In this episode of the McKinsey Global Institute’s Forward Thinking podcast, Michael Chui talks with David Autor, Ford Professor of Economics at the Massachusetts Institute of Technology.
Autor talks about the paradoxes created for labor markets by the pandemic, the effect of trade globalization, the rise of China as a world economic power, and the economic impact of automation. He answers questions including:
- How have labor markets changed as the result of the pandemic, and how might they evolve?
- How has the globalization of trade affected the US labor market?
- What could have been done, and should be done now, to mitigate localized negative effects of trade shocks?
- Does ‘cowboy capitalism’ give us higher growth?
- What’s the most surprising thing you’ve learned during the pandemic?
An edited transcript of this episode follows. Subscribe to the series on Apple Podcasts, Amazon Music, Google Podcasts, Spotify, Stitcher, or wherever you get your podcasts.
Michael Chui (co-host): I have a question for you. Do you prefer learning about a wide range of topics, or going deep into one thing?
Janet Bush (co-host): Well, that’s tricky. I am a Gemini and therefore deeply superficial, flitting all over the place. And I was a journalist. Ditto. But of course I love going deep into a topic because that’s how you learn. Of course, we do that at MGI and actually we do that with this podcast.
Michael Chui: That’s a good point! And we really are lucky we get to do this. (Sorry for the trick question.) But spanning breadth and depth is one of the things that today’s guest has been able to do. David Autor is a labor economist, and our conversation spans from inflation to global trade, from automation to how to create better working conditions. But what’s unique about David is that before he found his calling as a labor economist, he actually worked in many different jobs in fields as diverse as education, computer programming, and food service; he even talks about dropping out of college and being fired from a semiconductor manufacturing job.
Janet Bush: Yes, and that firing was to do with him wearing nail varnish, I believe. But of course having broad experience of real life makes him a very good economist. I am interested to hear what he has to say. So over to you, Michael.
Michael Chui: David Autor is the Ford Professor of Economics at MIT. David Autor, welcome to the podcast.
David Autor: Thank you very much, Michael. Pleasure to be here.
Michael Chui: I usually ask guests about their background—where you grew up, how you ended up becoming a well-known labor economist, all those sorts of things. And I’m particularly interested in hearing about your journey to where you are now, particularly because I understand you have a bunch of jobs that aren’t on your academic CV. Why don’t you go ahead?
David Autor: I sort of fell backwards into economics. If I knew where I was going, that was not the route I would have taken necessarily. I was actually a psychology major in college. And I dabbled in computer science, although I don’t have any credential in that.
I actually dropped out of college partway through. I started at Columbia, and I dropped out. I spent a couple years working as a software developer for a hospital while I was trying to sort of grow up. I matured, went to Tufts, and then I was going to do clinical psychology. And I even published research as an undergraduate in clinical psych. But by the time I was finished with the degree, the undergraduate degree, I thought the questions were great, but I was really not satisfied with the answers. And I felt like it was too particular, individualistic, didn’t answer a bigger question of solving larger problems.
I love computer science. And I felt like I was doing puzzle solving there. But I didn’t feel like it led me to the questions I wanted to answer. So I liked the methods, but I didn’t love the end goals at the time. And with psychology, I liked the questions, but I didn’t like the methods.
Anyway, I just kind of gave up on all that. I drove out to California with my girlfriend, and along the way, I heard about this computer learning center opening at a Black Methodist church in San Francisco, called Computers and You.
This was right around 1989. It was kind of sponsored by Silicon Valley. It was in the Tenderloin, which is a pretty rough-and-tumble district in San Francisco even now. And they’re trying to kind of help people without access to the technology to develop the skills and the learning opportunities.
And I thought that sounded really fascinating because it married the things I was interested in, which were social service and technology. So I showed up there and I volunteered. And then after a little while, I became the education director there.
I worked there for several years. And it was an amazing experience, both the teaching, the dealing with the really complex, diverse clientele, the fundraising, the outreach, and the tech toys themselves. We were basically the repository of everyone’s broken computer in the Bay Area at the time. We spent a lot of time fixing them.
After several years, I did something related. I volunteered in South Africa, working with the non-racial trade union doing also computer skills education.
After a few years of this, I realized I liked what I was doing a great deal. But I felt like I wanted to go to a different level of working on the same topic. I wanted to go meta. I wasn’t interested as much in the direct service as in understanding, was the thing we were doing even a useful thing to do?
So I applied to the Kennedy School to do a master’s in public policy. And I didn’t know what I was going to do with that, but I knew I would look credible. And so I started that. And then partway, I said, “Oh, I’m going to do a PhD in public policy. What have I got to do to get into the PhD program?” Well, I had to take the advanced economics and statistics classes. And so I start taking the advanced welfare economics class. And I just felt like, “Wow, nobody ever told me about—this is the thing that does social science questions using the tools that I think are so powerful.”
When I finished in 1999, I was very surprised and terrified to find myself actually in the economics job market, which is not somewhere I thought I was qualified to be. And I was hired as a junior faculty member by MIT, where I still am a faculty member today.
I feel like a guy who was playing for the farm league and somehow got drafted into the majors. It was quite a surprise. I still feel undertrained. But it’s been [an] extraordinary experience, and I’ve learned an enormous amount and gotten to work on questions that seem very important to me, and in many ways tie back to the work that I did working on technology and inequality, skills, and opportunity.
And the fact that changing labor markets, generally over the last four decades, have made labor markets worse for people without college educations in the United States, which is the group I worked with most directly.
Michael Chui: Let me just ask you, what did you learn from all those experiences? I think you left out the pizza job and some other things, too.
David Autor: Yeah, I did a lot of temp work. I worked at a pizza place for six months. I’m sure there’s more. I consider myself to have failed careers in many fields—computer science, education, food service, and light industrial work as well.
I actually got fired from a semiconductor manufacturer because I was wearing nail polish on my fingers while I was assembling chips. And they thought that was just too weird. Anyway, what did I learn? I don’t know if I could boil it down into a simple lesson.
I learned that poor education stands in the way of everything else. And it’s actually quite hard to remediate that among adults. And I discovered this both in San Francisco and even more so in South Africa, that even people who were latently very bright and very well-spoken and admirable in many ways, if they had been undereducated as kids, it was hard for them to do the type of analytical reasoning and communication that was needed for a lot of work they did.
So I didn’t feel that simple skill training was going to solve many of the more profound problems that I saw, the barriers that I saw for adults in particular. I also came away with—maybe this is prosaic, but I came away thinking that although the people I was working with were marginalized and poor and discriminated against, their values were incredibly middle class.
They were not radicalized or radical. They wanted what many people would want, which is a decent job, a stable life, and, most importantly, the opportunity to give those things to their children.
I did not come away radicalized in terms of thinking the system needs to be overturned. I felt the system needed to be fixed in a way that could create more opportunity. It’s not that what it was striving for was somehow not valuable. It’s that it wasn’t creating a level playing field or a good set of opportunities for people to strive for those shared goals.
Michael Chui: Well, let’s dive into it. Everything from your understanding of human psychology through some of the things that you learned working with people. And now your current research. This might be a mischaracterization—you should correct me if I’m wrong—but at least one large thread of your research is about the impact of various shocks or changes on labor markets.
Maybe we could talk about some of those. We are still experiencing a major shock in the global economy, which is the COVID-19 pandemic. I’d love to get your informed perspective on what’s going on from a labor market standpoint. What’s changed, how things might evolve going forward.
David Autor: The pandemic created all kinds of economic paradoxes. Many, many things have worked out very differently from what people anticipated. So, for example, we thought people were going to be wiped out. We had the lowest rate of poverty in the United States ever seen. We thought we would come out of the pandemic with [a] very slack labor market—more people looking for work than jobs looking for workers. In fact, we’re in the opposite situation.
We thought the pandemic would destroy businesses. We are in a period of rapid business formation. We thought the pandemic would sap productivity. In many ways, it’s kind of opened up new vistas of productivity. We thought that being the country that took the leading role in developing vaccines, we would also be the most vaccinated country. That also turns out not to be true.
So all kinds of paradoxes. Some of them positive, some of them negative. But the labor market side is one I’m watching of course very closely. I co-directed the MIT task force on the Work of the Future. And one of the things we said very loudly in our final report, and a book, as of today, is, there’s going to be labor scarcity. That due to aging population, low birth rates, dramatic, Draconian restrictions on immigration, increasing education levels that have made people less and less interested in doing a lot of the in-person or manual labor that needs to be done, that we were going to be in a period of long-term labor scarcity and that we would need a lot of technology, robotics and so on, to help make that labor productive enough to cover all the costs, including the healthcare [and] retirement costs, and allow us to invest.
But that’s been known for a long time. We didn’t anticipate, coming out of the pandemic, that we would hit that inflection point immediately. Now, there’s some good things and some bad things. So first, we could talk about why that’s happening. Nobody really knows, right?
One thing is, we created a lot of demand. We distributed huge amounts of cash to households and businesses. Savings rates are up at spectacular levels, and people are spending it down. So we would have created a lot of demand. There would’ve been a boom. The surprise was the reduction in supply of workers. Our labor force participation rate is down more than a million workers, closer to two, maybe more than that, depending on what you want to count. And that’s a substantial hit. And we don’t fully know why that is the case.
The bad thing about the labor shortage, of course, is it’s one of the factors leading to inflation. And inflation is not our friend. A lot of people are seeing nominal wage gains without seeing real wage gains. Fortunately, at the bottom of the labor market, that’s not true. The nominal wage gains are larger than the inflation rate. In hospitality and leisure, wages are increasing about 12 percent a year. Inflation’s running about 6 percent. So that’s a good thing.
Michael Chui: For workers.
David Autor: For workers. Well, I view it as a good thing, because workers are most people. And it’s a course correction that was needed, even though I realize, of course, businesses aren’t thrilled about this. But we have been in a four-decade period of eroding job quality for people without college degrees.
The fraction of jobs available for those in high-paying production jobs or in good office clerical jobs has fallen dramatically. So most people who don’t have a college education now are working in, basically, services. Food service, cleaning, entertainment, recreation, security, transportation, construction, there’s a range of things in there. But many of those are low-paid work, with almost no collective bargaining, and minimum wage levels that are in real terms the same as they were in 1950.
Every advanced country has faced many of the same headwinds as the United States in terms of changes in technology that have hollowed out the middle, globalization that has put pressure on manufacturing, rising education levels, which have been, in many ways, a good thing. Declining population growth. Aging populations.
And yet, there’s a whole spectrum of outcomes that they have produced. And the US is kind of at the left-hand tail of badness of those outcomes, in terms of the degree to which the quality of work has eroded. The degree to which the median wage has diverged completely from productivity growth. The job security that people can or cannot expect to get. The living standards associated with the same type of fast-food service work. So in my opinion, a really serious course correction is needed.
I do not think this is going to undo four decades of erosion, having a tight labor market now. I think it’s only a foundation on which to build. What will be built on it? Well, a couple things.
One, there’s more collective bargaining going on. I have mixed feelings about the way—I think union relations in the United States are extremely adversarial. I don’t think we have a very productive labor relations system, even when it’s working in strength. But in the absence of anything else, I think it’s better than nothing. So that’s going on.
And then I think to some degree, hopefully, I don’t really know for sure, there’s been consciousness-raising about how bad working conditions were for many of the low-paid people in our economy doing care work, doing service work, doing cleaning, working in factories, if it’s something like meatpacking. So that’s a change. But I don’t know. We’ll see.
Michael Chui: I did want to ask, because our audience is global, and you mentioned the United States labor relations not necessarily being tops in the world—where are things done differently and how is it different?
David Autor: The countries that I know best are the industrialized countries in Europe and Asia. If we just compare ourselves to Western Europe, every one of the traditional Western European countries has a substantial fraction of all workers represented by collective bargaining.
It works very differently in different settings. The Scandinavian countries, for example, would probably be the best examples, where essentially they kind of think of it as a tripartite system involving the state, business, and labor. And there’s a lot of negotiation. But it’s not plant by plant, job by job, fighting about union card checks, and did we get 51 percent or 49 percent. It lives at the level of an industry or an occupation. In many ways, that’s advantageous.
For example, if I’m Target and my competitor’s Walmart, and I get unionized and Walmart doesn’t, I consider that very disadvantageous, right? It’s like raising minimum wages one restaurant at a time. It’s not a good policy.
Well, it doesn’t work that way in Scandinavia. You’re going to have collective bargaining that would affect all the workers in that occupation or industry simultaneously. And so although firms still in general are not excited to pay higher wages, at least if their competitors are facing the same conditions, that makes it a lot more manageable. So bargaining occurs at a larger level. It’s generally less adversarial for that reason.
I don’t want to say that there isn’t lots of labor strife. You see a lot in France. You see it in Italy. But it especially works well in Northern Europe. And the problem with the US system by comparison is there’s no obvious way to get from here to there. Our system goes back to the 1930s. And it’s based on the notion that employers and workers are in some sense adversaries. So, for example, you can’t actually have a worker representative on the board of a US firm unless that’s a unionized firm, because those would be considered suspicious.
Michael Chui: A set of research that you’re most well-known for in the past decade is the impact of trade globalization on the US labor market. Maybe you could talk a little bit about what that showed.
David Autor: The work that I’ve done with my colleagues David Dorn and Gordon Hanson, as well as Daron Acemoglu, Brendan Price, and others, looks specifically at China’s rise as a way of seeing large-scale changes in the world trading system and trying to understand their implications for different countries engaged.
Just to step back, China’s rise is an amazing, spectacular event, from the perspective of the West, of the last three decades. But really, it starts at least four decades ago.
China’s growth has reduced world poverty enormously. It’s created prosperity not only in China, but throughout Central and South America. Great commodity booms brought enormous amounts of investment into sub-Saharan Africa that’s largely been neglected. On any world historical scale, this is one of the best events for global welfare in probably forever.
From the perspective of the US in particular, China’s rise was highly disruptive, especially after it joined the World Trade Organization—received permanent most favored nation trading status in 2000 and joined the World Trade Organization in 2001. And that led to a remarkable surge of exports.
At one point, the US trade deficit with China was about 2 percent of GDP. And while that was going on, it created a lot of displacement of US manufacturing employment, much more than was anticipated by the parties that negotiated that. We’re talking job loss on the order of one to two million jobs, depending on how you count it and where you look. It’s easy to say, “Well, look. This is a labor market of 145, 150 million people. One or two million jobs, let’s not be too sentimental here. How big a deal is that?”
And that would be true if those jobs were evenly distributed across the United States. You know, we have 3,500 counties. It would be less than a thousand workers per county, et cetera.
However, that’s not the way manufacturing works. Manufacturing is very geographically concentrated. Where it occurs, a lot of it tends to occur. And not just manufacturing overall, but manufacturing in specific activities. In assembly. In textiles. In furniture. In plastic products and so on.
When you talk about the loss of a couple million jobs, you’re talking about large chunks of the economic base of certain communities, local labor markets, being wiped out very quickly. Losing not just a little bit of work, but basically the industries there becoming noncompetitive. And it created a lot of misery, a lot of resentment. And in addition, the places that were directly affected did not bounce back with any of the speed or elasticity that economists tend to predict.
There’s been this long-standing myth that the US labor market has a great employment security program. It’s called “get a new job.” If you lose one job, you just get another. Factors reallocate so frictionlessly that we won’t even notice. But it certainly is not true, has not been true in the last several decades. And so the places that were heavily afflicted by the China trade shock, in terms of loss of manufacturing employment in particular, didn’t just see reallocation of workers to nonmanufacturing.
We saw declines in employment rates, rise in unemployment, and, over the longer term, declines in employment to population, falls in household income, increases in idleness among young adults, lower fertility, lower marriage rates, more kids living in poverty. Even an increase in what Anne Case and Angus Deaton have called deaths of despair. A lot of signs of social malaise, which would be consistent with these jobs in these industries providing a kind of anchor, an economic anchor on which a lot of the rest of the activity was tethered.
That’s been the thrust of our work on that topic. And again, it’s really not about China. It’s about adjustment.
Michael Chui: So what could or should have been done, or should be done, if in fact this is a pattern we’re seeing where trade shocks, while overall benefiting everybody, have these geographically localized negative impacts?
David Autor: A few things. One, of course, is we could have much more generous and forceful assistance to people who are displaced. We have a minimal policy called Trade Adjustment Assistance. It doesn’t reach many people. It’s not very easy to access. It isn’t actually geared towards reemployment as much as retraining. There’s evidence that it can work. But it’s a small program that most people don’t avail themselves of. This is just one.
For example, let me take another contrasting case from Northern Europe. Denmark, like the US, has very fluid labor markets. People expect to be terminated frequently. Lifetime employment is not an expectation. That doesn’t mean it doesn’t happen. But they’re pretty unsentimental about this. But then they spend a considerable amount of public money on labor market reactivation programs. They spend, I want to say, 0.4 percent of GDP on labor market programs.
The model is called, quote, “flexicurity.” What they mean is there’s flexibility with security. The jobs are not secure. The jobs are flexible. But the workers are secure. The US does not have anything on that scale. That’s one thing. I don’t think that’s sufficient, but it’s a starting point.
A second is we’re not very good, and I don’t think anyone’s especially good, at helping communities recover. Helping a community recover from job loss is different from helping a person recover from job loss, because if one person loses a job, you can help them search for another job right nearby. If lots and lots of people lose jobs, that’s going to have a multiplier effect, a negative multiplier effect.
A third thing, if we were doing it all over again with the China trade integration—at least if I were doing it all over again; I didn’t have a hand in it the first time—I would do it more gradually. I think it matters how fast things change, not just that they change.
I’ll give you the example, we know 20 years from now, most trucking will be autonomously driven. Or that’s our strong expectation. It won’t use the couple of million people now who are involved in vehicle transportation in the driving capacity. Twenty years is a long time. That’s a transition we can work with.
Because people won’t go into that occupation. Other people will retire from it, right? That’s a very manageable rate of change. Most technological change also occurs on a slow pace. In fact, you know, the technology may be revolutionary, but it’s very narrow, right?
Michael Chui: Let me pull on a thread that you had just mentioned, which is also the impact of automation. Your co-authors you’ve published with—Daron Acemoglu, whom we’ve had on this podcast, Pascual Restrepo—on the impact of automation, you have documented the impact of these trade shocks. Daron and Pascual have talked about the impact of automation accounting for a large percentage of the changes in the wage structure in the United States. Are those two in opposition?
David Autor: I started working on the technology question many years before the trade question. And the work that I did, particularly with Frank Levy and Richard Murnane on the skill content of technological change, set up a framework for thinking about this problem in terms of what tasks did machines have comparative advantage in? What tasks did people have comparative advantage in? And where was the complementarity and where was the substitution?
That work strongly suggested that where we would see the most automation would be in what we would call routine cognitive and manual tasks. Tasks that followed a well-understood set of rules and procedures that could be replicated by a machine. And that’s definitely what we’ve seen in the hollowing out of the middle of the labor market. The recent work by Acemoglu and Restrepo, which I like very much, really formalized a lot of that and shows how to test it by looking at the activities that groups were doing initially and seeing how those have been displaced, both by automation—they look at robotics, but generally they’re looking at what we call falls in the labor share. Displacement of labor by capital.
These things are not at odds. They’re both going on simultaneously. And when you say the percentage of this, it really depends on the time frame you’re looking at. If you said over the last four decades, what has been the most consequential factor impinging on the earnings power of people without college degrees, I would say automation.
If you say, what’s the factor that caused the most damage to US manufacturing workers since 2000, I would say it was the China trade shock. These things are occurring simultaneously. They’re not even going to actually be geographically correlated, in fact.
I think it’s also important, even when you say X percent is “explained” by automation, that’s a useful thing to say, but it needs to be contextualized, because in another country, the same automation wouldn’t have caused that. In the US context, with the lack of collective bargaining and very limited efforts to hold up the floor, automation unfolded with very few checks and balances, so to speak.
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As I stressed just a little while ago, if we look at Germany or Scandinavia or France or Austria or Korea or Japan, these countries are all using the same technology. Everybody’s got an iPhone. Everybody has the same access to cloud computing. Everybody has access to the same robotics. The US is not very far along in robotics compared to many of the countries that I’ve just mentioned.
But it hasn’t produced the same set of outcomes. It hasn’t produced the same stagnation of median wages. It hasn’t produced the same falls in real wages at the bottom. It creates pressures. It can create a headwind or a tailwind. How those play out is a function of the market forces, the institutional structures, the political economy. And even the norms.
That’s why I think one needs to contextualize it. If you simply say, “Oh, it’s automation,” then people say, “Oh, automation. Well, can’t do anything about automation. That’s progress.” And I’m not saying we should do something about automation. But we should not think that it’s an exogenous, immutable force that necessarily produces a given set of outcomes. Do we have all these institutional strictures that change, that shape the distributional consequences?
It’s a lot like trade. Trade raises GDP. Does it make everybody better off? Definitely not, unless we do something about it. Automation and trade are very similar in this sense. There’s going to be more winners and more losers.
So you can think of all these countries we’re talking about as kind of on a spectrum of market economies. They’re all market economies with some state involvement. You can think of, if you arrange them from kind of, you know, most market to least market, we are the—kind of the cowboy capitalism extreme, right?
You know, Scandinavia would be at the cuddly capitalism extreme. And anywhere in between. So it’s useful to make these comparisons, to see that even with the same underlying forces, we produce such different sets of results, because of the other institutions that we put in place.
Michael Chui: Does the cowboy capitalism give us higher growth?
David Autor: Not as far as we can tell. The US has not grown faster, on average, than other Western economies. And it doesn’t really have much higher productivity once you adjust for working hours. We work more.
I think the US has some unique virtues that I would hate to see sacrificed. It’s incredibly innovative. We’re out in front of the information revolution, of AI. Of biopharma. Of revolutions in transportation. The US has an entrepreneurial culture. It has a venture capital culture. It has a risk-taking culture.
It also has an ability to attract talented people from around the world and invest in them. Those are fabulous things about the US. I don’t know if they’re part and parcel of cowboy capitalism, per se. I don’t know that you need the rough edges at the bottom to attract that at the top.
China’s also an incredibly entrepreneurial economy. Not cowboy capitalism. Something else again. And arguably the two most innovative economies in the world right now are the US and China, and neither one is a close representative of the other.
Michael Chui: Now let me pull on another thread you mentioned before, real wage growth. Obviously, inflation’s in the air, in terms of what’s happening right now. Some of the MGI research on the social contract, others have noted recently, and have been reminded recently, that we often think about increasing the incomes of folks who are in the lower quintiles.
But their costs actually have been increasing, particularly costs that are required. Things like housing. Things like healthcare and education in places where people need to pay for them out of their household incomes. I’d love to just get your reflections on that.
David Autor: The three things that are unavoidable and highly costly and increasing in price are housing, education, and healthcare. And all of them have gotten a great deal more expensive, but especially housing in urban areas.
There’s been a long-standing view that cities are the escalator of opportunity. That’s where you go to rise. And I think there’s less and less evidence supporting that. If it was true in the past, and I think it was, I don’t think it’s true now.
The work that I did for the Ely Lecture, which I gave at the American Economic Association in 2019, showed how much wages have eroded for noncollege workers in urban areas since 1990. And the jobs that would have provided that ladder were many of those middle-skill jobs in production or in offices. Those have kind of been automated away. I actually think that this is not a good time for people without very high levels of education to be living in expensive cities. I don’t think they offer that bargain.
Michael Chui: Well, if you don’t mind, I’d love to do a quick lightning round of quick questions, quick answers. You should feel free to pass if you’d like. All right. Here we go. What is your favorite source of information about labor markets?
David Autor: Hmm. If I want statistics, I go to the Federal Reserve FRED portal, which is an amazing resource anyone can use. Paul Krugman is a master of using these in his columns. But for a lot of labor stuff, I just read stories about what people are—I find the examples are often indicative of some deeper phenomenon that’s under way.
Michael Chui: What’s the most surprising thing you’ve learned during the pandemic?
David Autor: I think the pandemic illustrates this really amazing phenomenon of how quickly a norm can change. This meeting that we’re having on a platform we wouldn’t—three years ago, it wouldn’t have occurred to us to do this, even though this technology was available. And I was not making a good-faith effort. But now we’ve agreed that this is an acceptable alternative.
The revolution is not a technological one. It’s a change in norm. The miracle is not that you could use Zoom or that I could use Zoom, but that we all agreed that we will use it and that that will be a suitable substitute for many of the other things we’ve done. I think that actually opens a lot of vistas for rising productivity and also a change in the geographic mix of where work is done. Now, it creates challenges as well, but I do think it’s an awesome example of how fast things can change.
Michael Chui: What gives you the most hope about the future of labor markets and the future of work?
David Autor: I’m always impressed by the paradox of how much employment there is, given how much automation there is. We obviously have been aware for 200 years that we’ve had lots of automation. Many of the technologies we made to displace labor have displaced labor, whether they’re in agriculture, whether they’re in assembly lines, whether they’re in cognitive work.
And so we tell ourselves a story: “You can tell why that would create work, because people have rising consumption, they’re wealthier, so they’ll buy more. In some ways, machines complement us. New work will be created.” But you could say that and not believe it until you saw it. And so it is amazing, even coming out of the pandemic, when we think there’s been automation that has been accelerated by this process of having to reorient the way we work, and find ourselves in a labor shortage.
Michael Chui: You might have answered this already, but what does worry you most about the future of labor markets and the future of work?
David Autor: I worry a lot about the quality of work and whether people will be able to do jobs where their skills are sufficiently scarce that they can actually have a reasonable quality of life, a modicum of economic security, and the ability to create opportunity for their families.
We have all the tools we need to be prosperous and to actually use the improving productivity and the growing capability of all the technologies we’re creating to raise standards of living for many, many people while cleaning up our environmental situation, such that we’re not going to be cooking ourselves.
It’s all doable. If it were just an economic problem, an optimization problem, it would be relatively easy. The problem is that it’s a political problem. And that’s much, much harder. And so I worry very much that the politics that are rising, and not just in the United States but really around the world, but especially in Western Europe, are very destructive and will lead to a lot of destructive economic choices.
Michael Chui: What would you be doing if you weren’t an economist?
David Autor: I would give you different answers at different points. At this point, I would probably be sailing around the world. I love to do stuff with my hands. I like to build stuff. There’s a part of me that always wanted to be just, like, a mechanic fixing stuff. But at this point, I would probably go for a big adventure that was relatively dangerous. And highly unpredictable.
Michael Chui: If you had one piece of advice for listeners of this podcast, what would it be?
David Autor: Let’s see. I’m trying to think who listeners are. Since the people who are listening to this podcast, many of them are in decision-making positions, I would say the one piece of advice I would give—really not for them, but for others—would be to work to create opportunity in employment.
We have a labor force that, considerably less than half the population has a college degree. If we’re talking about Black and Hispanic workers, less than a quarter of them have a college degree. And yet, many of the best jobs require a college degree up front, no negotiation, can’t be considered otherwise. And I would like to see more businesses reevaluate that stricture and ask themselves if there aren’t more jobs that could be open to people without four-year college credentials to do good work and move up the ladder.
If you’re a person who’s making such decisions, I would say evaluating ways to improve opportunity through hiring, that’s probably the most effective way, is through good employment. That’s my advice. I would like to see them act on that.
Michael Chui: If a high schooler asks you what to study, what would you recommend?
David Autor: At that age, I actually don’t think it matters as much as that you want to learn something. That you study something that is interesting to you. I heard some guy speaking, a trivia wizard in sports statistics. And the people said, “Oh, you have an incredible memory.” He says, “No, no. It’s just that it interests me and I pay attention. You remember the things you pay attention to and interest you. You’re just not interested in that.”
Michael Chui: David Autor, thank you for coming and sharing with us.
David Autor: Thank you very much. I enjoyed the conversation. Thanks for inviting me.
The opinions expressed by podcast guests are their own and do not reflect the views or opinions of the McKinsey Global Institute. References to specific products, services, or organizations do not constitute any endorsement or recommendation by MGI.