Turns out that having a highly-skilled population doesn’t create more low-skilled jobs

Groningen University, the Netherlands. Image: Wutsje/Wikimedia Commons.

Some good news for you: a study from Groningen University has found that having a highly-skilled population does not actually create any more jobs for low-skilled workers.

Well, it does in a way: the study found that, for every 100 highly-skilled workers, a city will create 10 low-skilled jobs are created. But – here’s the kicker – those jobs aren’t being done by low-skilled workers. In cities with a highly-skilled population, low-skilled jobs are being done by students and other high-skilled workers who haven’t been able to find high-skilled jobs.

Now before you start running in circles, clutching your face and gibbering at this earth shattering news, let’s take a moment to reflect on the fact that this is one of many politicians’ favourite myths. They just love the idea that improving the skills of an area’s population will improve the economic opportunities open to everyone.

It’s an attractive notion. The problem is that, while they’re invested in this idea, most governments refuse to invest in the other systems that are needed to make it happen.

So, assuming they want to make their favourite myth a reality, how could they do so? Here are a few ideas.

More grants for higher education, graduate opportunities and an end to unpaid internships

Cities with a highly-educated population are usually student cities – and students need money. The benefit to hiring students for low-skill jobs is that they tend to require less of a commitment. They are one of the only groups of people who benefit from zero hour contracts, they don’t tend to be overly bothered about pension plans, and they usually don’t need to take time off for family emergencies or maternity/paternity leave.

These desirable traits, combined with the pressure to undertake unpaid internships, mean that, until students have financial freedom to pursue their studies they will always be prime candidates for low-skilled jobs – reducing the number available to lower-skilled workers.

Increase affordable housing

It’s not enough to provide low-income jobs: a city also has to provide access to those jobs. Lack of affordable housing is pushing low and middle-income families further away from city centres, increasing both commute times and travel costs.

The Netherlands has done a fairly decent job of providing affordable – but in London we are starting to see what happens when rich tenants are given priority over low-income families. When homeowners were evicted from the Aylesbury and New Era Estates, they were also moving away from their jobs.

By increasing commute times and restricting housing options in the city centre, low-skilled workers are forced to pay more to get to work; meanwhile, the highly-skilled workers who can still afford to live in the centre enjoy short commutes.

And on the theme of people being able to physically access these new jobs...

Prioritise public transport in deprived areas

Good public transport links increase the value of a property. This can be seen the high desirability of houses near the Brisbane ferry landings; it’s the reason that London’s house prices are generally cheaper south of the Thames, where tube coverage is so much lower; and it’s visible in the way that the West End of Newcastle is reliant on buses while the comparatively wealthy East side of the city has a magnificent Metro.

City councils tend to invest in wealthy areas of a city, leaving lower-income areas with less access to public transport and a much longer commute. This goes beyond inconveniencing a few people so that their rich neighbours can travel with ease. For many single parent families, the extra hours spent on the bus become extra money spent on childcare – a significant hindrance to women hoping to stay in the workforce. Unless people are able to access low-skilled jobs, there will be fewer candidates and a higher rate of unemployment in poorer, less accessible parts of the city.

Value and support low-skilled workers

The majority of low-skilled jobs are manual, and while they’re vital to a city they rarely have much social cache. By providing a living wage, governments can acknowledge the importance of low-skill jobs, while also finding a way to help low-skilled workers afford to travel to and live near said jobs.

It’s not enough to just invite a load of highly-skilled workers over, sit back and expect them to pour jobs and money into the local economy. Workers need to be able to live in the same city as the place they work, they need to know that they can access these jobs without paying through the nose for childcare, and they need to know they can keep these jobs instead of being passed over for someone with a BA in history. Until that happens the idea that highly-skilled workers result in more low-skilled jobs will remain an empty promise.

 
 
 
 

The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.