The Impact of Robots on the Labor Market’s Evolution
03 Aug, 2015
By Dr. Charlie Grantham
Are you ready for when R2-D2 comes to your town?
One of the major trends, which blend demographic changes with technology advances, is the onward march toward greater automation in our economy. That’s a fancy way of saying, “The robots are coming.” And they are not just that warm, fuzzy image we have of R2-D2.
If you step back and look at the deeper picture this trend is really about the replacement of human labor in all kinds of activities from manufacturing to housekeeping. What started in the late 1970s as office automation is now starting to reach massive proportions.
This is one of those high probability, high impact trends. The question is: how will your community respond so it can remain a healthy, vibrant and agile place to live and work?
So, How Big is This Trend?
Depends on whom you ask. There are a number of reliable sources, but all estimates are based on assumptions of progress on the technology side. The Institute for the Future thinks that any job that pays in the $20 to $30 range is subject to robotization.
I think a reasonable estimate would be 30 percent of the current U.S. workforce could be replaced by these technologies. And that is not just factory workers as we usually think. It extends into the back office, the analysts desk and anything that meets our definition stated above. Admittedly the tactical economics of this replacement technology are still being debated but we are early on (say a five year window).
To sum up the scope of this labor market evolution, here is a quote from the staid, old line Harvard Business Review: “Left behind may be as many as 40 million citizens of no economic value in the U.S alone. The dislocations will be profound.”
Got your attention? Let’s turn to what industry sectors can be expected to be impacted first.
First to Fall
Manufacturing certainly that’s already here and growing at high rates. Close to 180,000 new robots were shipped in 2013.
Our next target is health care, at least in the preventive and diagnostic parts of the industry. We already see the first signs with computer-aided diagnosis. This coupled with wearable health sensors could revolutionize preventive and routine medical treatment.
Financial services are ripe for more automation. Most financial transactions and analytics are algorithm driven and repetitive. Except, of course, speculative trading, but the quants and automated trades may take a hit also. And you do not have to pay a machine a bonus. There is a tremendous amount of R&D work going on now about applying artificial intelligence to this sector. We are about two years out from product introduction.
Our final target is education. The current U.S. higher education systems is not producing graduates capable of competition in this emerging world of robotics.
According to “The War for Talent Has Resumed — Once Again,” published in the October 15, 2014, Herman Trend Alert: “However, the big challenge is that by 2015, 60 percent of the new jobs being created will require skills that only 20 percent of the population actually possesses.”
Again, the technology is about to come out of the laboratory. The only question which remains is: what will the delivery channel be — public or private?
College of Southern Idaho Committed to STEM Education
The College of Southern Idaho (CSI) in Twin Falls is the heart and soul of higher education in the region. It is also known for its ability to support economic development efforts, in particular with workforce training efforts. “We have a ‘whatever it takes’ attitude about supporting our businesses and industries,” says Dr. Todd Schwarz, executive vice president and chief academic officer, CSI.
CSI has a full-time staff member who works directly with companies in regard to learning their workforce training needs to bring to the college’s attention in order to develop training.
Recently, CSI hired an associate dean for STEM, who will work with faculty from the math, engineering, physical science and biology departments to create a coordinated delivery effort.
The college has also implemented a standalone STEM transfer degree. “We are working to identify specific students who would benefit the most from a certain pathway,” Schwarz says. “Most STEM students will be dual credit students from high schools so it is great to grab them and establish an academic plan.”
CSI administrators will ask legislators during the next session for additional dual credit programming support. They have asked the legislature for funding to create four transition coordinator positions. Staff will learn specific needs as well as connect postsecondary students to a higher education academic plan.
Among the thriving industries in southern Idaho are agriculture, food processing and research in those sectors. The area is home to companies including Chobani Greek Yogurt, Clif Bar, Frulact Group, Glanbia Foods, McCain Foods, Monsanto Corp., and others. A critical mass is forming in terms of research, and CSI is preparing students to transfer to universities in order to earn bachelor’s and graduate degrees. The college also assists in connecting students to internships in the area’s food industry research labs. “We are about to create a lab technician program in support of these research operations,” Schwarz says.
CSI also offers a food processing technician program, which is sustained by industry partners. “Industry is so supportive, committed and vocal about that commitment,” Schwarz says. “The efforts have already spun off a program on automation and controls to support the industry. The relationship has also created opportunities for noncredit, short-term workforce training, and apprenticeship programs.
For complete details about CSI and southern Idaho, visit www.csi.edu and www.southernidaho.org.
Implications for Cities
There are four basic implications for cities and municipalities. And they are all tied together with the assumption that the next generation of workers will be the ones who design, build and maintain this robotic infrastructure. These people (especially the younger ones) will migrate to towns and cities that provide them the quality of life they want for themselves and their children. Salary levels and taxation rates are not their primary motivators. So cities need to look at:
• Economic development infrastructure. This includes a robust technology platform that supports this technology. This implies an expansion of Internet-based networks, which are redundant so the local economy doesn’t crash because of some freak accident. And this takes a highly skilled workforce to support it. How many Internet Service Providers are there in your city?
• Workforce development. This is not your traditional ‘teach them to write a resumé kind of content. If you are being replaced by a machine you will need to get clear on what you would like to do to earn a living in the new world and develop those competencies that are now required.
This will take a different approach to developing and re-deploying workers. When designing, building and maintaining robotic technology replaces 30 percent of your workforce, you will need to show them how to be more like engineers and less like technicians. There will be a need for a long-term mentoring component to any re-training program. A lot of this will be on-the-job training.
• Workforce deployment. This is new area for civic attention. Assuming you can change the educational system to produce a good product and programs, which help people translate that knowledge into value adding abilities, then how do you match that up with industry needs? One suggestion is an automated system, which matches strengths to needs and has a component that manages the matching process.
Testing should be based on discrete competencies, which can be demonstrated. Talent will need a portfolio instead of a resumé. And on the back end, industries will have to get better at specifying their requirements. For example, “we need someone who can do X, Y, and Z as opposed to “we need someone with such and such a degree.”
The next question? Who is going to do the matching? This is most likely not a governmental function, but rather a business opportunity from a private third party.
• Funding. This is the big question. Who is going to pay for all of this? We don’t know right now. Somebody will have to invest a tremendous amount in this new civic infrastructure. Will it be the private sector to solve a labor demand problem? Will it be the cities themselves in order to attract and retain wealth-producing citizens? Or a combination?
Here is an alternative viewpoint. Right now the prevailing view of workers (from the C-suite) is that they are a liability to the company and can create losses. However, what if that mindset switches to seeing workers as an asset which create profit? So with robotics, people (talent) are the ones who make sure the work gets done, instead of doing the work themselves. A subtle shift, no doubt. But now you have a business rationale to invest in this new technology AND the development of the people who make sure it works.
This could make economic development and human resource management a profit center instead of a cost center.
Dr. Charlie Grantham, founder of the Community Design Institute has published seven books and several dozen technical papers. He is a frequent speaker at international events and a “go to” resource for the media on a wide range of workplace issues — ranging from psychology to public policy. Learn more at www.comm-design.net.
Illustration by Victor Habbick at Free Digital Photos.net