Long-term, persistent joblessness is the great American domestic crisis of our generation. In our 2017 special issue, “The Shape of Work to Come,” City Journal grappled with the problem, and our writers continue to explore it.
City Journal recently convened a panel of experts to talk about the future of work. Audio from their discussion is featured in this episode of 10 Blocks.
The panel consisted of Ryan Avant, a senior editor and economics columnist at The Economist; Edward L. Glaeser, the Fred and Eleanor Glimp Professor of Economics at Harvard University, a senior fellow at the Manhattan Institute, and contributing editor of City Journal; and Kay S. Hymowitz, a senior fellow at the Manhattan Institute and contributing editor of City Journal. The discussion was moderated by Steve LeVine, the Future Editor of Axios and a senior fellow at the Atlantic Council.
Audio Transcript
Brian Anderson: Welcome back to the 10 Blocks podcast, this is your host, Brian Anderson, editor of City Journal. First off -- we’d like to take a moment to thank all of you for tuning-in. Since we launched the podcast a couple years ago, the feedback has been tremendous, and we thank all of you for your interest or support. We made a few changes we think you’ll appreciate: We have a snazzier musical intro, and henceforth we’ll be posting episodes little more frequently.
Coming up on the latest podcast, we have an exceptional show forlisteners: Last year, City Journal published a special issue called, “The Shape of Work to Come”, featuring articles on the great American domestic crisis of our time, long-term joblessness. It’s a topic that our many of our writers are thinking about, and we will continue to revisit it for the foreseeable future. Last week, City Journal hosted a panel discussion in New York City with some of our own writers and other experts thinking about the future of work. You’ll be able to listen to that on this 10 Blocks. On the panel we have Edward Glaeser: Harvard professor, Manhattan Institute fellow, and contributing editor here at City Journal, and author of the great book on urbanism, Triumph of the City. Then there’s Kay Hymowitz, also a long-time contributing editor to City Journal and fellow at the Manhattan institute, and author most-recently of The New Brooklyn. They we were joined by Ryan Avent, senior editor and the free exchange columnist at The Economist. But the next voice you’ll here on the podcast is Steve LeVine, “Future Editor” at Axios, who moderated the discussion.
We hope you enjoy!
Steve LeVine: Good morning. Thanks very much for joining us here. That was an amazing understatement. This panel is a fantastic panel and I’m really looking forward to the discussion this morning to digging in. We are in the midst of a debate about the future of work, the underlying forces that are creating a crisis of stagnant wages and an uncertainty about jobs in the future. Among the elements in the debate, a main question: Is this time different? Is the technological cycle that we are in right now, the revolution in AI and the new age of automation, is it different from prior technological cycles over the last two centuries in which a normal economic turn has produced enough jobs to employ everyone displaced by the new technology? Why are wages stuck? How long will the disruption that we are in last? Prior disruptions have lasted decades. What will our society look like when the transition has been spent? And, finally, pivoting off of a piece that was in The New York Times a couple of days ago: What we are watching in the heartland that led to our current politics, did it start with an economic malaise or a status malaise? So, to tee off this conversation we are going to start with Ryan. And my question for you: What do past technological revolutions, past cycles, tell us about the current one we are in? Are they useful? Is it a useful roadmap?
Ryan Avent: Thank you, Steve, and it is great to be here with what is a pretty fantastic panel. It is an excellent question. I think that past technological revolutions really are probably a good guide to what we are going through. There is a possibility at some point that as AI becomes capable of doing just about anything humans can do, that this will start to look a lot different from what we have seen in the past. But I think that is decades away, at least. So, for now we’ve got a disruption that’s sort of built around a general purpose technology, information technology, and machine learning that can be used in lots of different places across the economy and that consequently is affecting lots of different industries, lots of different job categories. What I think the past tells us, first of all, is as you said, that this sort of thing can cause quite significant disruption over a long period of time. I think that part of what we have seen in terms of the malfunctioning of different institutions, different parts of the economy over the past few decades is linked to technological change. That is going to intensify for several decades to come. So, we are in the middle of a very long process of social change. I think that there is often the perspective looking back on how these things play out that everything ends up okay. That, you know, jobs are destroyed but jobs are also created. And then we all end up better off. And that does tend to be true over long periods of time, but if sort of look in on shorter periods of time there can be quite a lot of pain for established workers. There can be whole generations where wages don’t go up. And so I think we need to be, you know, we need to be hopeful but not necessarily too optimistic that the problems are going to solve themselves. And then I think the other big thing that these revolutions teach us is that there has to be quite a lot of evolution in terms of institutions and norms and in governmental policies in order to accommodate society to new technologies to make sure that the benefits in the technologies are broadly shared, to make sure that society is kind of okay with the way new technologies are being deployed. And we are already sort of seeing, I think, a lot of backlash now and a lot of pressure to start changing institutions, not just in terms of the economic effects but also thinking about Facebook’s role in our political cycle, thinking about how driverless cars are going to be used. There is going to be a lot of pressure to overhaul our institutions and that is usually not a very neat process, either. So, I think those are the sorts of things we can look forward to, so to speak, in the decades to come.
Steve LeVine: Thank you very much. That’s great. I want to dig in a little bit in our modern age. Let’s say from the ‘70s forward, Ed. So, you define the problem as a war on work. Can we dig a little bit in that thesis and also can you talk a little bit about your work on the Eastern heartland?
Edward Glaeser: Sure. So, when we take – and I couldn’t agree more with Ryan’s sentiments that you know, long-term joblessness is the defining and dire social problem of our age. When we try and understand how we got here, that 50-year evolution that he described, there is a steady and running academic debate which concerns is it from purely labor demand? Is it the changes in the technology, the decline in deindustrialization of the US? Or is it in labor supply, which can include two versions, one of which is it’s about the welfare state. It’s about the dis-incentives for working created by things like disability or the 30% tax on earnings created by food stamps and Section 8 housing vouchers? Or is it about the cultural side, that I think Kay will get into, that we are not training the next generation to actually want to work. As an economist I am uniquely disadvantaged in talking about cultural issues. So, I will leave that one completely on the plate for right now. And say that no matter how important one believes the labor demand side is going on, the labor supply issues, the welfare state issues, don’t help. And they are particularly badly designed for the most troubled parts of America. One way to see this, and I think we really do have to rethink our you know, having place-based policies in this country, and by place-based policies like me make it clear I am not talking about the Appalachian Regional Commission or building people-mover monorails. I’m talking about policies that actually recognize that labor markets are very different in different parts of the country. So, a point that I have often made, often to my audiences in fact, that having a national housing policy is kind of mad. That any housing policy that is appropriate for New York is not going to be appropriate for Detroit, and that is not going to be appropriate for Houston. These are very different conditions. Similarly, an employment policy that is targeted for Seattle or San Francisco Bay, right, you know, is going to be a nightmare in Eastern Tennessee or West Virginia. So, let me be really concrete about this, right, so the minimum wage in Seattle, not something that, like many economists, I am not a big fan of minimum wages, but to make the claim that it is somehow or other catastrophic is a mistake. That Seattle is an incredibly robust economy filled with highly skilled people. If anyone thinks that you know, imposing a $15 minimum wage on West Virginia would be sensible, they are out of their mind, right? That would be an absolutely catastrophic thing. Similarly, it’s only slightly more complicated to take the view that this long diagonal line of despair in the United States which starts in Louisiana and Mississippi and runs through Appalachia and up through Northern Michigan, right, this area which is the heartland of deindustrialization, of former parts of the Jim Crow South, is particularly low in education and also particularly problematic in terms of its political institutions as well. You know I often have sort of a two-variable model of economic growth, that it’s about rules and schools and unfortunately the Eastern heartland is weak on both fronts. This is an area in which routinely you see a quarter of the prime-age males were jobless. And this is an area in which having a welfare state that discourages work is deeply problematic. Will it necessarily bring, you know, will reforming that welfare state necessary bring you back to 5% joblessness rates in these areas? No, it won’t, right? We may need stronger medicine and we also have to count on some form of out migration. But we sure as heck need to rethink our policies today. And it is the most sensible thing that we can do, is to recognize that discouraging work, right, or failing to encourage it, is a big mistake in Eastern Tennessee, in Eastern Kentucky, in West Virginia, in Mississippi. And just to be concrete about this, you can either think about what you need is being a tilt, meaning that you are going to reduce the size of some payments which go to the jobless and use that money to reduce the tax on work. So, for example, you could reduce the level of disability payments but then enable the disabled to keep more of their earnings at a higher level. Norway has experimented with this, enabling the disabled to keep more of their earnings, and it has worked. And people who were on disability have actually earned more and have been more connected to the workforce. Or you can just say what we need is a national earned income tax credit that is actually targeted in a simpler way towards men who are out of the labor force. And then there is at least an argument for saying, look if I have a limited number of dollars to throw on that, let’s target it towards the areas where joblessness is higher. Because in fact we do have evidence that suggests that things that induce labor demand to go up in these areas do more to reduce joblessness. So, we really do have to recognize that this evolution and this change in terms of our working in America is not something that has afflicted America uniformly. There are particular areas, and the Eastern heartland is its core, where joblessness has risen most and accompanying joblessness has been misery, opioid abuse, suicide, the breakdown of the family. All of these things have gone together in a terrifying cocktail. And even though we may not know how to use economic policies to fix all of them, we know that dis-incentivizing work, having policies that stop work from paying, certainly aren’t making things any better and we should start by trying to reform those policies.
Steve LeVine: Okay great. Before we get into digging in further in the present, I didn’t want to leave history completely behind and so I want to ask both of you if there is a period, a past period that informs what you are thinking or the audience can think about something that we can look at that helps to understand where we are, where we are going, what is it? When is that time?
Ryan Avent: Well, I think you can think about sort of the late 19th century. And it was obviously very different in a lot of ways, but what we faced then was a pretty dramatic technological and economic shift, a pretty dramatic shift in the geography of the country in terms of where people lived and worked, and it was one that kind of left people much better off, but it was also a pretty tumultuous political period and it was the beginning of a period in which we started to construct this welfare state. And we did it for good reasons, I think, recognizing that in an industrial economy and an urban economy you were often going to have downturns. You were going to have, you know, people who through whatever, you know, no fault of their own could not find good work. And we didn’t want those people to die in the streets. And so there was the recognition that there was a need for institutional change. In order to get that institutional change there were different groups in society who had to mobilize, and so you had the rise of trade unions, you had social reform movements, you had the rise of new political interest groups. And I think that’s the sort of pattern we are going to be looking at here. I mean I don’t think in terms of the interaction between work and the welfare state and technology it looked the same then as it does now because of how different the institutional environment is now. But I think that pattern in which we see, as Ed did a very good job of pointing out, that current institutions are not working in which people become very unhappy and begin mobilizing for institutional change. That’s exactly the sort of set of steps we are going to be working through over the next few decades.
Steve LeVine: And we are talking 1890 to the beginning of World War I.
Ryan Avent: I think, well, and thereafter. I mean, I think you could include the inner war period, the Depression, and the sort of intense pressure we faced there to create Social Security, to begin building a lot of these basic welfare state policies. That whole period is really the one we are thinking about. It was quite a, you know – it’s not a short amount of time, but that’s how long it takes, I think, to arrive at a consensus about what actually should happen, you know, what sort of institutions do need to be in place, to develop the political movements to get those things in place, and actually to enact them and unveil them.
Steve LeVine: Ed.
Edward Glaeser: So, I think if you are looking at a historical period to model ourselves on, I would actually go to the major periods of reform in the social welfare state that both Germany and Scandinavia went through in the last thirty years. So, these are places that had extremely generous welfare states in the postwar period. They realized that many of their rules, many of their policies, were being deeply harmful in terms of the employment situation, and they quite sensibly reformed in ways that promoted work and did less to discourage employment. And in some sense, if you want to think about the divide in Europe between its relatively prosperous North and its you know, deeply troubled South, a lot of that divide owes much to the fact that the North was able to look at its labor market policies and say these are screwed up and we are going to fix them. Okay? And the South, many people have been looking at their labor market policies and saying these are screwed up and, you know, fixing them has proven too hard. And Macron is trying right now very hard in France, but I think very much, you know, we have to ask ourselves if the future of America is going to look more like Germany or Sweden or whether it’s going to look more like Greece. And we have got that choice ahead of us.
Steve LeVine: Great. Kay, so, Charles Murray famously wrote Coming Apart. You have written quite a bit on the subject of losing status, losing family, an amazing statistic that you cite unmarried and divorced people make up 32% of the population and 71% of opioid deaths.
Kay Hymowitz: I believe that’s men.
Steve LeVine: That’s men. Okay. Can you unpack when we are translating what Ryan and Ed are talking about into how this has affected humans, people?
Kay Hymowitz: Okay. So, some of you know I have been writing about family breakdown for a long time, and I hope to convince you by the end of today’s discussion that that actually has a lot of relevance to the discussion we are having today about these technological changes. When I first started writing about the family breakdown I was mostly talking about the difference between the way upper income, educated people were doing. Steve says, this is what Charles Murray was right about too, of course, how the people were doing at the top and how people were doing at the very bottom. I was mostly talking about the poor. And this was in the early ‘90s, mid-90s, it looked like the white working class, or the working class more generally, was doing okay, was hanging on there, at least in family terms. But since then there has been a massive catastrophe to the family and community structures of these places where we are seeing a lot of joblessness. What I think we have to keep in mind is that the implications are for the future of these places and of these people. Because what happens, we have begun to learn, is that boys who are growing up in families where there are no fathers or erratic fathers, father figures, really suffer, even more than girls. That evidence is becoming more and more clear, especially with a recent study that just came out from Raj Chetty about black children and mobility. And what he found was that the boys were having a lot more trouble than girls. What we now know is that the boys who are growing up in these homes are in very unstable fluid homes, and these are not – we are not just talking about a marriage breaks up and the child goes on to have a good relationship with both parents. Many of us in this room have seen many examples of that. We are talking about much more chaos. And J.D. Vance describes this, by the way, in his book Hillbilly Elegy. A lot of chaos, a lot of coming and going of various adult figures. And the reason that matters is because children, particularly boys, tend not to do well in school, or emotionally, when they are going up under those circumstances. So, we have increasing dysfunction among boys, younger boys, and as they grow up, but they become exactly the jobless men that we are talking about today. A lot of the boys, a lot of these young men actually who were – of the jobless young men, when you talk to them they often came from very chaotic homes themselves and were not able to learn and absorb any sense of agency over their lives. They instead have this sense that things just sort of happen and don’t have much self-control for themselves. So, they are not doing well in school, they are far less likely to go to college than girls. Well, okay, what happens when the time comes for having a baby? You are not going to marry – women do not marry men who make a lot less money than them and who can’t keep a job. That’s just a reality. It remains that way, even fifty, sixty years after the feminist movement.
Steve LeVine: Thanks. Let’s dig in just a little bit on that. So, two things go hand in hand. One is unemployment, but also employment at a low wage…
Kay Hymowitz: Yes.
Steve LeVine: …or uncertain, unstable employment. I am super interested in this dichotomy of sort of the malaise that we are in now, and that other countries are too, and this debate, is it this economic question, joblessness, low wage, or it is loss of status?
Kay Hymowitz: Right. So, it is impossible to really answer the question of whether – how much economics plays a role in what is happening to the family and how much it is a cultural thing, but I can tell you this, that we still know that married couples have a better chance, not just of making more money, but of providing more stability for their kids. And the kids are going to do better, tend to do better. This is what many decades of research has shown. So, if you look at, for instance, non-college-educated men, actually no, if you look at high school dropouts who are married, they are doing better than men with a little bit of college in some of these communities that we are describing. So, there is, we don’t know why that is, is there something about the personality, the social strengths of the person who is married? But it isn’t just income. Clearly, there is something more involved.
Edward Glaeser: So, can I just interject two facts which seem relevant?
Steve LeVine: Yes.
Edward Glaeser: First of all, we have now reached a point where fully 50% of the long-term jobless men, right, so that’s over 12 years, have never been married. Have never been married. Second fact, about 85% of the long-term jobless men are not living alone. That’s part of how the economics works. Of them, more than 30% are actually, more than 30% of jobless men are living with their parents. So, in fact, you have this sort of infant, it is you know, men who are not growing up. And then you have another 55%, a small number which are living with their lawful spouses, but a lot of them are living with other people who are somehow or other making that household work.
Kay Hymowitz: Right. Well I assume there is a great deal of moving around in and out of arrangements and not much stability. A lot of these guys, by the way just so we have a bigger picture about this, it’s not that they are thoughtless about their kids. A lot of them are really devoted to their kids, or think they are when the kids come, but what happens is that the relationship with the child’s mother, and the mother tends to be the custody parent, becomes very complex. Maybe there is a new man in the picture or a new woman in the picture, a new child in the picture, and gradually the father kind of backs off. And this has happened in the black community as well. So, fatherlessness is – it is not just that a father is not living in the house, although that is a key part of this picture, it’s that it is very difficult to maintain any kind of contact and loving and stable relationship with a father who is not married to mother. That’s just the reality.
Edward Glaeser: Parenting is hard in the best of circumstances, right?
Kay Hymowitz: Yeah. And mothers are the gatekeepers still, you know?
Steve LeVine: Ed finds at least partial causation in public policy are economic incentives or economic disincentives to work. What do you think about that? Do you have a causation hypothesis?
Kay Hymowitz: I, you know, again, I don’t think there is a way to think about this without talking about the changes in social and cultural norms. When you think about why men in the past have held jobs that were not particularly appealing, you don’t hear well, they may not have been paid much, I mean we often talk about the ‘50s and the period where, you know, the great industrial period of our history as if that was always the norm. It was not. And many times these jobs that men were working were really horrible. I had a quotation I wanted to bring in from a writer named Connie Schultz who is a columnist at The Cleveland Plain Dealer. Or she was, I don’t know if she is still there. And she described growing up in the Cleveland area. Her father worked at a factory in the boiler room. And she said that when she would go, she went to visit this place and it was some kind of hell. The temperatures were going up to 140, the filth was unbelievable, the fatigue that her father experienced, but she said her father would come home every day looking like he had just come back from Hades, which he had, and would say you four kids, he had four kids, you kids are going to college. In other words, the reason he was willing to put up with those jobs was because he had people that were really relying on him and to whom he was devoted. And so, when I think about the joblessness, it is hard for you know, and the question of how much this is an economic or cultural problem, these men don’t feel, for very complicated reasons, some of them true, that they are needed. Nobody is relying on them. They can hang out on the couch and play videogames. It doesn’t really matter. The kids are going to be okay, sort of.
Steve LeVine: Yeah. Ed, you have an interesting statistic in one of your writings. Only 41% of high school dropouts, maybe this is also men, only 41% of high school dropouts are working. That’s an amazing statistic.
Edward Glaeser: So, that’s not prime age. So, that is going to include the whole population, but that’s right.
Steve LeVine: Okay. So, two questions. One is this suggests, and you do suggest, that we need to, we need, in terms of a prescription, education, skilling up. So, I want to ask you about, you know, to make that argument. But also, I want to do, then, Ryan, if you will follow up right after that, you make the argument you trot out you know, the history of the workforce gaining more skill over time as the technological cycles evolved, unfolded. But then you say we may have reached skilled saturation in the workforce. Can you talk about that? So, Ed, you first.
Edward Glaeser: Okay, although you’ve got me so interested in the question you asked Ryan, I don’t want to – so, certainly I am a bit of a human capital determinist, right? I believe that skills are the bedrock on which individual, urban and national success rests. The differences in jobless numbers between the educated and the less educated are enormous, and I think, very clearly, America needs to do a better job in terms of educating its children. Some of that probably does continue to go through traditional educational institutions, some of it should be more entrepreneurial and more tied to the actual needs of the labor force. We should certainly do things that feel more like competitively sourced vocational ed that supplements traditional schooling, hopefully bypassing the teacher’s unions while doing so, maybe going to actually people who know something about, you know, the skills that are needed in the modern environment, you know, do it with constant use of randomized, controlled trials around this stuff, be innovative around it and invest in skills. The reason why I tend not to be emphasizing skills as much as I have in the past, though, in this recent work is that our traditional recipe, both for inequality and for any dislocations that came through trade, was skills, skills, skills. And that’s not wrong, but it is not enough, right? Telling a 50-year-old displaced worker in West Virginia that yeah, you have lost your job and will have no other foreseeable job in the next thirty years, but boy I’ve got a great Pre-K for your granddaughter, right? That’s not so satisfying for that guy, right? And that’s why we need to have more. We need to be able to say that we have a better solution, and what we do know about skills for the 50-year-old worker is we also have fifty years of work on job retraining programs for displaced workers, and almost uniformly the track record is dismal. Okay, which leads me to the view that by far the best thing we can do for that 50-year-old worker is get him back at work somewhere. Find some employer with some degree of government help who is going to actually give this guy a job producing something that somebody else wants. Give him something that provides structure to his life, give him something that gives him some degree of dignity, a sense that he is actually producing something the world wants. We can’t do it all with Pre-K. It’s not, it just isn’t there, and we have to do something that actually encourages entrepreneurs to find some form of work for this person, because in some sense every unemployed or underemployed American is a failure of entrepreneurial imagination.
Kay Hymowitz: Can we…
Steve LeVine: Yes.
Kay Hymowitz: …interject a question here? Are there other countries that do a better job at job training? Retraining?
Ed Glaeser: Retraining. I think there is some sense in which the Scandinavian countries do a bit better, but, you know, the educational systems in those areas are so much stronger in lots of different dimensions, and also in terms of the vocational ed, I mean, there is a lot to admire in terms of Germany’s system. I mean I think most of us would have trouble with a tracking system that basically looks at a person at the age of 13 and says, okay your job is you are going to be a tree for the rest of your life, or a garage mechanic, or whatever it is. So, doing things that allow the traditional American optimism about finding something, but combine that with, you know, serious vocational training on top of that would be a plus. You know, like I have got no problem with asking our kids to spend more time doing schooling, especially in the fact of what she is describing. In a world in which families work less, I think we should, you know, have other programs that work more.
Steve LeVine: One second. I just wanted to follow up. Ed, okay. Janesville, Amy Goldstein’s book, so she – one of the most interesting parts is the reskilling section and her survey of these workers who had been laid off from the GM factory and after six years those who went through reskilling and those who did not, and those who did not were on a much higher percentage employed and comparing those employed with skilled and did not reskill, they were earning a lot more. And her answer to that is that reskilling is not an answer totally in itself, there also have to be jobs to go into. Do you have any sort of observation there?
Edward Glaeser: It lines with fifty years of research on failed reskilling programs. I mean, it’s in line with what we have. And the point that you need to get these guys back at work, I think, is the central point. I mean most of us – it’s also true in terms of teaching. I mean, most successful teaching is about learning by doing. Most of it is sort of inspiring kids by what you tell them, to actually go and do work themselves, and that’s how you learn, right? It’s even more so for a 50-year-old. And you know, it’s very hard to get people with demographics like mine to learn new tricks and, you know, it is helpful if you are in a structured job environment to induce them to do so.
Ryan Avent: All right. So much to talk about. So, I think to get to the skill saturation point, I mean, it’s important to know that, you know, a huge part of our response to the Industrial Revolution was to increase educational attainment. You know, at the start of it most people could not read and write. By the end of it, you know, the vast majority of the working-age population had a secondary school degree of some sort, and 40% or so had a tertiary degree. That’s just a huge increase in educational attainment and so I think, you know, Ed gives us some very good reasons to think that education is not going to be the entirety of the solution this time around. And I think that is – the difficulty in trying to replicate that feat is another reason why we shouldn’t say that we can educate our way out of this problem. But I think it, you know, we also ought to look at the fact that while it is true that you get a big bump to income going from a high school degree to a college degree, it used to be the case that that premium was constantly rising. And since 2000 or so it has not been rising. The premium to getting an advanced degree does continue to rise and there is still intense demand for people with advanced degrees. But then that sort of raises that bar there. And if we are talking about someone who is coming from a troubled background who, you know, who perhaps doesn’t have the best primary education, how realistic is it to get them into a you know, an advanced degree program in computer engineering or something of that sort? And I think it’s, to sort of add to Kay’s point about people working to get their kids into college, since around 2000 or so real wages for college graduates have also been stagnant. And there has been to some extent growth in underemployment among college graduates where a growing share of college graduates are working in jobs that don’t require a degree. And that sort of then has a trickledown effect where you are displacing people with less education into jobs even farther does the ladder. But I think the sense that college is less of a guarantee of a significantly better life is perhaps something that is playing into psychology here.
Kay Hymowitz: I often think when I’m looking at the data on college, the college premium, that there is such a wide range of college status that you know, we forget, I think, a lot of people in this room probably think in terms of what college is, you know, an elite college, but most Americans who go to college are, it’s not just that they are at state universities, there are often at community satellite parts of that university.
Steve LeVine: Ryan, but your thesis, if you still hold – this is 2016 when you wrote this, when you published that book – that the actual percentage of the population that is college-educated, that we have reached – that’s your saturation point. And you actually use the phrase that the other part of the population is not cognitively capable.
Ryan Avent: Well, I think – no, I mean I think that – so, if you look at countries like Korea which have managed to raise completion rates for you know, university-level schooling significantly above the rest of kind of the OECD, what we do see is that there was a significant reduction in kind of the quality of education those people were getting. And it’s not – I don’t think it’s a sort of disparaging remark. I mean college is hard, you know?
Edward Glaeser: Not hard enough. Not hard enough.
Ryan Avent: And, I mean, you know, calculus is hard, linear algebra, these things are not easy and not everyone can do them. That does not mean that they are less valuable or, you know, or less worthy of respect than anyone else, but it does mean that we need to be realistic about how we are going to find employment for everyone.
Steve LeVine: Okay. So, let’s move. We are going to wind down in this part of the conversation, but before we shift to questions, so, in terms of solutions. So, we know now that skilling, reskilling is a hard thing. And, Ed, 50 years of failed or partly failed experiments, let’s talk first about the wages. Ed, you talk about incentivizing joblessness. Are we incentivizing stuck wages?
Edward Glaeser: Oh, maybe. I mean I think the most important thing is working on straight employment subsidies. So, you know, I think something like a flat-wage subsidy targeted towards the bottom end of the labor market is the right answer. Make it clear, make it a per-hour subsidy so it is not complex like the EITC. I am fine if you want to say that those dollars are going to be larger in West Virginia then they are going to be in New York. I am also fine if what you say is a $3.00 wage bump is just going to have much more of an impact in West Virginia than it is in New York. And so, it’s going to have a place-based impact regardless. There is a question as to whether or not you want to give the subsidy directly to the workers, which has a certain political appeal, or you want to give it directly to the firms which will probably be cheaper to implement, and also more effective in places that have a binding minimum wage. So, if your goal is to bump up wages, then giving it in those areas to the worker will achieve that, given that I’m more focused on joblessness rather than raising wages. I think giving it to the firm has a certain amount of sense to it.
Steve LeVine: Okay. Ryan, did you have something on that?
Ryan Avent: Well, so I think I have a particular view of sort of how this is all playing out. And I guess I share Ed’s diagnosis of what’s going on, but I think it’s probably going to be quite a bit harder to generate the kind of outcomes we want. My sense is that what has happened over the past decade or two, and what’s going to happen to an increasing extent as technology improves, is that the substitutability of domestic workers for either foreign workers or technology is increasing. It is easier than ever to take a domestic worker here working in a factory or a warehouse or whatever and have that job that they are doing be done either by someone in a different country or by a machine. And that substitutability is going to go up and up and up as technology improves. To me what that means is that we are stuck in a place where workers are essentially in kind of a wage competition, with a lot of the – either with machines or with the foreign workers. And the way that we maintain high employment is by allowing wages to stagnate or fall in real terms. Now, we run into trouble because we have these social safety net programs which mean that if wages get low enough people say it’s not worth it to work and drop out, and we don’t want that to happen. The alternative, or an alternative, would be to make those programs less generous and then to subsidize wages. And I think that is what Ed is proposing, and that should address the issue of joblessness but I’m not sure it really solves our problem in a few ways. One, I think if we wind up in a world where the government is essentially subsidizing the very rich to have massive household staffs, it is not clear to me that from a kind of status perspective or a cultural perspective that’s a desirable place to be or a politically sustainable place to be. The other thing I worry about is that we have, if we maintain this massive pool of very cheap labor, that dramatically reduces the incentive to use a lot of new technologies that are going to – that ought to raise productivity. I mean you are not going to automate the warehouse if you have, you know, massive numbers of cheap subsidized labor to keep using there. We want to automate the warehouse. Those are bad jobs. Automating the warehouse raises productivity, raises output. And so, I worry that we are stuck in a trap where we are not taking full advantage of the technologies available to us, we are not getting the productivity growth that we want because workers are so cheap. And solving that problem is very difficult, indeed.
Edward Glaeser: So, I don’t really disagree with that much of what Ryan just said. I do agree that it’s certainly possible to be very pessimistic about the future now. A lack of hope has never deterred me from taking on policy challenges, that’s part of the job of the academic and policy exchanges. Remember I have been, you know, at least for 15 years I have been arguing for a need to reform land use regulations in this country. And you know, I’m at a point where a 6-4 loss of the Wiener Bill looks like an incredible success over those 16 years. So, I don’t disagree. It’s just you know, I believe in taking on lost causes. That being said, I actually don’t think this is completely a lost cause. I do believe that regardless of what you think about the possibility of the future that there are, in fact, what we as economists wonkily call externalities associated with not working. Some part of that are the physical externalities associated with the payment and some part of it is social externalities which create broader problems as a whole. Now, the way we know how to fight externalities is to, you know, subsidize good behaviors and tax bad behaviors. And that’s basically what I am in favor of, is doing more to subsidize people to work and do less to subsidize them from not working, and some combination of the two. And I’m not sure that it is going to solve everything. Yes, it probably will deter a little bit of labor-saving technology, but I guess I’m just not that worried that we are going to underinvest in those. I mean, the past thirty years has seen a fair amount of that. And I think the other point that is floating around here that we probably haven’t made, and let me just say this, historically we have – historically in the U.S., when places became less productive we moved, right? We are a mobile nation. When the farmers of New England looked out you know, looked out my neighbor’s backyard and saw the rocky soil of Massachusetts and heard there was some place in the Ohio River Valley that was better, they moved. And they had neighbors who helped them raise a barn and they had balloon-frame houses to make their housing cheap. And when the farmers you know, in the late 19th century, thought that their agricultural incomes were low and saw an opportunity in Chicago or New York City, the tenement builders were there erecting homes by the thousands and hundreds of thousands to make space for them. When the Okies were hit by the Dust Bowl they packed up their car and moved to California, and again homes were made for them. The difference now is that we have parts of America that are wildly productive, including New York City, Silicon Valley, Seattle, Boston, and we don’t allow any building, right? And that is part of the problem. And the consequence is for forty years prior to 1992, American mobility rates never dropped below 6% across counties. Over the past ten years they have never risen above 4%. Income convergence across areas, which was abetted by the mobility of both people and firms, has completely stalled, right? From 1860 to 1980 this was the norm. Poor places got richer, rich places had less income growth. Over the past thirty years that has been completely flat. We have ceased to see it. Partially because migration historically has moved from poor areas to rich areas. Think about the great migration North of African Americans fleeing the desperate poverty and degradation of the Jim Crow South to find a brighter opportunity in Detroit or Chicago. Well, today, you know, we’d say you know, we want you to leave Detroit or Chicago and move to Silicon Valley. And they are going to ask you, where are they going to pay for that three-million-dollar starter home that occurs there. So as we know it at M.I., everything comes down to NYCHA, and at least part of the answer is allowing more migration. And you know, that service economy that you mentioned, I mean, that’s a particularly bleak version, is the vast household staff of the gilded age. But, you know, there is a lot to like in the service economy. And we think about, you know, a world where we are going to have a brighter world for less-skilled people and I think a lot of the answers do come in services and not all that’s wrong.
Steve LeVine: Okay. We are going to do a lightning round. Do you want to say some…
Kay Hymowitz: Yeah. I wanted to add two things. One, in terms of policies, I think we need to look at the schools and how they are doing with dealing with boys because we know they are having a lot of trouble. And we need to get to these kids before they drop out, before they have the kind of failure that leads to joblessness and/or low skills and becoming part of what they call the precariat, very precarious jobs that take you in and out of, you know, that are not reliable. Ed, one question about this mobility issue that I find so interesting is if you look historically, people, when they move, it’s generally due to social networks of some sort. That is, their neighbors moved, or their uncle moved and said oh, there are real opportunities here. And it is curious in a place like Brooklyn that I’ve studied, you have neighborhoods all over of different kinds of social groups. So, they are generally ethnic groups, but we can have a Bangladeshi neighborhood, or a Pakistani neighborhood, or Chinese, obviously, but we never get an Eastern heartland neighborhood. So, and I wonder what it is that makes people not see that as a possibility.
Steve LeVine: Okay. We have got just a few more minutes here. And so, I wanted to do a lightning round. What is the big – why are we having this discussion? Why is it important? There is a sense that the society is under threat. That how do you support an advanced democracy with the growth of jobs, $10-an-hour jobs, and the uncertainty about jobs period? So, my question for each of you, starting with you, Kay, is are we under – is our society under threat? Do you believe it is? And if you could do one thing, what would it be?
Kay Hymowitz: So, I think that it is under threat. I think the education-based meritocracy is failing a lot of people and also creating class divisions in so many respects. So, we are divided not just in terms of income, not just in terms of education, but in everything from the coffee we drink, the places we live, the way we think about families and marriage and children. And I think that that division, that polarization, has created just enormous anger at the lower end and that we are going to have more and more pressure, and this is an important point for conservatives, I think, to deal with, a lot of pressure for redistribution or some kinds of programs that can say that this system can work for people at the bottom. We talk a lot about the jobless men, but it is also people who are living and who are really actually working pretty hard and still not doing that well. And, with very few hopes for their children.
Steve LeVine: Thanks. Ed?
Edward Glaeser: Wage subsidies.
Steve LeVine: Well, wait. First answer the question.
Edward Glaeser: Oh, is it a major – yeah. It is a big problem and wage subsidies.
Kay Hymowitz: I like that.
Steve LeVine: Ryan.
Edward Glaeser: Fix NYCHA first.
Ryan Avent: Well, you know, I like listening to Ed because Ed is optimistic about things. I am sort of all the way on the other end of the scale. The main thing I look forward to is kind of we finally get to see which dystopia we are going to end up in. I think, I am sort of very concerned. If you look back at industrial history, it all worked out okay but there were a lot of points in which it might not have. There were, you know, there were serious revolutions. There was basically a century-long ideological conflict that nearly led to nuclear war. And that ideological conflict had its roots in kind of the inequities generated by industrialization. So, there is a lot of ways things could go wrong and there is not really anyone in control kind of saying here is what we are going to do so that the worst outcomes don’t occur. So, I think it is, you know, we need to be aware of kind of the difficulties that are ahead of us, and the more we kind of talk about and realize that we are going to have some radical solutions probably the better prepared we will be and the better able we will be to avoid the worst outcomes.
Steve LeVine: I feel a lot better now.
Ryan Avent: Yeah.
Steve LeVine: Okay. We are shifting to questions. Please wait for the mic to reach you. Identify yourself and who you are…
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