Rise of the machines: Automation reshapes job market

Rise of the machines: Automation reshapes job market

By Melanie Mason, Los Angeles Times October 27, 2018

FONTANA — Looking at a map of California on a projector screen, Johannes Moenius, an economics professor at the University of Redlands, hovered his mouse over the Inland Empire, which glowed with a splotch of red pixels.

The colored dots signified how susceptible an area would be to job losses caused by automation. And the alarm-bell red that covered Riverside, San Bernardino and Ontario signaled high risk — roughly 63 percent of tasks performed by workers in the area could be automated in the future.

To Moenius, the rise of robots in warehouses, factories and fast-food restaurants presents danger for places like the Inland Empire, where most residents work in logistics and the service industry and just 21 percent of adults have four-year degrees. As technology transforms the nature of work in California, how do people most at risk find their way to new jobs?

“We’re facing a major challenge,” Moenius said. “If we don’t do anything, then it will turn into an apocalypse.”

Whether confronting an increasingly automated labor market or grappling with how the gig economy is reshaping the relationship between companies and their workers, California’s next governor will have to address the changing nature of work.

That could mean rethinking how to educate Californians, remaking labor laws or considering major social safety net proposals such as a universal basic income. State government might not be able to control change in the workplace, but it will have to deal with the fallout.

The coming years “will make or break California,” said Eloy Ortiz Oakley, chancellor of the state’s community college system.

“If we don’t find a way to provide the skills and education and training necessary for the majority of Californians,” he said, “there’s going to be a lot more have-nots than we have today.”

California’s economy is booming. Its 4.2 percent unemployment rate is a record low. But experts warn the state’s labor market is particularly vulnerable to disruption from widespread automation.

“We are seeing a pretty high percentage of our workforce in relatively low-paying, low-skilled jobs,” said Somjita Mitra, director of the Institute of Applied Economics at the Los Angeles County Economic Development Corp.

Since the 2007-09 recession, the prospect of getting a well-paying job with just a high school diploma is dim.

“The challenge in the economy right now is that the kind of jobs that are being created are either at the lowest wages or the very highest wages,” Oakley said.

The rise of automation has sparked considerable angst among American workers. A 2017 Pew poll found that 72 percent of adults said they were worried about a future where robots and computers can perform human jobs.

But there’s no consensus on what the future will look like. One 2013 study, which Moenius used to build his analysis, estimated that 47 percent of American jobs were at risk of being automated. A 2016 paper put that figure at only 9 percent.

A study in 2017 posited that 23 percent to 44 percent of work hours in the United States will be automated by 2030 — particularly in jobs with a high degree of repetition such as machinists, office support and retail sales. But that study also said jobs would be added, especially among care providers such as surgeons, nurses, and construction workers.

Artificial intelligence — computers performing tasks typically done by humans — takes many forms. Computer vision, which allows machines to glean information visually, can be used in agriculture to give crops water and pesticides based on a plant’s needs.

Virtual assistants such as Siri or Alexa are being used in hotels, standing in for concierges or front desk assistants. Self-driving vehicles could upend the country’s transportation and logistics sectors, but it’s not clear how quickly those cars and trucks will be widely deployed.

“Depending on who you talk to, that’s a couple of years away or 30 years away,” said Stephen Baiter, executive director of the Oakland Workforce Development Board.

It’s one thing for a technological breakthrough to be invented, and it’s another to see businesses adopt that technology on a large scale. Experts predict that the impact on jobs will not be sudden, but more like a rolling wave.

The level of upheaval could vary by region. Moenius’ research found the Bay Area — home to Silicon Valley and highly educated workers — faces relatively low risk of job loss. The threat is higher in Fresno and Orange County.

But the area most susceptible to automation in California spans Riverside, San Bernardino and Ontario. According to Moenius, it is the fourth-most vulnerable metropolitan area in the nation, just behind other service-industry-heavy cities such as Las Vegas.

During World War II, the Inland Empire city of Fontana was home to Kaiser Steel, the Pacific Coast’s first steel mill, and was a crucial cog in the state’s vast shipbuilding industry.

But the steel jobs had withered by the 1980s — Fontana, like the rest of the region, became a bedroom community outside Los Angeles. It clawed its way back from the recession due in large part to warehouse and logistics jobs, and the service industry.

Now, on the campus of California Steel Industries Inc., the successor to Kaiser Steel, the Inland Empire is trying to reinvent itself again.

The Chaffey College Industrial Technical Learning Center, or InTech, is touted as the first public-private partnership in the state community college system. Originally envisioned as a place where companies could train workers for more advanced jobs, the program’s participants are now primarily unemployed or underemployed workers.

Training programs range from basic construction to more advanced skills like computer numerical control, which enables automated operation of machines. The center is run by local community colleges, but participants don’t earn college credits. Instead, they receive certifications based on input from local industry partners.

“Everything we do is designed by industry, for industry,” said Sandra Sisco, the center’s director.

For employers who need workers trained in HVAC repair, InTech teaches that. For companies that need employees skilled in additive manufacturing, or 3-D printing, InTech teaches that, too.

Joanna Farias, 23, attended InTech two years ago for an electrical boot-camp class. Now, in addition to her aerospace engineering studies at Cal Poly Pomona and her internship at NASA’s Jet Propulsion Laboratory, she’s returned to teach 2D and 3D design. And she won’t rule out returning as a student to pick up a new skill.

“You have to keep coming back to centers like these to get training and get updated,” she said.

Training centers and community colleges are likely to be the front-line defense against a changing labor landscape.

Since 2014, the community college system has received more than $240 million a year for career and technical education to prepare students for jobs. Last year, an online-only community college was created for working adults who want to learn new skills.

Educators at traditional schools resisted.

“Generally speaking, our academic institutions feel reluctant to place a high value on employability. Traditionally, our attitude has been: We prepare students to be better citizens, deeper thinkers,” said Oakley, the community college chancellor. “That’s all very true. But we have also become a proxy for employability, so we have to realize much more acutely the importance of job preparation in our curriculum.”

Much of the attention has centered on a gulf in the labor market. Companies continue to seek workers with college degrees. But in California, 8 million workers between ages 24 to 62 ended their studies in high school. To close that gap, some advocate more emphasis on certificates and other types of credentials that show a worker’s specific skills.

“We should focus on what an employee can do, not just their background or pedigree or educational attainment,” said David Marsh, who manages the Rework America Task Force at the Markle Foundation.

Others fear that deemphasizing degrees could exacerbate inequality.

“You end up stratifying your workforce,” said Lande Ajose, executive director of California Competes, a higher-education advocacy group. “You end up with people who have wealth or privilege who continue to get four-year degrees, and everyone else ends up with some kind of degree that is less than that.”

Education is usually seen as an issue for young people. But in a recent facilities maintenance class at InTech, the students ranged from early the 20s to mid-50s, showing how mid-career workers also need places to learn.

“It’s a really vexing problem — what do you do with that existing workforce where the occupations that are in demand are changing all around them?” said Kish Rajan, former leader of the Governor’s Office of Business and Economic Development. “They’re going to need new training, new skill-set development to be competitive.”

Chris McGarry, chief administrative officer of the Save Mart grocery company, said his business has never considered technology as a means to “strip out labor.”

But he does envision redeploying those who work at cash registers and in stockrooms, where technology can help trim costs, to positions that interact with customers, which he considers a necessity to compete with online retailers like Amazon.com.

For the United Food and Commercial Workers Union, which represents grocery clerks, that means figuring out a way to move cashiers to other parts of stores, such as butcher counters and prepared-food sections. The union is looking to apprenticeships, which have long been favored by construction and firefighters unions, as a training pipeline; a new law will expand apprenticeship to fields such as health care, retail and cannabis.

California has had some success in creating new work opportunities through its Employment Training Panel, which gives companies funding to train workers in more advanced skills. Businesses are paid only if workers are employed for at least three months after training, among other performance requirements. The program, which awarded about $100 million in contracts this year, is funded through a tax on employers that’s remained at the same rate since 1983.

“We have more demand than we have funding,” said Stewart Knox, the panel’s executive director.

There’s no shortage of policy proposals to promote lifelong learning. Some suggest a state tax credit for companies that invest in worker training. Others would lift the age limit on CalGrants, the state’s financial aid program, so people over 27 can qualify for assistance.

“What’s keeping somebody from (going back to school)? Perhaps it’s child care. What about infrastructure, like high-speed internet at the house?” Mitra said. “What are the ancillary support services we can provide to our residents and our workforce?”

The future of work is not just a matter for the classroom. The next governor will inherit a debate playing out in courtrooms and legislative chambers: How do we define the relationship between employers and workers?

The California Supreme Court sent businesses into a frenzy this year when a decision in a class action against Dynamex, a courier service, made it harder for companies to classify their workers as independent contractors instead of employees.

The fight over worker classification isn’t new. Companies have increasingly relied on independent contractors in nearly every job sector — for example, trucking, beauty salons and medical practices. Using contractors represents major savings for employers because independent contractors are not entitled to minimum wage, overtime or employer-provided benefits. A 2017 study found that about 8.5 percent of California workers were employed as independent contractors for their main jobs.

Even though the number of Californians working full time for on-demand platforms such as Uber or TaskRabbit is small — the University of California, Berkeley study estimated they are just 0.5 percent of the workforce overall — the gig economy’s high-profile emergence has inarguably shaped the debate.

Businesses are certain to turn to the next governor to buffer the impacts of the decision, either through exempting certain industries or reviving a dormant state commission to regulate wages, hours and working conditions.

Labor unions will seek to keep the court ruling intact. More people classified as employees means more opportunities for unions to organize. But advocates also say they’re fighting against erosion in the social safety net spurred by the rise of contractors. With fewer employees, companies have fewer obligations to pay into unemployment insurance or pay Social Security and Medicare taxes (The subcontractors pay their own FICA taxes).

“There’s a massive amount of investment in the social infrastructure that is lost on the independent contractor side,” said Derecka Mehrens, executive director of Working Partnerships USA, a labor-affiliated advocacy group.

The anxiety over automation colors this debate, even if it is not explicitly connected to worker classification.

“All the work we’ve done on automation just points to further erosion in job quality and potentially more independent contractor jobs,” said Doug Bloch, political director of the Teamsters Joint Council in Northern and Central California.

Both issues at their core are about the role of workers, Bloch said: “What can the next governor do to promote that (role) so workers have more power?”

The prospect of radical changes to work — a new robot-driven industrial revolution — has led to equally broad solutions being bandied about. Among the boldest is universal basic income. The concept, a fixed income for every adult with no strings attached, has been pitched as an answer to an automated future. Stockton’s millennial mayor, Michael Tubbs, this year planned a pilot program to give $500 a month to a select group of residents.

The proposal has been especially embraced in Silicon Valley tech circles, reflecting uneasiness over how their innovations may affect workers.

“There’s a surprising amount of circumspection, at the very least,” said Brian Brennan, senior vice president with the Silicon Valley Leadership Group.

The proposal inspires fierce critiques over its anticipated costs and manages to unite frequent foes in opposition.

“We could not be in more opposition,” said Rob Lapsley, who heads the California Business Roundtable. He promoted policies such as tax credits for the working poor, “rather than diversions like universal basic income that remove the personal value and financial incentive for work.”

Barry Broad, who lobbies for a number of labor unions, is similarly dismissive.

“In the labor movement, we believe very fundamentally that human beings need work,” Broad said. “What we need is a just vision for that society, not a bunch of these techno-narcissists lecturing us about how society is supposed to be constructed.”

Still, the universal basic income debate is indicative of the big-picture deliberations over the future of work that await the next governor. Should government undertake a safety net program to guard against job displacement? What about using regulation to ensure humans stay relevant in light of new technology?

The Teamsters union has used its lobbying power to carve out roles for themselves in a changing world. In San Francisco, they secured a city ordinance that encourages companies operating delivery robots to use union labor.

As commercial truck companies explore “platooning,” in which a convoy is controlled by the truck in the lead, the Teamsters pushed regulation to ensure that a company testing that technology in California has a commercially licensed driver in each truck. Government intervention has been a key part of the union’s strategy to keep workers employed.

“It’s when the government either regulates or uses the threat of regulation that the employers will come to the table,” Bloch said.

Others say the state of the economy — near-full employment is making it hard for companies to fill jobs with qualified workers — means businesses will be more open to new approaches to address workforce needs. That could mean benefits that workers could take from job to job or imposing a shorter workweek that would allow people to share jobs while taking home full-time pay and benefits.

“There is this opportunity with employers to start having the conversation about unique and creative ways to solve their labor market problems that at the same time create economic mobility and security for … workers,” said Tim Rainey, executive director of the California Workforce Investment Board.

The policy solutions differ, but the refrain from labor, business and educators is remarkably similar: What the next governor does will play a major role in determining just how scary the future of work will be.

“This is one of the biggest wealth opportunities we have in history, one of the biggest opportunities to alleviate us from burdensome work,” Moenius said. “The opportunity will only unfold if we pave the way for it today.”

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