My latest piece for the Globe and Mail on why Prince Harry is one of many young men ‘marrying up’
My latest piece for the Globe and Mail on why Prince Harry is one of many young men ‘marrying up’
Is there a better way to see the future of work than to follow the drama that is Uber? The ride-hailing service burst on to the scene in San Francisco just about six years ago and nothing has been the same ever since. From how to manage a gig workforce through to how technology is destroying some jobs and creating others (more on that in a minute) Uber is the maybe-not-that-reluctant poster child for the story of workforce change, the latest instalment of which takes place in London, England.
For those who have managed to miss it, last week London decided to revoke Uber’s license to operate in the city. As always, when it comes to Uber, emotions run high and the London decision apparently brought out the strongest of those. Some (led by traditional London cabbies) are jubilant at the decision, effectively calling Uber a not-fair upstart staffed by criminals. Others called the decision everything from Luddite-like to racist. Customers of the ride-hailing service are not thrilled.
There are lots of pieces to the drama, but for me one of the key parts is this: the jobs of London cabbies used to be protected by the fact that that they had a knowledge base that could not be easily replicated and now they are not. In fact, the test they take to be allowed to drive a cab is called ‘The Knowledge’, and it requires memorizing something like 25,000 London streets. Not surprisingly, preparing to take the test can take years and those who pass it are understandably proud to have done it. As a system it all worked fine until GPS technology and Uber came on the scene.
With the advent of GPS, it is as if robots have replaced the taxi drivers. That is, rather than being required to know every street by heart, every Uber driver checks directions by putting the street address into GPS, and every passenger can do the same on their phone anyway. There may be other ways in which taxi drivers have it over Uber drivers, but the argument that cab drivers can get you where you want to go better has effectively been destroyed. Technology has de-skilled the function of the cabbies, meaning that if the world operated in a true free-market sense, the taxi drivers would see their wages drop and their jobs disappear. As Uber has expanded, London taxi drivers have undoubtedly seen their incomes affected, but the majority have struggled on partly in the hopes that Uber would just go away.
And yes, regulation does exist and markets are not exactly free. That is why someone gets to decide whether Uber can operate at all, which in effect means deciding the relative fortunes of Uber drivers vs. cabbies. With the London decision, the cabbies have managed a win for now but they have to know it is a temporary one. Uber (as well as competitors such as Lyft) is rolling in in more and more cities, and is proving to be a hit with those who prefer to pay less rather than more for a ride and to hail it more conveniently to boot. For sure, there may be regulations needed to ensure that Uber drivers are thoroughly checked, but there is little to suggest that the majority would be better off if Uber did not exist at all, no matter what London has decided for the moment.
And so the impasse continues and right at the moment cab drivers and Uber drivers seem to hate each other, in London and in many other cities as well. Then again, they should maybe think about banding together to map out their joint futures. After all, Uber all has never made a secret of the fact that they want to have driverless cars ferrying passengers sooner rather than later. As they get closer to that reality, neither ‘knowledge’ nor ‘GPS’ may be enough to keep any kind of drivers in cabs.
As driver jobs are eliminated, others will be created although job functions will likely come and go over the years ahead. Rather than thinking just about specific knowledge, perhaps what workers need to develop are skills in things like ‘flexibility’ and ‘adaptability’. They may sound like buzz-words, but if Uber has taught us anything it is that the work world is turning on a dime and it might be best to be ready for the next instalment of the drama.
How would you like free college tuition for you and for your kids? It would really take the pressure off, right? Of course you’d take it if offered – but what if there was a catch, the catch being really high taxes forever? That’s the deal that Denmark – and a lot of Europe for that matter – has struck and it is working for them, at least more or less. Whether it would fly in North America is another story.
A blog from today’s Washington Post summarizes the situation nicely. In Denmark, tuition is ‘free’ (more on that in a minute) to everyone, and everyone gets an allowance from the government if they are in school. You can get this generous deal for up to six years, and even if you do drop out you owe nothing. Sweet.
Thing is, even those who have forgotten most of what they learned in Econ100 (and as a former professor of Econ100 I can hardly blame them) tend to remember one fact: there is no such thing as a free lunch. If you are eating, someone must be paying. And of course someone is paying in Denmark, and that’s the taxpayer. That’s fine in Denmark, which has one of the highest tax rates in the world and where there is a tacit buy-in to the fact that higher education for anyone who wants it is good for the economy as whole. But is it?
Again staying with the econo-reasoning, there is an argument to be made that if something is free, you consume more of it than you would if there was a price to it. In other words, a lot of people may be getting a college education when they might be better off doing something else. Even if you do not believe there is any harm in that in itself, the zero cost of education does make people less aware of choosing majors that will pay them well when they graduate. As the Washington Post notes, a frequent criticism of the Danish system is that it does not produce enough science and technology graduates, the argument being that if everyone had debts to pay back, they would think harder about studying things that would get them jobs.
Nor is it true that free education has wiped out the youth unemployment problem. As is true in pretty much every country in the world right now, youth unemployment is indeed an issue in Denmark, and at 11 percent the rate sounds pretty high. It sounds better though, when you compare it to the overall youth unemployment rate in Europe, which is stuck about 20 percent, or the rate in Canada and the U.S. which has hovered around 12 to 13 percent for the past couple of years. So Denmark is still wasting talent, but perhaps it is wasting a little less than other countries. As well, by almost any scorecard, Denmark also does better in terms of income inequality, which as we have been seeing lately is a pretty corrosive economic force.
So should we all go for higher taxes and take some pressure off our students? I’m still voting no on that one, but I do think the experience of Denmark is one to consider. If you just take the example of Canada, some estimates suggest that over the past couple of decades the cost of tuition and fees has actually tripled. Even assuming that that is an exaggeration, the cost of going to college in North America is prohibitive to some, and casts a long financial shadow over the lives of many who do manage to achieve it. That’s not without costs to the larger economy – proving again that whichever choice you go with, lunch is really never free.
I never thought I would admire Mallory Keaton, but I really do.
Okay, the person I admire is actress Justine Bateman, not Mallory Keaton, the ditzy teenager she played on television show Family Ties (it ran from 1982 through 1989). For those of us who grew up with her, it is hard to separate the two. Mallory was the comic relief to near-genius brother Alex, played by Michael J. Fox. While he pored over tax policy, she rhapsodized over eyeliners. In retrospect, I realize that that might have been sexist, but honestly it was a pretty funny show. And if Mallory was not a role model, Justine appears to be.
As an article in Fast Company detailed this week, Justine Bateman, 48 years old, is now a junior at UCLA, majoring in digital management and computer science. There is so much that is remarkable about that statement. Going back to school in your 40s is hard – especially if you never went in the first place. Taking computer science and calculus and statistics twenty years after you last took a formal math class has got to be extremely hard (I did take those things in university, which I went to right after high school, and I found them hard then). And most remarkable of all is the idea that an actress would choose to take that route. It is outside the box, for sure.
So why is Ms. Bateman doing something so outré? Well, from what I can tell one reason is that she did not have the kind of management that the Olsen Twins (who reigned on TV show Full House in the 1990s) did. Nearly twenty years after last playing Michelle (a role the two shared) Mary Kate and Ashley are still close to being household words and most certainly are rich, thanks to years of merchandising and hefty residuals. Ms. Bateman says her own residuals are closer to 25 cents a check. Ouch.
The other reason I would guess that Ms. Bateman is doing something different is that her last career is over. For sure there are successful 40something actresses out there, but the competition for jobs has got to be fierce. I imagine if something was beating down her door and handing her a chunk of money to appear in a blockbuster or headline a TV show she would do it, but I also imagine that is not happening for Ms. Bateman. And if that’s the case, there is certainly no shame in it: as many 20 and 30 and 40 and 50 and 60somethings know, the labor market–any labor market–is tough for most people.
And so Mallory is reinventing herself as a computer whiz kid, albeit years after she has stopped being a kid. Her ultimate goal is to either head up a company that melds the entertainment and tech worlds, or maybe to work in one. She had dabbled in that pre going back to school actually, but was finding her pitches for cool digital shows were falling on deaf ears. In fact, she had heard ‘no’ so many times in the previous five years, that (according to her Tumblr page) she was in shock when she got a ‘yes’ on her college application. (That flurry of ‘no thankses’ probably rings true job seekers as well).
I think that ‘reinvention’ is going to be a theme for the next decade. Careers are evaporating, industries are shifting, and the strong are going have to be able to morph themselves from one thing to another. Thinking abut it, it actually, it makes perfect sense that the poster-girl for cutting-edge teendom in the 80s is now the poster-girl for the reality of reinvention in the ‘10s.
It is a reality, and it is not fair: if you leave the workforce for a period of time, even for a good reason, your career can suffer for decades to come. Women have known that for a long time though the ‘motherhood penalty’ on earnings that results from choosing to stay hone with their children even temporarily. Now, men are apparently facing that same reality.
According to this piece from Bloomberg, men are dropping out of the U.S. labor force in significant numbers. The male participation rate – the proportion of those in the working age population who are either working or looking for work – is now 88.4 percent, down from 97.9 percent in 1954. So basically the U.S. has gone from a time when men just worked, period, to one where a solid percentage do not.
The big change to participation between 1954 and 1997 comes not from early retirements, but from a move for those aged from 25 to 34 to leave the labor force. Some of this group are clearly in school, and to be sure getting a MBA or whatever will likely pay off for them in the longer run. What the U.S. figures show, however, is that many of the out-of-workforce men are not actually pursuing an education. In fact, a chunk are veterans getting some kind of disability benefits, and yes, some are stay at home dads.
It is that increase in stay at home dads that I find interesting. According to the Pew Research Institute, the number of stay at home dads in the U.S. hit 2 million in 2012, up from 1.1 million in 1989. On a percentage basis, the U.S. Bureau of Labor Statistics estimates that 7.8 percent of U.S. families had only the wife employed in 2013, up from 5.7 percent in 1994.
I think that having dad stay at home is a great option for families if they decide that works for them, just as I think it is a great option if moms decide to do that However, I would be fearful for any young woman who decided to stay at home and in the process became viewed as unemployable, meaning she could not earn a living should she need to. I have the same fears for young men. The women at least are likely to have left jobs in the service industries or the public sector, and may be able to pick them up later. Disproportionately, the men would have left manufacturing or construction jobs that have disappeared all together. Without specific re-training, their re-entry into the workforce will be that much harder.
Given the fact that young women are earning more college degrees than men and are finding their way up the ladder in many careers, the decades ahead will undoubtedly see many families find it makes more sense for dad to stay home. Those dads who do not want to stay home long term would be best to prepare for what comes next and be ready to accept lower wages than they remember when they do go back to (the other kind) of work.
Oscar the Grouch as a great innovator? Well, not exactly, but apparently Sesame Street, the venerable children’s television show now in its 45th year, has taken a pro-active view of innovation for a long time. Give the show’s longevity, perhaps there are lessons for other companies from the experience of the Muppets and their colleagues.
By setting it in a urban neighborhood population by people (and monsters) of all colors, it promoted inclusivity. It taught about numbers and letters and math through a series of ‘commercials’ meant to entertain and educate (I personally remember wishing they would just get back to Cookie Monster and friends, but maybe I did learn something from them). Over time, the show also took some daring steps by dealing with problems that span the range from being bullied to having a parent in jail.
Behind the scenes, however, Sesame Street has been just as innovative. According to this piece from Fast Company, the Children’s Television Workshop (which produces Sesame Street) has a wing called the ‘innovation Lab’ which basically scans the market for new technology and figures out how it can be used to teach kids. The Sesame Street staff frequently form partnerships with tech developers in the early days of products so that they can help refine the products to their own best interests. Example: voice technology, which is now being adapted to be more user-friendly to kids.
I would credit Sesame Street and its creators with another bold step, which was early on realizing the value of branding and marketing. This is a controversial view, I realize (and I do not want to venture into a discussion about anyone’s trauma about not getting a Tickle Me Elmo doll during the craze) but the net result is that Sesame Street has garnered a huge amount of money through its products and productions. In turn, that has given it a freedom to expand in a way that would not have been possible had it stayed strictly under the auspices of public television.
The Sesame Street experience shows that it even when you are dealing with something as simple as teaching a child the ABCs, there is a role for thinking outside the box and for embracing the best that technology has to offer. That technology could be a an app that makes learning fun – or it could be a Muppet named Oscar.
Want to deal with the problem of income inequality? The answer is not, as many argue, to simply do a Robin Hood steal-from-the-rich-and-give-to-the-poor thing. According to a new study by the International Monetary Fund (IMF) , the best way to deal with inequities is to build strong economies, then use some of the newly created cash to fund education.
Income inequality has been a hot topic of late, for good reason. I spent a lot of time looking at the data when I wrote Economorphics, (www.economorphics.com) and honestly was astounded at how much damage is done when you have a large and growing gap between people of different income groups. There is even a credible case to be made that an off-kilter distribution of income was a contributing factor to the economic meltdown of 2008.
The IMF started with a pretty basic question: as a county grows richer, does its income distribution become more or less equal? Put another way, as economies grow, does the wealth get shared? At least over a long period of time, the answer is a resounding ‘yes’. Using historical data, the researchers found that a 1 percent increase in gross domestic product took down the Gini coefficient (a measure of income inequality that goes from 0 to 1, with 0 showing perfect equality) by 0.08 percentage points. Interestingly, and against common researchers looked at global data to deter men the relationship between a country’s prosperity and contrary to popular wisdom, they also found that when a country’s GDP grows, it boosts the relative income share of the poor and the middle class at the expense of the richest 20 percent.
The mechanism by which a stronger economy is translated into a more equitable income distribution is education. Richer countries spend more on education, and as more people get educated their earnings grow. There are lots of caveats to the whole thing but it really is a very simple story. And if it is true that the prospects are not immediately awesome for every recent graduate, it is also true that they are considerably worse for those who acquire less education.
Policy wise, what does not mean? ‘The IMF paper suggests that developed countries like the U.S. and Canada take care to make sure that they stem the number of high school drop outs, and further make sure that graduates are university ready. They also urge governments to deal with the post-secondary tuitions that are prohibitive to many.
I would not disagree with any of those suggestions but would also urge going back one step and dealing with building stronger economies as well. Unless you have investment and jobs and profits and productivity, you are not going to end up with much in the way of tax dollars to spend on anything, and income inequality will get worse rather than better.
The Organisation for Economic Co-operation and Development (OECD) is out with their new Employment Outlook and – as these things go – it is a fairly upbeat piece in that they do see the big picture improving, particularly in countries like Canada. Beyond the big picture though, the OECD has some fairly serious concerns about long term unemployment, worldwide but in Canada as well.
To me, the most salient point from the OECD report is that the world’s unemployment one is a cyclical one, not a structural one. ‘Cyclical’ unemployment is basically what happens when economies slow or go into a recession. Companies lose revenues, and they cut back workers. That’s not good, but presumably downturns eventually end, the business cycle heads up, and people get those jobs back – if the correct policies are employed.
The challenge, of course, is to figure out policies that boot the economy out of the downturn. Typically, that means low interest rates and maybe higher government spending (as we saw during 2008 and 2009). Finding the right combination can be difficult and governments and central banks certainly make mistakes, but it if you have the choice you really want to be experiencing cyclical, not structural unemployment.
Structural unemployment means you lose your job because no one needs your skills anymore. Maybe you are a master milliner, and everyone has given up on wearing hats. Maybe you make buggy whips, and now everyone drives cars. Or maybe you are a newspaper journalist, and newspapers are going broke all over the place. It is not quite that easy for a government to fix structural unemployment . You cannot order people to make hats, so what you have to do is help transition people into new careers. Arguably, governments are not great at that either, but the OECD urges them to try.
The OECD also makes an interesting point by suggesting that if governments around the world do not do more to fix cyclical unemployment, they might find that it has turned into structural unemployment. That is, once companies get used to not having certain kinds of workers around, they might never hire them back at all. That would cause all kinds of long term issues, from income distribution issues through to social unrest.
In the end, the OECD is calling for the same kinds of policy prescriptions we have been hearing for years. They urge Europe to cast aside fiscal austerity and spend more, which would be a pretty tricky thing to do. The only way many European countries could spend would be through gigantic deficits, for which they would be punished mightily in the financial markets. That would mean ever-higher government interest costs, which would squeeze money from other spending priorities once again.
In a separate report covering Canada, things are considerably more upbeat, with the OECD noting that Canada is enjoying a fairly solid labour market recovery. Like other countries, however, Canada has a problem in that long term unemployment – those who have been without work for a year or more – was over 12 percent of all unemployment. Although that is certainly better than the OECD average, this figure was only a little above 7 percent during the 2008/09 period.
The OECD seems to be making the assumption that long-term unemployment in Canada is structural in nature, and suggests that Canada and other countries deal with the problem by a host of means, including re-training and one-on-one counseling. If those things work fine, but the evidence is pretty mixed on that.
The best outcome? Figuring out policies that attract investment, boost productivity, create new jobs, and blast away unemployment. Those are not quick-fix solutions but they are the only ones that will ultimately work against a complex problem.
See my Globe and Mail Economy Lab blog here
See my Globe and Mail blog here