2013 January 28 Monday
Has America Hit "Peak Jobs"?

Jon Evans argues America Has Hit “Peak Jobs”. That might be premature. The robot revolution doesn't seem like it is far enough along yet for that to happen. Though it is certainly true for some demographics. Notably, in 2012 employment declined for both high school dropouts and high school graduates. Also, more than half of all high school dropouts are not employed. Pay more attention to labor market participation rates than unemployment rates. The labor market participation rates tell a grimmer story.

My guess is there is a rising IQ threshold that divides those seeing net employment losses and those seeing net employment gains. Where is that threshold? Is it already above 100 IQ? How fast will the threshold rise?

There's not a simple working/unemployed threshold based solely on IQ. Obviously someone extremely motivated, conscientious, who feels a strong need to be productive, who accepts orders willingly, and who likes to work is going to be able to stay employed longer at an IQ level where most at the same IQ level are no longer working. Other attributes matter: luck, geographic location, health for example. But if we could make an accurate chart of IQ on the X axis and labor market participation rate on the Y axis we'd see a graph that rises towards the right, especially if those in school are removed from the calculations.

Jon Evans thinks we'll enter a post-scarcity society where people get paid to do not much of anything. I think this is a utopian view that ignores labor and capital mobility. Robot owners are going to need natural resources, wherever they happen to be. A country that does not have much in the way of natural resources could witness its wealthiest leaving to operate their robots wherever natural resources can be found. The natural resource owners and robot owners will have reason to trade with each other and with top scientists and engineers. They won't have much need for anyone else.

What will the superwealthy robot owners want? Nice climate. Physical safety. Rejuvenation therapies. Natural resources. Better robots and more advanced artificial intelligence. What won't they want? The vast bulk of the human race. The wealthy should start looking ahead to where they want to influence governments toward highly selective immigration policies so that the wealthy can have refuges in an overpopulated world with depleting natural resources.

This graph from the US Department of Labor Bureau of Labor Statistics on education, income, and employment understates the extent of the change going on with IQ, training, and income. The unemployment rate is less important than the labor market participation rate. As mentioned above, over half of all high school dropouts do not work (at least not in legal work).


James J. Heckman and Paul A. LaFontaine pointed out in 2010 that the patterns by racial group aren't changing. Given America's demographic trends that does not bode well.

This paper applies a unified methodology to multiple data sets to estimate both the levels and trends in U.S. high school graduation rates. We establish that (a) the true rate is substantially lower than widely used measures; (b) it peaked in the early 1970s; (c) majority/minority differentials are substantial and have not converged for 35 years; (d) lower post-1970 rates are not solely due to increasing immigrant and minority populations; (e) our findings explain part of the slowdown in college attendance and rising college wage premiums; and (f) widening graduation differentials by gender help explain increasing male-female college attendance gaps.

The demand for high school drop-outs is on the wane. Supply looks robust and growing. Those who want cheap gardening services should be happy. Those who pay property taxes, sales taxes, income taxes, and other taxes far in excessive of services received should be worried. Those who are paying about as much in taxes as they get in services: that'll change as your services get cut and your tax load increases.

Will the most productive escape the growing clutches of the least productive and negatively productive? How's this going to play out?

Share |      By Randall Parker at 2013 January 28 08:32 PM 

DdR said at January 29, 2013 7:40 AM:

Play out? Do you mean in the short term? Medium term? Long term?

Short term I see the GDP growing slowly. Stock market too. Government expenditures will rise more quickly, eventually swamping private investment. Unemployment will remain sticky for people with a bachelor degree or less. Especially the black population.

This will cause bond holders to eventually start crushing the dollar. Probably around 2017. Government will need to start making some painful decisions instead of kicking the can down the road. Retirement for SS will finally go above 70. Seniors won't receive Medicare until at least 70, and when they do, it will be in the form of an HSA. This will of course not hit current seniors but future seniors like me who are paying for so many taxes with ever-decreasing benefits.

Congress will need to buff the anti-discrimination act because who wants to employ grandpa until he's 70? Employers will begin embracing robots even more.

Medicaid, the FHA, Obamacare won't survive the government cuts unscathed. It won't happen right away, but eventually black people will riot. It'll be worse than Rodney King.

Mexicans are more peaceful and will likely do nothing, peacefully protest, or move back to Mexico. They won't leave, however, until the low-hanging jobs are taken over by robots. We need to hasten this revolution.

White people and Asians who moved into the cities to do their Sex-and-the-City thing will realize that that won't be possible now that you've got recalcitrant blacks everywhere. They will move back to the suburbs. Gated communities will flourish, as will lifestyle centers. How can they afford this lifestyle when oil becomes ever dearer?

Low-tax states like Texas will witness population influx. The rich in California will create enclaves everywhere. Tax dodging will become the norm. That means that real estate in Nevada will bounce right back as Californians buy a domicile to say that they are a permanent resident there (and therefore escape the punitive state income tax).

This is a small portion of what'll happen. What I'm posting sounds nightmarish. But what do you expect to happen when you have: a) a heterogenous population; b) increasing tax rates; c) less government services; and d) more expensive lifestyle as oil becomes dearer? People will give up on the system. I have.

The US will eventually turn into a banana republic. Or a civil war will break out. I wonder if it will run along race lines?

Mthson said at January 29, 2013 2:07 PM:

Low-tax states like Texas should create programs to encourage their poor to move to high-benefit states like California.

It'd be a small investment that would pay dividends, including letting them keep their culture.

"Your welfare payments for your family this month could be twice as much if you moved to California. Contact your relocation assistance advocate for more information."

Liberals believe the more poor people you have the better, so everybody wins.

Randall Parker said at January 29, 2013 7:42 PM:


I like it. Pay the parasites to move where the parasites are wanted. I doubt such a fantasy is possible. That's a shame.


I'm thinking on a global level: Will the capitalists move their capital to where there are few people? Moving between states won't provide enough of an escape.

Seriously: Will robotics allow owners of capital to escape parasites entirely?

Imagine some billionaires identify some really cool islands which are nations. The billionaires could and pay their inhabitants a lot of money to move somewhere else. Basically, do a sort of leveraged buy out on nations. Best to use island nations as it makes border control much easier.

Any Caribbean islands seem like good candidates? Or could one buy out one of the Solomon Islands? How about paying the 43,000 inhabitants of Manus island to leave for Papua New Guinea in order to form a new nation of robot owners who do massive amounts of manufacturing in a small place?

During a financial crisis the Brits might be willing to sell (or long term lease) one of the Falkland Islands.

Check it Out said at January 31, 2013 2:52 PM:

It's really not that there is no more to do. It's the system itself. There's so much to do in this world once we get rid of all the parasite politicians, corporation owners and religious ministers who are the only ones interested in maintaining the status quo.

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