Remember when the robots were coming for our jobs? Before the pandemic, there was a constant stream of conferences, policy reports, and news headlines sounding the alarm about technology replacing human workers.
A sample of those headlines: AI and Robots Could Threaten Your Career within Five Years; Automation could replace 800 million workers by 2030; We’re heading into a jobless future.
Yet today, we are experiencing the opposite. There are nearly five million more job openings than unemployed people in the U.S., according to recent Department of Labor data, and a record 4.5 million people quit their jobs in November. Many employers say they are unable to hire enough workers, which has contributed to supply chain jams, small business closures, and even shortages of cream cheese.
How did so many get it so wrong? And how can we ensure that future predictions about the labor market are more accurate?
We got it wrong because we often excluded workers from this very conversation. If workers had been invited to fancy business conferences or gatherings of economists, more experts might have identified the ample warnings of today’s hiring shortages. Workers have long known that issues like low pay, being denied a voice in the workplace, and the high costs of care would eventually rear their heads as business vulnerabilities and national economic risks.
For years, workers have been saying, loudly, that it shouldn’t be normal to be working and poor. More than 53 million people work low-wage jobs and struggle to pay for rent, childcare, and transportation, let alone healthcare and education.
In the UN’s ranking of childcare in 41 rich countries, the U.S. scored second to last, far behind less well-off countries, like Slovenia. As any working parent will understand, a lack of reliable, quality child care leads to decreased productivity.
Workers could have told experts that erratic schedules make them want to quit. Following the success of just-in-time manufacturing and lean supply chain practices, companies began to apply these techniques designed for machines to human workers.
The result? Constantly changing schedules and no slack to facilitate learning. One man in Pittsburgh whose employer used a just-in-time scheduling algorithm found the changes to his schedule so untenable he was forced to take a lower-paying job with less advancement potential simply to gain stability.
Workers have continuously said—to opinion pollsters and through labor organizing—that they want stability, a voice on the job, family-sustaining pay and benefits, and a chance to get ahead.
By focusing so much attention on the threat of robot-driven job loss and ignoring these critical warning signs, we made our economy even more vulnerable.
There is a straightforward solution: Workers, especially those in the types of “essential” lower-paying jobs that keep the economy running, must have a seat at the decision-making table.
This is already underway. California’s Future of Work Commission modeled worker-informed policy development. It included business and labor leaders and heard testimony from frontline workers to identify multidimensional solutions, from innovation in workplace benefits to improving job quality and—yes—helping workers prepare for technology-related change.
Listening to workers and delivering good jobs is also smart business. The number one ESG issue Americans are now judging companies on is their treatment of workers. The industry is responding: The new Worker Financial Wellness Initiative—a coalition of 13 major companies employing more than 800,000 people in the United States—has committed to conducting assessments to better understand their employees’ needs and explore solutions that range from increasing salaries to decreasing benefits costs or offering stock ownership.
For employers, attracting people to open jobs may require not only increased pay but also more of a say. For governments, the trillions in recently appropriated recovery dollars are a once-in-a-generation shot to fuel quality job growth. Philanthropy and the nonprofit sector have the necessary tools to uplift worker voices.
Technology is one of many forces of change impacting the workforce, along with pandemics, climate change, the care crisis, and the absence of a fair shot for too many. But the impacts of these changes are not inevitable—the business and policy choices we make today will shape how they play out in the future.
We can better prepare for all changes (robots included) by ensuring workers have a seat at the table.
New claims for unemployment benefits are trending at their lowest levels since 1968, a sign of how few layoffs are happening in the tightest labor market in half a century.
Job security today, by some measures, is even better than it was in the economic halcyon days of the late 1960s.
Behind today’s extremely tight labor market is a transformed U.S. economy, not least because its labor force is much bigger, including more women and more jobs in the service sector. The total number of people either working or looking for work is now 164 million, more than twice what it was in 1968.
That means the layoffs-per-worker rate is significantly lower today than even in the 1960s. In March, there were about 1.1 jobless claims per 1,000 people in the labor force—roughly half the 2.3 jobless claims per 1,000 recorded in 1968, according to an analysis of Labor Department data.
“Right now, Americans are experiencing the highest level of job security on record by many measures,” said Aaron Sojourner, an economist at the University of Minnesota.
Initial jobless claims rose modestly last week, but in the three preceding weeks new unemployment filings came in at the lowest levels since November 1968. The four-week moving average, which smooths out volatile weekly data, is trending in April at the lowest levels on record back to 1967.
While jobless claims and the unemployment rate—3.6% last month and 3.4% in November 1968—are nearly the same, the labor market has little else in common with the late 1960s. Women make up almost 47% of the workforce in 2022 up from about 37% in November 1968. The influx of women into the workplace has supported labor-force growth over the past five decades.
Workers are now more likely to be employed in private-sector services, which in 2021 accounted for 71% of the workforce, than in manufacturing or in the public sector. Roughly 10% of today’s workers are members of unions, down from around 28% in 1968, according to research by economists Barry Hirsch, David MacPherson, and Wayne Vroman.
Manufacturing firms frequently lay off workers for short periods to adjust production levels, such as a summer shutdown for retooling an automotive plant. Conversely, service-sector jobs tend to follow broader economic trends.
Other indicators also point to a tighter labor market now than in the late 1960s.
The share of workers who quit their jobs and the share of job openings as a function of the labor force has also recorded record highs in recent months. That has made it harder for employers to operate at full staff. Quits and openings data only extend to 2001.
In the past, “companies tended to have more caution on the side of hiring than on the side of layoffs,” said Erica Groshen, a former commissioner of the Bureau of Labor Statistics. “I think right now they have a more balanced caution. The balance has tilted a little bit to paying attention to the risks of laying people off.”
Wages, adjusted for inflation, are also better in 2022. Nonsupervisory workers earned an average of $27.06 an hour in March, according to the Labor Department. That compares to $25.19 an hour, when adjusting for inflation, that similar workers earned in November 1968.
However, productivity improvements mean that workers today produce much more output per hour worked than they did in the past. Workers haven't fully benefited from those changes. The share of the national income that goes to wages has fallen 7.3% since the fourth quarter of 1968.
The tight labor market in the late 1960s came near the end of a nearly decade-long economic expansion. The current labor market developed just two years after an extremely deep recession.
The share of the national income that goes to wages has dropped 7.3% since the fourth quarter of 1968.
PHOTO: RON HOLMAN / VISALIA TIMES-DELTA/REUTERSCaroline Fohlin, an economic historian at Emory University, said the pandemic-induced shock is more similar to a war than a financial crisis.
Wartime economic shocks tend to sharply reduce the supply of workers and available goods, she said, since so many people and resources are devoted to the war effort. Between 1914 and 1918, during World War I, the unemployment rate fell to 1.4% from 7.9%, according to research by Hugh Rockoff, an economist at Rutgers University.
In this case, it wasn’t war that kept workers out of the labor force but disease or fear of infections, Ms. Fohlin said.
“Most of our recessions have some kind of financial element but some of them, less often, is like this—more like a war shock,” she said.
Still, it can be misleading to compare unemployment claims numbers between 1968 and today, said Ms. Groshen. That is partly because workers today are less likely to claim unemployment benefits when they lose their jobs than in the past. In some cases, people now turn to informal working arrangements or gig work when they lose a job, rather than file for unemployment benefits, she said.
“The proportion of people who lost their jobs who receive unemployment insurance has been on a long-term decline,” she said. The trend was disrupted by the pandemic when enhanced and expanded benefits enticed more to apply, but those programs have ended. “It looks like maybe we’re getting back to that trend again.”