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Preventing Displacement in the Future of Work

By Evan Schmidt

The future of work will not arrive all at once, with a thud and a sudden robot takeover. Rather, incremental changes will gradually affect how work is organized and the mix of jobs in the economy. Of course, this is already happening. Technologies, like automation, artificial intelligence, the internet of things, and more are giving rise to new occupations and phasing out old ones. McKinsey Global Institute issued a new report, The Future of Work, in July 2019 describing a nuanced picture of how different geographies, occupations, and social demographics will be impacted by these changes to work as a result of technological disruption.

  • They found that for different geographies, the size and economic engine of a community makes a huge difference in how significantly job displacement impacts that area. 25 mega-cities, or the nation’s largest cities with the most dynamic economies, like San Francisco, Chicago, or Atlanta, house 96 million people and have generated most job growth since the Great Recession. These same cities could capture 60% of US job growth through 2030.  To contrast, 54 trailing or more mid-sized cities, such as Yuba City, El Paso, Texas, or Flint, Michigan and roughly 2,000 rural counties, which collectively house 78 million people, have shrinking workforces, lower educational attainment, and higher unemployment. These cities are positioned for modest job gains, but rural counties could see a decade of flat or even negative growth.
  • Some occupations are at high risk for displacement while others will change and grow. Office support, food service, transportation and logistics, and customer service roles are at high risk of displacement in the next round of automation. At the same time, the economy will continue to create jobs, particularly roles in healthcare, STEM fields, and business services, as well as work requiring personal interaction. These changes will be uneven with new jobs appearing in some place and not others – there will be challenges in addressing these mismatches in different localities and workers will need help gaining new skills.
  • Labor market outcomes already vary across demographic groups and automation could amplify these patterns. Individuals with a high school degree or less are four times more likely to hold highly automatable jobs than those with bachelor’s degrees. Hispanic and African-American workers may be hit the hardest, with up to 12 million displaced. Nearly 15 million jobs held by young people could be lost, requiring new actions around creating career pathways for today’s students and young workers. Workers over 50 hold an additional 11.5 million at-risk jobs. Finally, middle wage jobs may shrink as growth concentrates at the high and low ends of the wage scale.
Valley Vision and SETA are partnering to prevent displacement of high-risk occupations.

Where is the Sacramento region in all of this? In the McKinsey research, metropolitan Sacramento is considered a stable city – in league with other comparable cities such as Kansas City, Fresno, Stockton, Birmingham, Alabama, Indianapolis, Indiana, and many others. These cities fall between the growth of mega-cities and the risk of trailing cities and rural areas. The Brookings Institution categorized us similarly when they did an economic assessment of our region last year and came to some similar findings about our region’s need to prepare workers for a digital future. Brookings noted that we are lagging in our attainment of digital skills. The need for digital skills is increasing significantly at all job levels, but our workers are behind in the attainment of digital skills and there are disparities across demographic groups in learning these skills, with Hispanic and African-Americans falling the furthest behind.

All signs point to the need to address these realities today. Valley Vision has been actively working to create dialogue, alignment, and action to prepare us for a digital and automated future for our regional employers, education systems, and communities. We are excited to announce a new effort to address regional Future of Work challenges. Valley Vision is working with the four Capital Region Workforce Development Boards, including the Sacramento Employment and Training Agency (SETA), Golden Sierra, Yolo County, and North Central Counties Consortium to develop our own regional analysis of high-risk occupational profiles. Much like the McKinsey report outlined, different occupations and demographic groups will be impacted differently by job displacement due to automation and other technologies. We will create a much deeper understanding of how Sacramento will be affected by these differences by defining and quantifying high-risk occupations in this region. We will be able to pinpoint the risk that our region faces when it comes to displacement and use this research to develop lay-off aversion, education, and job training strategies. This cutting-edge research will provide valuable insight and help us move past our worries about the future and move towards taking action to improve our opportunities and economy.

Valley Vision has already been active with Future of Work issues and our new project will get us to the next level. Some of the key actions we’ve taken so far:

  • We have been working with the four Capital Region Workforce Development Boards on a Future of Work initiative to understand the shape and dimensions of these changes in the Capital region since 2017. Starting with forums in Yolo, El Dorado, Yuba, and Sacramento counties, Valley Vision reviewed the preeminent research from across the country exploring these changes in the nation and used the findings to create priorities with community partners from business, education, workforce, and others.
  • In May this year, we worked in partnership with the regional Workforce Development Boards to create the Future Focus event – bringing a national futurist speaker to the region to address the coming challenges.
  • We have initiated a Digital Skills Initiative to address the gap in digital skills and ready workers for the future. Through this work we are developing strategies to prepare the workforce for the future of work as part of the regional Prosperity Strategy in partnerhship with the Sacramento Area Council of Governments (SACOG), the Greater Sacramento Economic Council, and the Sacramento Metro Chamber.
  • As part of our Digital Skill focus, we are part of the Sacramento Digital Inclusion Coalition to expanding digital equity in the region.

The Future of Work will change the dimensions of our economy and impact the opportunities throughout our nation and region. In the next few months, Valley Vision will be sharing a great deal of information about how we can best prepare for this disruption. To keep up with Valley Vision’s work, subscribe to our Vantage Point email newsletter!

Evan Schmidt is Valley Vision’s Senior Director working on the Public Opinion Surveying initiative and projects in the Healthy Communities and 21st Century Workforce strategy areas.