Technology is Killing Jobs for Skilled, College Educated Workers

In my 2009 book, The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future, I argued that advancing technology — and especially software automation — would increasingly threaten the jobs taken by college graduates, and might eventually undermine the incentive to attend college. At the time, this was a very unconventional view. Here’s part of what I wrote:

The unfortunate reality, however, is that the college dream is likely at some point to collide with the trends toward offshoring and automation. The fact is that college graduates very often become knowledge workers. These jobs — and in particular more routine or entry level jobs — are at very high risk from automation. The danger is that as these trends accelerate, a college degree will be seen increasingly not as a ticket to a prosperous future, but as a ticket to a job that will very likely vaporize. At some point in the future, the high cost of a college education, together with diminishing prospects for college graduates, is likely to begin having a negative impact on college enrollment. This will be especially true of students coming from more modest backgrounds, but it will have impact at all levels of society.

This is, obviously, a very unconventional view. Most economists and others who study such trends would probably strongly argue exactly the opposite case: that in the future, a college degree will be increasingly valuable and there will be strong demand for well-educated workers.

This is essentially the “skill premium” argument — the idea that technology is creating jobs for highly skilled workers even as it destroys opportunities for the unskilled. I think the evidence clearly shows that this has indeed been the case over the past couple of decades, but I do not think it can continue indefinitely. The reason is simple: machines and computers are advancing in capability and will increasingly invade the realm of the highly educated. We’ll likely see evidence of this at some point in the form of diminished opportunity and unemployment among recent graduates and also among older college-educated workers who lose jobs and are unable to find comparable positions.

We may not see an actual closing of the gap in aver-age pay for college v. non-college graduates because opportunities for workers of all skill levels are likely to be in decline. I am not suggesting that high school graduates who would have otherwise gone to college will choose to remain completely unskilled, but I do think there is likely to be a migration toward relatively skilled blue collar jobs if there is a perception that these occupations offer more security.

As new high school graduates begin to shy away from a course leading to knowledge worker jobs, they will increasingly turn to the trades. As we have seen, jobs for people like auto mechanics, truck drivers, plumbers and so forth are among the most difficult to automate. The result may well be intense competition for these relatively “safe” jobs. As high school graduates who might previously have been college-bound compete instead for trade jobs, they will, of course, end up displacing less academically inclined people who may have been a better fit for those jobs. That will leave even fewer options for a large number of workers.

Economists are now finding hard evidence that this trend has been underway since 2000. In a recently published paper, three Canadian economists argue that there has been a “great reversal in the demand for skill and cognitive tasks.”  Here’s part of the abstract for the paper:

Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together.

At present, high percentages of high school graduates are continuing to enroll in college, often taking on punishing levels of debt in the process. As nearly any recent college graduate knows, many of these people are ending up working in lower wage service jobs (Baristas for example).  I think it is entirely possible that future high school graduates will begin to look at these outcomes begin shying away from college.

Inexpensive online education may offer a partial solution, but it won’t necessarily address the fact that the most important incentive for seeking further education is being undermined. If there is no job waiting after all that work, a great many people probably won’t be motivated to make the investment, and the result may be a less educated population. In a world that is becoming increasingly complex and connected, and in a future that will hold unprecedented global challenges, the last thing we need is an an even less informed and educated population and electorate.

I think this is perhaps one of the greatest challenge we will face in the future. As technology destroys both high and low skill jobs, the conventional solutions — nearly all of which tend to emphasize still more education and more training — are very likely to be ineffective. A great many people will do all the right things but nonetheless fail to find a foothold in the economy of the future.  What will we do then?