WSJ Columnist: Robots Aren't Destroying Enough Jobs (foxbusiness.com)

An anonymous reader writes: Will millions be unemployed after a job-destroying robot apocalypse? That's "starkly at odds with the evidence," argues a Wall Street Journal columnist, who says the real problem is robots aren't destroying enough jobs. "Too many sectors, such as health care or personal services, are so resistant to automation that they are holding back the entire country's standard of living." Noting that "churn relative to total employment" is the lowest it's ever been, he writes that "The pessimism would be more plausible if the evidence weren't moving in exactly the opposite direction...

"In April, nonfarm private employment rose for the 86th straight month, the longest such streak on record. Monthly job creation has averaged 185,000 this year, more than double what the U.S. can sustain given its demographics. This has driven unemployment down to 4.4%, a 10-year low and below most estimates of 'full employment.' Growing labor shortages have boosted the typical worker's annual wage gain to more than 3% now from 2% in 2012, according to the Federal Reserve Bank of Atlanta. Instead of worrying about robots destroying jobs, business leaders need to figure out how to use them more, especially in low-productivity sectors... The alternative is a tightening labor market that forces companies to pay ever higher wages that must be passed on as inflation, which usually ends with recession.

"That is a more imminent threat than an army of androids."

Comments

Right conclusion for wrong reason.

[king neckbeard]

Wages should be considerably outpacing inflation, and that improves the economy, since the working class actually spends their income. However, we should be automating more, but aren't, because of the cheap labor he's complaining isn't cheap enough. Make the minimum wage $30 an hour, and anything that can be done by a robot will be soon. Paired with appropriate socioeconomic reforms, eventually landing on a UBI, and then things are better for everyone.

Re:Right conclusion for wrong reason.

[ooloorie]

Let's look at some of your statements:

However, we should be automating more, but aren't, because of the cheap labor he's complaining isn't cheap enough.

That cheap labor is largely supplied by illegal immigration. Meaning, if you don't want so much cheap labor and more automation, just deport illegal immigrants.

Make the minimum wage $30 an hour, and anything that can be done by a robot will be soon.

Correct. However, since that's above median family income, it means that more than half of families (let alone Americans) will fall below it.

Paired with appropriate socioeconomic reforms, eventually landing on a UBI, and then things are better for everyone.

If you set the minimum wage to $30 and then redistribute income via a UBI, the effect will be (roughly) that everybody will be living at about a $15/h wage, with only half the people working.

Wages should be considerably outpacing inflation, and that improves the economy, since the working class actually spends their income

Take a potato. You can consume it, or you can cut it up and plant it. If you do the latter, you'll have several potatoes a year later. It's the same with money: if you consume it right now, you end up with less a year from now than if you plant it. Deferring consumption and investing the potato gives you more down the road.

It's the same with money. Redistributing money to increase consumption does not help the economy in the long run, it just creates a short term "stimulus". For long term growth, you need less consumption and more investment.

There's a surprise...

[fuzzyfuzzyfungus]

As always, unlimited amount of magic financial instrument money are just 'productivity'; but any rise in real wages means that we are just days away from Wiemar hyperinflation. I'm totally shocked that the Wall Street Journal might hold this opinion.

Re:Ha

[dgatwood]

If wages outpace inflation*, it encourages a bubble in consumer confidence, as consumers have literally more money than they know what to do with. That in turn lowers saving rates, as people finally splurge on the luxuries they've wanted, without thinking much about how temporary their windfall is.

I don't buy the theory that people stop saving when interest rates get low. Never in my life have I heard somebody say, "I'm only getting 1% on the money that I've been saving for retirement. I think I'll piss it away on stupid crap that's going to be broken in three years."

Anybody who actually is saving money has a reason to do so, and that reason is never to earn interest. That's just why they have it in the bank instead of under a mattress. People save money either for the purpose of buying something or retiring. In the first case, they'll buy it when they have enough money, and in the second case, they'll spend it when they retire. The primary motivation for saving money doesn't suddenly go away or even change meaningfully merely because interest rates are low. At best, weak interest rates make people more likely to contact a broker and put their money into the stock market, thus saving money by investing it rather than loaning it to a bank. And when interest rates are low, stocks tend to do significantly better, resulting in those folks having more money, rather than less.

That said, sometimes consumers do find themselves able to buy things sooner because of better availability of credit at lower rates, which does result in more spending and less saving (up to a point, anyway).

That increases risk to future economic downturn when the income stops and they're now in debt and used to a comfortable life. In short, think of 1925, but with rampant money instead of uncontrolled debt.

That makes no sense. If they have more money than they know what to do with, how can they be in debt, which by definition, is caused by spending more than you have? Obviously if they have more money than they actually need, they wouldn't be going into debt, so if that happens while they're still bringing in lots of income, then what you're really describing is not caused by wages outpacing inflation so much as by availability of credit outpacing wages, and consumers not realizing that availing themselves of so much credit is a bad idea.

That said, I think you got the order wrong there. Folks get used to a comfortable lifestyle, and their efforts to maintain that lifestyle after their income decreases causes them to sink rapidly into debt, because they continue to spend like they were making lots of money.

Either way, IMO, we have a serious problem in this country with debt, and it is caused by it being way too easy to get credit, coupled with people being way too eager to take on debt. Blame it on the feds for cutting interest rates too much, or blame it on credit card companies for usurious practices, or blame it on the schools for not teaching home economics, but whoever you blame, the problem is very real, and it is a major contributing cause to poverty. Parents don't teach their kids not to spend more than they earn, and so you get people living well beyond their means by buying stuff on credit and making the minimum payment each month. And then when the jobs disappear, they suddenly can't afford those payments and they lose everything.

Don't get me wrong; credit is a useful tool, within limits. It makes it possible to buy things that you need but cannot afford, such as a house or car. It should, however, be reserved for exceptional situations—mainly for things that either A. will appreciate in value (your house, hopefully), or B. are necessary to earn a living (your car). Credit should never be used to pay for your day-to-day expenses. As soon as you start doing that, you're almost guaranteed to get into real trouble financially; it's mostly a question of when, rather than if. Assumi