The Future of Jobs: Perspective Paper
Total Page:16
File Type:pdf, Size:1020Kb
THE FUTURE OF JOBS PERSPECTIVE PAPER MAY 2019 THE FUTURE OF JOBS PERSPECTIVE PAPER MAY 2019 CONTENTS EXECUTIVE SUMMARY i CHAPTER 1 INTRODUCTION 2 CHAPTER 2 THE BAY AREA ECONOMY TODAY 6 CHAPTER 3 TECHNOLOGICAL SHIFTS 16 CHAPTER 4 ORGANIZATIONAL SHIFTS 27 CHAPTER 5 COMPENSATION SHIFTS 36 CHAPTER 6 LOCATIONAL SHIFTS 44 CHAPTER 7 STRATEGIES 58 ENDNOTES 74 ACKNOWLEDGMENTS 85 EXECUTIVE SUMMARY The Bay Area is known throughout the world as an economic powerhouse, continually at the leading edge of innovation. While highly productive and diverse, our economy is also quite volatile, creating significant strains on housing and infrastructure, especially during economic booms. This Horizon Perspective Paper, entitled The Future of Jobs, explores how emerging economic changes, ranging from automation and organizational adjustments to new locational dynamics, might affect the region’s economy in coming decades. The Future of Jobs Perspective Paper is intended to: • Review key trends affecting the regional labor market and job prospects of Bay Area residents, including automation of jobs, the emergence of the “gig economy,” and an aging labor force. • Consider impacts on jobs, wages, location dynamics and job sorting within the region. • Identify strategies on the state, regional and local levels to address planning and economic development challenges associated with a changing regional economy. • Continue the conversation related to the emerging economic development role of the regional agencies following the adoption of the Comprehensive Economic Development Strategy. Intended as a report to inform the wider regional planning effort called Horizon being undertaken by the the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC), this Perspective Paper explores four interrelated facets of change related to the future of jobs: technological changes, organizational changes, compensational changes and locational changes. It concludes with a list of strategies to move the Bay Area forward. Photo - Peter Beeler Association of Bay Area Governments and Metropolitan Transportation Commission THE FUTURE OF JOBS i KEY FINDINGS employment. As ways of working changes, we should work to update our labor market and benefits structure TECHNOLOGICAL CHANGES to ensure more portability with more frequent role Automation has long improved the productivity and changes for the current and future labor force. fortunes of the Bay Area economy. A new wave of automation driven by Artificial Intelligence (AI) is expected COMPENSATION CHANGES by many to fundamentally alter the scope of tasks subject Income gains have been growing unevenly, with to automation, ranging from financial analysis and legal high gains going to the highest earning deciles while discovery to news report writing. Automation will lead incomes are stagnating at the lowest earning levels, some occupations to become obsolete and new ones as technology has generally favored degree holders. to be created, but more generally a more complex To respond to inequality, we often look to increasing division of labor between humans and machines would access to higher education. However, not all four-year exist. Applying a dataset on occupational risk to the degree holders are well off, with the lowest 25 percent Bay Area, we find that 36 percent of workers are in the of four-year college-educated workers earning less than high-risk category of automation and 45 percent in the the highest 25 percent of those with only a high school low-risk category, with just 19 percent in the middle-risk degree or less. Approaches must look at more nimble category. Examining demographics, the most at-risk forms of training and re-skilling; new partnerships groups include workers in routine jobs, workers with a should be forged between labor market groups, high school diploma or less than a college education, and educational institutions, businesses and governments Hispanic / Latino workers. The most at-risk subregions to find common cause in the ongoing preparation of the generally include North Bay counties, while San Francisco, workforce of the future. the South Bay and some parts of the East Bay currently LOCATIONAL CHANGES contain a larger share of occupations more likely to While the very technologies of dispersal, such as be complemented by automation, such as Science, telecommunications, invented in Silicon Valley have Technology, Engineering and Math (STEM) and design- allowed unprecedented collaboration across great related fields. The region must prepare for a new wave of distances, this has not led to jobs leaving the core technological transformation and ensure that the different economic centers of the Bay Area. Conversely, the subregions and their communities can transition with majority of jobs added have taken place in a handful minimal disruption. of subareas of the region. The information-based ORGANIZATIONAL CHANGES economy has paradoxically shown a preference for While “Wage and Salary” jobs remain prevalent in the clustering in core areas while more population-serving region, they are increasingly complemented by a range sectors are more widely distributed. As the economy of alternative forms of employment, such independent has grown its manufacturing output but with far fewer contracting, freelancing, app-based gig working, workers, manufacturing has given way to tech and office temporary placement and other forms of contracting. uses more generally, with often bigger buildings and These genres of work have been increasing in the Bay more workers, presenting challenges and opportunities Area, driven by outsourcing and new technology. Marin for transportation services and housing provisions in and Sonoma counties have the largest proportions of the vicinity. At the same time, suburban office parks are workers in alternative arrangements, although with upgrading their facilities to appeal to amenity-conscious significant differences in earnings and industry between employers. As amenities are added in the suburbs, the two counties. The Bay Area, as home to several the key distinction between urban and suburban job industry leaders in the gig economy, not surprisingly has sites will be in the relative accessibility of the two to a larger share of proprietors engaged in gig work within different forms of transportation. The region should the Taxi and Limousine Service industry than the rest of tackle the challenges associated with concentrated California and the rest of the country. employment growth in key hot spots, often out of sync with commensurate housing development, leading to Some workers seek alternate forms of work for reasons congested roads and overheated housing markets. of flexibility, while others would prefer more stable ii THE FUTURE OF JOBS Association of Bay Area Governments and Metropolitan Transportation Commission PRIORITY STRATEGIES THE PATH AHEAD To address the challenges listed above for each area The next step of the Horizon process, Futures, of change, priority strategies have been identified as will test the strategies introduced in this and other potential solutions for future consideration. Priority Perspective Papers against a variety of potential political, strategies are intended to be long-range planning technological, economic and environmental challenges concepts to move the Bay Area in a more sustainable that would impact the lives of Bay Area residents. direction; they are not intended to be specific short-term Ultimately, it will require the coordinated effort of many legislative proposals but rather a list of strategies for stakeholders to ensure the Bay Area remains a great further study in the next phase of Horizon. place to live in the future – both in booms and busts. CHANGES IMPLEMENTING PERSPECTIVE PAPER STRATEGY RELATED TO: AGENCY T1. Priority Production Areas to Protect Key Industrial Lands: Identify critical areas to the regional industrial land base and establish a program to protect such areas, Local governments thus helping to stabilize land markets. T2. State-Level Training Fund for Workers Displaced by Automation: Establish a state-level transition fund for automation-induced displacement and distribute State government TECHNOLOGY grants to regional programs working in partnership with county workforce development boards. O1. Lifelong Learning and Training Accounts (LLTAs): Establish LLTAs to address State or federal the decline of traditional single-employer jobs, resulting in a better trained government workforce with greater fl exibility to change careers. O2. Portable Benefi ts: Uncouple benefi ts from employment and address the rise State or federal of part-time employment by advancing a portable benefi ts system and creating a ORGANIZATION government safety net for workers in alternative arrangements. C1. Increased Child Care Support for Low-Income Families: Provide low-cost and accessible child care for low-income communities to remove barriers to working Local, regional or for young families and reduce the transportation impacts associated with driving to state government distant child care centers. C2. Wage Insurance: Develop a wage insurance program to reduce the wage State or federal losses experienced by most re-employed displaced workers while encouraging government them to continue participating in the workforce. COMPENSATION C3. Universal Basic Income: Provide households with guaranteed cash transfers, commonly referred to as a “universal basic income,” should jobs be disrupted at a State