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One of our greatest challenges in today’s society is responding to the impact of technology automation. Over the last decade, technology has increasingly displaced jobs resulting in a reduction of the middle class and the widening gap of income inequality. Other factors such as offshoring play a role in job loss but the impact of technology is in full steam and there is no end in sight. My concern is that our society hasn’t come to appreciate the extent of the issue and doesn’t have a thoughtful plan to address it. The future of the middle class depends on our ability to comprehend the changing world technology has presented, and how we respond to close the jobs gap. Ignoring this issue may lead to further despair and hopelessness within our society similar to what was experienced during the presidential election season.

Technology Automation And The Job Market

The challenge of sweeping changes to the job landscape is nothing new. Previous societies have survived shifts such as the Industrial Revolution and Age of the Steam Engines. During these eras there was significant change in the job market and demand for skills. For instance, in the beginning of the 19th century Blacksmiths were experiencing a similar plight that many are today. Their craft was at risk due to industrialization. Over time Blacksmiths adjusted and learned the skills needed to survive in the new world. The same can be true for the challenges we face today, given the right focus.

The prevailing consensus is that we are in the Fourth Industrial Revolution. This period is represented by accelerated change within all industries brought on by the availability of mobile devices, pervasive internet connectivity, and innovative apps. This combined with the maturation of robotics, artificial intelligence, advanced manufacturing, 3D printing, and Internet of Things is transforming the way we live and work. The net result is a global shift leaving the middle class vulnerable to significant job loss.

Several institutions have funded research to better understand the effects of technology automation. The World Bank estimates 47% of U.S. jobs are at high risk (19% medium and 33% low risk) of automation. The impact is felt across industries ranging from transportation to agriculture to financial services. The jobs at the highest risk are routine cognitive (repetitive logic) and/or manual in nature. Examples include accounting clerks, bank tellers, and assemblers. On the opposite end of the spectrum jobs such as researchers, marketing professionals, and chefs are safe. These jobs are either non-routine cognitive (high level of creative thinking and/or social skills) or highly manual (complex dexterity) in nature. The figure below represents the World Bank’s view on the jobs impacted by technology automation.

Job Automation Probability (source: World Bank Report 2016)

Job Automation

In the beginning of the Fourth Industrial Revolution blue-collar jobs were adversely impacted by automation. Advancements in compute capacity and artificial intelligence has extended the impact to white-collar jobs. We have only scratched the surface on artificial intelligence and other transformative technologies such as the Internet of Things (IoT) and 3D printing. This translates into more jobs are at risk.

Let’s be fair and not mischaracterize technology automation, it’s not the enemy. Companies must invest in technologies to enhance customer experience, increase efficiencies, and reduce expenses. This is necessary to remain competitive in the global marketplace and respond to potential disruption brought on by startups. Technology brings tremendous benefits.

Statistics tend to paint a misleading picture of the job landscape. On the surface it appears job loss will be offset by new jobs created as a result of automation and industry growth. In reality, achieving the benefit of new job creation is subject to skills availability. Many of the new jobs require specialized skills. For instance, there are more than 39,000 Data Scientist positions open in the U.S. with the number growing daily. Displaced workers don’t have these skills and, for those inclined to pursue this profession, time is required to obtain the training needed to become a viable candidate. The jobs are there but the lag in skills exacerbates the middle-class gap.

Key Job Statistics:

  • 5 million jobs lost to automation
  • >4 million healthcare jobs created between 2012 and 2022 [1]
  • 700,000 jobs created in Renewable Energy by 2022 [1]
  • 650,000 jobs created in Information Technology by 2022 [1]
  • 130,000 jobs created in the Industrial (robotics, 3D printing, autonomous vehicles, etc.) sector by 2022 [1]

Technology automation and job displacement is a global challenge. Countries such as China, India, and the UK are in this predicament as well. The forecast is a 77%, 69%, and 35% of job loss due to technology automation. This may compound the issue in the U.S. considering exports of goods may decrease due to reduced demand in foreign markets.

Thriving in the Fourth Industrial Revolution

The future is bright if we recognize the technology automation challenge and respond in the right manner. The data shows that addressing the skills gap is absolutely critical in sustaining the middle class. This has also been confirmed by research. Citi GPS has researched the effects of technology automation and identified the top two options to enable a thriving middle-class: education and entrepreneurship. A collective response is needed from individuals, corporations, and government to address education and entrepreneurship, and counter the effects of technology automation on the job market. Let’s explore the actions that must be taken.

  1. Individual Accountability

Individuals must take personal accountability for their skills development, don’t wait on guidance from your employer. Acquiring and maintaining cognitive, social, and technical skills are essential in the Fourth Industrial Revolution. Continual improvement of these skills will greatly increase job opportunities and salary potential.

Critical Skills in the Fourth Industrial Revolution

Cognitive Social Technical
  • Higher-order cognitive skills needed for creative, design, planning, research activities
  • Complex problem solving abilities

Example Occupations:

  1. Surgeon
  2. Fashion Designer
  3. Artist
  4. Architect
  5. Photographers
  • Great social intelligence and communication
  • Persistence, grit, and perseverance
  • Open to cultures and experiences

Example Occupations:

  1. Public Relations
  2. Event Planner
  3. Social Worker
  4. Clergy
  • Manual dexterity needed to execute a complex series of tasks that contain some level of variability
  • Focused technical or vocational training
  • Skills related to specific occupations

Example Occupations:

  1. Chef
  2. Occupational Therapist
  3. Chemical Engineer
  4. Data Scientist
  5. Mathematician

There are several options for skills development. One popular option, Massive Open Online Courses (MOOCs), provides world-class instruction covering many disciplines at no cost. A reference of available MOOCs is posted on the MOOCs List website. Another great source for skills development is Apple iTunes University. Institutions from around the globe post open (free) course content ranging from engineering to philosophy. University of Oxford, MIT, Stanford, Harvard, and Yale represent some of the featured providers of course content. Individuals should take advantage of these opportunities to improve skills.

Individuals should consider entrepreneurship opportunities as an alternative to corporate America. This is a scary proposition for some but if you have a good idea that can be executed, go for it! Entrepreneurship leads to more jobs. For instance, the founders of Airbnb had a vision of improving the travel experience and used technology to make it happen. The result is a company employing approximately 2,500 people with a middle-class income. Sure, this isn’t representative of all entrepreneur ventures. Most ventures generate a fraction of these jobs but that shouldn’t discourage anyone. Small business makes up 55% of all jobs and is responsible for creating 66% of all new jobs since 1970 [2]. Entrepreneurship is vital to a thriving economy and sustaining the middle-class.

2. Corporate Responsibility

The Fourth Industrial Revolution has a significant impact on businesses. Immediate gratification has become the norm and customer expectations have shifted to a mobile-enabled, real-time, simple experience that can be consumed on their terms. At the same time there are competitive pressures from startups disrupting business models (e.g., Airbnb and the hospitality industry) and decreasing revenue. The business response to these challenges require a major shift and digital transformation is the path chosen by most organizations to succeed in their marketplace.

Good organizations incorporate talent management in their digital transformation programs and work to ensure employees obtain the skills needed to enable change. High-performing organizations understand their responsibility to continually develop talent – it’s part of the culture. These organizations invest more in talent development and empower employees to improve products and services. This is critical in the Fourth Industrial Revolution because it improves business results and develops the skills needed to fill those middle-class jobs.

I highlight this contrast to stress the importance of corporate support for development and training. Today’s job skills gap shines a light on the lack of talent and skills development focus within corporate America. Leadership must take accountability and responsibility to address this problem within their organization. Their business and viability of the middle-class depends on it.

3. Government Support

Government plays a key role in education and entrepreneurship. As previously stated, the individual is accountable for their development but the government has a strong responsibility to provide a great education. This includes providing re-training programs for adults in transition. It’s critical that government steps up in this role. The lack of adequate education will limit our ability to thrive as a society and extend the gap between the have and have not.

As previously highlighted, entrepreneurship is vital to job creation and the U.S. economy. The role of government is to ensure startups have the ability to enter marketplaces and compete on a level playing field. This includes preventing monopolies from dominating industries and thwarting competition. Maintaining rules such as Net Neutrality is critical to ensuring startups can compete.

We need to hold our political leaders accountable to ensure these issues are addressed for the good of all Americans. This is not too much to ask of our government representatives. After all, their job is to represent the interest of the people.

It’s clear that education and skills training is a critical path in countering the effects of technology automation. It maybe safe to characterize what we are experiencing as a skills shortage rather than a middle-class jobs crisis. Individuals and corporations play a direct role because both directly benefit. Government must play its part to support a thriving middle-class and sustain our position as a global leader.

What does the future hold?

The verdict is still out on the real impact of technology automation. How many jobs will be displaced? What will be the pace of job displacement? Will the net effect be a loss, potentially hollowing out the middle class? These questions reflect the anxiety many are experiencing in society today. It appears there are more questions than answers at this time.

The real effect of the Fourth Industrial Revolution is a shift to a highly cognitive, social, and technical workforce. Our focus shifts from basic tasks to solving more meaningful challenges of society – curing cancer, colonizing Mars. I’m optimistic that we will rise to the challenge and the middle-class will make the skills transition needed to thrive in the Fourth Industrial Revolution and beyond. Our history shows we are more than capable.

 

[1] Source Citi GPS: Global Perspectives and Solutions – Technology at Work v.20 Report

[2] Source SBA Government statistics

Posted by Karl

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