Why The Coming Jobs Crisis Is Bigger Than You Think

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The incoming Trump administration has made job creation a national priority. But here is a sobering prediction: No matter which political party holds the White House or Congress, over the next 25 years, 47% of jobs will likely be eliminated by technology and globalization, according to WorkingNation. It’s a phenomenon called “structural unemployment” and it affects nearly all industries and even white-collar workers. Venture capitalist Art Bilger founded WorkingNation to sound the alarm about the coming crisis and to spark discussions about potential solutions.

Bilger believes the nature of employment is fundamentally changing and cannot be reversed. But workers, businesses and the government can prepare for it if they work together — starting with stepped up infrastructure spending that has bipartisan support. He recently joined the Knowledge@Wharton Show, which airs on Sirius XM channel 111, to discuss his prescription for ameliorating the coming jobs crisis, and what his organization and others have tried so far. 

Jobs Crisis

An edited transcript of the conversation follows.

Knowledge@Wharton: Your organization did a report on the state of the job market prior to the election. What are some of the necessary things that the next president, his cabinet and the Congress need to address?

Art Bilger: You’ve got to start by understanding what the circumstances are out there, because in my three-year journey, it has been quite amazing to [see how little of the crisis is perceived by] even by the most sophisticated people. I have laid [the problem] out to major news executives, foundations, corporate executives — and people haven’t really understood the magnitude of this and how quickly things are changing.

[The idea] came to me three years ago at a dinner in New York … and the guest speaker was Larry Summers. … When he opened it to questions, I said, “Dr. Summers, as an economist, a former Secretary of the Treasury and as an educator, can you explain to the audience here how the most advanced economic society on the planet will continue to thrive and possibly even survive with a 30% dropout rate from high school?”

I said, “We’re talking about a third of the population that doesn’t have the skills for the jobs of today, let alone the jobs of 10, 20, 30 years from now.” And then, I said, “And to compound it, we’re doing something extremely well, putting aside cost, and that’s longevity.” So I said, “Here’s the math: A third of the population drops out at 15 and we keep them alive to 85. What do you do?”

“We could lose 47% of all our jobs within 25 years.”

I won’t go into the details of all the back and forth, but the reason I am sitting here now is that when he left the stage, I got up and went to the men’s room, and a guy in the audience chased me down, and when I came out, another guy chased me down. Two more came to my table that night, each of them saying, “I’ve never thought about this.” And I said, “If these major investors and top corporate executives in New York don’t understand this, then the average American doesn’t.” And I have been on this journey ever since.

Knowledge@Wharton: Maybe it’s just the culture or where people are in their particular careers, or where a company is in its life cycle, but it doesn’t even occur to them that this is an issue.

Bilger: When I posed the question, I narrowed it down to basically just education and longevity. But then you add to that [the impact of] globalization. Put a billion people into the global workforce at lower price points than we work for here. Great for the globe, not so good for jobs here. … So, when you take globalization, technology, longevity and broken education, put those four together, … the slope of the curve [based on the] change in jobs and skills measured against time has never been as steep as it is today. Matter of fact, we don’t even understand how steep it really is. And that’s the issue.

Knowledge@Wharton: In order to be able to tackle that steep curve, the solution can’t just come from corporate America. It has to come from a variety of different sources, right?

Bilger: Yes, but first of all, you have to recognize it, you’ve got to create the awareness. After that, then our philosophy is that the solutions are local. It’s not to say that federal tax policy and budget policy can’t influence matters, but the solutions themselves will be created by corporations, by not-for-profits, by academic entities, by local government. There are entities out there that are really doing very interesting stuff, but it has little to no visibility. A key part of what we’re trying to do is create awareness through storytelling.

… As we’ve watched [presidential candidates] Donald Trump and Bernie Sanders build their movements over the last year and a half, they made the point that we don’t have to look to tomorrow [for employment disruption]. It’s here today. Donald Trump’s election, which I believe was very much facilitated by the pain and discomfort at local levels, [was] about economics and jobs.

“It’s not just about the bottom 20%. This is about the lower-middle class, the middle-middle-class, the upper-middle class.”

Knowledge@Wharton: Are you optimistic that this is an issue that will be addressed in the near term?

Bilger: I believe there will be tremendous action that will take place. [The Trump and Sanders movements that tapped into job insecurity fears have] made my job of creating awareness much easier. Now, the key is [collaboration among] corporations, nonprofits, academics and local government to better understand and accelerate a lot of the programs they’re already thinking about. There are federal policies that can influence it. … Listen, the whole infrastructure job discussion that they’re talking about now is one of the stories that we were actually going to tell.

Knowledge@Wharton: How significant will be the jobs crisis?

Bilger: A study out of Oxford shows that we could lose 47% of all our jobs within 25 years … through a combination of globalization, automation and the fact that so many people don’t have the skills that will be required for those jobs. There are many corporations out there today who will tell you they have plenty of jobs they can’t fill. They are developing apprenticeship programs, things like that, to re-skill the workforce.

Knowledge@Wharton: It sounds like correcting this will take two phases: corporate retraining and the educational system.

Bilger: You’ve got two levels here. The first is the typical thing that we talk about, and that is K through 12, community college, four-year college. … There’s clearly a lot that we still should be doing, changes we ought to be making [as we recognize] how jobs will be changing. It doesn’t mean that you can’t go get a liberal arts education, but even here, are there new additions to the curriculum that are a little career-oriented or skills-oriented?

The other area that we really haven’t talked about — and it’s one of the key areas I’m focused on — is that we’re going to have to re-skill the 48-year-olds in this country. We haven’t had to do that in this type of magnitude — it’s still called education — but it’s a whole other thing that we really haven’t had to do. But now, projects are being developed for that.

Knowledge@Wharton: I’ve heard from some people that it may be harder to do. Some corporations would rather choose to not reinvest in the 48-year-olds; they would rather go with the 22- and 23-year-olds. And that 40- or 50-something generation just gets kicked to the curb.

Bilger: There’s a risk of that. One of the issues in re-skilling a somewhat older workforce is, are they going to be prepared? Individually, even if the corporations want to do it, will they be prepared to be re-educated?

We’re running some small projects, and we’re already seeing the resistance level of those 48-year-olds to the concept of going back into a classroom. Now, I think there’s some pretty interesting areas that I’m focused on. The whole area of augmented reality for training and education purposes, I think, is pretty interesting. We’re exploring that, and I’d love to be able to tell that story. We’re not there yet.

“What would our society be like with 25%, 30% or 35% unemployment?”

But you know, that’s an example of how you can train that older workforce without having to sit them down in front of a blackboard or a whiteboard and redo a lot of it. The other thing is setting up internships and apprenticeship-type programs inside corporations.

We’ve been speaking with Siemens Corp. I heard the CEO speaking one day at a conference, and he was talking about the inability to fill a lot of jobs here in the U.S. What they have done — and I think they started a little over a year ago — is they brought an apprenticeship-type program like the company has in Germany to the U.S. because of an absolute need to bring skills.

Knowledge@Wharton: You mentioned autonomous vehicles and autonomous technology in general. That’s going to change the job market. For example, Budweiser made a delivery with an autonomous truck in Colorado. I mean, just the trucking industry alone is one that could see massive change in terms of its labor force in the next decade or two.

Bilger: People who drive for a living, whether it’s trucks, taxis, buses, whatever, [will be affected]. In some states, it’s one of the largest [sources of] jobs. … You are talking about a dramatic change in employment in this country. And that’s a key reason that I am doing this, because another thing that’s different is that this time, it’s about the heart of America. It’s not just about the bottom 20%. This is about the lower-middle class, the middle-middle class, the upper-middle class.

When the movie “Waiting for Superman” was made, the people on Park Avenue in New York thought it was a terrific movie, but someone else’s issue. What I’m talking about here is, this is about the children and the grandchildren of the people on Park Avenue. It will affect them directly in terms of their own jobs.

A Wall Street Journal article published about a year ago [talked about] the whole area of data and analytics. Your marketing department of 10 becomes a marketing department of two, and you get better answers. Well, guess what? Those were good jobs.

What would our society be like with 25%, 30% or 35% unemployment? … I don’t know how you afford that, but even if you could afford it, there’s still the question of, what do people do with themselves? Having a purpose in life is, I think, an important piece of the stability of a society.

Article by Knowledge@Wharton

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