Why private/public co-operation is needed to manage the impact of AI on the workforce

Governments and companies need to work together, right now, to prepare for the impact that AI will have on already shrinking workforces, and to fill gaping skills shortages throughout industries across the world.

This is according to the latest Littler Workplace Policy Institute’s (WPI) report, The American Workforce Transformation - challenges and opportunities.  WPI is the US government relations and public policy arm of Littler, a US employment and labor law practice representing management. The report looks at the key challenges contributing to ongoing labor shortages, including the growing skills gap, and makes recommendations for public/private local strategies to overcome them. 

Michael Lotito, co-Chair of WPI and one of the report’s authors, explains:

We have been talking about job displacement because of the impact of AI and robotics for the last decade. AI will have a significant impact on the number and type of jobs. Every time there is a major technological change, like after the industrial revolution, there are eventually more, better jobs, and this is probably the case here. But for those who aren’t prepared there will be tremendous pain.

Shannon Meade, Executive Director, WPI, adds:

The number one issue American organizations are facing is the shifting landscape of labor shortages and the skills gap. There are 10 million jobs open and labor shortages means organizations just can’t get the workers they need.

She points to the example of the delay in the construction of the $40 billion chip manufacturing plant in Phoenix, Arizona. The world’s largest contract chip maker, Taiwanese company, TSMC has had to send its own staff to Arizona to speed up construction of the plant, which is scheduled to open next year. There aren’t enough local workers with the necessary specialized skills to install the sophisticated equipment the facility needs.  

Meade explains that the reason for the WPI report is that changes in the workforce due to COVID have exacerbated what were already existing conditions, and they need to be addressed quickly:

The labor shortages, and the widening skills gap together with technology advances in the pipeline, demographics, a declining birthrate, and the position of women in the workforce, all of that creates the perfect storm that only federal led but locally implemented strategy can successfully deal with.

Skills

The WPI report cites the recent World Economic Forum [WEF] 2023 Future of Jobs report, which describes the changes brought about by AI as ‘a structural reconfiguration of labor markets with the creation of new jobs and a demand for new skills’. The WEF report lists AI and machine learning specialists at the top of the list of fastest growing jobs and predicts the demand for skills in AI and big data analytics will increase 30-35% in the next five years. 

Lotito comments:

It is so important to have workforce development plans, and we have been talking about it for the last decade. In a way I think we may have been too early to the party. But now we have the first AI strike in  Hollywood, and that has brought it into sharper focus.

The authors of the WPI report believe the major challenge is to train workers in the skills necessary to perform new roles.

The top ten skills currently most in demand according to Indeed.com, a job search website are in:

• Cloud computing
• AI 
• Sales leadership
• Analysis
• Translation 
• Mobile app development 
• People management 
• Video production
• Audio production 
• User experience (UX) design

Lotito believes the strategy to train the workforce in new skills needs to be a public/private Federal-led initiative that individual states implement:

This is important because there can be big differences between states, so they need the flexibility that aligns them to different approaches.

But he believes it is now urgent if the US is to remain at the forefront of the global economy:

It is an ‘all hands on deck’ moment or the 21st century will not be US-led.

He thinks that Europe’s strategy to address the impact of AI, the EU’s AI Act, which was recently passed, puts it a bit ahead of the US, although the Act doesn’t provide a total workforce plan:

The different European countries are like the US States - they have different needs. For example, Germany has always had good skills development, with apprenticeships and planning. Things differ from country to country but it will impact everyone. There should also be an International AI strategy but with flexibility for individual countries or states.

There are huge political challenges for governments, but Lotito believes that the work the WPI has done with states has been like a breath of fresh air:

They can move more quickly than at the Federal level, and actually they have no choice as they need the improvements on a day to day basis, not in the distant future.

Meade agrees:

In the US the states are moving forward and of course are in the front line. At the Federal level the government, so the Senate, the House and the White House, are all still trying to develop policies with stakeholders.

Last year the White House produced its blueprint for an AI Bill of Rights, which set out voluntary provisions on the use of AI, but more recently released an updated strategy to coordinate and focus federal investments in AI. It has also held meetings with employers and labor representatives, and with companies working with and developing AI technologies to discuss the use of AI, and its impact on the workforce. 

The WPI report concludes that it will be local state level strategies that will be most successful. To achieve that it argues that federal labor market reporting needs to be modernized, so that data is accurate and accessible in real time to both job seekers and employers. Better reporting will also allow economy wide trends in emerging roles and industries to be spotted earlier.  

Legislate

To bridge the current US skills gap the WPI report advocates that Federal legislation is needed for an AI driven economy, because its success depends on the ability to train a broader workforce, and handle job disruption. 

The report’s authors believe that the re-authorization of the Workforce Innovation and Opportunity Act (WIOA) is crucial to retraining and reskilling, but the Act needs important reforms, like better support and funding for local led initiatives, and shifting resources away from federal bureaucracy so that funding is focused on re-skilling and up-skilling workers to meet employer local demands.

The report also concludes that apprenticeships and federal funded job-training programs need to be updated to reflect the needs of the US economy. The scope of the National Apprenticeship System needs to be expanded beyond its traditional fields, and it should work more closely with key industries and sectors of the economy. The post secondary education federal training grants should also be more accessible as employers are increasingly looking at skills based recruitment, rather than  a specific degree or qualification.

Lotito concludes:

Our report shows that with labor force participation still behind pre-pandemic levels and employers still struggling to fill open jobs, significant changes are needed to transform the American workforce. We have a challenging task ahead, but if we take the right steps now, the payoff will be felt for years to come.

My take

There is a growing sense of urgency across US organizations and the government sector that AI job disruption is beginning to be felt, and the skills gap continues to widen. If the US can put federal strategies in place now that are flexible enough to work locally there could be decent opportunities for both employers and employees. But after a decade of talk, it does need to get on with it.