America's Disappearing Workforce
Where did America’s workers go? The future of the American economy may hinge on the answer.
The US economy added 165,000 new jobs in April and the unemployment rate fell to 7.5%. But labor force participation remained low. In fact, the labor force participation rate fell three points since the end of 2008. In April, just 63.6% of Americans 16 and over were working or looking for work. Although the unemployment rate fell steadily over the last three years, people who have given up looking for work aren’t counted among the unemployed. The fact is that a smaller percentage of Americans are working now than at any time since the 1970s.
Labor force participation rose in America—and in other advanced economies—more or less steadily from the end of the 1960s to the early 2000s as more and more women began to work. The percent of men in the workforce dropped over the same period, but not as quickly as percent of women in the workforce rose. That net increase in labor force participation is one of the major reasons the US economy grew so much over that period, since more workers means more production. But in the early 2000s the participation rate of women leveled off around 60%, and total participation began to go back down.
In other words, the influx of new workers that helped make America rich in the last century has begun to reverse. There were always limits to how much the labor force could grow. You can’t have more than 100% of the population working, after all. And in general labor force participation tends to be lower in rich countries, where more people can afford not to work if they choose. But the drop in labor force participation in America is part of a troubling long-term trend, which has been only been amplified by recent economic problems.
Part of the explanation for the drop in labor force participation is demographic. Baby Boomers began to reach retirement age right around the start of the recession. The recession probably led many of Americans to retire earlier than they planned—why look for a new job when you were planning to retire in a few years?—but the truth is that many of them were planning to leave the workforce soon anyway. For many Americans, it wasn’t that they couldn’t find work, but they were ready not to work anymore.
Labor force participation has also dropped among Americans in their prime working years. It declined most sharply during the recession. But for reasons that are unclear it has been falling steadily since the end of the 1990s. The drop in labor force participation among Americans 25-54 means there are roughly 3 million fewer workers today than there would be if it had stayed at peak levels.
The problem is that fewer workers means a smaller economy. It means—roughly speaking—fewer people producing goods and services for the population as a whole. Some Americans of prime working age are likely to return to work if the economy improves and better, higher-paying jobs become available. But with Americans living longer and birth rates staying low, the workers lost to retirement probably aren’t coming back. As Americans age, demands on the social security and health care systems will increase while the tax base shrinks. To avoid deficits, the country will probably have either to raise taxes on those are working or cut benefits for those who have retired or can’t find work.
America might still be able to maintain its historical rate of growth. But it will be hard. A 2011 McKinsey Global Institute report estimated that productivity would have to increase 34%—to a level we haven’t since the 1960s—just to compensate for the aging of the population. Barring some dramatic industrial breakthrough it’s not clear where that much new productivity could come from. In other words, the recession may be over, but that doesn’t mean the boom times are coming back.
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The pizza giant Domino's partners with a Silicon Valley startup to start delivering pizza by robots.
- Domino's partnered with the Silicon Valley startup Nuro to have robot cars deliver pizza.
- The trial run will begin in Houston later this year.
- The robots will be half a regular car and will need to be unlocked by a PIN code.
Would you have to tip robots? You might be answering that question sooner than you think as Domino's is about to start using robots for delivering pizza. Later this year a fleet of self-driving robotic vehicles will be spreading the joy of pizza throughout the Houston area for the famous pizza manufacturer, using delivery cars made by the Silicon Valley startup Nuro.
The startup, founded by Google veterans, raised $940 million in February and has already been delivering groceries for Kroger around Houston. Partnering with the pizza juggernaut Domino's, which delivers close to 3 million pizzas a day, is another logical step for the expanding drone car business.
Kevin Vasconi of Domino's explained in a press release that they see these specially-designed robots as "a valuable partner in our autonomous vehicle journey," adding "The opportunity to bring our customers the choice of an unmanned delivery experience, and our operators an additional delivery solution during a busy store rush, is an important part of our autonomous vehicle testing."
How will they work exactly? Nuro explained in its own press release that this "opportunity to use Nuro's autonomous delivery" will be available for some of the customers who order online. Once they opt in, they'll be able to track the car via an app. When the vehicle gets to them, the customers will use a special PIN code to unlock the pizza compartment.
Nuro and its competitors Udelv and Robomart have been focusing specifically on developing such "last-mile product delivery" machines, reports Arstechnica. Their specially-made R1 vehicle is about half the size of a regular passenger car and doesn't offer any room for a driver. This makes it safer and lighter too, with less potential to cause harm in case of an accident. It also sticks to a fairly low speed of under 25 miles an hour and slams on the breaks at the first sign of trouble.
What also helps such robot cars is "geofencing" technology which confines them to a limited area surrounding the store.
For now, the cars are still tracked around the neighborhoods by human-driven vehicles, with monitors to make sure nothing goes haywire. But these "chase cars" should be phased out eventually, an important milestone in the evolution of your robot pizza drivers.
Check out how Nuro's vehicles work:
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