Dr. Mike Walden
North Carolina Cooperative Extension
There’s been good news recently about jobs. Last year (2014) 2.9 million net payroll jobs were created in the economy, the highest number since 1999. When all the numbers are in for North Carolina, the net payroll job gain for the year will be near 110,000, the largest increase since 2006.
The major reason for this good news is the recovery from the recession. The recession officially ended in mid-2009. This certainly doesn’t mean all is well in the economy; it means only that, since that time, the aggregate economy has been improving rather than declining.
Jobs follow a distinct pattern with the economy. Jobs are lost during recessions as households buy less and businesses sell less. But jobs return once the recession ends and the recovery begins, and both buying and selling gain. The ebbs and flows of jobs with recessions and recoveries are called “cyclical job changes.”
But over long periods of time – and unrelated to recessions and recoveries – jobs can change as the nature of work changes. Economists refer to these as “structural job changes,” and these may be the biggest source of job gains and losses in coming years.
For at least three decades, the nature of work has been slowly, but steadily, changing. Jobs that involve doing the same task over and over are increasingly being accomplished by machines and technology. This includes jobs in the factory, as well as some in office settings. In North Carolina, it’s estimated these routine-oriented jobs have dropped from two-thirds of all jobs in 1980 to less than half of total jobs today.
In contrast, two other categories of jobs have been gaining. First are jobs that require cognitive, problem-solving abilities. Most of these jobs are in professional, technical and managerial fields and require a four-year or advanced college degree. The jobs have not been taken by machines and technology because the tasks performed are complex and ever-changing. These jobs now make up more than one-third of the workforce, up from one-fourth 30 years ago.
Non-routine manual jobs have also increased, with their share of all jobs almost doubling (11 percent to 18 percent) in our state between 1980 and 2010. Many personal service jobs in healthcare, cosmetics and security are examples of this category. Like their cognitive counterparts, the specific situations workers face in these jobs usually vary – that is, they are on a case-by-case basis. However, the required training for these jobs is much less, and so is the pay.
As technology and modern machines advance in their capabilities, it is expected that more and more routine-oriented jobs will be replaced. Some see the factory of the future as being a floor full of machines and robots. Automation will replace people.
But what about the non-routine jobs, both the higher-paying type (cognitive) and the lower-paying type (manual)? Here the future may be both exciting and scary. Already we are beginning to see some inroads of technology. For example, some restaurants have replaced waiters and waitresses with tablets. Patrons do their ordering, paying and even tipping from the tablet at their table. And one fast-food chain recently announced it would be increasing the automation of its ordering process.
Yet what could be the biggest game-changer for jobs will be further developments in “artificial intelligence,” or AI. Think of AI as giving technology and machines an electronic brain to permit problem-solving and immediate decision-making. Probably the best-known current example of using AI is the driverless car. Once thought of as a science fiction dream only a few years ago, it has today become a reality. If the same capabilities can be applied to management, business, health and personal services, many jobs performed by humans today could be accomplished by machines.
In fact, two economists recently went through the tedious task of evaluating more than 700 specific jobs for their potential of ultimately being replaced by technology. Their result: Almost half (47 percent) of today’s jobs have a high probability of being replaced by technology and modern machinery during the next couple of decades. The list includes a wide range of occupations, from janitors, cooks and equipment installers to jewelers, computer operators and broadcast technicians!
What does this mean? There are several lessons. Many of the jobs we have today, and many of the jobs that young people are training for today, simply may not exist in 30 years. This means workers of the future will not only change employers, but will also increasingly change careers – maybe several times – during their lifetime. It also means future workers may spend longer periods of time out-of-work as they re-train for a different occupation.
There are also implications for our education system. It will have to be nimble, flexible, and up-to-date with changing job needs. Course offerings and majors – particularly at the two-year and four-year college levels – will have to be continually revised as the job market changes. Larger numbers of older students and students who are in-between careers will be in college. Ways will have to be found to quicken the pace of re-training and re-skilling so adult students will minimize their time out-of-work.
Perhaps the biggest implication is a question: What jobs will take the place of the 47 percent lost? Unfortunately, at this point most economists don’t have a good answer, other than to say that the economy will decide!
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. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks.
Previous columns are available at http://www.cals.ncsu.edu/agcomm/news-center/tag/you-decide
Related audio files are at http://www.cals.ncsu.edu/agcomm/news-center/category/economic-perspective