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Economic analysis

A macro view of employment in the new economy

Burgess COMMENTARY

Peter Burgess

A macro view of employment in the new economy

http://www.slideshare.net/gbolles1/a-macro-view-of-employment-in-the-new-economy

Gary A. Bolles, Partner at Charrette

One in a series of presentations on the future of work and learning in the new economy.

... Published in: Economy & Finance

A macro view of employment in the new economy 1. A macro view of employment in the New Economy. 2. Suppose you could have perfect knowledge about the total amount of skills possessed by everyone in the country who wants to and can work. 3. Suppose you could have perfect knowledge about the total amount of skills possessed by everyone in the country who wants to and can work. That’s this circle. 4. Suppose you could have perfect knowledge about the total amount of skills possessed by everyone in the country who wants to and can work. That’s this circle. One person. 5. And suppose you could have perfect knowledge about the total amount of need for work in the U.S., whether you’re talking about employers, or market need for entrepreneurs. 6. And suppose you could have perfect knowledge about the total amount of need for work in the U.S., whether you’re talking about employers, or market need for entrepreneurs. That’s this circle. 7. And suppose you could have perfect knowledge about the total amount of need for work in the U.S., whether you’re talking about employers, or market need for entrepreneurs. That’s this circle. One “bundle of work” (formerly known as a Job.) 8. Put the two circles together, and you have a way of picturing the work “marketplace.” (Of course, it doesn’t function like most markets, but let’s go with it.) 9. This is the part of the workforce that’s “employed” - making a gainful living. 10. This is the market need that’s not being met – when employers haven’t yet found the “trained” workers they need. 11. This is unemployment. 12. In recessions, employment statistics look like this. More unemployed people. Fewer job openings. 13. When the economy is thriving, employment statistics look like this. Fewer “unemployed” people. More job openings. 14. But the actual picture is a little more complicated. Just because the employment statistics look good, doesn’t guarantee you’ll have a healthy economy. 15. (Incidentally, this is the median wage in the U.S. - about $26 an hour.) 16. First, there are more people checked out of the workforce today than any time since the Great Depression. They’re called “discouraged from looking,” and they’re not counted in the unemployment statistics. 17. Next, the “need” isn’t evenly distributed; today, there’s a very clear need for lower- skilled jobs, and for higher-skilled jobs, but evaporating need for what are typically called “middle-skilled” jobs. 18. College degree required. College degree not required. Next, the “need” isn’t evenly distributed; today, there’s a very clear need for lower- skilled jobs, and for higher-skilled jobs, but evaporating need for what are typically called “middle-skilled” jobs. Some college or training. 19. Finally, there’s the issue of wages. The average household below the median income is making far less than it did before the recession began. So simply having a job doesn’t mean you’re making a living wage. People here are making less than they did 10 years ago. 20. That’s complicated enough. Then, along comes automation and globalization. 21. That’s complicated enough. Then, along comes automation and globalization. Many of these are the jobs that are most at risk of being duplicated by software and robots. 22. That’s complicated enough. Then, along comes automation and globalization. Many of these are the jobs that are most at risk of being duplicated by software and robots. Those remaining are low-wage jobs - typically paying less than $15 an hour. 23. These are the next to be automated. That’s complicated enough. Then, along comes automation and globalization. 24. Let’s go back to the simple model for a moment. 25. Whenever there’s been a “big shift” in the work market – such as the change from an agricultural to an industrial economy – there’s been an inevitable disruption. 26. Whenever there’s been a “big shift” in the work market – such as the change from an agricultural to an industrial economy – there’s been an inevitable disruption. 27. The people who’ve been displaced still need to work. And the “new economy” requires workers. Governments often tried to predict what the new demand will be, and then train the displaced workers. 28. That never worked very well. But at least it was possible to try, because the transition was reasonably slow. Decades 29. What happens when the disruption occurs in a blindingly fast period of time? 30. And what happens when the people trained for the old economy aren’t necessarily equipped to work in the new economy? 31. In the past, of course, even in massive shifts like agricultural to industrial, there eventually were more jobs. 32. But what if the combination of automation (software & robots) and globalization (jobs go where they’re cheapest) shrinks “demand”? What if there is just less paid work available? 33. But what if the combination of automation (software & robots) and globalization (jobs go where they’re cheapest) shrinks “demand”? What if there is just less paid work available? 34. But what if the combination of automation (software & robots) and globalization (jobs go where they’re cheapest) shrinks “demand”? What if there is just less paid work available? 35. But what if the combination of automation (software & robots) and globalization (jobs go where they’re cheapest) shrinks “demand”? What if there is just less paid work available? 36. And what happens when the disruption occurs in a blindingly fast period of time? Years 37. All of this defines “the problem domain.” To envision “the solutions domain,” some of the questions we need to answer include: How can we empower millions of individuals to continually prepare themselves for and find meaningful work? How can employers - in fact, anyone offering paid work - commit to actions that increase opportunity for workers? How can educators provide the kinds of learning opportunities needed to support those millions of people as they repeatedly seek or create new work opportunities? Look for more on solutions in a subsequent presentation.