WCRI: Keynote: Dr. Erica Groshen On Future Labor Trends

March 22nd, 2018 by Tom Lynch

Dr. Erica Groshen, former Commissioner of the U.S. Bureau of Labor Statistics, began this year’s conference. She is currently Visiting Scholar at Cornell’s Industrial Labor Relations School, and if anyone knows anything about the future of work, it is Dr. Groshen.

Labor market conditions: Since the end of the Great Recession, the U.S. has added 9.3 million jobs. As most of us have observed, the service industry has seen the most labor growth over the last year: professional, leisure and health services. The country’s unemployment rate is 4.1%. Dr. Groshen peeled that onion in discussing labor “underutilization.” She described how in addition to unemployment, underutilization, which addresses discouraged workers, marginally attached workers and part time workers who would prefer full time. That 3rd group stands at 8.2% of the population. Of the unemployed population, 20.7% are long-term unemployed. As further proof of the tightening of the labor market, currently for every job opening, there is 1.1 unemployed person. This seems low, but it’s about where numbers stood before the Great Recession.

Next, Groshen dove into a subject of great concern to me: wage growth. Essentially, there hasn’t been any since 1974. Real wage growth (wages adjusted for inflation) has been 0.0% over the last 12 months. Additionally, Dr. Groshen expressed significant concern about the relationship between productivity and wages. Until 1973, wages and productivity tracked on a one to one basis. Since then, productivity has soared and wages have been essentially stagnant.

The Gig Economy: BLS doesn’t know much about the Gig economy. You read that right. BLS “periodically” surveys 100,000 workers to determine the prevalence of what are called “alternative work arrangements.” Trouble is, the last time that happened was in 2005 (according to Groshen the failure of BLS to perform a really current survey is due to lack of funding). Given what’s happened to our economy since then, 2005’s data is pretty irrelevant. The BLS Current Population Survey, on the other hand is “current,” but what it shows is paradoxical in that there doesn’t seem to be any effect from what everyone perceives is a major shift in work and employment due to the emergence of the Gig economy. Groshen reported that in May 21017 BLS secured funding to conduct a new Contingent Workers Survey. We’ll have results, which will be of tremendous interest, in the near future.

Artificial Intelligence: Dr. Groshen considers AI as something that “replicates routine brainwork.” When AI is applied to routine work, for example, human coding of information, the result is higher quality work done by fewer people who handle the tricky work that humans need to do (at least, until now). As AI  rises in society, many jobs will be lost, but many jobs will be created. The same thing happened when we moved from an agricultural society to an industrial one. Groshen believes this will happen, but that producing the new jobs will take time, which will make things difficult for those who will be swept aside by growth in AI. Displaced workers, according to Groshen, can lose one to four years of income, which will be devastating for many. This will require government policy changes to help bridge the gap in employment. Good luck with that.

Official Statistics: Dr. Groshen emphasized the importance of “official statistics,” pointing out that, “We do not have a single statistical agency in America. We have 17 of them.” The BLS, established in 1884, is the gold standard and biggest of them all. She claims national stats are a public good. Who uses BLS statistics? The federal government, state and local governments, businesses and households (The most popular part of the BLS website is the Occupational Handbook).

There are challenges facing the BLS. Cybersecurity is, of course, a major one. Groshen reported that BLS has never had a data breech (to which I reply, “That we know of). Another challenge is, wait for it – Funding. From 2009 to FY 2019, nominal funding has been flat, standing at $609 million for FY 2019. However, if BLS had been funded at the rate of inflation, FY 2019 would be $715 million.

Dr. Groshen closed with a plea for help. BLS needs help in the form of money. Business has to do a better job of advocating for better and more data, data it relies on to make important decisions. Amen to that.