The Work Ahead

The Work Ahead
CFR.org
Task Force Report No. 77
The Work Ahead Machines, Skills, and U.S. Leadership in the Twenty-First Century
Updated April 2018
Download PDF

Introduction

The most important challenge facing the United States—given the seismic forces of innovation, automation, and globalization that are changing the nature of work—is to create better pathways for all Americans to adapt and thrive. The country’s future as a stable, strong nation willing and able to devote the necessary resources and attention to meeting international challenges depends on rebuilding the links among work, opportunity, and economic security. U.S. success in the twentieth century was built on the foundation that hard work and commitment by its citizens would be rewarded with jobs that provided reasonable material comfort, prospects for advancement, and a secure retirement.

That promise—of a life in which work offers opportunity and a measure of financial security—has eroded for too many, undermining faith in American institutions and weakening support for strong U.S. global leadership.

It took nearly a decade after the start of the Great Recession in 2008 for the unemployment rate to fall to its prerecession level, the slowest recovery since the Great Depression. Even with the continuing, steady recovery, the percentage of Americans working has fallen significantly, and many are still working only part-time or are marginally attached to the labor force.1  Far too many of the jobs created over the past decade have been lower-wage and part-time positions, many without the health care, paid leave, and retirement benefits that have long been the hallmarks of stable and secure employment. The lingering effects of the recession varied hugely across the country as well, with coastal and technology-based cities mostly recovering quickly and much of the industrial Midwest and South lagging.2  The relationship among work, opportunity, and economic security has been undermined for too many Americans, contributing to a spreading discontent and disillusionment that is damaging the fabric of the country.

The United States today faces an enormous twin challenge: creating new work opportunities, better career paths, and higher incomes for its people, while developing a workforce that will ensure U.S. competitive success in a global economy that will continue to be reshaped by technology and trade. If the United States cannot find ways for its companies to succeed and for its workforce to share more fully in that success, the political pressures for retrenchment—including trade protection, immigration restrictions, and possibly even restraints on technology and automation—will grow.3  The result will be an economically weaker, less confident, more divided, and more vulnerable United States, one that will retreat from global leadership. The consequences of such retrenchment will be a more unstable and less prosperous world—undoing the enormous gains made over the past seventy-five years. A United States that does not offer paths to success for more of its own people will harm not only its own prospects, but those of other countries as well.

The links among work, opportunity, and economic security have been weakening steadily for decades, and more precipitously in the twenty-first century. Real wages for Americans in the middle of the income distribution are up a mere 3 percent since 1979, and those at the bottom have lost ground.4  Inequality has widened more sharply than in any other advanced economy, with the gains accruing especially to the wealthiest; the difference in earnings between Americans in the top 10 percent of the wage pyramid and those in the bottom 90 percent has more than quadrupled since the late 1970s.5  The effects are lasting from generation to generation. In 1970, more than 90 percent of thirty-year-olds earned more than their parents had at the same age; today that number is barely half.6  And the trends have worsened over time; some 80 percent of U.S. households saw their incomes fall or remain flat in the decade after 2005, even as costs of such necessities as education, housing, and health care rose.7

Why has the link between work and rewards weakened? There is no single cause, but three in particular stand out—the rapid pace of technological change, heightened global competition, and growing barriers to opportunity.

Technology has long been the great engine of American prosperity, and the United States today remains the most innovative economy in the world.8  Innovation and the spread of technology are the drivers of productivity growth and the foundation for rising living standards, but advances in computing and robotics have also made it increasingly possible for companies to replace human labor with machines. While many new opportunities will likely be created to replace those lost, American workers face big obstacles in acquiring the education and skills needed to prosper in a more automated work environment. While there are different predictions about the pace and scale of the coming technological disruption that will be brought by artificial intelligence, driverless vehicles, and other breakthroughs, there is widespread agreement that disruption will increase. As many as one-third of American workers may need to change occupations and acquire new skills by 2030 if automation adoption is rapid, according to an estimate by McKinsey Global Institute (MGI).9

Trade expansion has similarly brought many benefits to the U.S. economy, creating new markets, attracting foreign investment, and lowering the prices of consumer goods, from clothing to food to the latest generation of smartphones. And it has benefited the world. More people—both in absolute numbers and as a percentage of global population—were lifted up from extreme poverty over the last two decades than in any other period in human history, with the poorer countries closing the income gap with their wealthier counterparts.10  Most of the gains came in countries that opened themselves to global commerce. But trade has also placed American workers in competition with overseas workers earning much less, and has freed up U.S. companies to invest and expand on a global basis. That has diminished prospects for some Americans, especially with the disappearance of manufacturing jobs that once provided a path to the middle class for those with modest levels of education.11  The United States lost some six million manufacturing jobs in the 2000s before recovering slightly in recent years; the remaining twelve million manufacturing jobs today account for less than 10 percent of nonagricultural employment.12  Intense international competition is likely to continue due to the global nature of supply chains in so many industries.

As many as one-third of American workers may need to change occupations and acquire new skills by 2030 if automation adoption is rapid.

Growing barriers to opportunity have also increased the obstacles for those seeking work. Occupational licensing has exploded: in 1950 only one in twenty American workers needed an occupational license; today one in four does. And most of these licenses are issued by states and are not automatically recognized by other states.13  Restrictive zoning has prevented the expansion of housing in many of the large cities where job opportunities are growing fastest. Public subsidies for housing have shrunk, and lack of investment in transportation infrastructure makes it harder for employees to commute long distances so they can live in cheaper housing. High-speed broadband, the arteries of the modern information-services economy, is still unavailable in many parts of the country, cutting people off from many of the opportunities of the twenty-first-century economy. And new business start-ups have slowed, diminishing the number of young, fast-growing companies that were once engines of job growth.

Unfortunately, too many U.S. political and business leaders were late in recognizing and responding effectively to these growing challenges. Many state and local governments are experimenting—often in close cooperation with nonprofit groups and foundations—with creative responses in education, worker retraining, apprenticeships, and local economic development initiatives. But these efforts have not reached critical mass across the country. Some employers are finding ways to tackle their own workforce challenges, often in the absence of supportive government policies, but self-help is usually beyond the reach of smaller companies. Federal policy has failed to keep pace with a changing economy and is doing far too little to help Americans navigate the new challenges. An effective response will require concerted action by all levels of government, as well as action by companies, educational institutions, foundations, labor unions, and others.

Work is important not only for people’s economic success but also for its ability to provide purpose and meaning, self-respect and dignity; work builds communities and allows individuals to contribute to the larger well-being of society. Every American should have the opportunity and resources needed to prepare for and pursue work that offers them a fair chance at both economic security and meaningful contributions to society. The United States should dedicate itself urgently to rebuilding the links among work, opportunity, and economic security for Americans.

Full list of endnotes
Up next
Findings
This site uses cookies to improve your user experience. By continuing to browse this site you accept the use of cookies as explained in our Privacy Policy.
Accept Decline