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Beyond the K-wave - a new infrastructure jobs perspective

Denis Pombriant Profile picture for user denis_pombriant October 25, 2016
Commoditization of the workforce brings real consequences in terms labor displacement. What kinds of job will be needed and where will they come from. We take a tentative peek into the future.

workforce contingent job
In part one of this mini series, I identified the cyclical nature of post Industrial Revolution economics. It is heavily focused on technological innovations that drive new business formation and dominate the economy for an extended period. Historically, these cycles run their courses in between 50 and 60 years to be followed by new technological innovations that drive the economy the next big step.

My assertion is that the current digital disruption is a form of commoditization of earlier cycles in information, transportation, and manufacturing. Commoditization does not drive job growth and my further assertion is that people trying to answer the question of where the new jobs will come from need to look further afield than the technology sector.

While new jobs will undoubtedly have a technological base and leverage education in science, technology, engineering, and math (STEM) these jobs will have different objectives and outputs than today’s technology driven production.

What comes next looks more like a large investment in infrastructure for the purpose of stemming the worst effects of global warming. This can take many forms.

For example, as modern travel experience shows, people can (sadly) get by with a crumbling transportation infrastructure but society can’t exist without sufficient water. A first step in a new age might very well involve creating a continental water infrastructure as a hedge against accelerating climate change. This infrastructure might be managed with AI and leverage satellite weather forecasting but most of the jobs will be in construction and allied fields.

Other candidates for attention in the new age include updating the transportation and electric grids. The self-driving electric car might be a transportation solution but will everyone own one? Chances are good that transportation will Über-ize, a commoditization of an expensive good turning into a service.

Fueling transportation will take ingenuity too. The Age of Petroleum, despite today’s relatively low crude oil prices, is on the way out. A report from the major oil company BP estimates there are roughly 1.6 trillion barrels of oil left in the ground, enough to support current needs for 53 years. That’s not a long time but long enough for most people alive today to kick the can down the road.

That number is a moving target that is influenced by advances in all kinds of technology. Experts may think there’s 53 years worth of oil left but demand will have a lot to say about the forecast’s accuracy. Another way to look at it is to consider whether using what’s left would constitute a global suicide pact given the emerging effects of climate change. Importantly, as that oil dwindles, it will also become expensive as demand outstrips supply. Also, much of it is under water and expensive to extract; naturally the costs have to be reflected in the price.

It’s not clear that solar, wind and other alternatives to fossil fuels can carry the day and even if they can, much more investment needs to be made in both the electricity grid and in generating and storage capacities. So some combination of grid modernization and construction and operation of a new energy infrastructure could create many of the jobs needed to sustain a new age. Some will argue that much of that 'work' could be taken up by 3-D printing but is that realistic in the next (say) 30-50 years? It will not obviate the need for world class designers and engineers of all kinds.

Still more jobs could be created by a global program designed to take carbon out of the atmosphere. Some will say it’s hard to figure a way to make a profit (a requirement for a new age, remember) on a process that is inherently altruistic like removing carbon from the air and sequestering it. But the only thing missing right now is a pricing mechanism and a decision to charge emitters (a better word than polluters).

A pricing mechanism already exists in the carbon markets, which are part of the Kyoto protocol. At the moment participation in the carbon markets is voluntary in the U.S. but mandatory in other countries. Putting a price on carbon is all that the marketplace needs to make carbon removal a profitable business and the available supply suggests that new businesses in the space will thrive for decades. This will also generate more jobs.

My take

It’s time to get real about the potential of the technology disruptions now directly before us. There are abundant signs that AI, the IoT, and other marvelous innovations will sweep the planet but as they do they will not likely produce the employment that many worry about today so the concerns voiced are valid.

If you think some planning might be needed to direct resources efficiently just saying that new jobs will spring up isn’t enough even though it may be true. Even if you are optimistic, what kind of jobs will those be and will they provide a 'living wage?' The new jobs will likely require different skill sets than the population now possesses in abundance. The jobs that are likely to be available in good quantity will be a mix of construction and advanced technology occupations requiring STEM knowledge including the biological and social sciences.

The greatest challenge we have to face is the size of the global population. In 1974, at the dawn of the Information and Telecommunications Age, which provided a lot of careers, global population was 4 billion. In March 2016 it was estimated at 7.4 billion or nearly double. Finding jobs for a swelling population in the face of technological advances is a heavy lift and one of the most important things that global leaders and thinkers have to tackle.

As in past disruptions, many jobs will come from adjacencies, areas that support the main drivers. For example, the machine tool industry got started in the Industrial Revolution but flies under the radar throughout history despite its contributions. History is replete with equivalents of the machine tool industry. So any analysis of where the new jobs will come from also requires assumptions about the adjacencies.

These challenges are not insurmountable in themselves. After all we deal with these kinds of challenges every fifty years or so.

More prosaically, technology vendors who claim to understand these topics and especially in the field of skills planning need do a far better job than has been the case to date. Too often we hear about skills shortages when in reality it is a lack of foresight and planning for changing skill sets that sets up conditions of scarcity.

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