July 17, 2019

How Will Companies Adjust as More Jobs Become Obsolete?

With any form of major technological advancement, jobs are both created and destroyed. The breakneck speed of advancement in automation and artificial intelligence is no exception. We are, perhaps, on the brink of the largest meta-shift in the workforce since the industrial revolution; and transitioning the global workforce to fit the new paradigm will likely be the greatest challenge of our time.

According to a recent study by the Brookings Institute, 25% of US jobs are at “high risk” of being automated. And according to Taiwanese venture capitalist and AI expert Kai-Fu Lee, up to 40% of the world’s jobs could be replaced by AI and automation in the next 15 years.

While the outlook may sound grim, there is an ocean of opportunity, as well. A January report from the World Economic Forum found that AI and robotics will create 60 million more jobs than they destroy by 2022.

Last week, Amazon made headlines by announcing they planned to spend $700 million to retrain about one third of their 300,000 U.S. workers for new high-tech jobs by 2025, as they employ ever-increasing amounts of automation. The program, one of the largest scale re-training efforts in history, will affect employees throughout the company, from the corporate office to the warehouse floor.

With low unemployment rates, and data/AI/automation jobs in particularly high demand, finding brand new employees to fill these new jobs becomes a difficult proposition, especially for a company of Amazon’s size. No doubt many other companies will face the same hurdles in the coming years.

CPGs, retailers and grocers will feel the pressure more than most. Per the Brookings Institute, the three areas with the highest risk for automation are production, food service and transportation – all bearing a 70%+ risk of replacement by automation.

According to a 2018 McKinsey study, by 2030, roughly 70 percent of companies will have adopted some form of AI, up from 33% today. The supply and demand for workers in this sector is going to grow tighter and tighter, so smart companies will likely be watching Amazon’s massive retraining experiment intently to see how it pans out. At the end of the day, they may not have any other option.

Massive CPGs and private equity firms, who frequently buy and sell companies will also be watching closely, as installing automation and AI-driven processes is a go-to solution for quickly making a company more profitable. How will they adjust to the supply and demand issue for specialized workers to operate this new technology?

With millions of new jobs in need of transition, this may even give rise to a new breed of 3rd party service providers who specialize in retraining workforces. The ability to quickly turn workers from being productive in one area to productive in another has unquestionable ROI, especially when you consider how costly hiring and training a brand-new employee can be.

Companies understand the need. A 2018 McKinsey study found that 70% of US executives said retraining or “upskilling” existing workers was a top 10 priority for their business. The same study found that only about 18% of global companies felt they could make the necessary adjustments mainly through the hiring process, so the demand for solutions is certainly strong. As for how it plays out, only time will tell.

What do you think about worker retraining programs? How do you think companies should approach the process of training these workers? Will these more skilled jobs help address the wage gap, or will it be a wash? We’d love to hear what you think. Sound off on social media now and join the conversation.