What Should We Be Doing about a Potentially Jobless Future?

July 11, 2017; Chicago Tribune

Concerns about lost jobs, stagnant wages, economic insecurity, and the growing wealth gap have been front and center for policymakers and our nation’s political leadership. Ball State University’s Center for Business and Economic Research has just published a meta-study that should be high on their reading lists.

Drawing on a wide dataset, the study draws a disconcerting picture of the future of the American job market, one that shows a significant impact on American workers.

Roughly one in four American jobs, across the income and educational spectrum, are at risk of foreign competition in the coming years. Much more critically, approximately half of the jobs are at risk for automation. Thus, considerable additional labor market turbulence is likely in the coming generation.

For government-sponsored and private human service organizations, this amount of dislocation will be challenging. For political leaders, the challenge is to limit the potential for “increasing political polarization and divergent regional economic outcomes.”

The negative effects, particularly of automation, will not affect all parts of the population equally. According to the Chicago Tribune’s coverage of the study, while the risk of losing one’s job to trade pressures or overseas labor competition is spread evenly across income and education, the risk of being replaced by automation is highest among people making less than $38,000 a year. “Low levels of automation risk are associated with much higher wages. Indeed, occupations in the lowest automation risk decile averages more than $80,000 in annual salary, while occupations in the highest decile of automation risk have incomes less than $40,000 per year.”

Those who are currently struggling will face the biggest challenges. From the authors’ perspective:

There is reasonable worry that economic instability makes it more difficult for already disadvantaged families to provide necessities, like education fees, transportation, food and safe housing. This, in turn, will manifest itself in increased negative educational outcomes and risk to children and families, with damages accruing to populations already at greater risk.

[…]

The consequence is that job displacement or involuntary job loss due to non-performance-based reasons, such as automation or offshoring, not only has direct impacts on the economic wellbeing of people, families, and communities, but also indirectly impacts health and mortality, childhood wellbeing, educational attainment, community integration and upward mobility.

Michael Hicks, one of the study’s authors, told the Chicago Tribune that “the transition period could be extraordinarily nasty, exacerbating existing trends that have driven much of the nation’s political and social discontent.” A successful response will require an openness to reexamining the current national, state, and local strategies for responding to job dislocation, approaches which have proven to have limited success.

National efforts provide individual workers with help in learning skills needed for their next job and some limited economic support to help them bridge the gap between their old and new career. Local state efforts are focused on attracting new jobs, often by enticing employers to relocate to new areas. Neither approach seems sufficient to respond to the large-scale changes we are facing.

The broad focus of policy, especially in the most at-risk counties, has been on attracting footloose employers, which have comprised a vanishingly small share of job creation over the past half century. We argue here, as we have elsewhere, that state and local economic development policies largely misapprehend the challenges, and misapply resources to address employment and population declines.

Finding a way to retrain, relocate, and support a large segment of the workforce during a period of change is the challenge before us. The future calls for a more comprehensive approach that addresses this challenge on a national level. However, we also must seriously consider whether the changing economy can provide enough jobs to allow full employment at living wages? What kind of social safety net will be required? As NPQ has covered, some governments are piloting universal basic income programs.—Martin Levine