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2/5/2019 7:54:00 PM
OPINION: Another Brookings study labels Indiana 'at risk'

Michael Hicks is the George and Frances Ball Distinguished Professor of Economics and the director of the Center for Business and Economic Research at Ball State University. His column appears in Indiana newspaper.

Last week the Brookings Institution released yet another study that should be read aloud in every Hoosier school, city council and in the General Assembly. This study was an examination of the automation risks to employment across the nation. It is worth discussing the findings, with a focus on what is currently happening in Indiana to address this problem. 

Faithful readers of this column will find some of the Brookings work familiar. Using different data sources, the Brookings study makes almost exactly the same claims my center reported in our 2017 study of vulnerable communities. Both studies reported that Indiana faces enormous risks of automation-related job losses. Indeed, Indiana the most "at risk" state in the union, with perhaps half of all jobs facing dislocation within a generation.

►Brookings study paints grim picture of Indiana's workforce investment focus

Both studies are nuanced, explaining that automation replaces some human tasks, but also creates demand for workers in different occupations with different skills. It is very clear from both studies that automation-related job losses will be concentrated among the lesser skilled workers, while new job opportunities come among the better skilled and more adaptable workers. The new tasks are mostly covered in four-year colleges, while the adaptability skills are the product of strong elementary education. Maybe the best illustration of how this is already playing out across the nation comes in a review of what has been happening in US labor markets for the last decade.

The Great Recession dramatically disrupted labor markets. Because the nation as a whole improved its level of education, this long recovery has made the nation more resilient and workers generally less at risk from automation. Across the U.S., the share of adult workers age 25 or higher holding a bachelor’s degree rose by an astonishing 3.9 percent, while roughly 75 percent of new jobs went to workers with a four-year degree or higher. In contrast, less than 20 percent of job gains went to workers with an associate’s degree or some college training, and only 6.5 percent of new jobs went to a high school graduate. Nationwide, workers without a high school diploma have seen job losses since the end of the recession. 

Nationally 41.3 percent of workers aged 25 and older hold a bachelor’s degree, up from 37.4 percent in 2009. This is a critical improvement in our nation’s long-term economic health, since better-educated workers are far more likely to adapt smoothly to the effects of automation. Moreover, an abundance of high-skilled workers actually improves the labor market prospects of less-skilled workers. 

Indiana’s story is much different. Since the end of 2009, the share of Hoosier workers holding a bachelor’s degree has actually declined by 1.3 percent to 23.3 percent. However, the data is even more worrisome at other levels of educational attainment. Unlike the nation as a whole, the biggest share of job gains in Indiana came to workers without a high school diploma. Across all education categories, college graduates saw the worst recovery in terms of numbers, though the best in terms of wage growth. 

The plain and ugly fact is that over this long economic recovery, Indiana’s work force actually down-skilled for the first time in our more than 200 history. To put it in stark terms that most Hoosiers will find disquieting, our workforce is now less well-educated than is Kentucky’s.

There are many causes for this, too many to cover in a single column. I’ll have to write more about in the future. What should now be clear to everyone is that this is a looming calamity for Indiana. Most troubling, today our education and workforce policies take little notice of an issue that has captured the national attention for years. One consequence of largely ignoring this problem is that over the past several years our workforce and education policies have increased our vulnerability to job losses.

By weakening the college preparatory focus, and shifting funding away from K-12, we have created a workforce less well-prepared for disruptions than they were a decade ago. The final takeaway is that when Kentucky is outperforming your state in human capital policies, it is time to do something different.

Related Links:
• Automation and Artificial Intelligence: How machines are affecting people and places

Related Stories:
• Research explains how cities like Terre Haute may see more automated jobs than other places

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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