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DSC Weekly October 18, 2022 – How the pandemic created a time warp

DSC Weekly October 18, 2022 – How the pandemic created a time warp


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How the pandemic created a time warp

Recessions, it has been said, are usually only visible in a rear view mirror. In theory, we are in a recession when the economy contracts for two quarters. In practice, however, not all recessions are the same. The last major recession, when the economy collapsed before GDP returned to pre-recession levels, was in 2020. Before that, in 2013-2014, there was a marked slowdown in the economy. economy that just came close to recession, even though unemployment was high. And before that, there was the Great Recession of 2008, which brought mass employment coupled with a long recovery time.

Today, U6 unemployment sits at 3.5%, which would have left many administrations salivating as the economy was firing on all cylinders. This condition – where you have a high employment rate while the economy is only showing moderate growth (or a very slight contraction) – may be because the structural changes that have taken place in the economy over the past two decades have accelerated as the effects of the pandemic have brought these changes forward by a decade.

It can be put another way: if you fell asleep in late 2019 and the pandemic didn’t happen, then when you woke up in 2030, that’s where the economy was trending. Working from home was only found in around 6% of all employment contracts, it is now over 45% – a number that remains stubbornly constant despite the best efforts of managers around the world. This trend was increasing in 2019, but the trend lines pointed to 2030 when this percentage was reached.

The same has happened in the cloud, as the need for telepresence, gaming, and streaming has dramatically spurred the development of cloud-based systems while accelerating the need for businesses to reduce reliance on in-house IT. due to the inability to access physical factories (most famously, when Facebook employees found themselves locked out of their headquarters). Innovations in artificial intelligence have occurred because the need for games has spurred the evolution of the GPU, accelerating machine learning systems and the growth of GPU farms. These changes were starting to happen even in 2020, but would have happened much more calmly had it not been for COVID 19.

Similar changes in the labor force occurred during the Great Reshuffle, when more than 20 million people were laid off or quit their existing jobs after being in limbo for several months. A significant percentage of this workforce simply left, people who postponed retirement or those who burned out after long hours, low wages and poor (and often dangerous) working conditions, mainly by working as frontline professions or first responders like nurses. and doctors, teachers, truckers, storekeepers.

Others moved from being in contact with people to going online, jumping from professions that were mostly well-followed to others (mostly in the gig economy) that hadn’t even appeared in the labor surveys before. This left a noticeable shortage of workers in physical retail, healthcare, services, and more. Finally, a small but significant number of workers have entered the reputation economy, selling homemade products online by producing media products, working as bloggers and video journalists and other jobs requiring the emergence of an increasingly mobile workforce.

Beyond that, the pandemic also wiped out the concept of GeoFencing, an idea that was so pervasive and intrinsic that it went unnoticed until it was gone. Much of the 19th and 20th centuries worked on a seemingly indisputable axiom: the work was where the business was. Every day, hundreds of millions of workers walked or took cars, trains, buses and planes to get to where they worked, which meant you had to live close enough to your job to get around. With the pandemic, this restriction (which had eased for a few decades before) effectively disappeared.

Companies have profited from outsourcing — using foreign workers to arbitrate labor costs — for more than three decades. With remote working suddenly becoming feasible for nearly half of the workforce, potential employees no longer needed to be in the same “geo-fenced” location as their employers and had much more choice. large number of potential employers. The implications of this are still being felt, but one consequence has been that the labor market has become more efficient, meaning employees can find more optimal jobs on their terms, not just those of their employers.

This changes quite profoundly the expectations of companies and their employees. Labor costs have risen for businesses, representing a significant change after decades of falling wages, which in turn reduce profits for investors. Given that investors’ profits make up a large share of GDP, this creates the strange recession that seems to be forming – tough working conditions but reduced profits (or even losses after outsized profits last year), coupled to excess inventory that has emerged due to demand signals being held up by supply chain delays.

One final observation: the time warp effect also shut down a lot of bad ideas that could have flourished but didn’t. Self-driving cars have proven more difficult to create than expected, although drones are becoming increasingly ubiquitous. AI is pretty good at doing things that people typically don’t want to do, like generating press releases, writing catalog descriptions, and making it easier to spark creativity. Yet its use also raises flags about copyright, privacy, and bias that won’t be resolved by technological means. The bigger question is how to ensure that creativity and innovation are valued more equitably than they currently are. I’ll get into that discussion more in next week’s column.

In Media Res,

Kurt Cagle
Community Editor,
Data Science Center

DSC Editorial Calendar: October 2022

Each month, I will update this section with many topics that I am particularly looking for and that are more likely to be featured in our flagship area. If you want to address one or more of these topics, we have the budget for dedicated articles. Please contact Kurt Cagle for details.

  • ESG (Environment-Social-Governance)
  • Digital Privacy
  • The electricity economy
  • VUCA (Volatility-Uncertainty-Complexity-Ambiguity)
  • Labeled property graphs
  • Inferential machine learning
  • Geospatial data
  • Drone traffic control
  • Linguistic Intelligence
  • ethical AI

If you want to post something else, that’s fine too, but these are areas that we think are hot right now.

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DSC Weekly October 18, 2022 – How the pandemic created a time warp

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