is being borne by the public in the form of decreased wages and increased subsidy from the public purse in the form of relatively low taxation (adjusted for our convoluted tax system which hides the true rate of corporate taxation) and the bailout mentality that protects this aggressive financial model (all in the name of protecting jobs).

I apologize in that this might be a bit all over the place, but I hope that it provides some food for thought.

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Dennis

I think this show missed the boat on what creates jobs. Jobs are created by demand. In recent years job growth has been weak and this isn't because of increased productivity. Its because of weak aggregate demand. Weak aggregate demand is a consequence of politics since governments decide that more and more money will be concentrated among fewer people who then leave that money sit idle. Corporations alone currently have trillions of dollars sitting idle.