Featured in today's newsletter:
- Wages, skills, and other workplace challenges we need to tangle with as AI improves.
- Pay transparency is coming for many more Americans.
- What unnecessary meetings cost us.
The latest virus forecast: The US had a 24% decrease from two weeks earlier, with about 47,000 new Covid cases on Friday. Wastewater analysis across the US points to a likely fall uptick, with one seller of Covid tests reporting a sharp increase in bulk orders ahead of colder weather.
The business impact: Despite cuts at high-profile employers Meta and Google, jobless claims reached a five-month low last week as the labor market remained hot. Consumer spending rose 0.4% in August, driven in part by higher housing and utility costs amid continued inflation.
Focus on the Impact of AI on Work
For a number of years, James Manyika led much-discussed research into the impact of AI and automation on jobs as chairman of the McKinsey Global Institute. A board and committee member across many nonprofit, academic, and government institutions, he brings both a research background in artificial intelligence and robotics and years spent working with businesses at McKinsey.
Since early this year, Manyika has been at Google as senior vice president for Technology and Society, where he focuses on how Google can have a positive impact in areas including AI, the future of work, and sustainability. We reached out to him for his latest views on how work will change. Here are excerpts from our conversation, edited for space and clarity:
What impact will AI and automation have on jobs?
The way I would summarize it is this notion of jobs lost, jobs gained, and jobs changed—because I think all those three things will happen.
Often there's particularly a concern around this notion of a 'jobless future,' that all jobs are going to disappear. I don't think that's going to happen because in most of the research they roughly conclude something similar: at least for the next two or three decades—which is the period over which some detailed work has and can be done—yes, there will be some jobs lost or that will decline. That's because some of the constituent activities in those jobs will become increasingly automatable. There are some occupations where they have a majority of their constituent tasks that are easy to automate. The good news based on our research—and others come in similar ranges—is that those jobs that will be lost are probably close to 10-ish percent of occupations.
But then you also have jobs gained. Jobs gained is where we will actually see job growth as a result of technology and automation. Some of those are occupations that simply just didn't exist, but will exist because of the impact of technology. There are also jobs gained in the sense that the demand for many existing jobs will go up. And then the other source of new jobs growth is going to come from mostly demographic shifts. We know that demographic shifts are going to change the amount, for example, of care work in the economy. There's a whole set of categories of work—teachers and others that are much, much harder to automate—and demography and other things will actually increase the demand for those occupations. Then, technology drives productivity growth. We know that whenever economies grow, labor markets get tight and demand for work goes up. So you put all those pieces together and the jobs gained category could actually be quite substantial.
The third part is the jobs changed category. In some ways, this may be the more important category because we know that many more jobs will change than will be lost or gained. What I mean by that is when we've done research—and others have done this too—where we looked at all the job categories that the BLS (Bureau of Labor Statistics) tracks, which is 800-plus occupations, something like 60% of those occupation categories have something like a third of their constituent tasks that will be automatable in the coming decades. That tells you that actually many more jobs will change than will be lost. If many more jobs are changing, then how do humans and workers adapt to working alongside powerful machines? That's where some of these questions about skills and so forth become important.
Journalist Kevin Roose and others have written with some alarm about the pandemic labor market tightness and remote work having accelerated the replacement of people with machines in some workplaces. Do you share that observation about those things being accelerants and do you share their alarm at the nature and speed of the changes?
There's no question that Covid has had a big impact on work. But if you actually look at all the occupations in the economy, we forget that the number of occupations where the work can be done remotely is anywhere between 20% and at the high end, maybe 30%, or a third. We can debate whether it's the 20% range or the 30% range, but it's not 100% because what happens is there's still another two-thirds of people whose work requires that they actually show up someplace because it's in some physical place. So we should always keep that in mind that often when many of us are talking about the remote work phenomena, we're talking about ourselves. We're not everybody by any stretch.
But Covid did accelerate the possibilities of remote work in some ways for the better. One of the useful correctives that remote work does is it actually makes it easier for people to work from many different places.
So I don't know if I'm as alarmed as perhaps those articles. But it does suggest that to me there are some new adaptations you are going to have to do to cope with the world where there is more remote work, there is more hybrid work, there are people working from different places. One of the things that I don't think we've evolved enough is how we adapt workflows to all these changes from automation, digitization, remote work. Skills are only a part of it. I think there are much, much more things to be done.
Over the last few years the power of labor has increased in workplaces, partly because there was a tight labor market. What does the future of automation that you're imagining mean for the power of the individual worker or the collective worker?
There's no doubt in my mind that it's important that workers feel empowered. Because when workers are empowered, they're more innovative, they're more productive. And in all of these settings, having the engaged collaboration of workers and organizations, is very, very important.
In the case of automation, we are more likely to build better systems that can complement work and workers if workers are involved in thinking through the design of those systems collaboratively. Today, if you're building a factory, your inputs are both capital—meaning equipment and machines—and people. So workers need to work collaboratively with organizations if we're going to get this to the right outcome.
Going back to the outlook for automation—with jobs lost, jobs gained, and jobs changed—what should individuals and leaders of organizations be doing now about these changes?
I am worried about a few things that we need to work on. The skills challenge is an important one. The reason the skills question is an important one goes back to jobs lost, jobs gained, jobs changed—as some occupations decline and others grow. There may be some shifts of workers from one activity to another, from declining occupations to growing ones. That often requires different skills, different capabilities, just to make the shift from the jobs lost to the jobs gained part of the equation.
The jobs changed part also has some imperatives that come with it, which is if people are shifting the mix of occupations, even as they work alongside machines, they probably need new skills. The responsibility for that is with both organizations and companies as well as workers to empower themselves.
The other thing that we need to think about is the wage effects. This one will be tough. We're currently going through a tight labor market, but if you take a much longer view of the next decade or two or so we'll need to think about wages and incomes. That's mostly because if you look at the mix of the jobs declining and the jobs growing, many of the occupations that are declining have been the source of middle-income jobs. And many of the jobs that are growing have tended to be ones that labor markets don't pay as well. In my view, we don't pay teachers what we should, we don't pay people who do care work what we should. We're going to need to think about how we make sure people are earning enough to do well and live and so forth.
The third challenge is that we are going to need to rethink the workplace itself, workflows themselves, how we organize how we do our work. Do things always need to work in the sequence that they used to work in? Do workplaces need to look the same way as they used to? It's always amazing to me when you go to a large warehouse these days where people still work there, but there are also machines in the same environment doing picking and stocking and so forth. I think that's fundamentally important and something that all organizations are going to have to think about.
Can you address how to deliver the skills workers need?
This is one of the grand challenges because we all talk about skilling and reskilling but the challenge is we don't have very many examples that are doing this at scale.
One of the questions that I find myself always inclined to ask, is when somebody tells me, 'Oh, there's an amazing skilling program happening here,' I'll say, 'Great. How many people are going through it?' And typically you hear maybe a thousand, maybe even 10,000, maybe 30,000, maybe even 50,000. You very rarely hear hundreds of thousands. You certainly don't hear millions. And yet the scale of the skilling challenge we're talking about over the next decade or two is of that scale.
The question for me on scaling is now how do we do this at scale? Part of that includes incentives for organizations, for companies. We haven't put in place enough incentives aimed at human capital, including skill building. With physical capital, people are allowed to depreciate their investments. We have tax incentives of one sort or another. But if you look at the equivalent for investments in human capital, not as much. Some organizations do it and invest in people, but we don't do this as consistently and at the scale we should.
Read a full transcript of our conversation, including more discussion of the skills workers should be training for.
What Else You Need to Know
California’s pay-transparency bill becomes law. The legislation, signed this week by governor Gavin Newsom, requires employers with at least 15 workers to provide salary ranges on all job postings beginning in 2023. It also expands an existing law requiring employers to submit pay information broken down by race, ethnicity, and gender to include contract workers.
- California will be the largest state to mandate pay transparency, joining Colorado, Washington, and New York, whose law takes effect November 1.
- Some 200,000 companies—including giants such as Meta, Alphabet, and Disney—will be covered by the new law.
- In an Indeed survey of 1,500 people earlier this year, 75% said they were more likely to apply to a job whose posting included the pay range. Some 62% of employers are planning on or considering including salary information in job listings even when not legally required, according to a survey of executives representing companies that employ 7.5 million people from consultancy Willis Towers Watson.
- “We’re approaching the point at which a job posting without pay will be like going through a supermarket and not seeing a price on your can of soup,” Scott Moss, head of the division of labor and statistics at the Colorado Department of Labor and Employment, told Bloomberg earlier this week.
Remote workers are worried about heightened layoff risk. Some 78% of employees believe that in a recession, those working remotely would be more vulnerable to cuts than those working in person full-time, according to new research from employment background-check firm GoodHire.
- In its survey, which included 3,500 workers, some 68% of respondents believed their bosses saw in-person workers as higher performers than those working fully remotely.
- Other recent research highlights the pervasiveness of such proximity bias, where humans unconsciously favor those who are physically closer to them. Some 96% of US executives say they’re more likely to notice the contributions of employees working in person, according to a survey released this week by workplace-experience platform Envoy.
- The effects of proximity bias are disproportionately felt by women, caregivers, and employees of color, who surveys suggest take advantage of the flexibility to work remotely more than their white male colleagues.
- Some strategies workplaces can use to mitigate this bias include setting up clear guidelines and norms around flexibility and hybrid work, such as committing to a maximum number of in-office days per week, and creating systems that deprioritize in-person collaboration in favor of asynchronous work. Darren Murph, GitLab’s head of remote, previously suggested to Protocol that companies “send as many signals as possible that the office isn't the center of power,” like removing whiteboards from the walls.
Return to workplace speed round:
- After facing employee backlash, General Motors has walked back parts of its return-to-office plan, including the timing of the hybrid return. Instead of beginning later this year, corporate staff won’t be required to be in the office three days a week until early 2023.
- Rents have continued to rise, driven in part by remote workers seeking larger living spaces. Even still, margins are shrinking for many smaller landlords, who are seeing much larger increases in operating costs, such as heating and labor, than revenue.
- Office vacancy rates in American cities remain higher than peer cities in Asia and Europe, and long-term demand is expected to drop another 10%, according to CBRE global chief economist Richard Barkham.
- With demand for commercial office space still much lower than pre-pandemic levels, city planners are exploring ways to convert empty office buildings into housing to revitalize empty commercial districts while addressing housing shortages.
- Amazon has asked some call center workers to work from home indefinitely as it moves to save on real-estate costs by closing down multiple call centers.
- Many New York City street vendors are struggling in the face of a slow office return, as fewer workers in business districts means a more sluggish lunch rush.
Here are some of the best tips and insights from the past week for managing yourself and your team:
- Prioritize assignments over interviews when evaluating candidates. Many typical screening processes, such as personality tests and interviews focused on previous work experience, can be poor indicators of future performance and introduce bias into the hiring process. Instead, give candidates “minimally viable demonstrations of competence,” assignments that allow them to show mastery of skills necessary for the position.
- Pause your inbox. To resist the urge to check messages while out of office, use a tool like Inbox Pause to hide incoming emails from your inbox until your return date.
- Play the subtraction game. This streamlining exercise asks people to first brainstorm individually, “What was once useful in your organization, but is now in the way? What adds needless frustration?” Team members then share and brainstorm in small groups or pairs. Finally, groups present one or two targets to the whole team.
- Give social meetings some structure. Even when gatherings have team bonding or connecting as a primary purpose, they’re still more effective with a clear agenda. Set an objective for the meeting, and give colleagues a prompt or activity to lead to more focused and fruitful conversations.
Meeting overload has a high price tag. A new report concluded that attendance at unnecessary meetings costs companies an estimated $25,000 per employee per year.
- The time-tracking study of 623 workers, led by UNC Charlotte business professor Steven Rogelberg in conjunction with transcription platform Otter AI, also found that people decline an average of 14% of meeting invitations—but that they want to decline more than twice as many.
Remote workers are going incognito. Worried that logging in from the beach won’t sit well with colleagues or bosses? Some employees working from far-flung locales have found a high-risk workaround: Keep the same hours, keep video backgrounds neutral, and keep their location a secret.
The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.