Preparing for the Automation Revolution

INTRODUCTION

One of the major societal shifts caused by COVID-19 was the acceleration of digital adoption, led largely by the automation of mundane tasks such as checking out at stores, ordering groceries online, and banking on our mobile devices. As a result, heart-wrenching stories about how machines stole jobs from cashiers, factory workers, and other blue-collar employees were plastered on the front page of many newspapers, leading to the common perception that automation would destroy a significant number of jobs. Many economic reports also support this claim, including a report by MIT and Boston University estimating that 2 million jobs will be lost to automation by 2025. Taking studies such as these at face value, one would argue that AI and automation will undoubtedly lead to job loss, but as with any economic theory, there is always another side to the story. In fact, some economists argue that artificial intelligence and AI will create more jobs than it destroys. In the Future of Jobs Report 2020, The World Economic Forum estimates that by 2026, 85 million jobs will be displaced because of automation, but that 97 million new jobs will be created – a net increase of 12 million jobs. Although people may never agree on whether AI will destroy or create more jobs, we can all agree that automation is poised to transform the way we work, learn, and live. In this post, I will focus on the ways in which AI will revolutionize the workforce and how individuals, businesses, and governments can take action to embrace the benefits of automation in the coming decades.

FEAR NOT, HUMANS

Throughout history, industrial revolutions caused by the introduction of new technology have boosted our productivity and led to economic advancements, but they have also caused fear and hysteria. Concerns about technological unemployment span all the way back to 1930 with Keynes’ “Economic Possibilities for our Grandchildren”, which discussed the potential for high unemployment due to technological advances exceeding the pace at which society could find new uses for labor. However, let’s consider a more recent example: the introduction of the internet – just a few decades ago, the world wide web was seen by many as a dangerous new technology, stoking fears of a global apocalypse at the turn of a new century, aka “Y2K”. Fast-forward to today, and the internet has contributed to the creation of more than 17 million jobs in the United States and now comprises 10% of US GDP. Although those fears seem irrational in hindsight, humans are hardwired to fear what they can’t understand, which is often the case when a new technology emerges. To embrace the many possibilities of automation, individuals and businesses should first strive to understand exactly what automation and AI mean for the industries they work in, and how they can prepare and position themselves for a digital future.

SOME WILL WIN, SOME WILL LOSE

To understand how automation and AI will affect certain industries and population groups, it is important to acknowledge that the detriments and benefits of AI will not be distributed evenly. As we saw during the pandemic, automation can easily replace repetitive and/or manual tasks, with a large impact on data entry & administrative clerks, assembly & factory workers, and mechanical & manufacturing personnel. The industry with the largest shift towards automation is automotive manufacturing, which employs 38% of all existing robots. Simultaneously, new jobs will also be created because of automation, with growing job demand for data analysts and scientists, AI/ML specialists, digital marketers and advertisers, and IT employees. For employees in the jobs with decreasing demand, this presents an opening to work on more high-touch and high-value jobs within their companies – but workers must be equipped to capitalize on these opportunities.

UPSKILLING & RESKILLING TODAY'S WORKFORCE

Although the opportunity to focus on more highly skilled and high-value jobs can benefit both businesses and individuals, these newly created jobs require a significant investment in the reskilling and upskilling of today’s workforce. According to the World Economic Forum, half of all workers will require some upskilling and/or reskilling to prepare for new jobs over the next five years, with high demand for skills like technology development, problem-solving, critical thinking, and analytics. These new models of labor also present an opportunity for new models of training and education that prepare young adults for an AI-centric workforce. According to the Future of Work Report 2020, 94% of business leaders now expect employees to pick up new skills on the job, often delivering training internally supplemented with online learning platforms and external consultants. I believe that employers who approach these new training models as an investment in their future, rather than an expense, will be well positioned for long-term sustainability and growth. One example of a successful upskilling initiative includes Amazon’s Upskilling 2025 Program, a $1.2 billion commitment to train 300,000 US employees and help them transition into highly skilled technical and non-technical roles. Since September 2021, more than 70,000 Amazon employees have taken advantage of an Upskilling 2025 program, preparing themselves for a more empowered future.

SOCIAL BENEFITS OF UPSKILLING

Upskilling programs like Amazon’s are not just important for empowering individuals, but also have significant social and economic importance. Gallup’s American Upskilling Study found that upskilling is associated with an 8.6% increase in annual income, or about $8,000 per year on average, as well as a higher standard of living. Thirty percent of workers said they were able to move into higher-paying jobs after gaining new skills, and 39% advanced in their current positions. Furthermore, 71% of workers who learned new occupational skills said it led to greater satisfaction at their job. Among young adults, upskilling was cited as the third most important benefit behind health insurance and disability coverage. Gallup’s Chief Economist Jonathan Rothwell also noted that if upskilling was applied on a larger scale, the practice could significantly boost economic growth and reduce wage inequality. In many ways, automation has brought increased attention to the importance of upskilling, which has a multitude of positive benefits for individuals and for society.

INVEST IN EDUCATION

In addition to company-sponsored programs for upskilling and reskilling, the public education system in the United States must also adapt to changing employer expectations. In the past, the U.S. responded to technological change by investing in education. For example, when many agricultural jobs were impacted by automation in the 1800s and 1900s, many states expanded access to public schools. After World War II, the GI Bill sent 7.8 million veterans (including my grandfather) to school from 1944 to 1956. Sadly, U.S. investment in education has stalled, placing the burden on individuals and corporations to foot the bill – today, we spend only 0.1% of GDP to help workers navigate job transitions, which is not even half of what the United States spent 30 years ago.

PUBLIC-PRIVATE PARTNERSHIPS

Although government-sponsored education is one way to prepare the youth for new automation-based careers, the traditional education system has become prohibitively expensive for many individuals, including adults without formal training in AI or technology. Outside of education, government investment in retraining programs like apprenticeships has proven to have substantial economic benefits for individuals and organizations in the form of increased lifetime earnings, reduced use of public assistance, reduced turnover, increased productivity and increased employee engagement. The New Jersey Institute for Social Justice reports that for every $1,000 the government invests in an apprentice, states realized an average net social benefit of $49,427 over the career of an apprentice. With programs like apprenticeships, businesses and governments can – and must – work together to address this transition and embrace the positive societal benefits of AI.

POTENTIAL DOWNFALLS OF AUTOMATION

One reason it is particularly important for businesses and governments to equip their employees and citizens with the skills to prepare for the automation revolution is because automation has the potential to drastically widen social and economic inequalities in the United States. As I mentioned earlier, certain industries are disproportionately affected by the introduction of technology – but certain population groups; including women, racial minorities, and less educated adults, will also be disproportionately affected. A recent McKinsey report outlines that automation will disproportionately impact Black workers who are highly concentrated in support roles that can be automated, resulting in the loss of 4.5 million jobs over the next 10 years. As a result, African Americans may be geographically displaced from job growth centers, negatively impacting income generation, wealth, and stability in Black families. According to the Government Accountability Office, workers with lower levels of education also face greater risks of having their jobs automated. If we do not equip individuals and businesses with the resources they need to dynamically adapt to new technologies, we risk leaving behind the most vulnerable members of our society.

CONCLUSION

PwC estimates that by 2030, artificial intelligence will lead to a $15.7 trillion, or 26% increase, in Global GDP, including a 14.5% increase in North America alone. Although automation has the potential to seismically shift the status quo, my hope is that individuals, businesses, and governments will take the necessary steps to embrace the transition with optimism rather than fear and find ways to contribute to a more innovative, knowledgeable, efficient, and collaborative society.