Few subjects are as important, - or as challenging to predict, - as the future of jobs in our emerging digital economy. While the US unemployment rate continues to improve, - finishing 2014 at 5.6% or 8.7 million people, - almost one third of the unemployed have been jobless for over 27 weeks. The total number unemployed or underemployed, - what economists call the U6 unemployment rate, - stands at 11.2% or 17.4 million people. And, the employment to population ratio remains at under 60%, the lowest such percentage since the 1970s. “The economic challenge of the future will not be producing enough. It will be providing enough good jobs,” wrote Harvard professor and former Treasury Secretary Larry Summers in a recent WSJ article.
Technological revolutions are highly disruptive to economies and societies. This was the case for much of the Industrial Revolution, as is the case today. “The digital revolution has yet to fulfil its promise of higher productivity and better jobs,” said The Economist in a special report on Technology and the World Economy in its October 4th issue. “The modern digital revolution - with its hallmarks of computer power, connectivity and data ubiquity - has brought iPhones and the internet.” But, “it is disrupting and dividing the world of work on a scale not seen for more than a century. Vast wealth is being created without many workers; and for all but an elite few, work no longer guarantees a rising income.”
Middle class jobs have been in decline for the past few decades in the US and other advanced economies, - particularly since 2000. And, the livelihood of significant additional workers is potentially threatened, as our increasingly smart machines continue to be applied to activities requiring cognitive capabilities that not long ago were viewed as the exclusive domain of human. How will these relentless advances in technology and automation affect the balance between humans and machines in the workplace, and the skill composition of future jobs?
This critical question was addressed in a recent paper, Racing With and Against the Machine: Changes in Occupational Skill Composition in an Era of Rapid Technological Advance, by MIT’s Frank MacCrory, George Westerman and Erik Brynjolfsson along with Yousef Alhammadi from the Masdar Institute in Abu Dhabi. The paper analyzed the changes between 2006 and 2014 in the skill composition of 674 occupations using the US Government’s O*NET data base, - the most comprehensive data sets of occupational skill requirements. The period from 2006 to 2014 saw the advent of several major digital innovations, including smart mobile devices, social media, big data and analytics, cloud computing and the Internet of Things.