employment – Sheila Kennedy

Keeping Indiana Backward

No one likes a smart-aleck who says “I told you so.” But–along with many other Hoosiers–I told you so.

The Indianapolis Star recently reported on one part of the economic fallout created by the culture warriors at the Indiana Statehouse.The headline confirms the findings: “Indiana politics make it difficult for tech industry to recruit, keep employees in state.”

The disconnect is growing between Indiana’s mounting socially conservative policies, which includes not only the near-total abortion ban currently stalled in court, but also a ban on trans girls playing school sports, and the tech industry’s increasingly vocal progressive workforce.

The tension is brewing as major employers struggle to recruit and keep employees in the state, a problem that is snowballing into a crisis for Indiana.

It isn’t just the tech sector. In the wake of the legislature’s hasty passage of the abortion ban in the wake of the Dobbs decision, a financial magazine quoted David Ricks, the CEO of Eli Lilly and Co.,reporting on requests he’d been getting from employees wanting to transfer out of Indiana. (Other non-tech employers have voiced similar concerns, and admissions officers at several of the state’s institutions of higher education expect fewer female applicants for admission.)

The tech workers who spoke with the Star following passage of the ban–ranging from those working in startups to employees of global software companies– reported that the abortion ban had prompted a number of coworkers to start looking for jobs in other states.

Some tech workers said the abortion ban would make it scary for them to start families because of concern that they couldn’t get the health care if they developed complications during pregnancies…

But for others, it’s not just the ban, but what it signals for the future for other social issues, such as LGBTQ rights.

As the article notes, tech workers are some of the most in-demand employees across the country. A significant number can weigh multiple job offers against each other, and a decision about where to locate will depend upon the attractiveness of the community in which they will be employed, as well as the company making the offer.

Jordan Thayer, a trans woman working as a consultant in automation for a software development company in Carmel, said she’s worried that she soon won’t be free to live her life as she wants and her family won’t be safe if they need pregnancy care.

She sees states like Tennessee proposing to ban drag performances in public and worries those laws will come to Indiana and make it hard for her to be out in public, she said.

So, long term, her family won’t stay.

“I don’t want to have to jump employers and change states in a hurry,” she said. “So, we’re looking now.”

Industry analysts warn that tech companies in states where abortion access and LGBTQ rights are restricted will need to offer remote work to attract some applicants. Those (well-paid) remote workers will be lost to Indiana–they’ll pay taxes to the states in which they reside, and they’ll patronize the bars, restaurants and businesses in those states.

The article quoted a female CEO:

You want to live in a community that supports your values and your life style,” she said. “If you’re a woman and you have a choice between living in a state that provides you a great job and your reproductive rights versus a state with a great job and no reproductive rights, it’s easily a tie-breaker.”

It isn’t as though Indiana is otherwise a sought-after place to live. We don’t have natural amenities, like mountains or lakes or great weather, and thanks to the gerrymandering that has protected a retrograde legislature unwilling to spend tax dollars to improve the quality of life, we have multiple other deficits.

As the article acknowledged:

Long before the Supreme Court became a super conservative majority that would reshape federal and state policies, Indiana has struggled with attracting top talent. Economists have pointed to a mix of reason, including lack of good schools, flat and largely landlocked landscape, poor infrastructure and sparse attractions and amenities compared to other states.

And so even when everything is equal: company brand, salary to cost of living ratio, amenities in the city, the social laws of the state is a tie-breaker, several tech workers said.

Indiana’s abortion ban may well be struck down for violating the religious liberties of Hoosiers whose religions permit abortion and prioritize the health of the mother, but–as the article makes clear–the ban is only one aspect of a legislative agenda that will keep Indiana firmly rooted in the 1950s–and on the “avoid” list of skilled Americans with other options.

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Send In The Robots

Don’t bother; they’re here.

Along with all the other causes of social upheaval–political polarization, Russia’s increasingly unnerving nuclear threats, escalating climate change, global inflation…the list goes on…the displacement of millions of workers by automation is getting closer and closer. Maybe–as yesterday’s post suggested–this is just the start of a brave new economy. Or not.

It has always been a mystery to me why workers in and out of unions have focused all their attention and anger on off-shoring, the movement of factories to countries with lower labor costs and the ability to evade rules protecting the environment. That movement has clearly disadvantaged American workers, but it pales in comparison to the steady, seemingly inexorable march of the machines–a march they’ve basically ignored.

When I was young–admittedly a very long time ago–attendants pumped our gas. In offices, rows of secretaries typed documents for lawyers and managers, using carbon paper for the copies. Clerks checked people out at the grocery store, and we paid with cash we got from a teller, not an ATM. The list goes on. And on.

Most of us don’t think about those those clerks and secretaries, bank tellers and gas station attendants who have been replaced by automation, but that is actually what robotics looks like–not like Data or even R2D2.

Consider Flippy.

Flippy is the robot described at the link; it is making the French fries at White Castle .

The fryer station is hot and it’s dangerous. It’s frequently where workplace accidents occur. It’s also where the drive-through gets jammed up at night with people waiting on their loaded fries and chicken rings.

So Miso let Flippy keep his jaunty name but re-engineered him to start dipping fries. White Castle bought in, installing Flippy in a Merrillville, Ind., location and then several others around the country, with the aim of having 100 over the next few years. Jack in the Box execs zipped up to Pasadena for a demo.

Fries are just the beginning. Miso Robotics–the company that came up with Flippy– is developing a coffee forecaster-maker-pourer for Panera. It has also begun work on Sippy, a drink fulfillment robot that pours, seals and labels beverage orders; Sippy has already been ordered by Jack in the Box .

Then there’s Chippy, which will soon be frying and seasoning fresh tortilla chips at Chipotle.

The robots, with their articulated arms, multiple cameras and machine learning, excel at those mind-numbing tasks restaurant workers have to repeat again and again. And they aren’t sniffy about working the graveyard shift.

“We realized for a robotic solution to be a real solution for our customers, it had to have a really high customer return on investment. Which meant it had to take a meaningful amount of labor off the table,” Bell said.

As various companies test and perfect these automated substitutes for workers, it’s easy to see their appeal. Robots work 24/7, don’t need breaks, don’t shirk when the boss isn’t looking, don’t argue with (or sexually assault) co-workers, don’t get sick or require benefits.

They are also currently pricey–although as production ramps up, prices will undoubtedly come down.

But now — with restaurants facing a protracted labor shortage and robotic technology becoming both better and cheaper — restaurant brands are doing new math. How long before an initial technology investment pays off? How long will it take to train human employees to work alongside robot co-workers? And, ultimately, how many restaurant jobs will be permanently commandeered by robots?

It is that last question that will challenge policymakers. I’ve posted previously about the likely disruption when self-driving cars and trucks are safe enough to take to the roads. Millions of Americans currently make their living driving everything from big rigs to school buses to Amazon delivery vans to taxis, Ubers and Lyfts. It is highly unlikely that a significant number of those people will be able to retrain and find alternate employment.

Fast-food establishments currently face a different labor landscape, of course.

If robots are cheaper and more efficient, experts wonder, will the more than 3 million entry-level fast-food jobs be ceded to robots entirely in the future? For now, the thorny problem is there just aren’t enough humans who want to do the work.

According to the National Restaurant Association, 65 percent of restaurant owners still say finding enough workers is a central problem. In the Great Resignation, prospective hospitality workers were being lured back with the promise of fancy fitness club memberships and 401(k) plans.

Whatever happens to restaurants, automation won’t stop there.

In addition to earning our daily bread, most of us derive substantial meaning from our jobs. What will happen when those jobs are gone? I don’t know about the rest of you, but I don’t have a clue.

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Automation And Social Welfare

Last weekend, I read about a robot developed in Japan that can assemble furniture from IKEA. Over the past couple of years, intermittent reports demonstrating the features of three-dimensional copiers have suggested we may not be that far off from the “replicators” on Star Trek’s Enterprise. And despite some setbacks, self-driving cars and trucks seem all-but-certain to displace drivers in the not very distant future.

Meanwhile, the “gig economy” continues to replace traditional employment arrangements.

While the American public is transfixed–and distracted–by the antics of the self-satirizing buffoon currently occupying the Oval Office, technology marches along, prompting major social challenges that very few people are addressing.

A recent paper from The Brookings Institution focuses upon the effect of these changes for social insurance–the government programs intended to provide a modicum of financial security to the elderly, disabled and/or unemployed.

The nature of work is being increasingly and suddenly altered by technological change, growing cross-border mobility, declining birth rates, and rising life expectancy. A growing share of work is done either under contracts that are shorter-term and less predictable, or without any contracts at all. Social insurance systems financed by payroll taxes created for times of stable employment with one formal employer and a substantial surplus of contributors over beneficiaries have become fiscally and socially unsustainable. Often, their rules leave the workers of the new economy without even a basic layer of social protection.

The authors suggest three major changes in the way the United States approaches social insurance: decoupling these programs from employment (payroll taxes provide the funding for these programs); for the elderly, establish a general-revenue financed basic pension for all; and set up a complementary pillar of privately-owned accounts for unemployment, health insurance, and old-age pensions, funded by tax-free private contributions.

I am insufficiently informed to weigh in on the latter two proposals, but it has been obvious for a long time that providing health insurance through employers–never optimal–has become increasingly unsustainable. It burdens larger employers, whose HR offices expend enormous time and resources navigating health insurance markets. It disadvantages small businesses and start-ups that cannot afford to offer competitive benefits and thus are less able to compete for quality employees. With the growth of the “gig” economy, increasing numbers of Americans are unable to access affordable plans (something Obamacare would ameliorate if the current Administration wasn’t determinedly sabotaging the program.)

These disadvantages aren’t limited to health insurance. As the Brookings report notes, providing social insurance through employers will only become more unsustainable, as automation displaces more workers and the number of independent contractors grows.

The solution is two-fold. The first is to eliminate the link between social insurance and employment status and provide a basic and affordable layer of social protection to all citizens, financed by general revenues…. The second is to supplement this insurance by a wider set of individually owned and financed insurance offerings.

Whatever the merits of these proposals or others, they are at least addressing important issues–issues with which a competent government would be dealing.

Unfortunately, we don’t have a competent government. We have deranged (and misspelled) tweet-storms from the White House and partisan game-playing from Congress.

Where are the adults when you need them?

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Bread and Circuses

“Bread and circuses” used to be a fairly common reference to the Roman government’s practice of distracting the masses by providing food (bread) and circuses (contests between lions and Christians, etc.) in order to keep them occupied. The term–used far less frequently these days– is a reference to superficial perks used to appease popular passions, a tactic to generate public approval through diversion and distraction.

I’ve been thinking about that tactic in connection with the GOP’s “middle class tax cut.” (I love GOP titles–remember George W. Bush’s “Clear Skies” moniker for a bill permitting more pollution? This time it’s a “middle class tax cut” for a measure that is anything but.) My specific question goes beyond the dishonesty of the bill’s title, however: I wonder whether the lower withholding requirements, which will initially allow workers to take home a somewhat larger portion of their paychecks, will be enough to distract Americans from the other, less pleasant and less immediate consequences of that bill.

Will it obscure the fact that tax “reform” will further enrich the already wealthy without stemming the job losses that are accelerating as companies increasingly automate, and as retailing faces enormous challenges? After all, this tax “reform” was hyped as a (trickle-down) measure that would incentivize those “job creators” to do their thing–to create jobs and raise the pay of their workers.

How’s that working out so far?

Harley-Davidson just closed a plant in Kansas City, laying off 800 workers. Managers blamed both a provision of the tax bill and Trump’s decision to pull out of the Trans-Pacific Partnership.

Passage of the tax bill didn’t affect or delay the decision of Toys-R-Us to close 180 stores–nor the closing of 63 Sears locations. Kmart has closed 45 stores; Macy’s has closed 68. Walmart made a big deal out of its response to passage of the tax bill, announcing $1000 bonuses (the company made less noise about the fact that only employees who’d been with the company for 20 years would actually get a thousand dollars), and immediately followed up that PR blitz by closing 63 of its Sam’s Club stores and throwing thousands of people out of work. (Given Walmart’s turnover rate, I’d guess there weren’t a lot of 20-year veterans getting the full bonus amount, either.)

Industry publications are filled with layoff announcements: Pfizer announced it will eliminate 300 research jobs in New England; another 4,000 are expected to lose their jobs with AT&T. Kimberly-Clark is using its tax windfall to reward shareholders, while laying off between 5,000 and 5,500 workers. Comcast said the $1,000 bonus it splashed across the news would serve as severance for 500 terminated employees. Microsoft, Coca-Cola and a host of lesser-known brands have also fired hundreds of workers.

The tax cut didn’t change any of these decisions, and other policies of the Trump Administration are only accelerating the job losses.

Those of us in Indiana know that Carrier has now completed its move to Mexico, despite Trump’s much-hyped “intervention.”

Meanwhile, the President’s love affair with coal led him to impose stiff tariffs on solar panels–a move that will not only depress sales and increase prices for environmentally-conscious consumers, but will cost a predicted 23,000 workers their jobs. Meanwhile, although coal is not coming back, the tariffs will slow the replacement of fossil fuels with clean energy–further enriching the Koch brothers, who demonstrated their gratitude to Paul Ryan for passage of tax “reform” by giving him $500,000 a mere two weeks after the bill was signed. (Estimates are it will save them a cool billion a year, so they could afford a paltry half-million to their House puppet. Quid Pro Quo much?)

American workers aren’t even getting bread and circuses–unless you count the circus that is Washington, D.C. And that one isn’t entertaining; it’s terrifying.

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File Under: We Ain’t Seen Nuthin’ Yet…

A business school colleague of mine recently drew my attention to an article predicting how our lives will change in the next twenty years.

The changes that are predicted are all consequences of technology–mostly existing technology– and they are entirely plausible. If even half of them come to pass, however, we are likely to experience an economic and social upheaval that will far surpass the dislocations of the industrial revolution.

A few of those predictions:

Software will disrupt most traditional industries within the next 5-10 years. (We already see this with retailing.)
Online legal advice (already widely available on the internet) will reduce the number of lawyers by 90%–only specialists will remain.
Self driving cars will be available in 2018; by 2020, the entire auto industry will begin to be disrupted. People won’t own personal vehicles; they’ll call a car on the phone, it will show up and drive to the specified destination. (“You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s licence and will never own a car.”) The implications are enormous: fewer accidents will reduce the need for insurance–and the companies that sell it; many car companies will go bankrupt, millions of jobs (truck drivers, taxi drivers, etc.) will disappear. Land used for parking will be redeveloped. There’s much more.
Electricity will become incredibly cheap and clean: We will see the true impact of solar production, which has “been on an exponential curve for 30 years.”
Companies will introduce a medical device (called the “Tricorder” from Star Trek) that works with your phone, takes your retina scan and your blood sample and analyzes your breath. It will then analyze 54 biomarkers that identify nearly any disease. It will be inexpensive enough to give everyone on the planet access to world-class medical analysis, nearly for free.
3D printing will be ubiquitous. The price of the cheapest 3D printer went from $18,000 to $400 within 10 years, and over that same timeframe it became 100 times faster. Major shoe companies have already started 3D printing shoes; spare airplane parts are already 3D printed in remote airports, and the space station now has a printer that eliminates the need to stockpile large amount of spare parts as before. The Chinese have already 3D printed/built a 6-story office building. By 2027, 10% of everything that’s being produced will be 3D printed.

These are just a few of the changes the article lists–there are many more.

It is difficult to envision the combined impact of these technologies; the author predicts that 70-80% of today’s jobs will disappear in the next 20 years. There will be new ones, of course, but it is unlikely that there will be enough new jobs to replace those going the way of the dinosaurs.

During my own lifetime, the pace of change has steadily accelerated. Much of the social and economic dysfunction we are currently experiencing is a direct outgrowth of that change–not just the economic stresses involved, but the disorientation people suffer as cultural attitudes shift and expectations about their future lives are upended.

If there is one thing that’s clear, it is that our current political system is not capable of meeting the challenges we will face. How will ideologues like Paul Ryan and those like him–lawmakers who think unemployed folks can just “pull themselves up by their own bootstraps”– react to massive joblessness? What about the “alt-right” bigots who justify their anti-immigrant rhetoric with the claim that the newcomers are taking American jobs? What will those on the left do when they can no longer blame job losses on outsourcing and trade? Where will all these culture warriors turn without their overly-simplified, convenient culprits? And who will they turn on?

And a far, far more important question: how will the fortunate remnant–the still-employed, highly skilled specialists–respond to the needs of the suddenly un- and under-employed? What policy interventions will they support? What sort of social contract will they recognize?

Twenty years isn’t a long time. It’s practically tomorrow.

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