The Future of Work, and Education

Source: McKinsey Global Institute (2017)

Today's job market is dramatically different than that of the previous generation.  Long venerable career paths (doctors, lawyers, oil engineers) have been replaced by new ones like startup executives, software engineer, or data scientists.  However, not everybody can, or want to, or should, learn coding.  So what really is the future of work?

What is the future of work?

We have heard futurists declaring manufacturing jobs extinct, replaced by factory automation.  Other manual laborers (accountants? lawyers? also likely victims: real estate brokers, insurance, and loan officers) may also disappear, replaced by AI and blockchain.  Service work may persist, but likely transformed beyond recognition.  McKinsey recently issued a report arguing that 1/3 of Americans would need to change careers by 2030, thanks to automation and machine learning.

However, in all likelihood technological disruption won't make the future of work "jobless".  Instead, it’ll look like a new labor market in which millions of Americans have lost their job security and most benefits that accompanied work in the 20th century, with nothing to replace them.

Source: Katz and Krueger (2015)

Subcontracting ("alternative work arrangements" -- basically freelancing) have already toppled the American labor market over the past 20 years, albeit quietly.  The "sharing economy" of late is not the primary driver -- these changes happened way before Uber was conceived -- but it is part of the same trend.  From Danny Vinik:

"Among “transportation and material moving workers,” a category that includes everything from taxi drivers to flight attendants, the share of contingent workers had doubled: In 2005, it was 9%; it was 18.2% by 2015. Among health care support workers, it nearly doubled, from 9.5% to 17.9%. The share of food preparation workers in contingent work had quadrupled. And this trend wasn’t limited to blue-collar jobs: The rise in contingent work was as large for people with a bachelor’s degree as it was for those without a high school diploma."

Source: Katz and Krueger (2015)

How should education evolve for the future?

Higher education, especially, is in desperate need of a massive disruption.  Most of us understand the whole deal, and let's face it: the vast majority of students are lazy, the vast majority of teachers are uninspiring, and the  administrators just wanna get by with minimum effort.   New York University sociologist Richard Arum writes that 45% of college students don't show any improvement in critical thinking, complex reasoning and writing by the end of their sophomore years; even after completing their fourth years, 36% does not demonstrate significant improvement.  Reading comprehension is also in steep decline: Forbes quoted a 2006 survey result which states that 45% of college students "don’t enjoy reading serious books and articles, and only do it when [they] have to."

Today’s college students are less willing than ever to make the littlest effort of showing up for class and learning whichever topic is on the test.  From Bryan Caplan:

"Fifty years ago, college was a full-time job; the typical student spent 40 hours a week in class or studying.  Effort has since collapsed across the board. “Full time” college students now average 27 hours of academic work a week—including just 14 hours spent studying.   Students at one typical college spent 13 hours a week studying, 12 hours “socializing with friends,” 11 hours “using computers for fun,” eight hours working for pay, six hours watching TV, six hours exercising, five hours on “hobbies,” and three hours on “other forms of entertainment.” Grade inflation completes the idyllic package by shielding students from negative feedback. The average GPA is now 3.2."

The other issue with higher education is that they cost too much, and they burden students with too much debt right when they need to build a career and financial standing.  It seems the only real, plausible argument for a college degree can be summed up in two words: credential inflation.  The same jobs today require higher qualifications than they did 20 years ago, even just to get your foot in the door -- just because college degrees are so widespread but practical knowledge is hard to find.  It's the same case outside of white collar work: there are so many new licenses certifications required for anybody to be a florist, home entertainment installer, or even a barber, in the US.

Vocational education—classroom training, apprenticeships and other types of on-the-job training, and straight-up work experience— teaches specific job skills, and revolves around learning by doing, not learning by listening.  Most researchers agree that vocational education improves pay and reduces unemployment.  Even formal education can benefit from adopting more practical (as opposed to pure academic) training.  Finally, the next wave of education is likely to emphasize lifelong, continual training—to keep current in a career, to complement rising levels of automation, and to gain skills for new lines of work that may arise.

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Kevin Roose (NYT) argues that we are living in a MoviePass economy, wherein urban professionals' comfort and convenience are propped up by venture capital bubble and the working class' loss of benefits and job security.  Indeed, the major cost of technological dislocation would be income and wealth inequality, but this can be tackled with sound government policies, such as universal basic income, public health insurance, financial aid for lower income students, and other forms of social safety net.  These approaches, however, may not be feasible in developing economies -- the very countries whose workforce composition is highly susceptible to technological disruption -- due to insufficient government (tax) revenue and lack of political will.

So yeah, the future looks bleak, but we're not flying blind. Actually we have pretty good ideas, albeit not easy ones, for navigating the uncertain future of our economy.