Will A.I. take jobs away? 

Of course it will. The only question is whether the jobs it eliminates are replaced by other jobs up the food chain, in different and perhaps yet unknown industries and job classes.

The world has seen various waves of automation and globalization over the last century. Name the game changing technology, and there was paranoia that jobs were being eliminated and workers would be idle, never to find work to replace what was lost.

Through it all, a little talked about stat called “US Labor Share” has tracked the worker’s share of the economic pie.  For the uninitiated, here’s the definition of US Labor Share from the Bureau of Labor Statistics (BLS)”

"The labor share is the percentage of economic output (GDP) that accrues to workers in the form of compensation. It is calculated by dividing the compensation earned during a certain period by the economic output produced over the same period."

For the sports fans out there, think about this as the salary cap number for the US non-farm workforce.  For the non-sports fans, think about your company’s salary budget as a percentage of revenue.

A quick historical look at the Labor Share (nonfarm business sector) chart from the US Bureau of Labor Statistics shows that from the 1950’s through the year 2000, Labor Share remained fairly steady at 62% to 64% of US GDP.

Then, things changed. Labor Share started dropping hard in 2008-2009 (both in and coming off the recession) dropping from 60% of GDP to a level now looking to at the 56% range. According to Fortune Magazine, that equates into about $11,000 less in annual income for the average US household when compared to an economy that provides a 65% percent share to the US workforce.

Here's a look at the chart (email subscribers, please click through if you don't see the image):

Machines displaced a lot of farmworkers in the 19^th century, but millions of new jobs in manufacturing were created.  When the manufacturing sector in the US took a hit in the 50’s, 60’s and 70s’, new jobs in services became a much larger part of the economy, and Labor Share remained steady between 62% and 64%.

And here we are – at 56% - in a peak economy. What gives?

It all comes down to job creation as the term automation gets replaced by A.I.  What’s the new sector of jobs that’s coming online as A.I. – the new, at times scarier version of automation – displaces human labor?

Factory workers became truck drivers across the Midwest when factories went away. What blue collar profession do they turn to when automation/A.I. fully delivers self-driving, autonomous vehicles to the transportation industry?

White collar workers have been impacted by automation as well, but globalization and the impact of cheap labor available overseas has had greater impact. What happens when A.I. delivers a seamless tax return or handles coding at a deeper, more self-aware level that transcends the age-old argument of chasing cheaper white collar labor in the Philippines?

Read enough, and you'll find opinions that A.I is the beginning of the end, or overhyped to a large degree.

I’m a fan of technology and progress. I’ve always believed that jobs eliminated by technology would re-emerge up the food chain.

The current Labor Share chart in the USA is making me think deeper. We’re almost a decade into the expansion, the toughest recruiting environment for employers imaginable, and workers still can’t get theirs?

Buckle up.  The next couple of decades are going to be interesting.

I’ll give you $10,000 and 3 months of pay if you quit today and do something else. 

Who’s interested? Everyone!

Who takes me up on my offer? Well, that’s where it gets interesting.

If the whole “we’ll pay you to quit” sounds familiar, it was the rarified air of the HR culture darling, Zappos.com.  We loved Zappos back in the day for a variety of things, including their offer to pay new hires to quit early in their tenure.  Here’s how the thinking went – if you’re not sure this is for you, we’ll pay you to eliminate the cultural misfit and just go.

The Zappos offer to pay you to quit was child’s play. Amazon saw that offer and said, “Hold my beer.”

In case you missed it, Amazon was in the news again late last week with a Godfather offer (you can’t refuse) to employees designed to create momentum to build the delivery capability needed to meet its future needs. The offer was this - 10K and 3 month’s pay for any employee who will quit and start a franchised delivery business under the Amazon partnership umbrella.  Here’s the details of the announcement:

You have to admit, that’s kind of cool.  But it’s a trap for many of the Amazon employees who hear the offer and think being their own boss is a path that’s for them.

That’s because the business those employees would be entering under the Amazon partnership umbrella isn’t a delivery business, it’s actually a people management business.  CBS news did the math last year and reported that to make low six figure as an owner of this business, you’d need to employ at least 20 full-time equivalents per year.

Danger!! (Siren sound in the background)

Not sure whether the offer is for you, Amazon employees?  Fear not, because I’m here with an uber-simple 5-item questionnaire designed to help you understand whether you should quit your Amazon job and start a delivery business once you’ve been accepted into the Amazon “lease some vans and start a business” incubator. 

Answer the following questions “yes” or “no”:

1. Have you ever thought your manager was a complete dipshit related to business savvy?
2. Do you actively avoid dealing with some people at work?
3. Have you ever been asked to be part of an interview process for open positions and thought, “I’m too busy” or “that’s not my job”?
4. Do you ever vent to your spouse for long periods of time about co-workers?
5. Have you ever had a co-worker vent to you and refused to get involved in whatever issue they had, either directly (telling them you didn’t want to get involved) or indirectly (waiting for them to finish their rant and excusing yourself as softly as you could)?

Score your answers in the following way:

--0-1“yes” answers: This Amazon offer might be for you.

--2-3 “yes” answers: You shouldn’t quit your day job. You’ll likely start well in your Amazon delivery franchise, only to grow disenchanted, look back and see year one was by far the best year of your delivery business.

--4-5 “yes” answers: Run away. You’re going to burn the f###ing trucks by month six, end up in jail for arson, insurance fraud and divorced.

The Amazon deliver business is a “people” business. Don’t be fooled by the vans, the cool scanners and the Amazon tech stack.  If you don’t enjoy (or can’t tolerate) the people side of business, you have NO SHOT at employing/retaining 20-40 full-time drivers in 2019, with America at peak economic cycle, hourly employees employed at their next job 3-7 days after quitting on you, and the 200 ways people will disappoint you in a given day and force you to engage them directly.

I hope Amazon will evaluate you for inclusion into the program with this in mind. 

But you might just have decent credit and be able to float a note for 20 leased vans.

Unless you passed my 5-question quiz with flying colors, stay on the Amazon payroll. As hard as life is there, it’s safer for you.

Most readers of this blog are blessed in many ways, including financially.  As HR and recruiting pros, many of us live our lives and really don't consider things from our workforce's point of view often enough.

Case in point: The concept of Daily Pay as a tool for retention.

Daily pay is something that doesn't feel natural to HR pros. After all we've long since settled into our 2 week cycles for payroll.  Payroll is due!! What's our error rate on Payroll?  Are the transactions getting done in a systematic way?

Our 2-week payroll cycles make the concept of Daily Pay foreign to a lot us.  I was reminded of this when P Hall, a reader of the Capitalist, sent me the picture you see at the right (email subscribers click through if you don't see the photo) from a Taco Bell in the Carolinas.  My reaction to it was mixed, which underscores what a lot of HR pros and TA leaders would say about the concept of Daily Pay.

"Nobody really needs daily pay."

"Daily pay would cause anarchy in our department"

"Our employees need to wait until payday. We're not the bank"

But our own perspective and experience isn't shared with the rest of the world.  For those of you with large hourly populations, you've got a workforce with a high number of people living paycheck to paycheck. And that means that disruptions in your employee's lives can cause bad things - absenteeism, lower focus on their job at your company via second jobs, moonlighting and turnover.

Payroll technology in the app world makes the transition to daily pay easier than you might think.  More from SHRM:

"We're seeing a lot of traction for instant pay apps in companies with large hourly workforces where employees live paycheck to paycheck and unexpected expenses can cause big disruptions to their lives," said Ron Hanscome, a research vice president at Gartner in Minneapolis who specializes in HR technologies. "It can be a differentiator in markets where turnover is high and organizations are looking to create a more stable workforce." The ability to draw pay right away can keep some hourly workers from jumping ship to competitors for a 25-cent or 50-cent per-hour pay increase, Hanscome said.

Organizations including Outback Steakhouse, McDonalds, Dial America and Maids International are using some version of the pay option, with some saying it has contributed to a reduction in turnover among hourly workers. Walmart has announced it will begin allowing its workers to use an app called Even to access a portion of their wages before standard paydays.

Just as importantly, we're in a peak economic cycle, and your hourly workforce has more options than ever before.  You've got employees who live paycheck to paycheck, and being able to tap into their wages before you decide to pay them every two weeks might be a contributing factor moving forward to you being able to attract hourly workers - or keep them.

Turns out, you might need to be the bank in today's world.

In case you missed it, Amazon announced today that it would establish a $15/hr minimum hourly wage for all 350,000 of its U.S. employees.

The new pay threshold will go into effect Nov. 1 and impact all full-time, temporary and seasonal workers across the company’s U.S. warehouse and customer service teams as well as Whole Foods, the company said in a blog post. It did not disclose what its current minimum pay wage is for U.S. workers, perhaps in part because there is not one set rate.

You can say that it's the right thing to do, but beyond providing a livable wage for employees, THIS IS THE SMARTEST THING AMAZON COULD HAVE DONE FROM A BUSINESS PERSPECTIVE.

Why is that? Because the Amazon effect is on the cusp of being like the Wal-Mart effect of a decade ago.  Remember that vibe?  Wal-Mart put small, local mom and pop shops out of business.  Then they were accused of providing bad jobs and poor working environments.

We all love Amazon Prime.  But Amazon is eliminating as many jobs as Wal-Mart.  They just aren't as visible as the mom and pops that went out of business a decade or two ago.  They're putting big box retailers, malls, strip malls and e-commerce shops out of business.  Why?  Amazon Prime.  We love it.  It's changing a lot of things.

Meanwhile, click on the links below to learn about some reports of working conditions at Amazon:

Workers at Delivery Services contracting to Amazon claim deplorable conditions

Amazon Execs Admit "Employee Cages was a bad idea"

With AI coming on the scene and more disruption on the way from Amazon, the decision to pay all workers a minimum of $15 should have been easy.

If you work for Amazon in Kentucky, you're feeling great today.  If you are based in California, you're probably asking "where's mine?"  If you work for a contractor of Amazon in delivery, it doesn't impact you.

Amazon's going to have the same PR issues as Wal-Mart did within 2 to 5 years.

This move made perfect sense.  Way to get ahead of the coming storm, Amazon.

Ok, kids - we're up to 10 states and 8 municipalities that have outlawed/banned asking candidates questions about pay history.

That's a lot.  Kind of sneaks up on you.

The laws are aimed at ending the cycle of pay discrimination and some go further than merely banning pay history questions. A few also prohibit an employer from relying on an applicant's pay history to set compensation if discovered or volunteered; others prohibit an employer from taking disciplinary action against employees who discuss pay with coworkers.

The best running updated list is found here - at HRdive.  Go check it out.

h/t to Jason Cimno at Kinetix for sharing the resource!

One of the best salary surveys that you will find from a vendor is the Dice Tech Salary Report.  See the 2018 version - released last week - by clicking here.

We're in a peak economic cycle, so surprisingly, the report finds that average tech salaries are flat, and have been for a couple of years now.  For many of you, it doesn't feel like tech wages are flat, does it?  (note, email subscribers enable images or click through to see graphs).  Here's your chart of average tech wages:

But the survey confirms what we all know below.  If you want to steal a tech talent of ever average happiness from another employer, the most important thing is still MORE MONEY (see survey responses about what's most important to tech talent when changing employer below.  It's not the juice bar or your "culture"):

But of course, the average for all tech skills isn't 93K, now is it?  Here's your top 10 paying skills/languages below, count how many you had ever heard of before for fun.  I got to 7, and note that just because these are the top paying doesn't mean that candidate volume is high.  

Finally, the Dice survey confirms what we probably already knew - the best way for a tech guy/gal to get paid more is to <shudder> manage people.  Like sports, that probably means the people in your development shop that get paid the most aren't the people with the best coding skills, they're the people willing to put up with all the bull** from people and attempt to find the best path forward related to all the personalities.  Biggest jump in the graph below isn't to simply lead a team, it's to be a manager for a group of teams in a bigger development shop.  Note the jump from that level to being in charge of the whole thing isn't much.  I'd chalk that up to the fact that being a "head of department" in a smaller tech shop is the same thing as being a "manager of a group of teams.

Great data here by Dice, put together from direct responses from over 10,000 tech pros.  See the whole report - released last week - by clicking here.

Raise your hand if you feel like wages are flat.  LOL.  I trust the data, but all pain is local, right?

Here's what power looks like in an employer, my friends...

Less than a month after unanimously passing a contentious tax on big business, Seattle’s city council has voted to repeal the so-called “head tax.” Against the fervent protestations of residents and local coalitions—which were extended to a full hour of testimony—council members voted 7-2 to pulled the plug on what would have been a vital source of support for city’s growing homeless population. 

Let me break that down for you: The city council unanimously passed the tax, then one month later repealed it.  What happened?  The city's biggest employer, Amazon, said "what up", flexed it's muscles and reversed the whole thing in a month.

Before breaking down what Amazon did and being awestruck by the raw power, let's learn more about the "head tax" that was proposed from Gizmodo:

In the form it was passed last month, the “head tax” would shave off $275 per full-time employee at companies generating over $20 million in revenue, totaling an estimated $47 million per year for five years. Those funds would then be earmarked for homeless services and affordable housing. Seattle declared its homelessness a state of emergency in 2015, with soaring costs of living and congestion of public services considered the foremost catalysts for the rising homeless rate.

The repeal comes a day after the No Tax on Jobs campaign—a coalition which large businesses which would be affected by the “head tax,” like Amazon and Starbucks, pledged significant financial support to—announced it had gotten over 45,000 signatures, more than enough to generate a referendum to overturn the tax in November. Speakers on behalf of No Tax on Jobs at the City Council chambers repeatedly described the coalition as “grassroots,” however the Public Disclosure Commission of Washington reveals it gave over $246,000 to a firm called Morning in America for “signature gathering and verification” and an additional $20,000 to Cre8tive Empowerment for “campaign/volunteer/social media management.”

Among other things, Amazon reacted to the head tax by halting construction of office towers in downtown Seattle (click link to read more), which caused some freak outs about Amazon potentially leaving Seattle, a prospect that is surely strengthened by the fact that the giant online retailer has 20 cities on a list of finalists for a second headquarters.

"Hell, we'll just pick two places instead of one" is the clear message.

My city, the ATL, is in the running for the second HQ, and the Seattle head tax teaches us one thing pretty clearly - Be careful what you ask for when Amazon comes to town.

Here's some deep thoughts for today.

If you're a professional sports fan, you know all about the concept of a salary cap, which is defined by Wikipedia as follows in sports:

In professional sports, a salary cap (or wage cap) is an agreement or rule that places a limit on the amount of money that a team can spend on players' salaries. It exists as a per-player limit or a total limit for the team's roster, or both. Several sports leagues have implemented salary caps, using it to keep overall costs down, and also to maintain a competitive balance by restricting richer clubs from entrenching dominance by signing many more top players than their rivals. Salary caps can be a major issue in negotiations between league management and players' unions, and have been the focal point of several strikes by players and lockouts by owners and administrators.

So what? The concept of a salary cap can be transferred to the business world in a couple of different ways:

1--Your company has a salary cap.  It's called the headcount budget, and the cap is all the budgeted money in that headcount budget.

2--Countries across the world don't have a salary cap, but they have something close - it's called Labor's Share of GDP.

What is Labor's Share of GDP?  It's defined as the following:

The wage share can be defined in various ways, but empirically it is usually defined as total labor compensation or labor costs over nominal GDP or gross value added.

The wage share is countercyclical; that is, it tends to fall when output increases and rise when output decreases. Despite fluctuating over the business cycle, the wage share was once thought to be stable, which Keynes described as "one of the most surprising, yet best-established facts in the whole range of economic statistics." However, the wage share has declined in most developed countries since the 1980s.

So add up all the compensation to labor, compare it to Gross Domestic Product (a measure of a country's economy), and you've got Wage Share/Labor's Share of GDP.  Which also serves as a floating salary cap of sorts for your country.

It's interesting to note that Wage Share/Labor's Share of GDP goes up and down and has been falling since the 80's in developed countries.  Take a look at these graphs from France, the UK and the USA from a paper on Labor Share in the G20:

If you look at those graphs, you'll see the history of Labor share in those 3 countries, which also gives you some history to which national economies have endured the most change, which economies have a bigger safety net for labor in the midst of global change, etc.  France started at an 80% labor share of GDP and after a brief dip, is right back there.  The UK and the USA started a similar places, but safety nets in the UK have held the line lately at a 70%+ labor share, while the USA is in a bit of a free fall towards a 60% labor share.

Is that healthy for the USA?  Gordon Gekko would say yes, but rational, normal people would have to say no.  Thinking about all the changes that have occurred in our economy - global outsourcing, offshoring, tech deployment in place of human capital - and it's clear that we've been one of the most aggressive developed countries in those areas, and that's left our labor force with a much smaller share of our GDP, and likely has widened the gap between the "haves" and "have nots".

Note - I'm a moderate republican.  I'm not hating on the fact that America has less regulation than other countries - but - this type of change related to Labor Share of GDP has consequences for any economy/society over time.  You can't ignore that and it's worth being educated about the differences.

So America has a salary cap of sorts - call Labor's Share of GDP.  It's not a hard cap, it's been falling for a time and when you think about it from a sports perspective, it basically means this - in America, a higher percentage of the money in the economy goes to owners of capital rather than employees.

By the way, if you're wondering what labor's share of revenue (salary cap) is for American professional sports, a quick scan shows 47% in the NFL and 53% in the NBA.  Major League Baseball doesn't have a salary cap.

Mommas, don't let your babies grow up to be Cowboys - or unskilled labor.

HR Coordinators who read my blog - don't do this.  No matter how dumb you may feel the person/organization you work for is, you'll eventually pay the price.

Of course, you'll have some nice vacations leading up to that.  You'll also probably have a nicer place as well.  In addition, wait... I'm off track.  An HR Coordinator in Hoover, AL has robbed a WalMart location of 200K across a span of three years.  More on this shifty coordinator from AL.com:

"A former employee of a Hoover Walmart is expected to plead guilty to defrauding the company out of more than $200,000. Angelia Steele entered an agreement with prosecutors in federal court last week in which she will plead guilty to one count of computer fraud, court records show. She was also ordered to pay $201,488.96 in restitution.

According to a report by Alabama Media Group, Steele worked at the Walmart store in Hoover between 2000 and 2017 as a personnel coordinator. Between May 2014 and March 2017, investigators learned at least one assistant store manager's credentials were being used to approve time card adjustments for Steele's account, which added 10,681.52 hours of reporting pay to her payroll for that time period.

Court records show that in 2014, Steele added 939.6 hours for a total unearned income of $16,827.04; in 2015, she added 3,817.34 hours for $70,239.12; in 2016, she added 4,964.65 hours for $96,339.76; and in 2017 she added 960 hours for $18,083.04.?

How did this happen?  It's pretty easy to see.  It could happen in a lot of places:

1.  The coordinator was responsible for payroll.

2.  There's enough OT flowing through the location that the coordinator could use someone's sign in to approve OT for herself and due to the volume of OT, it was a small % of the total.

3.  She started slow. Then she realized no one was watching and got ballsier every quarter.

4.  The operations and HR leadership side was busy enough that they never had a reason to catch it.  It just slipped through for a long period of time.  I'm guessing the ballpark payroll for a Walmart Supercenter is in the range of 10M annually.  Do 10% OT and that's 1M.  That means her 16K and 18K numbers could slip through.  But the 70K and 96K numbers she put in for OT.  Savage.  Testing, 1...2...3.... Is anyone out there?  Anyone watching?

But as with all good things, the free OT party came to an end.  My guess is that the coordinator got tagged in a wave of change.  New leadership came into the store or HR (possible she was the primary local HR contact for the store in question) and said the following:

"What is up with the OT at this store?  Angelia, run a report for me of all employees over the last 3 years with their hourly rate, the total annual amount of normal pay, the total annual amount of OT, etc.  Need it in 10 minutes and want a stamp from the system.  You know what, I'll just walk with you back to your cube and you can run it for me then..."

At which point Angelia threw up at her desk.  And then went on a Leave of Absence - approved the same day!  By... you guessed it! The same manager she was using to approve the time cards with phony OT for herself.

She was trying to wean herself of the fraudulent OT and almost made it!  Single points of failure.  HR's not immune.

Read your OT detail quarterly, HR Leaders...

This appeared in my gmail as a paid ad today (Email subscribers, click through to see the poison below):

I'm not a financial advisor.  There's probably money to be made in Bitcoin, although the SEC has issued investor warnings.

The vast, vast majority of your employees aren't qualified to evaluate Bitcoin as an investment option.  When ads like this pop up, I'm assuming they aren't offering Bitcoin as a speculative 5% of someone's portfolio - I'm assuming they want to cram all 100% of that rollover in Bitcoin for various reasons that have to do with money.

Many of your employees have 401ks parked with a previous employer.  25% know about Bitcoin and are interested in the hype.  1/5 of those would consider this ad.

It's worth you getting in front of this with a HR comms piece -  to let people know that ads are rolling encouraging 401k rollovers straight into Bitcoin and there's some danger via the SEC.  

Respect the game.