Six months in, we’re learning that the COVID-19 recession has spurred a trend that was apparent pre-pandemic: the substitution of technology for lower-skilled labor. We wrote about the potential for many jobs to be replaced by automation here, here, and here. Now comes a report from the Federal Reserve Bank of Philadelphia examining how the current recession is encouraging automation. Here’s the abstract:
This empirical study evaluates whether COVID-19 and the threat of future pandemics has expedited the process of automation in the U.S. The results suggest that the pandemic displaced more workers in automatable occupations, putting them at a greater risk of being permanently automated. The automatable jobs that are more vulnerable to the pandemic include jobs that do not permit remote work, have a high risk of COVID-19 transmission, or are in the most affectedsectors. While most of the job losses during the pandemic are expected to be temporary, a replication of the analysis for the Great Recession suggests the losses of automatable jobs could become permanent during the recovery. The pandemic also hit automatable jobs held by minority workers particularly hard, increasing the risk of permanent job losses for these workers who are already vulnerable in the job market.
The report points out that
,,, since the 1980s, almost all employment losses in routine occupations, which are relatively easier to be automated, occurred during recessions (e.g., Autor, 2010; Hershbein and Kahn, 2018; Jaimovich and Siu, 2018). The loss of more automatable jobs during the recessions were largely substituted by technology during the recoveries, leading to “jobless recoveries.” Many strategic and long-term adjustments may be already under way, but the pandemic could push firms to act quickly and few sectors would be immune from such a deepening of automation.
The Philadelphia Enquirer also reported on the Fed study.
The study by economists Lei Ding and Julieth Saenz Molina compared automatable jobs — such as shuttle drivers, retail salespersons, and bank tellers — to occupations at a low risk of being taken by robots, including nurses, plumbers and teachers. Workers with automatable occupations lost 4.2 more jobs per 100 than the low-risk workers as of August. There were 2.6 million jobs nationwide at risk of permanent automation last month, the study said.
The Philadelphia Fed found that automatable jobs held by workers of color were particularly hit hard, suffering 5.1 more job losses per 100 jobs than those held by white people. A possible explanation could be that Black people and Latinos are concentrated in jobs that can be done by robots and can’t be done at home, such as food service or customer service, the report said.
“Pandemic-induced automation is also likely to exacerbate many preexisting racial and economic disparities,” the report said. “The jobs threatened by automation are not evenly distributed across society.”
The full report is readable and relatively short. We recommend it. This from the concluding paragraph is worth noting.
As the pace of automation is likely being expedited by the pandemic, policymakers need to rethink how to improve the safety net for workers abruptly displaced by the pandemic, who also face an imminent risk of being replaced by technology, as well as how to prepare for the complex workforce transitions ahead induced by the potentially accelerated automation. The uncertain nature of the pandemic may cause a prolonged spell of joblessness for many displaced workers. For workers whose jobs were eventually replaced by technology, it may take years for them to settle down in more sustainable occupational opportunities. This could lead to unprecedented need for government interventions to support the jobless.
Perhaps the best government intervention is more effective promotion of postsecondary credential attainment. We have mentioned often the work of the Washington Roundtable and the Partnership for Learning on the Path to 70% Credential Attainment. The most recent report in the series, Restarting Amidst the COVID-19 Pandemic, is particularly apt given the Philly Fed’s report. The Fed’s findings echo the work of the Roundtable and Partnership and provide recommendations for increasing postsecondary credential attainment, a goal which will ultimately lift workers from job categories vulnerable to automation and increase their opportunities for career success.