Tag: Labor Markets

ECONOGAL > Labor Markets

Technology and The Labor Market

Posted on by Econogal

Internet Repaired

Yesterday our new internet provider finished the installation. The two men travelled seven hours and were planning on installing five systems in three towns spread out over hundreds of miles. But the men’s labor did not include much that was manual. Instead, they used a  Vibratory Plow.

New Technology

Vibratory Plow Vemeer SPX25 digging a trenchThe digging equipment looks traditional in appearance. However, it is much smaller than the trencher forerunners. Furthermore, the equipment is “driven” by tablet. A human is still needed to operate the tablet, but an individual no longer sits upon the unit operating manual gears and steering wheels.

Of course, the original machines were men with picks and axes.

And even though the physical aspect is reduced, the customer service remained and was outstanding.

Trenching the Cable

A Vemeer SPX 25 was the unit involved in trenching my yard. Its technology went a step beyond just plowing through my topsoil. This machine pulled a cable casing underneath the ground while operating. So, the machine further reduced the effort needed to successfully install the cable line needed for Internet service.

However, the actual line then needed the two men to thread the line through the orange plastic casing. Human labor is still a small part of the process. But with the ever-increasing development of technology, it may not be long before only one individual is needed. Or perhaps none.

Cable Casing rising out of ground behind a Vibratory Plow.

Current Reading Tie-in

I am currently reading Could Should Might Don’t: How We Think About The Future by Nick Foster. The first few chapters offer a history of technological progress since the last Ice Age. The premise of the opening pages is that for much of history gains in productivity were slow and could be represented by a mostly flat horizontal line.

Now technological growth is accelerating exponentially. Thus the curve needs an almost vertical line. This raises many questions about growth and what kind of roles humans will play. Or will AI take over?

Technology and the Labor Market

The biggest surprise from the use of the Vibratory Plow was the speed. The two-man crew was here less than an hour. The distance trenched was nearly 75 feet. Technology was a huge time saver. But there are other impacts on the labor market. Ditch diggers of old did not necessary need any skills other than the physical ability to wield a shovel. Yet, the Vemeer SPX 25 needed someone with the skills to operate the remote control. Perhaps this a skill easily learned, but it is still more than manual labor.

As technology moves forward, how much will a kindergartener need to know? And each grade above that? Will everyone be able to code software before graduating from high school? And what if one can’t? And an old question I used to ask my students, ten years from now what jobs will be obsolete and what unheard of positions will develop.

These are truly interesting times we live in.

Help Wanted vs. 32-Hour Work Week

Posted on by Econogal

Help wanted signs are everywhere so I was surprised to hear of a suggested 32-hour work week yesterday on the radio. Senator Bernie Sanders from Vermont is calling for the mandatory reduction in hours along with an increase in the minimum wage to $17.00 an hour. On the surface the idea will sound great to many. But, as always there are costs to a regulated market. Even the labor market.

Free Markets

The concept of free markets is a major contributor to the economic success of the United States as well as most other developed nations. In a free market, prices adjust due to supply and demand. Economic theories are complex and include ideas such as price stickiness and stagflation. But overall, the concepts work. If there is a shortage buyers pay more. When there is a glut suppliers need to cut prices or products languish in warehouses.

Wages represent the price of labor. Help wanted signs are signals that the labor market is not in equilibrium. So, more workers are needed than are willing to work. In a free market situation, wages are increased to the point more individuals are enticed to work. To a certain extent, the process works.

Help Wanted

However, other factors are impacting the labor market. Covid-19, Baby Boomers retirement, child care costs and government policy are all limiting the availability of workers. The combination of factors is having an adverse effect. There are too many reasons to not work whether one is young or old. Perhaps AI (Artificial Intelligence) will take up the slack. But for the present, we have a labor shortage. Hence the Help Wanted signs.

So, businesses respond by cutting hours of operation or even services in general. This results in disgruntled consumers. A vicious cycle begins.

32-Hour Work Week

So as a retired economics instructor I was taken aback by Senator Sanders’ proposal of a 32-Hour work week. In my opinion this is a recipe for disaster. We already have a labor shortage. Fewer hours worked, no matter how productive those hours, means an additional drain on the labor supply.

Certain industries absolutely cannot work with a shortened work week. Just-in-time industries such as fast-food restaurants don’t benefit from a shorter work week. Hamburgers can’t be “saved” for future use. Other industries such as accounting do not benefit from a 32-Hour work week either. Taxes are due when they are due. The same holds true for the legal system. Farmers certainly can’t stop the tractors and combines once the 32-hour mark rolls by.  I could go on and on.

Unfortunately, many states have K-12 systems that are prepping society for a 32-Hour work week. My local school system went to just four days a week about a decade ago. I still think this is a bad idea. Perhaps schools in Vermont where Senator Sanders is from are all on a four-day schedule.

Before retiring to focus on writing I worked in excess of 40 hours a week on a regular basis. My spouse still goes into the office on Saturday mornings. This is in addition to the longer than eight hours during the week. Workaholics? Maybe, but the quality and quantity of work is a positive. Things get done. Service-good service- is provided.

Work Ethic Needed

I am sure Senator Sanders is well intentioned. But I still disagree with his proposal. Our society needs to value the work ethic of its’ labor force. Under a free market, wages will respond to this ideal. Even if it means a period of time dotted with Help Wanted signs. Perhaps it is my Protestant upbringing, but I feel strongly that each individual needs to contribute to society through work.

An umbrella of social services is needed for those who cannot help themselves. BUT, our umbrella is too large. My experience has witnessed severely physically handicapped individuals doing their utmost to contribute somehow and in some way.

Too many individuals not in this category are opting out of work and out of society. Could this unwillingness to provide labor be responsible for our increase in violence? Perhaps. I believe happiness comes from within. If one has not accomplished even a simple task, can one develop this inner emotion? Satisfaction with one’s work plays a key role. But my understanding of psychology is limited. I will stick to economic markets. Help Wanted signs do not equate to a 32-Hour work week.