Preparing America’s Workforce to Succeed in the Digital Age
As the global economy and its employment needs grow increasingly complex, the U.S. is in serious jeopardy of falling behind if we fail to prepare American workers for the future.
U.S. and world economies have been rapidly evolving to keep pace with demands of an increasingly complex Digital Age, a revolution most sharply defined by its escalating reliance on artificial intelligence (AI) and other advanced technologies. This rapid transformation of the ways competitive economies design, build and deliver their output has been aptly described as “the digitalization of everything.”
The digital revolution has profound implications for American workers today as well as for those who will prepare in our schools and colleges to enter the workplace of the future. Yet the systems of workforce preparation the U.S. economy has leaned on for many years seems suddenly too fragmented, outmoded and unprepared to meet demands of the Digital Age. As a result, the U.S. is in serious jeopardy of falling behind its global competition if our workforce systems are unable to adapt – and quickly – to prepare American workers with the skills and mindset needed for success.
Seeing the implications of the Digital Age and its profound impact on the nation’s economy and way of life, Two Paths America is concerned that our existing systems of workforce preparation are proving inadequate to the task. This White Paper is designed to summarize workforce challenges presented by the Digital Age and to lay out a straightforward, nonpartisan approach for seizing opportunities to rebuild our workforce systems for success.
The Digital Age Is Transforming Our Workplace – and Our Workforce Needs
According to a Brookings Institution report, which utilized a scoring system to quantify changes in digital content in 545 U.S. occupations between 2002 and 2016, those jobs requiring significant digital knowledge grew by more than 25 percent over that period. Significantly, the share of employment in occupations with high digital skills (defined as occupations with digital scores above 60 on a 100-point scale) ballooned from 4.8 to 23 percent of employment. Employment in occupations with medium digital skills (scores of 33 to 60) increased from 39.5 to 47.5 percent. By contrast, employment in occupations scoring with low digital skills (below 33) declined steeply from 55.7 to 29.5 percent. In total, over the study’s timeframe the share of all U.S. jobs requiring high and mid-level digital skills surged from 44.3 to 70.5 percent, underscoring the continued transition to a digitalized economy. There is every reason to believe these numbers have increased, perhaps dramatically so, since the Brookings report was compiled.
While the Digital Age is indisputably transforming the U.S. workplace by requiring new skillsets of workers and employers alike, its technologies are also bringing a number of benefits in the form of higher productivity and increased economic growth. But to harness the benefits of new technologies to their full effect it will be essential for employers – large corporations and small businesses alike – not only to upskill their current workforce by providing continuous learning opportunities, but also to create a culture of lifelong learning throughout the organization.
Employers will need to look for ways to implement AI and other technological advances in a manner that enhances their workers’ skills, thus reducing the chances of workers being completely replaced with automation. Equally important, it means each employer must actively partner with others in their industry and community to ensure strong workforce systems for future workers who will be coming up through the education pipeline.
Failure to Rebuild Our Workforce Systems Will Lead to a Deepening Opportunity Divide
In this Digital Age, up-to-date technological skills are key contributors to increased earnings at every level along the skills continuum, because workers are rewarded for their digital skills through increased wages and more employment flexibility. But a lack of skills, and thus an inability to reap these rewards, will create the very real risk of a growing Opportunity Divide – a sharp and damaging gulf between highly skilled workers and less educated or traditionally marginalized workers. The Opportunity Divide can be narrowed by workforce systems that operate effectively at every educational and income level, in all communities and across every sector of our diverse society.
The private sector will play a key role in creating reinvigorated workforce systems that can transition workers to succeed in an economy transformed by automation, advanced digital technologies and AI. However, a strong inter-reliant partnership of the private sector, non-profit organizations, educational institutions and public workforce programs will be the essential foundation for creating effective and sustainable systems.
Each sector in this necessary partnership already has its well-defined role, if not its self-entrenched silo:
The private sector, providing skills forecasting.
Educational institutions, creating the accompanying curriculum.
Public workforce programs, funding efforts that target low-income and disadvantaged workers as well as for those not covered by their employer.
Nonprofits, identifying job candidates and providing wraparound services not available through the public sector.
But going forward, all must understand that silos must be shed and old methods reconfigured, because the success of each partner in the Digital Age will depend entirely on the success of all others.
New and restructured systems built by these partners must recognize and then prioritize those workers most vulnerable to failing a successful transition to prosperous employment in the Digital Age:
Workers engaged in repetitive, high-volume tasks who are most likely to be replaced by repetitive-process automation.
Workers who lack adequate training in information technology.
Many otherwise highly skilled workers, such as derivative traders and accountants, who nevertheless will find their tasks automated over the coming decade.
Workers at small and mid-size businesses that lack the resources to upskill their workforce or to compete with larger companies for a limited pool of skilled workers.
But our existing public workforce systems, including K-12 and higher education, are not configured to close these gaps quickly or effectively for individuals facing displacement by automation or for companies that are struggling to find workers with in-demand skills. Held back by years of tradition and inertia, many of our educational system’s metrics are aligned to inputs not outcomes, lacking the flexibility or foresight to offer creative solutions.
There are, of course, many private businesses and individual workers with the resources and initiative to find their way around these challenges. Many of our largest corporations have the ability to train and upskill their current workforce or to find and recruit the skilled employees they require. Motivated individuals can find a wide range of in-person and online platforms for post-secondary education and jobs training, many offering financial support. But these companies and individual workers are exceptions, lying at the extremes along a broad continuum of need for workforce training. Small and mid-size companies and their employees are caught in the middle of rapid change and lack the internal training resources of larger firms. Too many individual workers lack an understanding of (and too often digital access to) available workforce training, while finances remain a challenge. For these, our existing public workforce infrastructure lacks the flexibility to meet the full extent of their business or individual needs.
For Two Paths America, these challenges raise important questions for each category of worker, present and future, threatened by a failure to adequately confront workforce needs of the Digital Age:
Incumbent workers – There is an urgent need to upskill large numbers of current workers who in the short or medium term will be displaced because of automation. What are we doing for those people who are currently employed, many by small and medium-sized businesses, who will be displaced within the next ten years?
Unemployed workers – What are the barriers between unemployed workers and their ability to attain technology skills? What can the partnership of public, private and non-profit efforts do to incentivize unemployed workers to acquire new skills? Can we create more flexibility with government programs and more partnerships that help people get retrained while also providing the necessary supports?
Our future workforce – The U.S. economy is experiencing a lack of graduates across the board with the skills necessary to fill current jobs much less jobs of the future, a situation made even worse by COVID disruptions to education and the economy. What can our K‑12 and post-secondary education system do differently? What is the role of the private sector?
Building the Workforce of the Future – Ideas and Initiatives
From in-depth discussions of these issues with experts in the digital revolution and workforce readiness, Two Paths America is convinced that challenges facing the American workplace will require a greater sense of urgency and cooperation that many with roles to play have shown to date.
Educational institutions more than ever need to work closely with private-sector firms, particularly those locally, to understand their changing workforce needs more fully, then develop courses and programs to fill those gaps. Learners at these institutions will then be prepared for a Digital Age economy driven by the technology needs of local companies. This process can address current needs as well as any future skills gap that will be created by the inevitable growth of AI and automation.
The public sector needs to do a more effective job in helping fill training gaps for unemployed workers and incumbent workers at small to medium-sized businesses. In addition to increasing the flexibility and scale of existing programs such as Registered Apprenticeship and the Incumbent Workers Training Program, the public sector should create inducements, such as tax-based incentives, to reduce training costs, increase productivity and insulate workers from redundancy for small and medium-sized companies.
The private sector plays a critical role in preparing our workforce for the future. Companies such as Amazon, AT&T and Microsoft are already investing significant resources into programs to upskill their existing workforce. Amazon announced an initiative to upskill 100,000 employees by 2025, with emphasis on employees from fulfillment centers, the transportation network, retail stores and corporate hubs. AT&T initiated a $1 billion web-based, multi-year global reskilling initiative that relies on partnerships with for-profit training companies and leading universities that provide online courses. The company also established a career center that helps employees identify which jobs are needed in the company. The goal of these and a number of similar programs initiated by the private sector is to transition existing workers into an economy driven by AI, digitalization and machine learning. Such efforts need to be duplicated across the private sector.
Those with a stake in addressing America’s workforce challenges can also be inspired by a number of creative approaches being explored internationally. Two examples:
Sweden has created a network of job-security councils to help unemployed workers obtain the necessary skills quickly for in-demand jobs. The Swedish councils are non-profit organizations based on collective agreements between industries and labor unions or social partners, operating as an insurance-based system that covers most sectors, industries, occupational groups and types of companies. Councils are independent of the state, with private-sector companies paying 0.3 percent of their payroll annually to support their efforts to retrain laid-off workers and provide them with in-demand skills. Sweden also provides a safety net with benefits in place to support workers during the time they are unemployed and training for new skills.
Germany changed the way its national labor agencies operate by shifting the focus of its public-employment policy from a passive system of unemployment compensation to an active, more holistic approach, where employment agencies now serve as job centers that manage and facilitate retraining of the unemployed.
The Bottom Line
The Digital Age is just beginning and its implications for the United States yet to feel the full impact of its potential economic and social toll. Addressing these challenges will require a concerted, aggressive and perhaps incentivized effort to retrain current employees while hiring entry-level employees with the goal of training them with required new skills. Success will not be achieved without effective and flexible partnerships that bring together private companies of every type and size, educational institutions at every level, public workforce programs and nonprofits in order to conduct effective retraining and provide the necessary supports. Industry associations and organized labor must also play important roles in these efforts. Fortunately, these solutions are straightforward and bipartisan – if not sometimes difficult to achieve.
A diverse, well-trained workforce – men and women equipped with the skills required to adopt AI, automation and other advanced technologies – will ensure that local, state and national economies enjoy strengthened productivity growth while the talents of all workers are harnessed and rewarded.
Two Paths America warns that failure to address growing workforce demands of the Digital Age will only accelerate a widening Opportunity Gap, rising skill-and-wage division and increasing social tensions. Our ability to reap the benefits of these new technologies and avoid their harms will depend most crucially on how adaptable American companies, individual workers and the public sector prove to be in the face of new opportunities – and challenges – of the Digital Age.