Massive shift to online services may threaten Bay Area job recovery.
When COVID-19 sent millions of Californians home to work remotely, shop online and video conference their doctors, companies adapted by replacing certain services with new technology.
Now, that automation is reshaping jobs faster than previously thought.
“Everything’s online. It’s become the nature of our lives during the pandemic,” said Jane Oates, president of the nonprofit WorkingNation and former assistant secretary for the U.S. Department of Labor during the Obama administration. “It’s going to accelerate the use of technology in every job and for functions where it wasn’t used before. Some jobs that were already beginning to go, the pandemic will accelerate their demise.”
The pandemic is speeding up America’s rush toward automation, a trend that is now set to displace an additional 8.4 million American workers by 2030, according to a study by the research branch of the Washington-based management consulting firm McKinsey & Co. That’s a 23% increase from a pre-COVID scenario. The report modeled the effects of the pandemic on automation, accelerated e-commerce and remote work in more than 800 occupations in the U.S. and found that jobs in sales, office support, and food and customer service will face the largest losses.
“[Automation] is not a 10-year issue right now. It’s a two, three-year issue for many jobs, particularly the back office, middle wage office jobs,” said Jeff Bellisario, executive director of the Bay Area Council Economic Institute. Bellisario said he feared the combined forces of remote work, automation, and a growing number of workers who lack marketable skills may create a “massive job dislocation that is almost permanent” in the Bay Area.
To be clear, jobs across all sectors were facing threats from increased automation long before the pandemic. Paralegals, cashiers, clerks, bookkeepers, manufacturing workers and train drivers were all at risk. The pandemic is accelerating that process, the McKinsey report found, but it’s also automating jobs like inspectors, packers, salespersons, product demonstrators and even waiters.
Americans created an unprecedented surge in e-commerce and online grocery orders during the pandemic. And In warehouses, grocery stores, manufacturing plants, and call centers across the state, employers relied on machines and robots to reduce physical proximity and cope with higher demand, the McKinsey report found. Experts expect videoconferencing to permanently reduce business travel, which Oates said will have a domino effect on airlines, taxis and restaurants. At San Francisco International Airport, United Airlines already plans to furlough more than 3,000 workers starting next month due to a slump in demand.
These trends could mark the permanent end of 4.3 million jobs in customer and food service in the U.S., as well as hundreds of thousands of office support jobs like secretaries and assistants, according to the McKinsey report.
The number of jobs lost will ultimately depend on our post pandemic habits, according to UC Berkeley public policy and economics professor Jesse Rothstein. “My hunch is it won’t be that big of an acceleration. My hunch is it could be just a blip, but I could be wrong,” Rothstein said.
Still, more than eight in 10 business leaders say they are accelerating automation of their services in response to the pandemic, and 43% anticipate reducing their workforces because of new technology, according to a World Economic Forum report that surveyed 291 executives worldwide.
At the same time, the pandemic rush toward online tools is creating new jobs.
The analytics software company Burning Glass Technology found that demand for workers skilled in videoconferencing increased 177% between 2019 and 2020. And while jobs postings between March and September 2020 decreased by 39% nationwide, they grew 18% in the logistics sector and twice that in remote work-related sectors like cloud computing and network systems.
Much of that growth is attributable to the boom in e-commerce, remote work, and telehealth, according to Vivek Ravisankar, CEO and co-founder of HackerRank, a hiring platform based in Mountain View that matches software developers with companies like Walmart and LinkedIn. “Across all of these industries, everything we expected would happen in 10 years has accelerated within the span of one year,” Ravisankar said. “And that of course has driven a huge demand in developers.”
In 2020, HackerRank had twice as many matches as the year before, helping about a quarter of the Fortune 500 companies recruit software developers, he said.
“Tech is across everything now, making it even more challenging for the people who dropped out of the labor market to get back in,” said Lisa Countryman-Quiroz, CEO of the Bay Area nonprofit Jewish Vocational Service, which helps Bay Area low income and unemployed workers of all faiths find jobs through programs like data analysis and digital literacy. Countryman-Quiroz highlighted some federal and company retraining programs but said standardizing these efforts will be key to avoiding permanent job displacement.
Kim Beas lost her job as a tax consultant at a large accounting firm last fall. A single mom, Beas says she’s looking for a higher paying job that she can do from her home in San Francisco’s Bayview neighborhood. “Jobs that are more flexible are more competitive,” Beas said. “All the jobs I’m interested in required Python or SQL” — two coding languages. Now, she’s learning both at Jewish Vocational Service.
This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.