ChicagoBoothReview
Video killed the radio star
How games, phones, and other tech innovations are changing the labor force
This essay is adapted from the speech given at the 527th Convocation at Booth this past June.
The first big graduation I remember was for my bachelor’s degree. My mom was there, and she had her Polaroid camera. She took 1,000 pictures that day—most of them blurry. I remember it well because we have these big picture books at home. Flipping through those books helps me to remember that day.
At today’s graduations, we have phones that can capture high-quality pictures and video, which we can share with friends and family in real time. On top of that, parts of the graduation itself, including my talk, are being videotaped by Booth. These videos will be posted online and preserved on YouTube forever—alongside a variety of cat videos.
Technology has not only changed the way we preserve the memories of graduations. During the past few decades, technology has fundamentally altered the way we work, the way we play, and the way we live. Much of my current research has focused on the way technology has changed labor markets.
Between 2000 and 2015, the employment rate for lower-skilled men and women between the ages of 21 and 55 fell by 7.5 percentage points. (I’m going to refer to “lower skilled” as anyone with less than a bachelor’s degree.) To be concrete, just over 84 percent of lower-skilled men aged 21–55 had a job in 2000. That number was under 77 percent in 2015. A 7.5 percentage point decline in employment rates is a massive change relative to historical levels. What I also want to stress is that the decline has been persistent. It was falling prior to the recession, fell sharply during the recession, and has barely rebounded after the recession.
The patterns for higher-skilled workers—those with a bachelor’s degree or more—have been much more muted. This group includes most of us in this room, and our labor market has been relatively strong relative to that of those with less schooling.
“If we didn’t ration video games,
I am not sure my son would ever eat.
I am positive he wouldn’t shower.”
Can changes in technology help to explain the labor market for lower-skilled workers since the early 2000s? Many economists think the answer is yes. There is a large literature showing that technological advances have contributed to a sharp decline in manufacturing employment. Since 2000, the US economy has lost more than 8 million manufacturing jobs, despite manufacturing output going up.HT to and headline from: MercatorNet
US manufacturers have switched from labor-intensive production to capital-intensive production. Instead of hiring a worker for the assembly line, manufacturers now use machines to do the work. The new technology results in firms reducing their demand for lower-skilled labor. Lower-skilled workers are the ones being displaced by the increasing technology.
I am convinced that declining labor demand is part of the story for why employment rates for lower-skilled workers have fallen so sharply and persistently during the last 15 years. I am also confident that changing technology has played a role in this decline.
However, in my current research, I have been thinking about the role of technology on labor supply. This line of inquiry has received less attention from academics. Individuals make decisions about whether to work or not. Most people—including you . . . and me—do not like working for free. (I like to stress that point when talking in front of the deans.) That is why we have to pay people a wage to get them to work. When making our work decisions, we compare the benefit of work—the wage—against the cost of working. What is the cost of working? We give up leisure. The more attractive our leisure time, the less we’ll want to work, holding wages fixed.
Is it possible that technology has changed the value of leisure? I think the answer is a definite yes, and let me give you an example of how I am experiencing this firsthand. I have a 12-year-old son at home, and we ration video games for him. He is allowed a couple of hours of video-game time on the weekend, when homework is done. However, if it were up to him, I have no doubt he would play video games 23-and-a-half hours per day. He told me so. If we didn’t ration video games, I am not sure he would ever eat. I am positive he wouldn’t shower.
Certain technologies—such as video games and social media and the internet—have increased the value of leisure time. Not only do people report them as being more fun than watching TV or going to the movies, they also say they’re more interactive. When my son plays video games, he often does so with his friends who are sitting in their living rooms, in their homes, avoiding their showers to the extent possible....MORE
