Employment will be on the minds of the financial press between now and 2 August when the jobs situation report data is released. Between now and then, two unemployment claims reports will be released and the Board of Governors of the Federal Reserve System would have made their decision on the federal funds rate.
The Board of Governors has been holding off on raising the interbank overnight lending rate until it sees better inflation data. To beat inflation, the Board needs to see a slowdown in consumer demand and that translates into a flattening out in wage levels and/or an increase in unemployment.
Increases in unemployment is not what politicians or the electorate wants to hear. Politicians still go, to some extent, by the saying, “chicken in every pot, car in every garage.” The electorate wants to know that it can still go to the grocery store and buy a chicken and a pot and on the way home, put some gasoline in their cars. Can’t make rent, gas, and food happen if a threatening cloud of unemployment is overhead.
In addition to the threat monetary policy poses to work is the emergence of technology, specifically artificial intelligence. Artificial intelligence or AI is constantly mentioned on the financial news channels. Every other asset manager is warning investors of the potential benefits to productivity from its application. You’ve heard the banter. “AI is gonna revolutionize this. AI is gonna revolutionize that.” It is getting on my nerves, especially when I am writing, and AI is making suggestions. But I digress.
Workers are concerned about the impact on the availability of jobs, especially the creative and knowledge worker types who are hearing more stories about how AI will replace accountants, bookkeepers, code writers, and lawyers (Oh, lord …). Remember 10 or 15 years ago how President Obama wanted us to prepare to work in the knowledge economy and go to college and get some of the STEM training? And remember how AI was allegedly going to primarily be a clear and present danger to people in factories?
Now, we are being told that the ambidextrous may have a fighting chance to survive the job apocalypse while we degreed creative types may be walking poodles in the next decade or worse, be forced to work on our human interaction skills because, allegedly, these will be more in demand. The boys and gals on Wall Street and in the North Carolina research triangle concur.
Citing a report by Goldman Sachs, the Kenan Institute of Private Enterprise found that worldwide, AI could eliminate 300 million jobs. Among these occupations, 46% of office and administrative support, 44% of legal, 37% of architecture and engineering, and 36% of life, physical, and social science positions could be eliminated. Women are more exposed to these losses than men. While six out of ten jobs held by men are exposed to generative AI, eight out of ten jobs held by women are exposed to this emerging technology.
As we approach the release of this week’s first-time unemployment claims report and next week’s jobs situation report, these are the topics that Mr. Trump and Ms. Harris should be discussing.
There is the slight possibility that Ms. Harris, should she be nominated by the Democratic Party and go on to win the presidency, will be governing during the period that these changes are occurring. Given her assertion that her party has a vision of the future, part of Ms. Harris’ strategy should be to incorporate the threat of AI into her campaign narrative.
Alton Drew
23 July 2024
For more of my insights on the American political economy, buy my book at amazon.com/author/altondrew.
Lawyers Write the Bets. Bankers Sell the Bets. 