Class 3: “Globalization, Tech & Future Work” by UC Berkeley Professor Reich
foreign [Music] to week three of wealth and poverty last week we began the process of answering the questions or several questions that I put on the table for the first week and also the beginning of the second week and that is why is this going on why the extraordinary increase in income and wealth disparities in the United States why are other countries following along is there something about the nature of late capitalism or free markets what is going on and number one we saw last week that to some extent we all have something to do with it because we're constantly seeking the Great Deals the best deals possible and those best deals possible are indirectly or sometimes even more directly pushing down the wages and the job prospects of some other people we also saw once we began inquiring as to why CEOs are making so much money that it is more complicated than them simply as some of you said gaming the system there is a market for stars whether we're talking about athletes or actors or even people here working for this best Public University in the world you saw the extraordinary differences between the pay of various people here at Berkeley so it may have something to do with the fact that there is a larger and larger market for stars star performers in terms of not only the number of people in the audience or the number of consumers but also the ability of those stars to have free agency to actually be in a position where they can sell their services almost directly to very very large audiences and then we began to go deeper into Capital markets themselves and we talked about shareholders and how much executive pay actually comes from shares of stock just this morning I was looking at the latest data on stock BuyBacks and we talked a little bit about stock BuyBacks that's one of the places where big companies that are very profitable have been putting their money they've been buying back their shares of stock well those share BuyBacks have reached record levels in fact the last quarter of 2022 they reached levels that we have never seen before so instead of investing in workers or investing in productive capacity companies are buying back their shares of stock which got us to a deeper question which is the meaning and purpose of a corporation and a change that occurred and here is the kicker here's the connecting of the dots because what I really want you to do is to ask yourself what is this telling me about the system in ways that help me answer some very perplexing questions about it and one of the ways that we connected the dots last week was to see that in the late 1970s beginning 1980s that is when the nation began shifting from stakeholder capitalism to shareholder capitalism that is when the corporate Raiders then known as today known as private Equity managers or even hedge fund managers that is when they began hostile takeovers they began threatening that unless companies maximized share prices then they might be taken over by Financial groups that would maximize share prices and faced with that Prospect of losing their jobs CEOs began seeing the role of the corporation differently than before we also and I showed you the difference between two periods of time one before the 19 late 1970s one after the 1980s began in terms of where share prices and values began coming from the strong suggestion being that there was a shift not only from stakeholder to shareholder capitalism but what this shift actually meant as a practical matter is that companies were spending Less on workers and abandoning their communities and substituting machinery and equipment for working people and Outsourcing sometimes Outsourcing abroad all for the purpose of maximizing shareholder returns but sacrificing in pursuit of those shareholder returns other commitments tacit commitments tacit contractual commitments that those companies have built up over many many years again question that I had put on the table week one why did we see wages begin to stagnate after the late 70s early 1980s even though the economy kept on growing in terms of productivity now you begin to see the possibility of a set of answers having to do the shift in the economy now the reason this is important pedagogically is because again last part of the course we're going to be talking about public policies and public policy quote-unquote Solutions but we have no way of understanding what public policies are until we see how historically markets changed based on public policy alterations in that case that case it was unfriendly takeovers which up until that point had not been permitted or been frowned upon today we're going to be looking at the jobs of the future but more specifically and more importantly we're going to continue with our inquiry into why inequality of income and wealth continued has continued to widen and specifically we're going to see in the resulting jobs resulting from the factors that we talked to last week why the complexion characteristics the nature of the jobs in the United States and increasingly around the world have started to shift themselves first of all consumers investors and the new Corporation secondly we'll talk about globalization and Technology thirdly the three categories of jobs and their futures fourth race and education fifth the growth of the gig economy and finally I will end on that uplifting topic of politics now consumers as we have seen last time and the time before have been under greater and greater pressure to get the best deal possible why are they underboard more pressure to get the best deal because wages stopped growing so obviously people are even under greater pressure than they were before uh to have their dollars go as far as those dollars can possibly go secondly corporations are under greater pressure to get the highest returns why are they under greater pressure because so much power has shifted to financial markets to demand that they do that for the reasons that I mentioned just a few minutes ago and three more income and wealth efforts a result of one and two of God have been going to in to investors and less to workers now that's a cartoon version and I hasten to say this it's a cartoon simplified version but I just wanted to give it to you so that you at least had that outline in your head so the corporation 1945 to 1980 that is the post-war Corporation what was the most significant barrier to entry now I want to introduce this concept to you of a barrier to entry it is impossible for a company to make money and make profits unless it has some way of keeping competitors out now I'm not talking about monopolizing I'm talking simply about the sheer logic of it if you come up with a great invention let's say you have a a new Gadget that nobody else has and you were selling it and it's and people love it if everybody else who is a potential competitor every other company can simply get into your market and produce exactly the same Gadget then you're not going to make any money if there's no barrier to entry from any competitor all of those gains will be siphoned off so logically you have got to have some entry barrier if you're going to make any money and justify any Investments you make in research and development and business creation so what's the most significant barrier entry in those years after the second world war was it access to Capital or B economies of scale or C Geographic proximity to customers or D executive Talent when we talk about barrier Century these are the four candidates that most of the researchers looked at for the period of time mostly the decades after the second world war a lot of interest in access to Capital economy economies of scale I mean simply the larger the Enterprise uh the cheaper it was to produce every individual widget in the Enterprise because you could spread the costs over many individuals the third Geographic proximity to customers that was important but it was not nearly as important as the first two executive Talent is always important but executive talent in those years was arguably far less critical than it is today so economies of scale become the most important issue as a result of economies of scale and let me just emphasize this the large corporation of the three or four decades after the second world war at the height of America's influence and power economically that large corporation depended on high volume standardized stable mass production it depended upon everything in that company including workers being highly predictable because the only way you could get economies of scale high volume standardized stable mass production was if everything was exactly the same in time period two as it was in time period one that is if everybody did exactly the same thing the more variety the more difficult it was to have economies of scale that meant that stability and predictability were critical it also meant that you needed to have your Workforce there you didn't want change you didn't want people leaving and then new people coming in because then you had to train them and you risked not getting the degree of predictability and stability you needed but that in turn meant Rising incomes over time in order to keep your workers everybody everybody in the workforce who stayed there on an average of 20 30 40 years with the same company everybody expected and received lockstep wage increases jobs were stable and by stable I mean jobs were described in a way that did not change people did the same things over and over and over again they were to some extent monotonous but that was part of the purpose of the corporation in terms of making money through economies of scale and careers were also predictable and this is an important point because people as I said stayed with the company for years after 40 years you would get a little golden chain you would get a pension it was very common in certainly my father's generation to stay with companies forever and for those companies to stay in their communities forever and for people to get wage increases that they could anticipate in advance so they could trade up in terms of cars and homes and refrigerators the picture I want to paint for you is a picture that very much reflected the culture of the 1950s 1960s early 1970s in terms of predictability the corporation today what is the most significant entry barrier today is it access to capital a is it brand loyalty B is it innovation see is it market dominance d what do you think all right how many people think it's a access to Capital 78. how many people how many of you think it's brand loyalty seven how many think it's innovation 46. how many believe it's market dominance 423 well it is easy to talk about market dominance and we will come back to this question of Mark and dominance but today I want to emphasize with you this notion of innovation because unlike the period of time before the 1980s 1990s when high volume standardized stable mass production was critical in terms of making money and keeping other competitors out since then continuous innovation has been very important yes market dominance is also very important but innovation coming up with new ideas better products better processes better ways of deploying your resources all of that continuously has become a major entry barrier which gets us to globalization and Technology most discussions of widening inequality in the United States and in Europe and in other rich countries come back to globalization and technological change but there's a lot of Mythology around technology and globalization the big debate is it technological change or is it globalization uh a I think technological change has been a bigger effect on the U.S labor force than
globalization or B I disagree I think globalization has had a larger effect than psychological change well globalization has talked about a great deal technological change is certainly also if you follow the logic of the point about Innovation and barriers to entry critically important but this is another trick question because even though it is posed as a choice and most research poses it as a a kind of either or in fact both of them reinforce each other technological change makes globalization possible for example Satellite Communication Technologies you couldn't have a firm that was doing something in one country and importing from another country and having a kind of a global reach unless it was coordinating that through Satellite Communication Technologies the same thing with cargo ships container ships huge technological advances you could not have globalization without those Technologies between 2001 when China entered the World Trade Organization and now how many U.S manufacturing jobs do you think were lost and this is exploring obviously the issue of trade and globalization five hundred thousand or is it 1 million or 2.5 million or is it 3 million well the answer is at least 3 million I was in the Clinton Administration when the issue was raised by Bill Clinton and by Congress of whether the United States should support China's joining the World Trade Organization which would mean lowering tariffs and other barriers to Global Entry on China and a lot of people at the time said and I remember sitting around these big tables in the white house they said of course we want China to be part of the global trade system because if they're part of the global trade system then they will be more democratic they will have a more more incentive to cooperate and collaborate they also will produce inexpensive products and if you create a lot of inexpensive products that's good for American consumers right so there were a lot of these discussions and the decision was made to definitely have China join the World Trade Organization globalization places in the United States most affected by Chinese Imports since 1990. now most affected 20 percent you can see where they are Missouri Tennessee Kentucky North Carolina Arkansas Indiana Pennsylvania Wisconsin a little bit Minnesota I want you to keep this in mind because these places began losing manufacturing jobs the three million job losses were centered in these areas manufacturing and the U.S trade deficit what you can see here is that starting in the late 1990s right through 2000 right up till today you have a tremendous reduction in the number of workers who are doing Manufacturing in the United States and at the same time the trade deficits continues to increase and that trade deficit means we are buying more from abroad than we are selling to foreign Nations a pretty direct relationship those of you who are concerned about globalization or at least said globalization was one of the main drivers of what we are now observing may be correct or the evidence seems to suggest that by the way there are two very distinct forms of globalization one is trade we make something we sell it to those in another country they sell us their goods and their services we trade across borders but there is another form of globalization and that is direct Investments and by direct investment I simply mean Capital flows a company in the United States for example buys a Factory in another country in Mexico in China elsewhere and that factory owned by and financed by the company in the United States is producing a great deal of widgets of products of services for that foreign country trade is not really operable here it is direct Financial investment from the in this case American company into that foreign country these are confused very often and it's important to keep them in mind because even before the pandemic trade was dropping and Global direct investment was increasing this is outbound foreign direct Investments as a percentage of the total economy here is trade as a percentage of the world economy well trade was already slowing down this is what has been picking up now why is all this important for the following reason because there are several myths about globalization you know globalization globalization globalization globalization I mean rarely has a word gone so directly from obscurity to meaninglessness without any intervening period of coherence what exactly do we mean by globalization not just the two forms of globalization I mentioned to you but what exactly is our fear and what is the basis for that fear I mean one mythology is that foreign work forces are much cheaper than American workers that is not necessarily the case in fact U.S jobs have been threatened in very
important ways by Foreign workers who are as productive if not more productive than American workers a few years ago I had well I had to have my my hips replaced and I won't get into the details I have new hips I have beautiful new hips it's really nothing I didn't know no I didn't really work hard but they are titanium and they're coated with plastic uh but here's the thing I I went back to the hospital where my new beautiful hips were installed because I was curious about this issue about you know of where things are made and I discovered that my beautiful new hips were actually fabricated in Germany they make very very good stuff but why wait a minute why is it that my hips were fabricated in Germany not just they make good stuff but why specifically my hips in Germany they have the know-how in fact they have the know-how for precision manufacturing their ability to make precise products not just hips but really precise I wanted my hips I mean I I I don't have any objection to any other country making my hips but I want my hips to be made really in a precise way so German precise very precise manufacturing was critically important uh to me and my oh and I also discovered another thing my beautiful new hips were designed in France I have French designer hips but but that's but but this is again I I say this only because of there is this mythology that people who are making things in other countries are making it are charging much less because they are so much less productive or they are are charging they have lower wages but no German wages are actually a median or higher than American wages right now uh and French wages at the median are just about the same as American wages right now median so what was the advantage in France and Germany because their value added Precision manufacturing design skills don't fall for the myth that globalization is only about them having cheap labor there is another mythology that for foreign corporations have made inroads in the United States Market that it is all about foreign companies coming here and basically like Toyota and and becoming uh major major companies that take away business from U.S companies you have heard this over and over again I began doubting this uh at some time when I was in the administration when you're a Cabinet member you always have a political assistant who is appointed by the president or at least that was the case then and your political assistant tends that your political system tends to be fairly young I had a political assistant who was in his late 20s uh and I didn't know what he did most of the time I mean he followed me around he was a nice fellow but what was he actually doing uh I didn't understand until one day he asked me Monday morning I got into work he said well what did you do this weekend I said well my family needed a new car our old car died and we went to a couple of showrooms couple of dealers and he said his ears I could tell he got very interested and he said well where did you go I said well we've found I think we found exactly the right car uh it was a and he said well what kind of car I said a Toyota and he said oh he said Mr secretary and he was very very subtle about this he said Mr secretary may I remind you your Secretary of Labor of the United States maybe you might consider uh an American-made car and instantly I understood why I had a political assistance and I understood why he was paid the kind of money he was and I no longer kind of resented him following me around I thought oh well this is interesting I mean he actually made a very good point so the next weekend my wife and I we went to a Ford dealer and we found a car that was you know it was almost as good as the Toyota and then but then I I asked I remember I asked the Ford dealer I said now I need to know something uh was this car actually made in the United States by American workers and then there was a long pause and he looked at me trying to decide whether I was one of those or whether I was one of those and they looked up and he said which would you prefer but you see suddenly it became very obvious to me it didn't matter the Toyota and the Ford were both made all over the world they were assembled here in the United States from foreign Parts everything was made globally components were coming from everywhere and there was no real difference between the Toyota and the Ford even in terms of where the money went because Toyota had an account here in the United States was keeping a lot of its profits here in the United States for a variety of reasons and Ford was putting its money all over the world for tax reasons and so what was the difference between buying a Ford and buying a Toyota the point I want to make with you and this has particular bearing upon the notion of foreign direct investment do not fall for the mythology that there are things called American corporations that are competing with non-american corporations and that that competition has some direct bearing upon wages in the United States uh for an example when you buy an iPhone what's the biggest thing you pay for is it a manufacturing B legal and financial services see advertising and marketing services or D distribution and sales services how many of you believe it is a Manufacturing three how many believe that you're paying for legal and financial services primarily seven how many believe it's advertising and marketing 312. how many say it's distribution and sales 106. well let's take a look at the anatomy of an iPhone oh there's also design and Engineering I've forgot I forgot that design and Engineering Services well let's take a look at the anatomy anatomy of an iPhone and this is a uh wholesale the retail price is uh of an iPhone 12 is 1099 components in labor 490 dollars the screen 65 battery uh well uh you can see that there is a well there it comes to I mean memory is very important well let's examine that I'm so glad you asked Apple's iPhone 12 by the way led to the largest revenue and profit in companies history uh and uh that's important I suppose because it's it's important to Apple but it's not necessarily important in terms of explaining much of what is happening and where where do most of your dollars go for components in labor is it to Japan and we're talking about an iPhone the same iPhone or is it Germany or is it South Korea or is it the United States how many of you think it's Japan two how many of you think it's Germany uh six how many of you think it's South Korea 14 uh the United States 22 and China uh overwhelmingly you think most of your dollars go for components and labor in China now let me just say before we explore this uh this does look like a manufactured item doesn't it it looks like it's solid this is what we think about when we think about manufacturing we think about a solid object but I hope you're getting the drift of my remarks this is a bundle of services this is advertising services and marketing services and Design Services it's Engineering Services this is nothing but basically a set of services and then it's an assembly operation I just want you to keep that in mind as we explore the next issue which is where your dollars actually go for components and labor well it turns out uh that actually 13.6 of your dollars for the iPhone go to Japan and Taiwan uh particularly for semiconductors uh and uh Europe uh for a lot of components South Korea for a lot of components the United States for a lot of design and Engineering China mainland China 4.6 now the assembly happens in mainland China but mainland China is getting components from these other countries this is another confusion I mean beginning with the Trump Administration we've put up all sorts of trade barriers uh to China and we consider that China is sort of taking away our jobs and I showed you a few slides ago that China does seem to have been I mean the World Trade Organization once China got in a lot of jobs disappeared but wait if you actually look underneath the surface of your iPhone or anything else you see that China is a major or had been a lot of it's now moving to Vietnam and other places in Southeast Asia a major assembly station and exports from China were counted as total exports from China without any accounting for where China was buying various components your dollars are actually going to a lot of places around the world which brings us to the categories of jobs now I want to offer you this this is a kind of taxonomy kind of category categorization of jobs and I designed this mainly to help you and others understand what was happening to jobs because of technology and globalization because there was so much mistaken assumption there were so many mythologies around the issue of jobs and globalization and technology that you needed to actually disaggregate jobs into three categories arbitrarily I came up with these three categories now you could come up with any number of taxonomies I came up with this uh routine production personal services and symbolic analytic work what do I mean routine production is n a production in which people do the same operation over and over and over it is mostly in manufacturing for the reasons we talked about before high volume standardized stable Manufacturing economies of scale but it doesn't have to be only manufacturing it could be economies of scale in for example insurance a claims adjuster does basically the same thing over and over and over and over anything that is repetitive is routine production personal services speaks for itself it is one person giving somebody else some particular attention and we'll get into this in a moment and the third symbolic analytic has to do with juggling different ideas and symbols let's get into this a little bit more deeply which has shrunk the most because of globalization and technological change is it routine production repetitive and predictable personal service care and attention or symbolic analytic work problem solving creative work which has shrunk the most because globalization and technological change in the United States most of you think that it's routine production and we have some of you about 122 think of its personal services and some of you think that symbolic analytic work well let's let's just look at the data where did the hourly wage jobs go well the change in U.S employment overall and
for construction manufacturing service Industries you can see generally but here's manufacturing manufacturing outputs for all of this period of time particularly from the 1980s through today manufacturing output has been pretty much consistently increasing but manufacturing Employments has been dropping now I want to stress to you there is a relationship between output increasing and employment dropping manufacturing has become enormously productive in the United States and the reason it's become productive is that fewer and fewer people are needed in manufacturing it's not just trade it is also technology a few years ago a governor of a state asked me to help preside over the ribbon-cutting ceremony the governor was so proud that she had actually got another company from another state to come to her State and provide all these jobs and I was also very happy to to come and and and and and give a little talk and and break the the ribbon and and kind of add in the celebration and the festivities uh but before I did that I went into the factory and I noticed that there was almost nobody there were about 20 workers sitting in front of computer consoles and the computer consoles were connected to all sorts of equipment that were and the equipment was actually doing the jobs that hundreds and hundreds of workers used to do for that kind of work and the factory when it was existing in another part of the country but now it was automated I mean it this is even slightly before artificial intelligence but it's now all automated so she had a ribbon cutting ceremony and I was happy to be there but there were only a handful of jobs and the state her State paid a huge amount of money to lure the company and lower the jobs there but there were very few of them manufacturing has become much more productive there are fewer and fewer manufacturing jobs fewer opportunities to earn a living wage average annual earnings in manufacturing and Manufacturing workers without a four-year college degree well you could see what has happened manufacturing still pays more than non-manufacturing but manufacturing has not gone anywhere percent of U.S employment in manufacturing versus non-manufacturing well you can see here manufacturing employment as a total as a percentage of the total employment keeps on shrinking in the United States non-manufacturing keeps on growing in the United States so employment in all routine production share of the population 16 and over employed in jobs that involved primarily root chain production what you can see starting in 1968 is a tremendous decline in routine production work both because of globalization and because of technological change what about personal service work well just to explicate a bit we're talking about health care workers nurses Nurse Practitioners orderlies Physicians dentists uh physical therapists psychoanalysts anybody who is has to be there in person we're talking about caregivers children elderly disabled we're talking about learning service providers K-12 counselors therapists personal coaches we're talking about attenders retail workers restaurant workers hotel workers bartenders flight attendants retail workers and therapists personal service work has it been increasing as a percentage of the U.S Workforce or it's been about it been decreasing or there's been no substantial change what do you think uh a it's been increasing 324. it's been decreasing 37 and no substantial change about 48. uh well uh the reality is that as a percentage of the U.S Workforce
it has been increasing dramatically so in your heads you ought to actually be saying to yourself well the people who are involved in doing the same operation over and over and over routine production work there are fewer and fewer people doing that because of technological change and because of globalization but there is a greater and greater movement toward people involved in personal service work the question you want to be asking yourself is how well do personal service jobs pay because they are done in person they are generally not terribly productive they don't generate a huge amount of output they have to be person to person that should give you some clue what about symbolic analytic work also people who are known as knowledge workers or creatives a few years ago I I kind of did a study with some graduate students looking at the breakdown of the composition of the U.S Workforce by job category starting post-war extending as far as we could and the trend was very pronounced and it looks like it's continuing to be pronounced here we have symbolic analytic work which we'll get to in a moment I'll describe it in more detail a larger and larger portion of the US Workforce we also have personal service work a larger and larger portion of the US Workforce these are the two categories that are growing this category routine production work continues to decline and then I was interested in government well government actually is declining as a percentage of the total U.S Workforce and Agriculture and Mining is also declining by the way I should add one reason agriculture is declining is because of the same thing we saw in manufacturing with regard to technology agricultural productivity is off the charts at the turn of the last century around 1900 approximately a third of all Americans worked on farms now you've got maybe four percent of Americans working on farms but those Farms are hugely mechanized they are hugely productive there is an inverse relationship between numbers of people working in a field or a sector and productivity symbolic analysts are people who are as the term implies analyzing and manipulating symbols the symbols could be mathematical symbols the symbols could be verbal they could be literally just symbols but mathematical engineering architectural verbal words it's the manipulation of symbols that you are all learning you are learning to be symbolic analysts you are not learning to be engaged in the personal service sector of the economy most of you you're not learning most of you to do routine production you are learning to be a symbolic analyst a knowledge worker well what do you actually do or will you do we'll take any of these from this particular list and add it to any of these from the set this list and added to any of these in this third column in other words a systems policy designer or a financial management planner or a creative research engineer or a business planning director or a research management planner or a product applications designer these titles mean less and less because the work is basically symbolic analytic work the geography of symbolic analytic work follows exactly the geography of innovation research patents research universities these places around the country are the centers of symbolic analytic work the top research universities and patent grants and you can see that there is a lot of symbolic analytic work around the coasts particularly the West Coast particularly the Northeast Coast a little bit around Chicago but much of the country is not engaged in symbolic analytic work now the reason I want to talk about geography with you is because it has profound implications for culture and politics changes in income and wealth by race and education since 1989-90 well which racial or ethnic groups income and wealth has dropped most over the last 30 years relative to the median U.S income and wealth now that's a complicated question let me just say that again I'd like you to decide and I'm going to give you some options which racial or ethnic groups income and wealth has dropped the most over the last 30 years relative to the median U.S income and
wealth and the choices are black workers without college degrees Latinos without college degrees white workers without college degrees or Latinos without college degrees black workers with college degrees or white workers with college degrees what do you think okay those of you who think black workers without college degrees put up your hands not many of you very few those of you who think it's Latinos without college degrees still very few of you how about white workers without college degrees the number of you uh black workers with college degrees a few and white workers with college degrees some of you all right well let's take a look because everything we have talked about up until this point is going to elucidate what has happened to people with college degrees and different racial groups so let's take a look at what's happened to white Hispanic and black workers non-college graduates and again we're talking about relative to 1990 we see that actually white non-college graduates their incomes relative to 1990 have actually dropped the most what about college graduates well they start already they're doing much much better but we can see that it's black college graduates who actually relative to the median have dropped considerably that bear that in mind since 1990 changes in wealth relative to median by educational attainment and race let's look again wealth relative to 1990 relative to the median we can see white whites without college degrees a drop college graduates already very very different positions but white college graduates with college degrees wealth has increased substantially this Gap has broken out very very fast in the United States a lot of this has to do with forces that we've been looking at globalization technological change the growth of the category of work that I've been calling symbolic analytic work the decline of both personal service work in terms of wages but also the decline dramatic decline of manufacturing for non-college particularly white particularly men I should also have mentioned here while we're looking at what has happened to these various categories of job I have got to mention the growth of the gig economy uh the increase in contract work as a proportion of U.S Workforce Now I'm talking about contract work by gig economy work I'm talking about work that is not under the Aegis of a particular employer you as a contract or gig worker are getting from me you're getting simply not a regular paycheck you're not an employee you are not getting a you're not on my payroll you are getting a check from me for a particular project or for particular what you do you might be an Uber driver in 1989 17 of the U.S Workforce was contingent and contingent is another word for contract work or gig work 2020 43 percent now we're including here all contract workers all Freelancers everybody's who's working for themselves but what I want to illustrate to you is part of the dramatic change we are seeing in the composition of work and the workforce has a lot to do with the decline through dramatic shift from employment to contract from full-time payroll employment to being a gig worker or a contract worker none of the people who are gig workers or contract workers or contingent workers or working for themselves quote unquote none of them are protected by the labor protections developed by over the last hundred years the minimum wage Social Security unemployment insurance we could go through all of them gig workers don't get them they are self-employed at least that's what the fiction is and sometimes it is a fiction in fact One Way companies have reduced their payrolls and we talked about this last week payroll's largest single costs that companies have to deal with one way companies have reduced their payrolls is to move their workers from employment to contract work now technically it is not legal to do that but it is very hard to enforce the law why the growth in contract work increasing pressure on companies to reduce costs B increasing pressure on companies to be flexible and responsive to changes in consumer demand and see increasing desired workers to freelance start their own businesses and we don't have to even do a show of hands here because I've already talked about this all three are operative that is there is an increasing desire of workers to start their own businesses and there is increasing pressure on companies to be flexible responsive to changes in consumer demand but one of the most important reasons for the growth of contract work is companies have smaller payrolls and which would you prefer security a stable job predictable wage and benefit but relatively little opportunity to advance and lots of monotony or be opportunity unstable job unpredictable wage and benefits contingent work but many opportunities to start your own business Advance on Merit devise new Innovations make a killing as it were how many of you prefer a okay about 200 or so how many of you prefer B I'm saying about the same number and that's not surprising in fact if you look at uh what do most Americans prefer it turns out most Americans prefer security over opportunity when given the choice between a steady job that may be monotonous and may not have very much upward possibility and having the opportunity of starting your own business and making it on your own and making a lot of money most people take security over opportunity you today were a little ambivalent you were more ambivalent than most people on these National surveys why is that why is that yeah you don't have I mean maybe you do have families but most of you most of you don't have to worry about supporting your kids and your spouses and other people you will maybe but right now here Carefree as it were not really no you have to pay you're worried about money I'm not saying you're not worried about money but is there something else yes well it may be you know it may be that you can rely on your parents but there is something about you and what that thing is about you is that could it be because we're kind of geared to work in like the analytical you have a future you are at the best public university in the world hello most people don't have the opportunities ahead that you do because of your education so you will take opportunity over security to a much greater extent than most Americans because a you are young you don't yet have the kind of bills and the kind of needs that a lot of people have for secure jobs but also you are on a route if you want to be toward great opportunities I should say something else about this because now that we're talking personally nothing I say in this class should be interpreted by you as an endorsement of the idea that you should get a high-paying job I mean that even if your parents think you should tell them I said it's up to you which gets us into issues of student debts we will get there we'll talk about that too and finally getting it gets us to politics uh again places in the U.S most affected by Chinese Imports this is what we did before I just want to refresh your recollection and then also we looked at geography of symbolic analytic work uh the thing that is interesting about both these charts is they should both tell you a lot about the geography of American politics today and not only today but over the last 25 to 30 years combine that with what I've pointed out in terms of who is losing ground relative to where they were before what you have here is a large part of the country that is pretty much shut out of symbolic analytic work that is not part of the future opportunity economy and at the same time we've got former industrial States call centers medical centers Insurance centers retail Restaurant Hospitality they are lower wage and they do not have job security attached to them go into Middle America today and this is what you see populations in these areas are aging ambitious young people are moving out I used to love to drive across the United States I don't know how many of you have done it I still love to do it every opportunity I get I drive across America when I came out to Berkeley in 2003 or 2004 I remember I I I left Cambridge Massachusetts and I got to Oklahoma not in one day a couple of days I was driving my Mini Cooper and uh I stopped in a gas station there was a line of cars in front of me and I was in Oklahoma Oklahoma City and these truckers came up to my car and they said and I didn't know what I had I had to lower the the window and they they they said we don't understand I said what do you not understand they said how does anybody fit in this kind of car they had never seen a Mini Cooper before well I had to make a decision at that moment and I decided to open the door and I came out and I stood up and I said no problem and then they looked very flustered and I said well I'm from Massachusetts and everybody from Massachusetts is under five feet tall and then they went off muttering to themselves but by the time I got out to Berkeley I realized that Massachusetts Cambridge Massachusetts and and Berkeley California were the same city I mean they were the weather was different but culturally and sociologically uh they were about the same place I had driven 3 000 miles and come back home to where I started there is a vast cultural difference it was then in 2004 it is now even larger between these different Americas Coastal urban areas are becoming more crowded and expensive housing costs are soaring homelessness is increasing We are Becoming two Americas and we were even before the politics of the last few years if you just look at jobs geography and economics you see how different people are living in the 2020 election counties that voted for Biden comprise 70 percent of the economy counties that voted for Trump 30 percent well look at this map superimpose the other maps that we've looked at in terms of symbolic analytic work and routine production work and you see a picture of a country that is becoming politically divided between on the one side college graduates mostly in urban areas multi-racial who are also in more and more crowded circumstances paying more and more for housing and on the other hand non-college graduates who are living in increasingly rural areas that are emptying out that are becoming older and those people feel that they don't have much of a future so when a politician addresses all of these people who are in these non-college rural or semi-rural or becoming rural areas of America and says I understand your problem your problem is because of them the them pronoun becomes extraordinarily important who is them is there a villain here and if there's a villain who is that villain in 2016 and 2020 elections in swing States non-whites and white women college graduates we're on one side of the Divide and whites without College agrees were on the other side and I can show you more specifically and we're looking at three so-called swing States Pennsylvania Michigan and Wisconsin and you can see the biggest impacts were non-whites and women college graduates versus whites without College in both 2016 and 2020 the other point I wanted to stress with you is that the number of swaying States so-called swing States they're called swing States because elections are swung in these states has been getting smaller and smaller as we segregate by geography into our particular areas of the country we don't see people who have different political and economic beliefs and needs and as we segregate that means the number of so-called swing states that could go either way becomes smaller and smaller when I was growing up in the early post-war years many many states 22 24 of the 48 states at that time were swing States they could go either way in presidential elections I remember in 1952 1956 1960 1964. these elections they were almost National in terms of we didn't know yes they The South was Democratic and New England was more or less Republican but the rest of the country was up for grabs my father voted for Dwight Eisenhower twice my mother voted for Adelaide Stevenson his opponent twice they cancel each other to vote but it didn't matter but I have seen over the last decades fewer and fewer States become at play in presidential elections I hope this all is evident to you and the reasons are becoming evident to you again I as I've stressed before politics economics sociology and history are all inseparable in 2020 Biden owed his Electoral College Victory to just under 43 000 votes in just a handful of Swing States in 2016 Trump owed his Electoral College Victory to 77 744 votes do you know how tiny this number of votes is in a country the size we have contrast these numbers with the number of actual voters in the last five elections candidates with the most popular votes Nationwide LED their opponents by an average of over almost 5 million votes more than a hundred times more than these razor-thin Battleground wins now let me tell you something as you get these numbers forty two thousand seventy seven thousand as these numbers yet over time smaller and smaller what happens you get more litigation over the results of elections you get more battles you get more anger more suspicion do you get more attempted coups I don't know but you're asking for more divisiveness the more this occurs you're also asking for more and more presidents to be elected without a popular vote so far in this Century we've had two presidential elections and they were very rare before this century in which the president who was elected lost the popular vote now what we've done today is begin to try to figure out by looking at the different kinds of jobs and the different effects of globalization and Technology on those jobs look at what has happened sociologically it looks like it's random it looks like it maybe is the result of just accidents or free market decisions we can see the closer and closer we get it is actually the result of very specific policy choices specific in the sense that choices over globalization over trade over what kind of Technologies are going to be developed and supported in terms of research and development public research envelopment choices over what sort of financial ploys and strategies are going to be legal under the Securities and Exchange Act and what are not all sorts of policy choices underlie where we have come to what we need to unpack and understand is that these policy choices are not inevitable in fact many different policy choices could have been made I had breakfast this morning with a congressman who represents Silicon Valley and his passion his name is rocana his passion is economic development of what is now called Red State America I'll tell you more about that sometime soon have a good weekend [Applause]
2023-07-09 05:04
