Digitalisation in the US – Significantly higher risk of job losses for workers with low wages

Digitalisation has a substantial impact on the labour market, by modifying skills needed, working conditions and job dynamics in the US.

Concerning skills needs, individuals need new digital skills to respond to employers’ needs, but Capture d’écran 2016-08-09 à 09.29.25also to function well in society as whole. These skills range from basic digital
literacy to advanced technical skills. Moreover, it is the combination of general job-specific skills and skills related to technologies that are relevant for the job (i.e. double-deep skills) that makes individuals more employable. This is especially important for medium-skilled workers, since their jobs will increasingly disappear in favour of jobs for higher and lower- skilled workers.

While it is commonly accepted in the EU that investments in skills related to Science, Technology, Education and Mathematics (STEM) are valuable to respond to the skills needs in the labour market, there is an ongoing debate in the US about whether there is a shortage or a surplus of STEM skills. The US Bureau of Labor Statistics concludes that both exist, depending on the sector observed, STEM discipline and location. Since the skills shortage is most pronounced in the private sector, including Silicon Valley, companies will need to invest more in training to develop the digital skills of their workforce and keep cooperating with educational institutions to increase access to STEM education and tailor students’ skills to their needs.

Concerning job dynamics, digitalisation has led to a boom in tech-related jobs (with a 31% faster growth than other expanding sectors) and STEM-related jobs (three times the average growth) in the US. However, employment in ‘new’ sectors remains limited (0.5% of the US workforce) and there are concerns about jobless growth.

Sectors with the highest degree of digitalisation – ICT, media, professional services and financial services – are expanding, but only account for 19% of total employment. The impact of increased digitalisation on other sectors is unclear, but there is significantly higher risk of job losses for workers with low wages.

Finally, the question of working conditions within the digital economy is not a big issue in the American literature or debate, given the traditionally lower level of protection. In the same way as in Europe though, digitalisation prompts major transformations in how work is organised. Due to digital data, high speed internet, audio and video technology, etc. workers have the flexibility to work at any time and from anywhere. As a result, businesses can now hire specialists on demand and keep their workforce flexible in response to fluctuations, for example in the form of freelance workers. Platforms designed to match companies with talent – in the form of online gig economy or crowdsourcing platforms – are an important driver of this evolution. These platforms could boost global gross domestic product (GDP) by $2.7 trillion by 2025, mainly by increasing the labour-force participation of currently inactive people or the number of hours of work for part-timers. Despite the output gains and opportunities of digital media, potential downsides exist. There are also concerns about the protection of gig workers, as independent contractors are not covered by protections and benefits provided by some federal labour and employment laws.

Capture d’écran 2016-08-09 à 09.28.19

Chosen excerpts by Job Market Monitor. Read the whole story at  The Future of Work: Digitalisation in the US Labour Market

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