Tackling unemployment and the “skills gap” needs to happen at the corporate, state and local levels.
In a speech announcing his candidacy in June 2015, Donald Trump stated: “I will be the greatest jobs president that God ever created.” He repeated this promise in various ways throughout the campaign. Hyperbole aside, how much can any president, or the federal government in general, directly increase job opportunities on a significant scale in the United States?
Not very much, according to participants on a panel titled “The Future of US Labor” at the recent Wharton Nation Brand Conference.
For one thing, there are larger forces at work, according to Art Bilger, founder and CEO of WorkingNation, a Los Angeles-based nonprofit that highlights the challenges facing US employment. The main forces he named were technology, globalization, people’s increased longevity and an outdated educational system. He stated that one of the most significant issues facing our nation is the prospect of up to 40% structural unemployment—that is, long-lasting and caused by fundamental shifts in our economy. “It’s been an amazing experience to see how little understanding there is about these issues,” he said.
He showed the audience a WorkingNation-produced video which stated that within 20 years, 47% of all US jobs are at risk of being replaced by technology, according to a 2013 Oxford University study. The video described the impending (and ongoing) loss of jobs to automation. The advent of driverless vehicles would throw thousands of drivers of trucks, buses and taxis out of work. Computers threaten to replace many hospital technicians, armed with artificial intelligence that can analyze CAT scans and biopsies and even deliver low-level anesthesia. Even restaurant cooks are in danger of being replaced in the coming decades by machines that can follow recipes.
While throughout human history technological change has rendered some jobs obsolete, said the video, the pace of this change has speeded up exponentially. Since 1965, computer processing power has roughly doubled every two years. “All of the computing power that controlled the Apollo mission to the moon can now fit on a chip inside your smartphone.”
On the globalization side, blue-collar jobs likely will continue to be shipped overseas. And a new wrinkle has emerged: Even professionals such as lawyers are at risk. According to the video, law firms are beginning to outsource basic work to developing-world lawyers trained in the American legal system.
Add to this the fact that people are living longer, said Bilger, so they are participating in the workforce longer and competing for available jobs. And lastly, our current educational systems are inadequate to the pace of change.
Bilger asserted that the popularity of last years’ presidential campaigns of both Donald Trump and Bernie Sanders reflected that “millions of people are in pain” in a way largely related to jobs and the economy. “When I started on this [WorkingNation] journey three years ago, I thought I had to look out five to 10 years… but it’s here today.”
A chief economist with Boston Consulting Group, Philipp Carlsson-Szlezak, added that this problem extends well beyond the US. “Everyone’s a little bit in the same boat” when it comes to globalization, he said. For example, Americans talk about losing their jobs to Chinese workers, but many of those jobs get outsourced even further. “Samsung, for example, took their flat panel production out of China and moved it to Vietnam. Why? Because Vietnamese wages are where Chinese wages were 15 years ago.”
Local Solutions to a National Conundrum
According to Bilger, the solution to the employment problem lies not at the federal level, but with states and localities. Not that federal tax policy and budget policy don’t have an influence, he said, but real solutions happen as a result of initiatives by corporations, not-for-profits, academic institutions and local governments.
In agreement with Bilger was Martin Scaglione, the president and CEO of the nonprofit Hope Street Group, which accelerates solutions for social impact, and a former contributor to former US President Barack Obama’s Jobs Council program, Right Skills Now. “What we have seen work really well, from our experience, are regional coalitions.” He explained that these initiatives, which go by various names—coalition, collaborative, partnership—are typically composed of workforce investment boards, community colleges and other thought leaders.
“It could be NGOs [nongovernmental organizations] like Goodwill that are participating,” he added. “And they start to create a movement toward a skill-building initiative, or talent pipeline.”
Crystal Bridgeman, a senior director of workforce development programs for the Siemens Foundation, noted that her company had recently begun an initiative to build up the middle-level STEM technical workforce.
“Siemens … had been very focused for years on these kind of higher-credential jobs, whether they be engineers, or others … But what they saw was this real shortage around workers with the technical skills kind of right there in the middle.” She described this group as having “more than a high school diploma, but less than a four-year degree,” and possessing very specific technical skills for manufacturing, energy work, IT or health care.
She said that average salaries at this level start at $50,000 and the jobs have “endless ladder potential” within their industries. From a philanthropic perspective, she added, developing this group of workers would enable job growth in major metropolitan areas.
Bridgeman noted that Siemens also focuses on accelerating successful training models, and that within a year of her group’s efforts they had seen “some really great outcomes … We’ve seen states committed to advancing models around work-based learning, whether that be apprenticeships or internships.”
According to Bridgeman, while the current generation of young people—who lived through the 2008-09 recession—is open to the idea of alternative career and educational pathways, the big hurdle is one of awareness. “There really isn’t a lot of information out there about how to become a process technologist or a respiratory therapist … not as much as how you become an engineer or a doctor.”
Are Employees the Problem, or Employers?
Chauncy Lennon, a managing director and head of workforce initiatives in global philanthropy at JPMorgan Chase, agreed with Bridgeman about the lack of awareness. But he believes there are also negative perceptions of two-year and apprenticeship programs. He took issue with what he called America’s “college or bust” mentality.
“‘Go to college, spend four years, take a lot of risk’ is not a model that’s going to work for a lot of young people.” He noted that most teens start some kind of postsecondary education, but that a large number—especially low-income teens—don’t make it very far and end up with no job, no skills and often in debt. “It’s a huge loss to our economy that we don’t have those kids trained up and ready to go.”
However, Lennon cautioned, this significant supply-side problem of workers lacking the right skills can inadvertently mask what he views as a bigger demand-side problem. Do firms have a clear strategy when it comes to investing in human capital, and do they understand the kind of talent they need to be competitive? “Quite honestly, it’s hard to overstate how badly most firms do at that,” he said. “I think firms often imagine that the workers they need are just waiting outside that door ready to go … That [attitude] greatly undermines firm competitiveness.”
He noted that JPMorgan Chase has launched a series of initiatives, one of them called New Skills at Work, a five-year, multi-million-dollar project that is focused on building “the right kinds” of data infrastructure and training infrastructure and a “strong, aligned demand side.”
Scaglione said that we are starting to see a trend toward “deep employer engagement.” “There is a business imperative now; they’re starting to recognize that, whoa, I’m going to have some difficulty in my business in all kinds of dimensions if I’m not engaged in this talent development process.” So, while the efforts are local, he said, the coalition-building now includes the voice of the employer, which he believes is “absolutely critical.”
Which Jobs Will Survive?
The panelists were asked to name some jobs likely to survive the ravages of technology and globalization. Scaglione said that he believes the health care industry will continue to require “a human touch.” He said that although there will unquestionably be increasing automation, health-related jobs that will probably continue robustly will include home health care as well as information technology, engineering, logistics and transportation.
But Scaglione asserted that apart from any particular industry, the one job skill that will be needed by every worker is the ability to reinvent themselves to keep up with a swiftly-changing job market.
Bilger mentioned data analytics as a booming field, stating: “In my opinion there will not be any aspect of business, government, or not-for-profit that won’t be driven by data and analytics.” He also predicted a “massive increase” in the number of jobs in the not-for-profit world, which he said currently accounts for about 7% to 8% of US gross domestic product (GDP).
BCG’s Carlsson-Szlezak questioned the very premise of steady, widespread job loss on the scale depicted in the WorkingNation video. “I think the video does a great job of pointing to exactly those twin forces [of] globalization and technology. But both of those forces are under threat themselves.” Brexit, he said, demonstrates a large-scale resistance to globalization. And innovative companies like Uber and Airbnb have run into regulatory issues, he said, citing Airbnb’s 2016 lawsuit against New York State after the state tried to impose fines on hosts who advertise illegal short-term rentals.
“There’s a lot of challenges to technology itself,” he said. “We don’t really know how it’s going to evolve; it’s not a linear process. There could even be a popular backlash against [it].”
He also said that although the video had accurately evoked the loss of manufacturing jobs, there are other sectors such as financial services where “it doesn’t quite hold true yet.” And yet, he cautioned, “we don’t know the future; what’s going to happen when blockchain hits the back office,” he said, referring to the controversial Bitcoin-related digital ledger technology.
So, what companies need to ask themselves, said Carlsson-Szlezak, is this: Given our business model, our geographic footprint, and our segment in our given industry, what are our particular challenges? Moreover, firms must have the “agility, flexibility and adaptive strategy to actually work against those trends as they unfold.”
*[This article was originally published by Knowledge@Wharton, a partner institution of Fair Observer.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
Photo Credit: VM
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