You Decide: How will the job market change?

Although the job market in North Carolina has been improving for the last five years, there still is a long way to go. The number of people employed today is 4 percent higher than before the recession and 12 percent more than in 2000. But since the turn of the century, the state’s working age population (20 to 64) is up 24 percent.

You Decide  by Dr. Mike Walden

You Decide
by Dr. Mike Walden

Yet what if I told you that over the next 40 years the number of jobs in the state could actually fall by 1.2 million! This would send the state unemployment rate to well above 25 percent. Am I just being an alarmist trying to grab headlines?

Actually these calculations are based on the work of two economists (Frey and Osborne) analyzing the concept of “technological unemployment.” Technological unemployment simply means the replacement of jobs by technology. Historical examples are vehicles replacing wagon masters, word processing programs replacing typists, and answering programs and electronic calendars replacing secretaries.

Recent research shows one of the reasons for the relatively slow recovery of jobs after the recession is the decision by more businesses to replace workers with machines and technology. This is particularly the case for routine-type jobs – jobs where the same task is being done over and over. These kinds of tasks are obviously very susceptible to being performed by technology.

However, the expectation is that as technology advances, technological unemployment will become broader and deeper. Especially as “smart technology” is developed – where the technology can gather information and make decisions – jobs beyond those that are routine-oriented will become candidates for technological unemployment.

What Frey and Osborne did was tediously analyze all jobs classified into more than 700 occupations and assigned a likelihood (probability) that each would be replaced by technology in coming decades. I then took their results and applied them to the current occupations in North Carolina.

The results were startling. Scores of occupations in our state have more than a 70 percent likelihood of disappearing. Included are occupations such as retail salespersons, cashiers, fast-food workers and office clerks. Customer service representatives, janitors and cleaners, and auto service technicians have a moderate (30 percent to 70 percent) chance of being eliminated by technology. Those with the lowest likelihood of downsizing are jobs requiring a high level of complex decision-making, like physicians, nurses, teachers and computer software developers.

I also discovered an income element to these findings. The occupations with the lowest probability of technological unemployment had the highest median salaries, while the occupations with the highest probability of technological unemployment had the lowest median salaries.

I then used Frey and Osborne’s probability of technological unemployment for each occupation together with projected growth rates in the occupation’s industry and job-to-output ratios to project the total number of jobs in North Carolina’s current occupations remaining in 2050. This is where I found there would actually be 1.2 million fewer jobs in 2050 than today.

But there’s reason for hope. Notice the 1.2 million fewer jobs is for current occupations in North Carolina. It is likely there will be new occupations created in our state over the next 40 years, just as there has been in the last 100 years. For example, when technological unemployment came to farming, factory occupations were created. When technological unemployment came to the factory, service occupations appeared.

So, along with the current wave of technological unemployment we’ll likely see many new occupations develop. What will they be? I certainly don’t have a perfect crystal ball, but I think strong arguments can be made for new occupations in several areas, including repair and maintenance of new technology; data management, analysis and logistics; efficient resource usage; global interaction; and assistance to active and independent elderly households. Each of these developing occupations follow socio-economic trends that are expected to dominate our economy in decades ahead.

This means we will have to be agile with our future educational and training systems. The downsizing of some occupations and the creation of others will occur at an erratic and often imperceptible pace. Formal and informal training programs will have to be attuned to emerging trends and be willing to rapidly shift resources away from declining occupations to growing ones. Future workers will not only have many different jobs during their careers, but also many different occupations.

We’ve always had technological unemployment, but the information-technology revolution is sparking a new wave which has not yet run its course. You decide if we’ll be ready!

Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of North Carolina State University’s College of Agriculture and Life Sciences.

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