The Economist Who Figured Out What Makes Workers Tick MIT’s David Autor is helping shape the U.S. response to the biggest economic issues from the China Shock to job hunting after the pandemic

 The man whose thinking helped change our understanding of the American labor market lives in perpetual motion. If he isn’t working, he’s disassembling a broken kitchen mixer, teaching himself how to splice rope, or listening to podcasts at double speed while doing the workout routine he calls his “seven-minute workout.”

David Autor cut a peripatetic path through most of his 20s as a one-time college dropout and self-taught mechanic, before he stumbled into economics.

 “I fell into it assbackwards,” he said. 

Today, his work is helping shape how the White House is approaching the biggest labor issues from responding to the threat of a “China Shock 2.0” to thinking about the economic impacts of artificial intelligence.

Autor has shown how the rise of the computer was hurting middle-class jobs. He sounded the alarm that workers in the South were getting pulverized by Chinese imports, years before Donald Trump was elected president, playing off this fear. 

Now, Autor’s research has taken an unexpectedly optimistic turn: He has shown how, after the pandemic struck, low-wage workers have started catching up. He holds a hopeful view of AI, arguing that it could help low-skilled workers.

“To me, the labor market is the central institution of any society,” said Autor, 60 years old. “The fastest way to improve people’s welfare is to improve the labor market.”

Lawrence Katz, a Harvard University economist who has trained a generation of labor economists, said Autor has “probably been the most insightful and influential scholar of the labor market” in decades.  

The Biden administration’s efforts to shield domestic manufacturers from a rising tide of Chinese imports have been guided by Autor’s work. The Council of Economic Advisers’ annual report to the president this year is riddled with references to his research.

Autor grew up in Newton, Mass., the middle child of two psychologists, Sanford and Sherry Autor. He remembers himself as a painfully shy introvert. His mother recalls a kid who loved his dog and spent hours taking things apart. 

He dropped out of Columbia University after three semesters, did computer consulting work, bought a motorcycle, and taught himself how to fix it. After a couple of years, he returned to college and studied psychology and computer science at Tufts University. 

When Autor graduated in 1989, just shy of 25, he wasn’t sure what to do. So he drove across the country in an eight-forward-speed, stick-shift 1980 Dodge Colt RS that cost $250. On the way, he heard a radio segment about a program that taught computer skills at Glide Memorial Church in San Francisco’s Tenderloin district. 

Autor started working there, and his views on labor began taking form. The people he was working with were poor, and what they desired was basic: decent jobs, and stable lives. 

After three years he started graduate studies in public policy at Harvard’s Kennedy School.

There, at age 29, Autor took his first economics class. It blew his mind.

“This is the thing that puts together the questions I care about with methods that I like,” Autor recalled. “Why didn’t anyone tell me about this?”

As he prepped for the job market, a fellow Ph.D. student asked him whether he was really going to wear his gecko earring to an interview. Of course, Autor replied. He’d gotten it when he and his wife, Marika Tatsutani, were first dating and split a pair.

During the pandemic, Autor and his younger daughter got gecko tattoos. Now his son has one, too. His eldest daughter is on the fence.

(Autor now bears a gecko on his calf to match his earring, the souvenir of a father-daughter trip to the tattoo parlor.) 

He was surprised to get an offer from MIT’s economics department. It often grants jobs to Harvard’s economics Ph.D.s—but not public policy Ph.D.s.

During Autor’s early days as an economist, an “aha!” moment came during a series of conversations with Harvard’s Frank Levy and MIT’s Richard Murnane. At one point, Levy suggested they could measure how hard a task is for humans by measuring how much code it would take for a computer to accomplish it. The premise: what is hard for computers is hard for humans.

Autor pointed out that it was the opposite. Adding up hundreds of numbers is hard for people but trivial for a computer. Figuring whether something left on a desk is trash is easy for people but enormously hard for computers.

They concluded that computers are good at tasks that are cognitive but also routine—the type of work done by bookkeepers and switchboard operators.

As a result, computers were displacing jobs that were once tickets to the middle class for workers without college degrees. Meanwhile, more educated workers were benefiting from the increased productivity computers were giving them. Low-paid service work, like cleaning the homes of those educated workers, wasn’t hurt either: Computers couldn’t put sheets on beds. 

Their paper was published in 2003. It has been cited in 129 academic publications so far this year alone.

In those early years at MIT, Autor said he felt like an impostor. He’d had to catch up quickly on math in graduate school, auditing calculus at Harvard at age 30 with a bunch of 18-year-olds. Now he was supposed to teach economics to MIT whiz kids. At night, in his office, he cried. 

He put in long hours, too. He and Tatsutani had young children at home. “My kids think I’m a good parent,” he said. “But my wife and I both know that I wasn’t when they were young.”

In a field where long hours are lionized, a tutor is known for working really long hours and devoting time to his students. 

“No one knows how he finds time, but he finds time,” said Sydnee Caldwell, a former student of his who is now a professor at the Haas School of Business at the University of California, Berkeley.  

Autor keeps in his MIT office a Nixie clock that he and his son built.

He throws himself into hobbies like he throws himself into work. He loves sailing: He got hooked at 14 when a friend took him on the Charles River and they capsized. He loves hockey, too: He started playing after he took his daughters skating when they were little and broke his kneecap. 

A few years after Autor got tenure, the 2008 financial crisis hit. Construction work dried up. Unemployment soared. And then there was China’s rise as a global manufacturing juggernaut. Economic orthodoxy held that the benefits of trade far outweighed any drawbacks. 

With economists David Dorn and Gordon Hanson, Autor dug in. What they found: People in communities competing with Chinese imports, such as furniture-making towns or textile-manufacturing centers concentrated in the South, were losing their jobs. Often, they were forced onto food stamps and disabled.

The research, first released in 2011, was controversial. But Donald Trump, campaigning for the presidency in 2016, successfully tapped into exactly that frustration. Indeed, later work would show that the more affected an area was by “the China Shock,” the larger the rightward shift among that area’s white voters. 

Autor had ‘Pro-Worker AI’ baseball hats made for MIT’s Shaping the Future of Work Initiative. He believes that AI will empower people with less education to do work that is now the purview of elite workers.

When Covid arrived and the unemployment rate shot to nearly 15%, Autor found something he didn’t expect: As the job market came back, low-wage workers’ wages rose at a faster clip than their higher-paid counterparts.

Working with Arindrajit Dube and Annie McGrew from the University of Massachusetts, Amherst, Autor sought to understand why. 

Labor economists have long recognized that low-wage, less-educated workers often aren’t well-matched into jobs where they can be more productive and make more money. The dishwasher at the restaurant on the corner of State and Main might not know there is a better-run restaurant a few blocks away that pays more. 

The pandemic changed all that. First, it shook poorer workers out of their jobs. Then, when the economy reopened, many of them found better work that paid more. Government relief might have helped, too. With more money in the bank, people had the luxury to take the time to find a good job.

The outcome: The still-large pay gap between the highest-paid workers and the lowest has substantially narrowed.

When it comes to AI and workers, Autor is hopeful. Although computers hurt many middle-class jobs, Autor thinks AI could do the opposite. People with less education will be able to do more work that can now be performed only by highly trained elite workers, such as computer coding. 

“It’s a mistake at this point to think that it’s just more of the same,” Autor said. “I don’t think it is, and that’s great.”

 Sales of previously occupied U.S. homes fell in May for the third straight month as rising mortgage rates and record-high prices discouraged many prospective homebuyers during what’s traditionally the housing market’s busiest the year.

Existing home sales fell 0.7% last month from April to a seasonally adjusted annual rate of 4.11 million, the National Association of Realtors said Friday.

Sales also fell 2.8% compared with May last year. The latest sales still came in slightly higher than the 4.07 million pace economists were expecting, according to FactSet.

“I thought that we would actually see a recovery this spring —- we are not seeing it,” said Lawrence Yun, the NAR’s chief economist.

Despite the pullback in sales, home prices climbed compared with a year earlier for the 11th month in a row. The national median sales price rose 5.8% from a year earlier to $419,300, an all-time high on records going back to 1999. It’s also up 51% from five years ago.

Home prices rose even as sales slowed and the supply of properties on the market hit its highest level in 4 years.

“It’s somewhat of a strange phenomena,” Yun said. “We had low home sales activity, prices are hitting record highs and homes look like they’re still getting multiple offers.”

The U.S. housing market has been mired in a slump going back to 2022 when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.

The average rate on a 30-year mortgage has mostly hovered around 7% this year as stronger-than-expected reports on the economy and inflation have forced the Federal Reserve to keep its short-term rate at the highest level in more than 20 years.

Federal Reserve officials said last week that inflation has fallen further toward their target level of 2% in recent months and signaled that they expect to cut their benchmark interest rate once this year. The central bank had previously projected as many as three cuts in 2024, which raised expectations in the housing market for mortgage rates to have eased further by now.

“Maybe the Federal Reserve interest rate cut policy, which was projected to happen, but did not happen — it’s getting delayed and delayed and delayed —- maybe that’s causing the home sales recovery to be delayed,” Yun said.

The elevated mortgage rates are keeping many homeowners who bought or refinanced more than two years ago from selling now because they don’t want to give up their fixed-rate mortgages below 3% or 4% — a trend real estate experts refer to as the “lock-in” effect.

As of the end of last year, more than 50% of homes with a mortgage had a rate that was 4% or lower, and 87% had a rate at 6% or lower, according to Realtor.com.

Another factor that’s constrained the housing market is a tight supply of homes for sale, though that’s been easing this year, partly because homes are taking longer to sell.

All told, there were about 1.3 million unsold homes at the end of last month, an increase of 6.7% from April and up 18.5% from May last year, NAR said.

That translates to a 3.7-month supply at the current sales pace. In a more balanced market between buyers and sellers there is a 4- to 5-month supply.

“Let’s wait to see if this leads to more home sales,” Yun said. “So far, that’s not the case, but at least the inventory is beginning to loosen up.”

Despite the increase in available homes for sale this spring, sellers generally still have the edge over buyers.

Homebuyers snapped up homes last month typically within just 24 days after the properties hit the market. And 30% of those properties sold for more than their original list price, which typically means sellers received offers from multiple home shoppers.

First-time homebuyers who don’t have any home equity to put toward their down payment continue to have a tough time getting into the housing market. They accounted for 31% of all homes sold last month, which is down from 33% in April, but up from 28% in May last year. They’ve accounted for 40% of sales historically.

Homebuyers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 28% of sales last month, up from 25% in May last year. And about 16% of homes sold in May were bought by individual investors or homeowners looking to buy a second home, up from 15% a year earlier, the NAR said.

 Disney workers are suing their employer, claiming they were fraudulently induced to move from California to Florida to work in a new office campus only to have those plans later scrapped amid a fight between the entertainment giant and Florida Gov. Ron DeSantis.

In July 2021, the Disney Parks’ chief told workers in California that most white-collar employees would be transferred to the new campus in Orlando to consolidate different teams and allow for greater collaboration.

As many as 2,000 workers in digital technology, finance, and product development departments would be transferred to the campus located about 20 miles (30 kilometers) from the giant Walt Disney World theme park resort, the company said at the time.

Many workers were reluctant to make the move given their longstanding ties to Southern California and fears of uprooting their families, but Disney encouraged the move by promising a state-of-the-art, centralized workplace and greater affordability in central Florida, according to the class action lawsuit filed earlier this week.

“In sum, employees were incentivized to move through a combination of reward and punishment,” the lawsuit said. “An employee could choose to move to a better life in Florida, or alternatively, choose not to move and be terminated by Disney.”

By late 2021, as large numbers of Disney employees resisted relocating, Disney told them to put their moving plans on hold. Meanwhile, a group of workers who had decided to relocate, including the lead plaintiffs, Maria De La Cruz and George Fong, sold their California homes with the understanding that the company expected them to make the move, and they purchased homes in central Florida, the lawsuit said.

Fong, who works as a creative director of product design, sold his childhood home which he had inherited.

By June 2022, though, Disney leaders told the California workers that the opening of the new Orlando campus was being delayed and that they could postpone moving until 2026 but were still encouraged to relocate by 2024.

By this time, DeSantis had begun a feud with Disney over the company’s public opposition to a Florida law that bars instruction on sexual orientation and gender identity in kindergarten through third grade. With the help of Republicans in the Florida Legislature, DeSantis revamped the governing district for Walt Disney World and installed his own appointees to its board in early 2023. Before the DeSantis takeover, the governing district had been controlled by supporters of Disney for more than five decades.

By May 2023, Disney told its workers that the plans to open the $1 billion campus in Orlando were being scrapped and that the workers who had moved to Florida could move back to California if they chose.

According to the lawsuit, many of the workers who had moved to Florida were worried about their job security if they didn’t relocate back to California since most of their team members were still there and the company lacked the facilities in Florida to accommodate the teams.

After the decision to pull the plug on the Orlando campus, housing prices surrounding the campus dropped and the price of housing in California continued to increase, just as mortgage interest rates also rose higher in 2023. Fong and De La Cruz, a vice president of product design, have moved back or plan to move back to California and are seeking undisclosed economic and punitive damages.

“Other similarly situated individuals have been forced to purchase or rent less desirable housing upon their return to California,” the lawsuit said.

Disney didn’t respond to an email seeking comment on Friday.

Earlier this month, Disney and the DeSantis appointees to Disney World’s governing district formally ended their fight over control of the government by signing a 15-year development agreement. Under the deal, the DeSantis appointees committed the district to making infrastructure improvements in exchange for Disney investing up to $17 billion into Disney World over the next two decades.

Two Lockheed Martin subsidiaries have agreed to pay the federal government $70 million for overcharging the Navy for aircraft parts, the U.S. Department of Justice announced Friday.

The federal agency says Sikorsky Support Services, based in Stratford, Connecticut, and Derco Aerospace, headquartered in Milwaukee, Wisconsin, knowingly entered into an improper subcontract for spare parts and materials for aircraft used to train Navy pilots.

Under the contract, Sikorsky purchased the parts from Derco at the cost Derco paid other suppliers, plus a 32% markup.

Sikorsky then billed the Navy for the price it paid Derco, in violation of federal regulations barring such arrangements, which prosecutors said drive up government costs.

“Today’s settlement demonstrates that the Justice Department will ensure that government contractors do not skirt the law and engage in self-dealing that may artificially inflate their charges at the expense of the American taxpayers,” Brian Boynton, head of the DOJ’s civil division, said in a statement.

Lockheed Martin, based in Maryland, said in a statement Friday that it is “pleased that the settlement will bring this case to a conclusion,” noting that there also was no finding of wrongdoing by Sikorsky or Derco Aerospace.

Prosecutors said the settlement resolves a lawsuit filed by a former employee of Derco under the whistleblower provision of the federal False Claims Act. The case goes back to 2011, or several years before Lockheed Martin acquired Sikorsky, the maker of the military’s Black Hawk helicopters, in 2015.

Darrin Jones, of the U.S. Department of Defense’s Office of Inspector General, said the settlement should serve as a deterrent for those looking to exploit the agency’s procurement process.

“Overinflation of parts and material costs for the repair and maintenance of aircraft affected naval air training and is a disservice to the American taxpayer,” added Greg Gross, of the Naval Criminal Investigative Service’s Economic Crimes Field Office.

The Internal Revenue Service said Thursday a review of 1 million claims for the Employee Retention Credit representing $86 billion shows the “vast majority” are at risk of being improper.

The ERC was designed to help businesses retain employees during pandemic-era shutdowns, but it quickly became a magnet for fraud. Its complex eligibility rules allowed scammers to target small businesses, offering help applying for the ERC for a fee — even if they didn’t qualify.

About 10% to 20% of the 1 million claims show “clear signs of being erroneous” and tens of thousands of those will be denied in coming weeks, the IRS said. Another 60% to 70% show an “unacceptable risk” of being improper and will be further evaluated.

“The completion of this review provided the IRS with new insight into risky Employee Retention Credit activity and confirmed widespread concerns about a large number of improper claims,” said IRS Commissioner Danny Werfel. “We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims.”

About 10% to 20% show low risk, and the IRS will begin processing those claims. The first payments for that group should begin later this summer.

The IRS stopped processing new claims in September and it said Thursday that the moratorium on ERC claims submitted after Sept. 14, 2023 will continue.

The IRS said businesses can pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.

 American Airlines put an unspecified number of employees on leave for their involvement in an incident in which several Black passengers were removed from a flight in Phoenix, allegedly over a complaint about body odor.

American CEO Robert Isom wrote in a note to staff that the incident was unacceptable.

“I am incredibly disappointed by what happened on that flight and the breakdown of our procedures,” Isom said in the note this week. “It contradicts our values. … We fell short of our commitments and failed our customers in this incident.”

Three Black passengers sued the airline last month, charging that they were removed from the January flight because of racial discrimination. They said they were told that a white male flight attendant had complained about an unidentified passenger’s body odor.

The men said they did not know each other and were seated separately while waiting for the plane to depart for New York. The three said they were among eight passengers – all the Black men on the flight, they said – who were told to leave the plane.

The men said they demanded an explanation for their removal during a confrontation with airline personnel on the jet bridge. At least one of the men recorded the discussion, capturing an airline employee seeming to agree that the men were discriminated against, according to their lawsuit.

After a delay of about an hour, they were allowed back on the plane.

American did not say how many employees were put on leave or describe their job titles. A spokesperson for the airline said, “We are holding those involved accountable, including removing team members from service.”

Isom said American would form an advisory group to focus on the experience of Black customers, to promote the reporting of discrimination allegations, and to improve diversity training to “focus on real-world situations to help recognize and address bias and discrimination.”

In his note, which was reported earlier by CBS News, Isom said he had spoken with the president of the NAACP about the incident. The civil rights group did not immediately respond to a request for comment Thursday.

America has faced allegations of discrimination in the recent past. In 2017, the NAACP warned Black travelers about flying on the airline, claiming that several African American passengers had experienced discrimination from airline employees. America promised to make changes, and the NAACP lifted the advisory nearly nine months later.

German top industrial union IG Metall will demand a 7% pay rise over 12 months from Volkswagen (VOWG_p.DE), opening a new tab at wage negotiations in October, the union said in a statement on Friday.

The talks concern a collective agreement for around 120,000 employees across six company sites in Lower Saxony and Saxony Anhalt states including Wolfsburg, where Volkswagen is headquartered, IG Metall added.

IG Metall earlier this week advised its members to also demand a 7% raise in a wider round of collective bargaining for the mechanical engineering sector that does not include VW, well above the current inflation rate.

 Extreme heat has companies in the United States changing the way they work. One frequent response: work less. Here is how heat affects several large industries and what they do about it:

• Construction: Work slows at construction projects. What usually takes two days can take three or four as builders take breaks, estimates Art Hogan, chief market strategist at B. Riley Wealth. Changes could include shifting the workday earlier. Slowing projects could also hit the companies that sell supplies, but the impact on the likes of Home Depot (HD.N), opens new tab and Lowe's (LOW.N), opens new tab is likely limited because builders buy in advance and the projects are not canceled, Hogan added. And such retailers see demand for air conditioners and fans.
• Crude oil: Oil refineries are geared to withstand high air temperatures, but efficiency drops. Financial services firm Macquarie Group estimates extreme weather costs the oil industry between 1.5% and 2% of refining throughput a year. "Temperatures matter a lot," said Vikas Dwivedi, global energy strategist at Macquarie. Refiners in hot climates limit the time workers are outdoors, set up hydration stations, and move work shifts earlier in the day, to cooler hours. Austin Lin, a former refinery worker and now an analyst at energy consultant Wood Mackenzie, said he would organize work so arriving contractors could immediately start projects, without waiting for assignments or briefings. In extreme heat, around 110 degrees Fahrenheit (43 degrees Celsius), workers can only spend about 30 minutes of the hour working and need regular breaks to stay safe.
• Retail: Retailers may see more demand for shorts and other clothing that works well in the heat, in addition to fans and air conditioners. One of the most significant changes in retail for high-heat situations involves the delivery of items ordered online. Amazon (AMZN.O), opens new tab says it adjusts routes on hot days to give drivers more time to cool off and offers drivers beverage coolers in vans and water-filled sleeves that keep temperatures down. The Teamsters union, meanwhile, is using extreme heat to rally workers, saying unions can secure better protection.
• Transportation: Heat makes travel harder. Airplane wings don't generate as much lift in heat and flights stuck on the tarmac have been reported with triple-digit-degree F temperatures inside. Railroads may limit train speed over concerns heat will warp tracks and damage engines and electrical components.
• Manufacturing and warehousing: Companies with huge buildings often condition the air with systems that are less costly than the air-conditioning used in homes and offices. Fans to drive out hot air, mist to cool work environments and plenty of available water are top responses. Spirit AeroSystems (SPR.N), opens new tab, which makes plane parts for Boeing (BA.N), opens new tab, says its water-cooled system keeps maximum temperatures in its factories in the low 80s F, and there is no impact to production.
• Agriculture: It would take weeks of prolonged heat to reduce yields of recently planted corn and soy crops in the U.S. Midwest, especially with beneficial rains forecast in the coming days, analysts say. Modern row-crop agriculture requires few workers in the fields for planting and newer tractor cabs are air-conditioned, mitigating human risk. But in California's Central Valley, grapes are tended by hand. Temperatures can swing tens of degrees F over a few days, and the heat working within rows of grapes is four or five degrees F hotter than the surrounding area, some workers estimate. Farmers try to provide extra water for crops and humans alike, as well as shade. And they cut hours worked.
• Tech: In heat waves, tech companies need extra effort to cool and safeguard big data centers, which are seeing soaring demand from the artificial intelligence boom that relies on power-hungry microchips. That may mean the use of backup generators, which data-center operators such as Digital Realty say can remain operational for hours, even days.