Author: Neil Harrington
LEAD’s previous work has considered automation’s potential labor market impacts at the industry and occupational level and examined the likely disparate experiences by demographic groups (race and ethnicity, sex, and age) and geography. This article discusses potential policy prescriptions for mitigating automation’s negative labor market impacts and where we go from here. Due to the unique circumstances of North Carolina’s Manufacturing industry, and the potential disruptions (positive and negative) automation can produce, future LEAD Feed articles will consider a policy framework to allow the industry to flourish.
Serious disruption potential exists, not necessarily job destruction
The data used in this series looked at work characteristics and job tasks of occupations to understand North Carolina employment’s exposure to disruption from automation. The results show which occupations automation technologies could disrupt because they have tasks that could theoretically be done by machines now or soon if technology advanced a little more. This does not mean these jobs will be eliminated; just that the current definition of these occupations could change as technology reshapes them. A few key takeaways from the series:
- About 40 percent of North Carolina employment could face high exposure to automation disruptions, slightly more than the share of national employment.
- Transportation and Warehousing, Manufacturing, and Accommodation and Food Services are among the industries that could face the most disruption.
- Many of the occupations listed as the most exposed have typical tasks that are more routine and manual.
While automation might eliminate some employment and temporarily displace some workers, it also creates new jobs and simply changes tasks within existing roles. Often, these impacts have been enough to offset any apocalyptic predictions of widespread unemployment from new technology, as evidenced by the continued rise in total employment nationally and in North Carolina.
LEAD’s research, data, and analysis to date has focused on the ability of automation to replace routine tasks. New and evolving artificial intelligence systems will likely impact an array of non-routine and creative tasks as well. As that picture becomes clearer and more quantifiable, LEAD will follow-up with additional insights on AI's potential impacts on the labor market.
Policies should focus on both worker and firm needs
Readers who have followed this series might be wondering if anything can be done to minimize the negative labor market and business impacts from automation disruption. There is. Automation and AI’s labor market impacts will unfold at varying rates, with some firms taking up automation technologies more quickly than others depending on their individual circumstances. As the impact does unfold, policies that safeguard workers from prolonged displacement and economic insecurity and address the challenges of firms for which automation might be inevitable will be important. These dual goals will necessarily require approaches that distinguish between the needs of individuals and firms.
Worker-focused policy approaches
The challenges brought about by automation that policy should tackle for workers remain unchanged: providing re-training programs and facilitating access to new internal or external job opportunities. For workers in occupations most exposed to disruption, proactive retraining now for occupations less exposed to automation might make sense. The tight labor market—both in North Carolina and nationally—means it’s relatively easy for workers to get jobs right now, perhaps especially so for individuals picking up skills that will be more in demand in the future. Generally, workforce training and other strategies to mitigate displacement and economic hardship will require a variety of approaches from different entities.
Promote transferable skills development widely.
Uniquely human skills like those identified in the NC Department of Public Instruction’s Portrait of a Graduate—adaptability, collaboration, communication, critical thinking, empathy, and more—will become increasingly important to separate human workers from machines. Emphasizing these skills and others like digital literacy at all levels of education will better prepare North Carolina’s workforce for the future of work.
Businesses will need to carry out some retraining responsibilities.
Employer-sponsored or on-the-job (OTJ) training is one strategy that has been successful for firms. Even if firms do not offer direct training, tuition assistance or other skills development benefits would be helpful. This would also afford workers who could be displaced by machines the opportunity to gain new skills and simply shift roles within a firm, not having to deal with the stress of looking for new employment. North Carolina could encourage firms to invest in training by incentivizing these activities, just as Georgia, Mississippi, Virginia, and other states have done.
Leverage the workforce system’s business relationships.
Local workforce development boards (WDBs) and career centers already have relationships with firms in their service areas. If these entities and their staff know which firms are in exposed industries, they can work to enhance or foster relationships with those businesses. By doing so, they could stay informed about companies’ strategic plans regarding automation, and consequently, be better equipped to address workforce demands by organizing training programs or facilitating the implementation of new technology. It could also make WDBs and workforce systems more responsive to mass layoff events if a firm ceases operation in an area.
Couple training with support services to ensure opportunities are widely available.
Laying the groundwork for training to prepare for automation disruptions is essential, but its effectiveness relies on individuals pursuing opportunities and transitioning to new jobs. However, switching occupations often requires returning to school or training centers, which can be disruptive and unappealing for workers who need consistent income to support their families, especially those further along in their careers. Access to support services like child care, transportation, career counseling, and more for students and individuals in training programs can make it easier to pursue further education and credentials. Many North Carolina community colleges already offer support services like child care to students, but intentionally designing new training programs that respond to automation risks with support services in mind can make it easier for workers to pursue new career options.
Firm-focused policy approaches
For businesses in exposed industries, state agencies and economic development groups should aid firms in implementing new technologies while minimizing job loss and ensuring their survival in the local community. Automation may be inevitable for some firms in highly exposed industries. Encouraging them to pursue automation now—alongside providing robust training systems for displaced workers—can minimize individual economic impacts and ensure firms remain globally competitive. This approach is especially advantageous in the current tight labor market, where finding new jobs is easier, reducing potential harm caused by automation-related displacement.
Promote small- and mid-sized business productivity.
Evidence suggests that more productive, larger firms are more likely to automate. Whether through tax incentives tied to equipment purchases, direct grants to companies, or technical assistance in securing financing for new technologies, programs that minimize the cost of automating would be especially helpful for these smaller firms. For example, the North Carolina Manufacturing Extension Partnership’s (NCMEP) technology acceleration work helps accomplish this by connecting smaller firms with technologies that can improve their productivity and providing cyber security guidance and assessments.
Enable businesses to expand apprenticeships and sector partnerships.
These initiatives, along with training tax credits, can help mitigate negative labor market impacts from automation. For example, Oregon's Hillsboro School District has successfully established early apprenticeships for high schoolers in advanced manufacturing, creating a pipeline of skilled semiconductor manufacturing workers.
Encourage employers to implement skill-based hiring alongside training.
These practices replace the typical education requirements employers look for and enable workers to transfer skills picked up in one job or training program to another employer. Governor Cooper has already taken strides toward a skill-based economy by joining more than half of the nation’s governors in the Rework America State Network and encouraging state agencies to substitute skills and experience for formal educational requirements.
Policy approaches vary based on industry
Automation looks different depending on a firm’s industry. While some policy efforts aimed at mitigating the worst labor market impacts might look the same, program design will ultimately vary based on the industry affected, perhaps especially at the firm-level. LEAD’s next series of articles will consider one of these industries in more depth: manufacturing.
Manufacturing has historical and contemporary importance to North Carolina’s economy. In 2021, manufacturing provided about 464,000 jobs or 10.3 percent of North Carolina’s total employment, the third largest sector by employment in the state. The industry paid average annual wages of about $65,884, roughly 10.5 percent higher than the average wage across all industries. Manufacturing firms serve as lynchpins in regional economies across the entire state, providing good paying, middle-class jobs in both urban and rural areas. Nearly every North Carolina county’s Manufacturing sector pays average wages higher than the average across all industries.
As we know from this research, manufacturing is also ripe for change. In many ways, it’s the most innovative industry, continuously trying to improve efficiency to attain a competitive advantage in the global marketplace. Previous waves of technological progress have certainly transformed manufacturing production processes already, and new advancements in machinery and AI will continue reshaping the industry. The next series will examine how manufacturing is evolving, consider the industry’s strengths and weaknesses, identify opportunities and threats to it.