There may be no greater truism than saying the economy is changing, and that tomorrow's work will be very different than the work people do today. As technology spreads and more industries automate, this "news" pops up even more frequently than ever. Nonetheless, in between these redundant accounts a truly new change has arisen–one that creates tremendous opportunity with one hand, and keeps the labor force from taking advantage of it with the other.
To fully understand this new reality, let's first look at how it took shape. Since the turn of the 21st century, our economic landscape has suffered from the gradual weakening of three longstanding American traditions: a system of education that is relevant to the times; private and public investment in workforce training; and the preeminence of the traditional 9-to-5 job, as well as the assumptions of advancement that go with it. Decline in each of these traditions has eaten away a different corner of the economy. Over time, as the erosion in all three domains has spread and merged together with technological change, we have been left with a brand new problem: a job market mismatched to the skills and needs of our workforce.
In the view of McKinsey, the global consulting firm, the upcoming shift of workers to new occupations "could be on a scale not seen since the transition of the labor force out of agriculture in the early 1900s."
This dynamic has put American workers in a quandary. In many pockets of the economy, work opportunities do remain alive (and the glowing jobs report released in early March shows that a burst of new jobs can still occur from time to time). But a range of solid opportunities geared to the future is not widely accessible. In fact, our research suggests that those best able to adapt and thrive in the years ahead will be people who possess an entrepreneurial turn of mind, and the discipline to think like master craftsmen. Unfortunately, the American system of advancement has never been designed to prepare people for these requirements.
Where did stable careers go?
In your parents' day, it was reasonable to expect a structured, predictable path for career advancement that could last most if not all of your working life. You earned a specific degree, slotted into an existing job, and worked to advance within the company or industry. No more. The average tenure for an American worker in today's economy is just over four years. Companies are increasingly hiring people on a piecemeal or contingent basis.
As a result, project-based "gig" work has become more and more mainstream — a trend that is often enabled by technology. Two prominent labor economists, Larry Katz and Alan Krueger, estimated that 94 percent of the jobs added to the economy from 2005 to 2015 were in temporary, contract, independent, or freelance. A recent Marist/NPR poll found that approximately 20 percent of Americans' jobs are untraditional — a figure that could rise to 50 percent in the next ten years.
The half life of skills
There is another reason for today's job instability: Skills that correlate with a specific occupation are becoming outdated with noticeable speed. By one estimate, the "half life" of skills today is about five years, and quickly shortening. As digital skills become more central to a range of occupations, workers will have to update and add to their skill sets even more often.
Adding to that pressure is the need to compete with tomorrow's machines. In one of many predictions on this front, a study by McKinsey Global Institute, a leading consulting firm, recently found that 45 percent of job activities could be automated with existing technology; and up to a third of U.S. workers may need to change occupations. Pearson, an ed-tech company, estimates that 7 of 10 workers today are in occupations that will see increasing uncertainty by 2030. In McKinsey's view, the shift of workers to new occupations "could be on a scale not seen since the transition of the labor force out of agriculture in the early 1900s."
One one hand, the robots building these cars are stealing autoworkers' jobs. On the other hand, every robot has to be designed, built, maintained, programed, and updated. That new reality opens up a myriad of new jobs — for those who are able to seek them out. | (Courtesy Craftsmanship Quarterly)
The decline of employer investment
One would think companies would adjust to this change by ramping up their training programs, to keep the skills of their workforces relevant. In some cases, this is happening. Employers like Proctor & Gamble, Walmart, and the Container Store are just a handful of companies with robust internal employee training programs. Others like General Assembly, Galvanize, and various coding boot-camps are experimenting with new ways to train employees with skills targeted to an emerging need in a specific company.
Overall, however, internal training programs are increasingly hard to find. One recent study found a 28 percent decline in employer-paid training across the United States. According to another, an analysis by the White House Council of Economic Advisors under President Obama, the percentage of workers who benefited from employer-sponsored training between 1996 and 2008 dropped 42 percent, while on-the-job training fell by about a third.
Ironically, these cutbacks run counter to market demand. In a recent Gallup poll, Americans expressed little interest in classroom-based, off-site training programs, and even less interest in online training — which is an increasingly common approach to worker training. Workers were very enthusiastic, however, about their employers' providing real, on-the-job training. The lack of training opportunities particularly affects lower-skilled and lower-educated workers, who are the most vulnerable to automation, and those workers who would benefit most from knowing in advance the outcome to which a specific type of training would lead.
Skill development, but the wrong kind
For millions of American workers, getting ahead in an age of automation will require more and different talents — in particular, the capacity for adaptability and entrepreneurialism. A recent report on the occupations of 2030 showed that eight out of 10 top jobs will require ingenuity, creativity and judgment. In our own New America-Bloomberg report, conducted through the Shift Commission, when we looked at the emerging categories of work (in lifestyle, high-tech, and corporate settings), each one required workers to seek out their own pathway and training, if not outright invent the job they want to have.
Starting at the turn of the 21st century, the U.S. job market entered a decade of upheaval. As can be seen from this graph, at various times many more jobs disappeared than were created–the worst being just after the 2008 recession. Since 2010, those wild swings have begun to level off, leading to today’s uptick in demand for skilled workers. | (Courtesy of New America and Bloomberg)
Despite the urgency to "upskill" the workforce, our current system is not fit for this purpose. Anthony Carnevale, head of Georgetown University's Center for Education and the Workforce, summed up our mentality this way: "[T]he U.S. is an education nation, not a training nation." According to Dr. Carnevale's calculations, the U.S. spends just $8 billion a year on training, compared to $500 billion on higher education.
Meanwhile, even those adult training programs we've created have had an uneven and often disappointing record of effectiveness. "The ironic and sad truth," says Hillbilly Elegy author J.D. Vance for the Shift Commission report, "is that we have bipartisan agreement that 'retraining' is a panacea, even as we learn that the ways we've tried to retrain workers have not been that successful." One reason is that training programs almost always end up being reactive, and thus "stove-piped" to fit the industrial needs of the moment; what they continually miss are the deeper, long-term sources of dislocation — namely, automation.
To answer that challenge, our system has too often taken the easy way out. Some of the most promising, innovative approaches to credentialing and adult learning — such as "nanodegrees," virtual and augmented reality, coding boot camps, and MOOCs (massive open online courses) — disproportionately attract workers who are already digitally sophisticated or highly educated.
Put simply, we do not yet know what works at scale to retrain low- and middle-skilled adult workers for new occupations. The challenges to upskilling are especially acute for these workers — a group that receives little support from employers, and faces many obstacles to upskill, stay abreast of market trends, and search for opportunities. They must therefore navigate this territory on their own, despite having little financial cushion, scheduling flexibility, core skills, and belief in the payoff of pursuing training in new skills.
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