Dramatic Changes Arriving for the Labor Market
The American economy is undergoing dramatic changes, characterized by the adoption of new technologies such as artificial intelligence and automation, as well as increasingly global labor markets that price many American workers out of job opportunities. These advances show promise for future economic growth, but the American workforce is not presently equipped to adapt to the challenges that the Fourth Industrial Revolution is creating for many traditional jobs.
Since the year 2000, nearly nine in 10 manufacturing jobs in the United States have disappeared. Additionally, around 48,000 coal mining jobs have vanished as the United States transitions to different energy sources. Both of these sectors provided job security and a stable income for American households. However, as automation, artificial intelligence, and globalization continue to become more prevalent in the modern American economy, it poses a fundamental threat to the workforce. During the COVID-19 pandemic, several industries experienced an acceleration in automation as a necessary response to supply chain challenges and employees staying home to reduce transmission of the virus. This adaptive innovation also eliminated positions that did not return during the reopening period of the pandemic.
Over the last 10 years, there has been a significant decline in workforce participation. While job retraining programs are available and adequately funded, the fundamental issue with retraining lies within the programs themselves.
Job Retraining Programs Often Miss the Mark
Studies have also shown that retraining programs in their present form show few, if any benefits. One Trade Adjustment Assistance (TAA) study found that participants in the federal program designed for displaced manufacturing workers actually generated less income over a four year period than the control group. A similar evaluation of Michigan’s No Worker Left Behind program found that one-third of workers didn’t find work after participating in the program, only slightly lower than the 40 percent unemployment rate that laid-off factory workers experienced generally.
Job retraining programs are generally not designed for adults in the middle or late stages of their careers, with families and significant financial responsibilities. Not only do these adults have to account for a decrease in income by attending school, but many also need to contend with the costs of childcare. Additionally, many growing sectors of the labor market require students to obtain an internship to develop their skills and gain the necessary experience to be productive employees. However, most of these positions often pay lower salaries or do not offer any financial compensation. As a result, opportunities for these types of career changes are slim for workers who have been displaced from their original career fields.
This crisis manifests for older workers in the form of debt or a complete inability to adapt and find new work, leading to lower workforce participation rates and increases in poverty, as well as the social issues linked to poverty. Direct cash policies can serve the purpose of easing the financial uncertainty surrounding the transition that many will have to make into a new career, without many of the limiting factors of other policies that discourage mobility in the labor market.
Direct Cash as a Means of Supporting Work
Even if not displaced, the workforce today must stay current on innovative trends, often requiring new technology, processes or other enhancements in their industry. Direct cash can assist the workforce in acquiring professional certifications, workshops or other training that will help them fine tune their skills and remain a competitive contributor while they are employed.
Without the stress of financial insolvency, Americans are able to find work and continue to participate in the labor market. SEED, a guaranteed income pilot conducted in Stockton, California, sent participants $500 a month for two years. Participants spent the funds on various basic needs such as food, home goods, clothes, utilities and car-related expenses. Researchers also found increases in employment, productivity and well-being, with participants moving from part-time to full-time jobs at more than twice the rate of the control group.
With the steady decline of American workforce participation, combined with the displacement of jobs due to rapid modernization, legislative action to protect and prepare workers for the coming changes to the labor market will only grow. Humanity Forward’s efforts to advance direct cash policies will assist American workers to adapt to the changes of the 21st century economy and insulate them from the worst effects of job displacement.