Technological unemployment could mean 1.2 million fewer NC jobs

Although the job market in North Carolina has been improving for the last five years, there still is a long way to go. The number of people employed today is 4 percent higher than before the recession and 12 percent more than in 2000. But since the turn of the century, the state’s working age population (20-64) has increased by 24 percent.

But what if I told you that over the next 40 years, the number of jobs in the state could actually fall by 1.2 million rather than rise? This would send the state unemployment rate to well above 25 percent. Am I just being an alarmist?

Actually these calculations are based on the work of two economists, Carl Benedikt Frey and Michael A. Osborne, analyzing the concept of “technological unemployment.” Technological unemployment simply means the replacement of jobs by technology. Historical examples are vehicles replacing teamsters, word-processing programs replacing typists and answering programs and electronic calendars replacing secretaries.

Recent research shows one of the reasons for the relatively slow recovery of jobs after the recession has been the decision by more businesses to replace workers with machines and technology. This is particularly the case for routine-type jobs – jobs where the same task is being done over and over.

However, the expectation is that as technology advances, technological unemployment will become broader and deeper. Especially as “smart technology” is developed – where the technology can gather information and make decisions – jobs beyond those that are routine-oriented will become candidates for technological unemployment.

Frey and Osborne tediously analyzed all jobs classified into over 700 occupations and assigned a likelihood (probability) that each would be replaced by technology in coming decades. I then took their results and applied them to the current occupations in North Carolina.

The results were startling. Scores of occupations in our state have more than a 70 percent likelihood of disappearing. Included are occupations such as retail salespersons, cashiers, fast-food workers and office clerks. Customer service representatives, janitors and cleaners, and auto service technicians have a moderate (30 percent to 70 percent) chance of being eliminated by technology. Those with the lowest likelihood of downsizing are occupations requiring a high level of complex decision-making, like physicians, nurses, teachers and computer software developers.

I also discovered that the occupations with the lowest probability of technological unemployment had the highest median salaries, while the occupations with the highest probability of technological unemployment had the lowest median salaries.

I used Frey and Osborne’s probability of technological unemployment for each occupation together with the projected growth rate in the occupation’s industry and the industry’s current use of labor to forecast the total number of jobs in North Carolina’s current occupations in the year 2050. This is where I found there would actually be 1.2 million fewer jobs in 2050 than today.

So, along with the current wave of technological unemployment, we’ll likely see many new occupations develop. What will they be? I don’t have perfect foresight, but arguments can be made for new occupations in repair and maintenance of new technology, data management and analysis, efficient resource usage, global interaction and assistance to active elderly households. Each of these developing occupations follows socioeconomic trends that are expected to dominate our economy in decades ahead.

This means we will have to be agile with our educational and training systems. The downsizing of some occupations and the creation of others will occur at an erratic and often imperceptible pace. Training programs will have to be attune to emerging trends and willing to rapidly shift resources away from declining occupations to expanding ones.

The trends also imply future workers not only will have several different jobs over their careers, but also probably several different occupations for which new training will be needed.

We’ve always had technological unemployment, but the information-technology revolution is sparking a new wave that has not yet run its course. We need to be ready.

This story was originally published May 1, 2015 at 4:00 PM with the headline "Technological unemployment could mean 1.2 million fewer NC jobs."