Job Retraining and the Future of Work
In recent years, the face of work in the United States has been rapidly changing. As the nation begins to adopt new technologies and automation in the workplace, the demand for unskilled labor is simultaneously declining. With the expansion of alternative energy sources, the American tech sector, electric vehicles, etc., the need for technical workplace skills and advanced training is becoming more prevalent. While this new industrial revolution offers convenience and utility to consumers, it presents the national labor force with an interesting predicament. Absent some sort of intervention, one would imagine that this change could drastically increase unemployment, particularly in those who lack the skills or educational backgrounds required to perform the skilled labor high-tech firms will demand. To adequately address this evolving issue, the federal government may be forced to explore various solutions including job retraining programs or perhaps, universal basic income.
Long before the COVID-19 pandemic ushered in a new era of remote work, economists and labor experts often debated how increased automation would change the future of work in America. At first, the dominant position in such debates was that eventually, “intelligent machines” would largely displace human workers, causing mass unemployment. In recent years, however, the prevailing view on the topic has begun to shift. According to an expansive report from McKinsey & Company, experts anticipate a “net positive job growth for the United States as a whole through 2030.” How can this be the case as increased automation is set to encapsulate more and more in the coming decade? The McKinsey report concedes that while “millions of jobs could be phased out” automation will add enough jobs to offset this loss, ensuring a net positive. This prediction clearly implies that while the quantity of American jobs may not suffer, the nature of these jobs is almost guaranteed to change. At the very least, such a dramatic shift raises questions about how American workers will bridge the gap between the jobs of yesterday and those of tomorrow.
To better understand how the nature of work is changing, it is helpful to take a closer look at those industries with the highest potential for automation. For example, in 2018, numerous reports estimated that in the coming decade, the American trucking industry will lose “hundreds of thousands of jobs” as self-driving cars become commercially viable. To better understand this change, MIT researcher, Daron Acemoglu conducted a systematic review of the adoption of “industrial robots … used in car manufacturing in the United States from 1990 to 2007.” Acemoglu found that “for every robot deployed, six workers within commuting range lost their jobs, and wages for those still employed fell by 0.7%.” To say these reports are concerning would be an understatement. Moreover, for those workers who stand to lose their careers, McKinsey’s estimate net positive job creation is of little consolation.
The Legal Profession
Finally, in the face of such concerning reports about the future of work, those with advanced degrees such as lawyers may be inclined to assume that such a change poses little threat to their job prospects. Yet, such an assumption misunderstands what sort of tasks are conducive to automation. In a recent edition of Harvard Law School’s “The Practice” newsletter, authors Neville Eisenberg and Richard Susskind argued that while the entire legal profession could not be automated, there remains, “many legal tasks that are, on the face of it, routine, repetitive, and can therefore be standardized.” Thus, it is not simply unskilled positions that are faced with a fundamental change looming in the next decade. According to Forbes writer, Kimball Parker, “the further automated legal products move upstream, the more of a threat automation is to law firms.” In his piece, Parker points to the proliferation of online legal services firms such as LegalZoom and Rocket Lawyer in making this point. Though these firms have essentially tackled standardized legal tasks such as filing documents, their success shows the legal field’s potential susceptibility to disruptive tech in the coming years.
So What Now? – Solutions
Given the wave of automation poised to change skilled and unskilled labor alike, how can firms and workers hope to limit the downside of disruptive change? Moreover, what sort of intervention can ensure financial health and dignity for those who face potential unemployment? According to the McKinsey report, the U.S. “can improve outcomes nationwide by … equipping people with the skills they need to succeed … and supporting workers in transition.” While it seems that governmental support in this area will surely be needed, what exactly such support will look like is yet to be determined. Despite this uncertainty, experts and business owners alike have offered some potential prophylactic solutions to curtail looming job loss. Of course, the most obvious tool available to governments may be to offer worker retraining programs. These programs, which typically include career advice and vouchers to cover retraining costs, have already seen success at scale in countries like Sweden and Germany. A closer look at one such example may provide valuable insight on the pros and cons of this strategy in the U.S. context.
Tried and True
In Sweden, workers whose duties are replaced by intelligent machines have little fear for their personal financial security. This is because Sweden maintains a “network of job security councils jointly run by industries and unions that retrain laid-off workers…” These councils are strategically positioned to track the skills most needed across industries and steer workers toward subsidized programs that teach those skills. At first glance, this may seem like yet another utopian example of European labor standards that would never succeed in the United States. This assumption could not be further from the truth. According to Susan Lund, co-author of the aforementioned McKinsey study, increased automation by 2030, “…will require training at the mid-career level at a scale we’ve not seen in this country (the U.S.) or any other country before.” If such programs are meant to succeed domestically, the McKinsey report states that “the United States will need to look at modernizing and strengthening the social safety net to support workers as they transition between jobs.” While such a suggestion may seem idealistic, it will likely prove necessary to support those most susceptible to future job insecurity.
As previously mentioned, these evolving changes in American labor are poised to leave many underprivileged communities ravaged by unemployment. Without an expanded social safety net, technological advances and increased automation could exacerbate the already widening wealth gap between America’s dense urban areas and its rural communities. Specifically, Lund and her co-authors found that just 25 counties (dubbed “megacities”, “high-growth hubs”, and “urban peripheries” respectively) are estimated to account for 60% of net job growth by 2030. Not surprisingly, this leaves less educated workers in rural communities who live paycheck-to-paycheck at risk of severe financial distress. As the report notes, without any support, “even a short period of disruption could provoke tremendous stress” for such individuals. If left unchecked, these changes could further divide citizens on the opposite sides of this spectrum, leaving America more polarized and less united than ever in the 21st century. To avoid this sort of economic and political fallout, perhaps even more drastic solutions are in order.
As this analysis has shown, it is highly unlikely that worker retraining programs alone will be enough to minimize American unemployment and wage insecurity in the face of vast technological change. Even in countries like Sweden that currently use retraining programs, much of their success is predicated on the social safety nets that keep workers “afloat” as they gain new skills and begin new careers. Thus, over the next decade in the U.S., a robust social safety net may need to include universal basic income (UBI) to help bridge this gap. By definition, UBI is a “government program in which every adult citizen receives a set amount of money regularly.” The program is seen as a potential alternative to need-based social programs that often require a high degree of bureaucratic involvement. In recent years, the possibility of implementing such a program in the United States has gained traction with presidential candidates such as Andrew Yang, who made UBI a campaign staple. Specifically within the realm of automation and unemployment, even entrepreneurs such as Elon Musk have spoken out about the need for UBI. According to Musk, “ultimately we will have to have some kind of universal basic income…I don’t think we are going to have a choice.” While Musk didn’t delve into the specifics of UBI implementation during this speech, he labeled the potential for unemployment a “massive social challenge.” This leaves one wondering how such a program could exist in the U.S. (or elsewhere) and how it could plausibly be funded.
According to former presidential candidate Andrew Yang, universal basic income in the United States is not as far-fetched as it may seem. The plan has garnered support from famous economists such as Milton Friedman and even passed in the U.S. House of Representatives twice in 1971. One state (Alaska) already has its own state-level form of UBI funded by the valuable oil extracted there. So how could the federal government fund a similar program on a national level? Yang and many others believe that the most effective way to do this would be via a Value-Added Tax or (VAT). This value-added tax would generate revenue, particularly from the sales of large tech firms (i.e. Amazon, Apple, Google) which have come under fire recently for their avoidance of tax liability. While this plan makes sense in theory, it seems the United States is still rather far from accomplishing such a goal in reality. Adopting a value-added tax regime like that of the EU would take significant time and bureaucratic resources. Moreover, diverting these funds to support a form of UBI would likely entail an intense political struggle that may endure long after mass unemployment impacts these vulnerable communities. Until this idea gains more traction with those in Congress, it seems UBI in the United States is little more than an optimistic wish.
Ultimately, the prospect of being replaced by a fixed-cost, intelligent machine is threatening for any worker in modern America. Particularly now, as inflation reaches new highs and consumers are losing purchasing power by the day, this forecast becomes all the more concerning. While providing the necessary support for an estimated 20+ million Americans is a daunting governmental task, it is imperative that these workers be treated with the respect and human dignity they deserve. Whether future administrations will opt for some combination of retraining and UBI or a different solution entirely remains unknown. However, with the American economy already undergoing massive change, this decision may be required much sooner than most would imagine.
Brandon Richards is currently a 2nd year student in the 3-year JD/MBA program at Cornell University. Brandon graduated from Villanova University in 2020 with a Bachelor’s in Business Administration in both Economics and Real Estate. After graduation in 2023, Brandon plans to leverage this strong foundation in business and law as a corporate associate attorney in the mergers and acquisitions space. He currently serves as an associate on the Cornell Journal of Law and Public Policy.
Suggested Citation: Brandon Richards, Job Retraining and the Future of Work, Cornell J.L. & Pub. Pol’y, The Issue Spotter, (May 21, 2022), http://jlpp.org/blogzine/job-retraining-and-the-future-of-work.