Monday, July 10, 2017

Employment: "The great video game scare of 2017"

I thought this was settled last year, link after the jump.

James Pethokoukis writing at The Week:
America faces a massive array of daunting economic challenges. But Overwatch, Final Fantasy, and Call of Duty are not among them.

You may have heard otherwise, thanks to the media deluge about a new study titled "Leisure Luxuries and the Labor Supply of Young Men," which suggested that really awesome video games explain why young men don't work more. Researchers noted that between 2000 and 2015, hours worked by men ages 21-30 fell by 12 percent, compared to an 8 percent decline for men 31-55. And as young men's leisure time increased, time-use studies show, most of those additional hours were spent playing video games. This wasn't the case for older men. Or as the study put it, "Improved leisure technology played a role in reducing younger men's labor supply."

Video games might well be a factor in young men deciding whether or how much to work. But concerned parents should slow their roll before they start unplugging and hiding all those Playstations and Xboxes.

First of all, it's a red flag that the big gaps in hours and employment between younger and older men emerged during the Great Recession and Not So Great Recovery. There are lots of potential non-video-game explanations for this. For instance, employers might have started demanding more education or experience before hiring during a time of economic tumult.

As my American Enterprise Institute colleague Stan Veuger explains, "Think of a world where suddenly no one ever gets hired, only fired, for example. All young people would be unemployed but previously employed old people keep their jobs. That's not crazily different from a world where job openings went from 4.5 million to 2 million — though of course there were mass layoffs as well."
The big jobs event in 2007 wasn't the release of Halo 3. It was the start of a severe economic downturn.

If the recession and recovery played a big role in young men working less, then work rates should improve the further we move into the economic expansion. And that's exactly what seems to be happening. The employment-to-population ratio — the share of a particular population with a job — for 20- to 24-year-olds fell to 61.3 percent in 2010 from 72.7 percent in 2006, the last full non-recession year.

But that number has since rebounded to 66.2 percent. Is video game quality suddenly getting worse? Of course not. It's just that an improving labor market seems to be drawing young men back in....MUCH MORE

"Are video games killing work for young men?"
From The University of Chicago Booth School of Business, Sep. 1, 2016:

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.

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.....MORE