aAlmost everyone I agree that the mid-2010s were a terrible time to be a worker. David Graeber, an anthropologist at the London School of Economics, coined the term “bullshit jobs” to describe purposeless work, and argued that it is widespread. Recovery from the 2007-2009 global financial crisis has been slow, with approximately 7% of the country’s workforce OECD There was a total lack of jobs in the rich country clubs. Wage growth is weak and income inequality appears to be widening inexorably.
How things change. In the rich world, workers are now entering a golden age. As society ages, labor is becoming increasingly scarce, and manual labor, in particular, is difficult to replace with technology. The government has and is likely to continue doing so with big spending to keep the economy hot and support demands for higher wages. On the other hand, artificial intelligence (love) can increase the productivity of workers, especially those with low skills, and may also lead to higher wages. Some of these trends reinforce other trends. For example, in regions with labor shortages, the use of advanced technology is more likely to increase wages. The result will be a change in the way the labor market works.
To understand why, return to the darkness. At its peak in 2015, China’s working-age population was 998 million. Western companies could use the threat of relocation or pressure from Chinese competitors to force lower wages. David Orter of Massachusetts Institute of Technology (mitt) and colleagues estimate that this pushed down Americans’ paychecks from 2000 to 2007, with lower-paid people being hit harder. Populist politicians, including Donald Trump, have taken advantage of this, vowing to end China’s job “theft.”
Today, China’s working-age population is shrinking, other poorer countries are struggling to build industrial capacity, and geopolitical instability is making outsourcing less attractive. The rich world also faces a labor shortage (see Figure 1 on the next page). In fact, the number of people in the age group from 20 to 54 (the age at which manual labor is possible) has already leveled off. A recent survey of 41 countries by staffing firm ManpowerGroup found that 77% of companies are struggling to fill staff, double the number from 2015. Two-thirds of industrial enterprises in Poland say that labor shortage is one of the main problems back in production. Public transport services in Germany are being cut back due to a shortage of bus and train drivers. In South Korea, older people are increasingly staying at work to avoid labor shortages, with about 59% of people aged 55 to 79 working, up from 53% a decade ago.
Labor has become so valuable that companies have begun hoarding it. According to a survey of American small businesses, more than 90% would like to retain their employees if possible. In Germany, where the economy has been in a slump since the beginning of last year, job centers are recruiting for around 730,000 jobs, close to a record high. The unemployment rate remains at just 3%. Partly due to labor shortages, the rich world is experiencing an immigration boom, with the foreign-born population growing at a record pace. However, the future labor shortage will be so large that even immigration on this scale will not be able to fill it.
So even without interference from politicians, it would be a good time to become a worker. But they have put up little resistance. Most countries are OECDCountries including the United States and France have been able to maintain or even raise their minimum wages in real terms during the recent period of inflation. In the rich world, trillions of dollars are being spent to accelerate the green transition, reduce dependence on China, and create jobs. These subsidies mostly go into the pockets of companies, and while tariffs are expensive for consumers, they provide a bargaining chip for workers in protected industries.
The mix of macroeconomic policies favored by today’s politicians and officials also suits workers. In the mid-2010s, inflation rates in rich countries were at their lowest levels outside of crises, but few countries opted for stimulus. Part of the reason was a flawed analysis that suggested the economy was running at full capacity, but it later turned out there was more headroom. In 2013, the US Federal Reserve believed that the unemployment rate would stabilize at 5.6% in the long run. By 2019, that estimate had dropped to 4.1%.of imf Germany was thought to be close to full employment in 2012. The country has since added 2.8 million jobs without extraordinary wage increases.
Today, the situation is very different (see Figure 2). Despite high inflation european union On average, countries will run budget deficits of more than 3%. GDP The European Commission predicts that this year: The Congressional Budget Office reports that the US budget deficit will reach 5.8%. Aging societies, climate change, and uncertain geopolitics imply that governments will soon have a hard time tightening their purse strings. For now, central banks are determined to keep inflation in check. However, their policy guidance suggests that they want to avoid the lack of demand and low inflation of the 2010s.
Policymakers will therefore aim for what Janet Yellen called a “high-pressure economy” before becoming U.S. Treasury secretary – an economy very close to its potential. Western leaders want to ensure they can contest the next election, pointing to healthy employment and rising wages, especially for low-wage earners. They seem to have learned the lessons of the 2010s.
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This approach is already bearing fruit for workers. In a recent paper, Auter et al. show that a tight U.S. labor market is leading to rapid wage increases as workers change jobs in search of better pay, with poorer employees benefiting the most. (See Figure 3). Researchers believe that since 2020, about 38% of the increase in wage inequality over the past 40 years has been reversed.
Similar trends are likely occurring throughout the wealthy world. Germany’s employment agency is keeping track of job vacancies facing a severe shortage of workers. So far this year, 48 professions have been added to the 152-strong list. Most require technical rather than academic education, and what is lacking is construction and health care. Japan has issued temporary visas to workers in 12 sectors, including machine parts manufacturing and shipbuilding, and wages in the country are rising faster than at any point in the past 30 years. The wage premium for those with a university education is already shrinking. It might fall even faster now.
The tight labor market is also prompting trade unions to demand more free time, which is scary for already short-staffed companies. German steelworkers will seek 32-hour work weeks instead of 35 in future negotiations. In Spain, the new government wants to cut the standard 40-hour work week by two and a half hours. Survey evidence and data on work hours show that even Americans want to work fewer hours.
Many bosses expect computers to pick up the slack. love They require creativity, improvisation, and learning and will be able to perform tasks that were previously beyond the reach of machines. Companies have strong incentives to implement it. A preliminary study by Dean Alderucci and colleagues at Carnegie Mellon University, using U.S. patent data from 1990 to 2018, found that companies innovate even with more basic forms of patents. love Job growth was 25% faster and revenue growth was 40% faster than other similar companies.
If this technology can help service personnel, for example in call centers, work more efficiently, it will increase productivity and perhaps job satisfaction. In fact, a recent study by Erik Brynjolfsson found that mitt And their colleagues found that when such employees received support, they were able to solve 14% more problems per hour. A.I. Those who use bots and have the lowest performance will benefit the most from this tool. According to the survey, OECDapproximately 80% of manufacturing and financial services workers report: A.I. Increase productivity. The majority also said working conditions would improve.
Some employees A.I. than others. Professional service workers, such as doctors and lawyers, regularly have to make high-stakes decisions in unusual situations. This requires good judgment and extensive training, as there is often no right answer. A.I. You may be able to help people reach the level of expertise they need.imagine A.I.– Auxiliary nurses who take over tasks from doctors, or limited programmers who can take on more complex duties. “In a positive case, A.I. We can put more people into high-paying professional jobs,” Auter says.
Early evidence from freelancers editing or writing text suggests that chatGPT Monthly income decreased by 5.2%. However, such findings should be taken with a grain of salt. A.I. before the labor market adjusts. A lot depends on how the adjustment goes.
Employed people are affected when demand increases significantly as prices fall. A.I. You may benefit from increased productivity. Because you can serve more customers, even if you get paid a little less per activity. And the good news is that increased productivity will lead to increased demand elsewhere. Consider a robot that is better at making cell phones than humans. With this, phones become cheaper, demand increases, and production increases. This means that mobile phone designers and app coders will be in high demand. In a recent study by Daron Acemoglu, Massachusetts Institute of Technology And the co-authors looked at Dutch data from 2009 to 2020 and found that the use of robots meant higher wages for workers who were not replaced, and that the benefits extended beyond automating companies. did.
Simply put, a more productive economy is a richer economy, which creates demand not only for labor but also for goods and services that are less affected by new technologies. According to Acemoglu and Pascual Restrepo of Boston University, about half of the growth in employment from 1980 to 2010 was due to new job creation. This process is likely to continue and may even speed up. A.I. As some workers are displaced, new jobs will be created around them and in other parts of the economy. The skills needed to perform these new tasks will not necessarily be digital skills, but those that best complement them. A.I..Hospitals may be looking for nurses with great manners to work with at the bedside A.I. tool.
Melanie Arntz of the University of Heidelberg says, “Technological advances over the years have replaced routine tasks, first for physical jobs in the 1970s and then for administrative tasks in the 1990s.” talk. “On the other hand, those with higher skills were on the complementary side of progress and saw their wages rise as a result.” A.I. When a revolution occurs, the beneficiaries are likely to be those with fewer qualifications. And they are the very people who are already seeing higher wages as companies struggle to care for an aging population and find workers in new, green industries.
Forces changing the labor market – demographic changes, policies, A.I.– Different conditions have different interactions. Regions with rapidly aging populations will experience chronic labor shortages, especially in occupations that require manual labor. As long as macro policies remain expansionary, upward pressure on wages will remain.That’s what spurs me on A.I. If you use it, your wages may increase. It is important for governments to remove barriers to the use of technology in regulated professional areas such as medicine and law so that these benefits can be reaped.
In the United States, where demographic pressures are not as strong, A.I.The impact of this is even more difficult to predict. It threatens to drive down wages and could lead to strikes, as happened in Hollywood. But history suggests that this country creates new jobs that benefit from wealth. A.I. You should bring it. Politicians will want to develop their pro-labor credentials by supporting those protesting on the streets. A.I.. It would be better to advise them to look after those who have lost their jobs during the transition, but not to interfere with the transition. When in doubt, always bet on American dynamism. ■