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Will automation replace our jobs while the cost of living continues to escalate? Will freelancers have an advantage over full time employees in the future gig economy?
Table of Contents
- The Cost of Living Today
- How Automation Will Affect the Cost of Living
- Is Our Education System Keeping Up With Technology?
- How Will Automation Affect Jobs?
- Which Jobs Are Most Likely To Be Replaced?
- How Can You Adapt Your Job To Survive Potential Automation?
- A Warning About Automation Disruption To Jobs
- How To Survive Automation With High Income Skills
Every time you hear about another technological change – more self serve kiosks, self checkouts, chatbots – are you confident about your future, or do you worry that you’ll be replaced?
The news that machines are stealing jobs is not new. The numbers change, but the facts stay the same. Reports say that “47% of people employed in the US are at risk of being replaced by machines and 35% of jobs in the UK may similarly be threatened – with even higher threats in developing countries, with two thirds of jobs at risk of being automated.”
What’s different this time is that the middle class is in the line of fire. So are a lot of white collar workers. It’s not just the blue collar workers whose jobs are threatened anymore.
What can you do to prepare yourself for a future with increasing automation? Changes are happening, but the question is … will the changes be enough? Educators are adding alternatives to the school curriculum. Industries are modifying job tasks for various occupations. And automation is improving our quality of life, impacting our cost of living.
The Cost Of Living Today
If you’ve noticed how fast the cost of living has risen over the years, you aren’t the only one feeling the economic paranoia. Compared to just 20 years ago, the dollar has lost buying power, meaning that household income is failing to keep up with the price of housing and the pace of inflation.For example, something that cost $20 two decades ago will cost $31 today. The cost of housing over the same period has also increased, while household incomes have fallen behind. Click To Tweet
Using actual numbers from the US Bureau of Census, a new home in May 1999 was $193,900. Adjusted for inflation, that price today should be $298,774. However, the average sale price in May 2019 was actually $377,200. That amount is 26 percent higher than the price when accounting for inflation alone.
In comparison, the median household income in 1999 was $42,000. Adjusted for inflation, that income today should be $64,716. But in 2018, household income was just at $61,227, meaning that it is 5 percent below where it should be.
When compared to other countries, the situation in the US becomes more grim. Its purchasing power and cost of living doesn’t even rank in the top 10 around the world.
The Cost of Living Around The World
How does the cost of living for Americans compare to other countries around the world?
The US doesn’t even rank in the top 15. According to statistics, people in Bermuda can afford more than a US citizen. Although goods in Bermuda are 90 percent more expensive, the average income is also 80 percent higher.
Using the cost of living calculator, and inputting New York, USA, and Hamilton, Bermuda, (two expensive cities) you can compare the differences in cost of living for both cities. If you have $5000 in expenses in the US, then your costs, including rent in both cities, would be $5659.42 in Bermuda.
Looking at just the cost of dining out and rent for these two cities, the cost of food and beverages at restaurants tends to be higher, while the cost of rent tends to be lower. The income of people in Hamilton is higher on average than those in New York.
That’s just a comparison of two cities. How does the US compare with other cities around the world for cost of living?
Cost Of Living Around The World - Infographic: pic.twitter.com/3qHZSxdlSv Click To Tweet
The US is approaching 2020 with decreased buying power and household incomes. Its cost of living doesn’t compare with other leading countries. And when you look even more closely at the US with a microscope, you find a deep divide between the income classes.
The Increasing Gap Between The Income Classes
The group that has been gaining the most financially over time is the richest 1 percent of the population. They hold the majority of the wealth, have the highest income, and have the highest increase in income growth compared to the middle and lowest income groups.
The middle class make up roughly 50 percent of the population, but they have also been steadily decreasing from the 1970s, when they were about 60 percent of the population. They are also the next to be targeted by automation.
How Automation Will Affect The Cost Of LivingAutomation will create a ripple effect in the economy, from lowering the cost of goods, to better wages and new types of jobs. Click To Tweet
Decreased cost of living
Multiple innovations, from the IoT (internet connected thermostats), to 3D printing, to demonetization of cost of hotels (AirBnB), advertising (Craigslist), and retail (Amazon) will lower the cost of major expenses and monthly bills.
Machines will do the heavy lifting on the factory floor and people will create, oversee, and maintain the machines. The result will be higher wages for skilled laborers and decreased production cost of these cheaper goods.
Higher wages and shorter work week
Automation is saving people from manual, repetitive, and dangerous work. For example, mining has become safer as machines do more of the work underground in dangerous conditions. Factory robots in China have taken over repetitive tasks while workers have moved onto more high value jobs.
For example, in an automated industry, manual labor workers are freed to help entrepreneurs create new innovations or start their own businesses. As robots replace old jobs, new ones take their place. For example, laborers move from production on the factory floor to overseeing the robots.
With higher wages, changes in the type of jobs available, and cheaper cost of goods, the 40 hour work week may no longer be the standard in the future. People will have time to pursue other leisure activities or freelance in a gig economy.
However, one obstacle to a reduced work week would be workplace policies. For example, if a worker receives health insurance coverage by working a minimum of 35 hours a week, that worker may not want a job with fewer hours if it also means fewer benefits.
Although automation is taking over repetitive and dangerous jobs and opening the door to the possibility of a shorter work week, change in the way we view full time jobs is not happening in the near future.
One possibility is to change the way we view work and careers starting from our school system.
Is Our Education System Keeping Up With Technology?
We have more to worry about than just losing our jobs to automation. According to research for the National Association of Colleges and Employers, business leaders aren’t impressed with the “career readiness” that colleges are providing students. Employers “unnecessarily have to retrain graduates to get them up to speed.”
Graduates are on the same page as the employers. They don’t believe the colleges they attended prepared them for a professional career, resulting in higher levels of unemployment than for previous generations.
Adjunct professor Mark Beal says, “My concern is that college graduates are not given all the career transition insights, knowledge and skills they will need for the dozen job searches they are expected to have by the time they are 38-years-old.”
Graduates are looking for a job for an average of 7.4 months after graduation. Author Dr. David DeLong believes that many graduates have “unrealistic expectations about the job market and do not realize a ground floor position is sometimes necessary to get started.”
For example, “working in the mailroom at a major player in your chosen field is probably a better job than working in retail — unless your career path happens to be retail.”
Does Higher Education Mean More Employment?
Although many college graduates are taking longer to find employment, they are more likely to find work and make a higher income than those with only a high school education.
Studies have found that graduates with bachelor’s degrees are only 50 percent as likely to be unemployed. And over their lifetime, they make an average of $1 million more in additional earnings than high school graduates. Also, college graduates in their early twenties make a median of $43,000 in annual income compared to high school graduates who make $25,000 when they are in their twenties.
Despite this career advantage, college graduates are taking longer to find work after receiving a diploma. If they take an average of 7.4 months to find work, and if they have a monthly salary of $4000, then they could have earned $29,600 during that time.
Earlier this year, the industries with the highest rate of unemployment are agriculture, leisure and hospitality, and construction. The industries with the lowest rate of unemployment are self employed workers and unincorporated workers, and financial activities.
One of the reasons for the unemployment rate is the choice of degrees that don’t have high employability. For example, videographers and photographers have an unemployment rate of 11.4 percent. If these graduates had studied general business, their chances of getting a job would be higher. The unemployment rate for general business is 6.79 percent.
Sometimes, all it takes is a change in your college major to increase your chances of employment. Computer and information systems for example, has a higher employment rate than computer science. And marketing and marketing research has a higher employment rate than advertising and public relations.
In other cases, increasing your employability is the difference between studying history or studying social science/ history teacher education. One has an unemployment rate of 8.74 percent and the latter just 1 percent.
Rise Of Entrepreneurship and The Gig Economy
If a college degree isn’t a complete guarantee of employment, then what other career alternatives do workers have? As businesses add more automation and decrease their need for full time or seasonal employees, workers are finding other ways to supplement their income.
One way is with the gig economy, where workers freelance by taking jobs and projects. Once a job finishes, the worker moves onto the next one.
Freelancing and remote work is gaining in popularity. According to statistics, “In 2016, 35% of workers were freelancers and estimates are that by 2020, this number will increase to 43% in the United States.” If the trend continues, as much as 60 percent or more of workers will be freelancers by 2030.
Schools are recognizing the trend and offering more courses to prepare students for the gig economy. For example, entrepreneurship, web page design, sports and entertainment management, and other similar courses that help students create their own job opportunities.
There is more emphasis on building diverse skills and alternate training options so that students will be “crafting their own career”, instead of depending on an employer to create their professional career.
The way that workers apply for jobs will also change. They will no longer rely on degrees to compete for jobs in the gig economy. The new approach will be work portfolios, online reputations based on social media and other profiles, and results from previous projects.
The education system will also encourage students to think differently about their career paths so they will have the skills that automation cannot replace.
The Future Of Education
Even in Silicon Valley, the world’s largest startup hub, institutions such as Santa Clara University is encouraging entrepreneurship. Business students are learning about establishing their own startups and service-based companies.
Professors are encouraging students to think more broadly about their future career paths. One professor is teaching the four T’s (target, talent, technology, and technique). Accomplishments, skills and technology are what students need to succeed in a future with automation.
- Targets are defined as what we need to accomplish.
- Talent represents our capabilities, learned or innate.
- Technology encompasses the tools at our disposal, whether they are cutting-edge or tried-and-true.
- Technique is where it all comes together, as tools and talent are harnessed toward reaching our targets.
Other colleges are teaching students to develop their social interaction skills and creativity. Both will give them an advantage over computers.
Skills such as negotiating, persuading, managing teams, and assisting customers with a human touch cannot be replaced by computers in the near future.
Similarly, people can leave the problem solving and monotonous tasks to computers so they can engage in more creative activities. The MIT Initiative on the Digital Economy, for example, set up a $1 million challenge to encourage businesses to create solutions for “human traits” to work alongside technology.
They believe that new opportunities can be created by helping struggling industries and connecting more workers with employees in the digital age.
Exactly How Will Automation Affect Jobs?
The education system may be preparing future workers to find employment in a world of increasing automation, but what about the current workforce? What can workers do to prevent themselves from becoming replaced by a machine?
Oxford University researchers conducted a study to estimate the number of occupations that would be replaced by computerization. Out of 702 occupations, 47 percent were at risk. Jobs that required higher levels of education were less likely to be automated than jobs that required less education.
Economist David Schmidt said that, “There isn’t a direct, one-to-one relationship between automation and changes in employment.”
“For example, automation in an assembly plant may lead to an assembler being replaced by a robot that does 80 percent of the job – the repetitive part – and instead requires a technician to make sure that the robot is running, or one who does a more delicate part of the job that robots are not yet capable of performing reliably.”
In other words, we can’t say that when a robot replaces a worker at one job, then that job is lost. A new job with a different skill set may be created because of the change. If the worker who lost that job is re-trained with new skills, then the worker would still be employed.
Also, predictions about the future aren’t necessarily accurate. Researchers predicted restaurant servers wouldn’t be computerized because of their interaction with customers. However, food server jobs are 94 percent likely to be replaced by automation in the next 20 years.
Which Jobs Are Most Likely To Be Replaced?
Some experts believe that we shouldn’t think of people losing their jobs to automation. Instead, they think that we should welcome having machines to take over boring tasks while humans spend time on higher-level tasks.
Jobs aren’t going to be wiped out; tasks are going to be reorganized, redesigned, and re-engineered.
For example, these jobs are most likely to be candidates for machine learning:
- Mechanical drafters
Morticians, undertakers, and funeral directors
- Credit authorizers
- Brokerage clerks
And these jobs are identified as least likely to be candidates for machine learning:
- Massage therapists
- Animal scientists
- Public address system and other announcers
- Plasterers and stucco masons
Jobs requiring more social skills or dexterity are less likely to become automated. Also, some parts, but not all of an entire job could become automated. The advantage of automating just parts of a job is the productivity of a worker will increase.
Machines and humans can work together so workers can focus on aspects of the job that need their attention while machines focus on repetitive tasks. As a result, workers can focus on taking a leadership role to decide how they can use automation to deliver more value and service to customers.
How Can You Adapt Your Job To Survive Potential Automation?
According to one famous study, 47 percent of existing jobs in America are at high risk of potential automation in the future. Click To TweetWith this statistic, there is a high likelihood that your job could be on the line.
However, if jobs aren’t necessarily in danger of extinction, and tasks are going to be reorganized, then what can you do to prepare if your job becomes targeted for change?
Depending on your occupation, you may need to reskill or change jobs entirely. Some jobs are already being replaced or changed by automation, while others will be affected in the near future.
Data Entry Clerks
Workers in these occupations are paid an hourly wage to transfer data from one format to another, or compile it into one place. The tasks are monotonous and there is room for human error. To reduce errors, these jobs could easily be replaced by machines.
To avoid being replaced, data entry clerks could get skills training, get promoted, and oversee the machines.
Self-driving cars are no longer the technology of the future. The technology is already here today. Autonomous cars can replace professional taxi drivers and autonomous trucks will replace long-distance drivers. Ride-share drivers for Uber and Lyft, that just found an employment niche in the gig economy, may need to find another source of income.
Either reskill and switch to a new industry, or learn business skills and become the owner of a self-driving car business.
Telemarketers, Customer Service Assistants
People don’t like to answer calls from telemarketers. They also don’t like to be put on hold for customer service. These customer attitudes have resulted in miserable conversion rates for direct phone sales, and an increase in smart chatbots to answer customer questions. The switch to automation is an extra setback for people working in these jobs. Their jobs are already being outsourced to other countries.
Artificial Intelligence (AI) and humans can work together to improve customer service. AI can scan customers for personality patterns and match them with a human assistant with a similar personality for an improved customer service experience. Also, chatbots will answer customer questions. For questions that AI can’t answer, human assistants will answer questions from AI.
Chefs and Servers
In the future, a robot could cook your meal. The advantage is automation can prepare and serve meals at speeds faster than human chefs can achieve. Machines can also duplicate specific recipes at faster quantities than their human counterparts. Table delivery drones can replace servers to deliver food to customers.
Automation will require chefs to create the recipes that the machines replicate. Programmers are needed to prepare the instructions for 3D food printing machines.
Some experts predict that 30 percent of banking sector jobs will be replaced by automation in the next 10 years. When it comes to money, accuracy is of high importance, so machine learning tools are increasing in popularity. For example, computers can spot trading patterns faster than humans.
“Relationship banking” cannot be replaced by robots, so humans will continue to be the ones to maintain relationships between the financial institution and its customers. Analysts who can combine financial sector knowledge with computer science to map algorithms will continue to have jobs.
Construction and Manual Labor
Robots can work nonstop, in hot or cold weather, without getting tired. This is an advantage for manual labor jobs that are physically taxing.
Robots are not yet able to replace humans for manual dexterity. For example, robots at Amazon’s warehouses move around racks of shelves and bring them to stationary human workers who pick the required items off the shelf.
Musicians and Artists
Automation and AI are already able to generate stock music and images and that technology will continue to improve over time. Also, automation will be able to create more work in a shorter period of time than any human.
Learning to use these automation tools to create algorithms to generate music or paintings will give your skillset an extra advantage.
Even lawyers’ routine legal work can be replaced by automation. AI can help with legal discovery (part of pre-trial process) and creating contracts. Although not all legal work can be replaced by robots, lawyers are expensive, and automation will keep costs down.
Not all areas of legal work will be replaced by automation, but lawyers who study both law and AI will have broader work options.
Writers can be replaced by automation because of advances in computational creativity and text generation. Bots will be able to generate sports reports as well as generate articles of creative journalism.
Journalists can hire bots to be their researchers. They can also use bots to personalize stories that were already written.
Cutting edge technology is already changing how patients receive medical care. Computing systems are making recommendations about cancer treatments that include coming up with a personalized treatment plan. Wearable devices, such as headphones, are giving treatment instructions directly to patients. Robots are assisting human surgeons to carry out delicate eye surgery.
In the near future, your doctor or surgeon might be a robot, but for now, automation is supplementing the work of humans. Technology is not yet ready to replace medical personnel.
A Warning About Automation Disruption To Jobs
There is no doubt that automation will change the future of work. A balance between replacing job tasks with automation and creating new job tasks for humans is crucial. If automation replaces labor jobs too quickly, there will be a major disruption to the workforce.
As robots take over more repetitive tasks, new, high value tasks that give humans a skills advantage need to be created. This gradual transition will prevent massive job losses to low-income workers.
Critics who have given warnings about automation and AI, including Elon Musk, have serious concerns about how technology could disrupt entire communities.
Low-income and low skilled workers are easily replaced by automation that becomes cheaper than the cheapest workers. Consider what businesses will do when faced with the choice of increasing the minimum wage for workers, or investing in automation.
- “The CEO of McDonald’s pointed out that the cost of a $35,000 robotic arm begins to look more reasonable to him when faced with the prospect of paying all his workers $15 per hour.”
- “Earlier this year, Foxconn — the Chinese supplier of Apple products — announced that it has used robots to cut the workforce at just one factory from 110,000 down to just 50,000.”
How To Survive Automation With High Income Skills
Low-income and middle-income people are the most likely to have their jobs replaced or changed by automation. In contrast, high-income people are the least affected by either the cost of living or automation.
The answer to surviving automation would be to increase your income and have a skill set that automation can’t easily replace. But what are the most effective ways to increase your income if you can’t afford to leave your current job, or you don’t have time to go back to school?
One way is to develop a high-income skill. A high income skill will earn you a monthly income of $10,000, or a six figure income yearly. It’s also transferable from industry to industry. Some examples of high-income skills include:
- High-ticket closing
- Digital marketing or web design
- Platform closing
Copywriting, or salesmanship in print, is a very lucrative career that can be learned in a short time or on the job. The more skilled you are at persuading people to buy, the more you will be paid for your ads, social media posts, landing pages, or email.
High-ticket closing is closing deals on premium priced products, such as real estate, enterprise sales, coaching or business programs, or business deals. Closers are skilled salespeople who act as consultants for prospects.
Flexibility Across Industries
The high income skills in the list appeal to freelancers because of the flexibility to work as many hours as you want from the comfort of your home office. You can learn these skills on your own or by taking a course, and master your skills while you work part time and keep your day job. Other freelancers make a full time income from working several freelancing gigs.
Another option is to learn a high income skill that is a hard skill (skill you need to learn) but applies to more than one industry. For example, software development, technical skills (healthcare, engineering), training, or leading teams. These skills take longer to learn and you may need to return to school for a degree or diploma.
No matter which high income skill you develop, you can survive automation. High income skills pay well and are in demand in multiple industries, giving you the flexibility to move from job to job, industry to industry as you need.
What is the cost of living in a world of automation? Over the past 20 years, our household income hasn’t been able to keep up with rising costs and inflation. The middle class is slowly disappearing, and the wealthy 1 percent continues to hold most of the world’s riches. People are freelancing to supplement their income while employers cut jobs and work hours.
The education system is realizing that traditional paths for developing a career are out of place in the gig economy. They are offering entrepreneurship programs and teaching skills that are more difficult for robots to duplicate, such as social interaction.
Automation is replacing monotonous and dangerous jobs, but there isn’t a direct correlation between eliminating a job and job loss. Human workers can retrain into new roles, working side by side with robots to offer better value to customers. In some cases, only some tasks and not the entire job is replaced. For example, robots can assist with surgeries, but they will not perform the entire operation.
People with high incomes are the only income class unaffected by the cost of living and automation. Learning and developing a high income skill will give you greater flexibility with job choices and work hours, and increase your income level.
Get An Advantage In The New Economy
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