Communities with large numbers of residents armed with only high school degrees or earn low salaries working low skilled positions are at risk of losing many jobs to automation and offshoring, says a new report from Ball State University’s Center for Business and Economic Research (CBER). The report, “How Vulnerable Are American Communities to Automation, Trade, and Urbanization?” also found that the rise of automation and offshoring could extend such job losses beyond the factory floor. Michael Hicks is the George and Frances Ball Distinguished Professor of Economics and director of the Center for Business and Economic Research. He joined MPT to share the report’s findings and what it means for our industry.
MPT: For the average American, how real is the risk of job loss due to automation or offshoring?
Michael Hicks: Almost every American faces technological change at work, and our workplaces are filled with new devices, ever changing software and equally importantly, new techniques for organizing the office, shop floor or commercial space. Technology will tend to automate tasks, not jobs. So, if you are in an industry where some particular task you perform is very non-routine, technology will probably complement, rather than substitute away those skills. If your job is very routinized you are at risk of job losses. Over the next wave of technology, say a generation or so, it is conceivable that half of jobs wil be replaced, with news ones appearing elsewhere and with other skills.
MPT: Which types of workers are most affected by each risk? How do automation and offshoring break down along worker income?
Michael Hicks: Trade related job losses tend to effect workers across the income and earnings spectrum. So, occupations with the highest risk of offshoring pay about the same as occupations with the lowest risk. For automation, the story is quite different. The highest 10 percent of occupations at risk of automation related job losses earn on average, about $36,000 per year. Occupations at the lowest 10 percent of automation risk make about $84,000 per year, so there is a real inequality of risk across earnings.
MPT: How has government at the federal, state, and local levels addressed this problem?
Michael Hicks: Not well I think. At the federal level, government flows much resources into education and training, but with a very low rate of return on those investments. At the state and local level, it is a very mixed story. Job disruptions mean workers will have to retrain and upgrade skills throughout their lives. That means fundamental education elements, like math, reading and basic science knowledge, along with a full suite of soft skills, like teamwork, dependability, and other skills are critical. It’s not clear to me that schools are doing well at this anywhere in the USA.
MPT: What is the difference between “footloose” and “non-footloose” jobs? What impact do they each have on the stability of local economies?
Michael Hicks: Local economic development policy tends to focus on attracting employers who can relocate. But, as our story suggests, the United States has effectively created no ‘footloose’ jobs in a half century. Thus, these policies have been hugely disappointing. In addition to spending literally hundreds of billions of dollars to shuffle manufacturing firms around the country, the focus on attracting footloose firms largely makes regions more susceptible to a downturn in the economy.
MPT: Given these trends in the U.S. labor market, what does the future hold for the average American worker?
Michael Hicks: America is still the best place in the world to work, but increasingly, education matters. Workers without some college ought to expect a lifetime of marginal economic success, but for everyone else the future can be bright. But, the future will demand relearning old skills, updating to news skills and changing occupations and location throughout the rest of the twenty-first century. ◆
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MODERN PUMPING TODAY, August 2017
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Automation and the American Worker
