Dean Barber

A Calm, Stable, Predictable World of Work is Not Happening

In Corporate Site Selection and Economic Development on July 9, 2017 at 2:29 pm

A world in flux, of great uncertainties, characterized by deep tectonic shifts in advanced economies, affecting the future of work. This is the world that we are living in.

We know that automation, robotics and artificial intelligence offer higher productivity, increased efficiencies, safety, convenience, and economic growth. But these digital technologies raise questions about how people will come out on the other end. Everyone will not go home with a prize.

Technology has been reshaping the workplace since the Industrial Revolution. In 1900, 41 percent of American workers were employed in agriculture, but by 2000, automated machinery had brought that number down to just 2 percent.

The difference today is the speed by which digital technologies are developing, which can disrupt jobs, skills, wages, and the nature and future of work. We might prefer a world of work that is calm, stable, and predictable but the reality is far from that, leaving many angry, confused and depressed.

I watched the angst play out this past week on television, images of mostly young protesters, identified as “anarchists” by some, battling it out with police at the G-20 Summit in Hamburg, Germany.

Without being there and wading into the crowd of an estimated 100,000 protesters to ask questions, I can only surmise that most blame governments, global institutions, corporations, and establishment “elites” around the world for causing or allowing their limited income-earning opportunities.

The very thought of having the G20, a small group meeting behind closed doors, making decisions that affect the entire world, provides plenty of fodder for the protesters. Many see capitalism itself as the main culprit.

And to some degree, I actually get that. Keep in mind that household incomes in advanced economies have been stagnating worldwide for decades, and there are increasing skill gaps among workers.

In the United States and the 15 core European Union countries (EU-15), there are 285 million adults who are not in the labor force—and at least 100 million of them would like to work more.

Collapse of the White, High-School-Educated Working Class

In this country, we are seeing a dramatic rise in “deaths of despair” from drugs, alcohol-related liver diseases and suicide among middle-aged, less educated whites who face tepid demand for their limited skills and stagnant wages.

I spoke last week to an economic developer, a friend, from Ohio whose community has been wracked by hundreds of opioid overdose deaths.

“This is real and we need to get a handle on this. We cannot ignore it,” he said.

A recent analysis by Princeton economists Anne Case and Angus Deaton paints a portrait of a gradual “collapse of the white, high-school-educated working class after its heyday in the early 1970s,” whose health, mental well-being, and attachment to the labor force have become successively worse for people born after 1945, they said.

In 2015, the two researchers discovered that death rates had been rising dramatically since 1999 among middle-aged, less educated white Americans, reversing decades of longer life expectancy.

By contrast, they found that the mortality rate has continued to decline for whites with college degrees, but also for blacks and Hispanics, who face many of the same income struggles as less educated whites.

So why a rising mortality of working-class white adults? It appears to be rooted both in worse job opportunities and increasing social dysfunction, following generations of relatively stable lives that involved job advancement and an expectation of living better than one’s parents, the researchers said.

“It seems to be about accumulating despair,” Ms. Case told the Wall Street Journal in March.

Wages aren’t rising with age now as much as they once did for high-school-educated white men, and the jobs available to them have changed with little upward mobility.

“The company man job has gone away for working-class people,” Mr. Deaton said.

A Corrosive Impact

Now, I realize that linking protesters at the G20 in Hamburg with decreased mortality among the high-school educated whites in America may be a stretch for many of you. It’s a bit of stretch for me as well.

But still I believe it so. A 2016 McKinsey Global Institute report, Poorer than their parents? Flat or falling incomes in advanced economies, finds that between 2005 and 2014, real incomes in 25 advanced economies were flat or fell for 65 to 70 percent of households, or more than 540 million people.

To suggest that the economic and social impact of that is corrosive is an understatement. We are seeing the ramifications play out in Hamburg and in Appalachia and virtually all points in between.

This is especially true in rural America, where opportunities are limited and where an embitterment has taken root against the federal government on the widespread belief that Washington has forgotten them. (I’ve seen this in countless communities and have written about it in past blogs.)

Yes, globalization has brought numerous benefits, including lifting millions of people in emerging economies into the consuming class (China in particular). But it also has eliminated millions of good-paying manufacturing jobs in this country, and make no mistake, we’re still reeling from it.

Men Not At Work

Curiously, many men have taken themselves out of the workforce, essentially given up on looking for work. Despite the low unemployment rates across much of the country, one in seven, (or 15 percent) of American men between the ages of 25 and 54 currently aren’t working—and this number has been on the rise for decades.

In a 2016 report, President Obama’s Council of Economic Advisers examined the declining labor-force participation rate and suggested that a drop-off in good jobs for low-skilled men was part of the explanation. The theory goes that these typically less educated men don’t find it worth their while to seek out bad jobs.

Employers Want Skills

What is clear is that having strong back and a good attitude is no longer enough. Employers want people with skills. A man with only a high school diploma is twice as likely to be out of work as a man who has a four-year college degree.

That is not to say that all young people should go to college and get a bachelor’s degree. People can get the needed skills through vocational training for a rewarding career, but only if it is offered, which is a sticking point in many, particularly rural places.

The lack of vocational training in many places only exacerbates the problem of men dropping out of the workforce. As I mentioned in my last blog, It’s Time to Appreciate Apprenticeships, I have been to community colleges in small towns where the only vocational classes being offered were in cosmetology.

Many experts disagree on what automation, artificial intelligence and machine learning will mean for the workforce, the economy and our quality of life. This much we do know, that for the first time, digital technologies could affect prospects for everyone in every demographic and skill level.

It will change how we work. The most pressing question is whether people will have the needed skills to perform the jobs that do remain.

Big Questions, Few Answers

Few “futurists” imagine a future with large, dependable employers that can help American workers secure income, health care, and retirement. That does not seem to be in the cards, which means the central role of employers needs a re-examination.

If large employers are no longer islands of security and stability (and they are not), what will replace them? Do we owe each other a pathway for a meaningful life of work?

These are big questions for society to grapple with that only now we are beginning to face. I am not certain what the world of work is going to look like in the future. (I have some ideas, as I believe the future of work will shape cities and regions.)

Predictions about the future of work is a fool’s game. We should remember John Kenneth Galbraith’s reminder that, “We have two classes of forecasters: Those who don’t know — and those who don’t know they don’t know.”

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. BBA helps companies and communities. Mr. Barber is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com

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