Everyone is talking about the economy these days. Interest rates are rising, inflation seems to be spiraling out of control and there is a hint of recession in the air. Nonetheless, employment growth remains strong and unemployment low. What’s really going on?
After years of study and hundreds of conversations with business leaders, I’ve come to a big conclusion. Not only are we going through an economic cycle, but the global economy has changed. And that shift, which I’ll discuss below, is likely to create high levels of employment, job growth and economic opportunity In spite of the current business cycle.
Review: The theory that automation kills jobs
As early as 2007, researchers from Oxford Economics, followed by the World Economic Forum, predicted that more than 45% of jobs would be “killed” due to automation. Economists and researchers spoke of rapid workforce disruption and warned us that robots would take over our jobs.
Actually pretty much of course the opposite has happened. While routine work (defined below) has been reduced, Non-routine jobs have exploded with growth. And this trend creates jobs: better jobs, higher-paying jobs, and jobs that require new skills.
Think, for example, of self-service store automation, ordering via mobile phones and in-store kiosks. These automation tools eliminated the need for call center jobs, retail order taking, and routine sales and marketing jobs. But the high volume of new transactions created a multitude of jobs in service delivery, customer service and support, analytics, supply chain and logistics. In fact, the Purchasing Managers’ Institute announced this month that demand for “services” is at a 20-year high.
In other words, automation hasn’t eliminated work at all – it has created new jobs, better jobs, and an acceleration of our workforce into what we now call the “service economy.” We are essentially moving to the right in this model.
Fig. 1: Typical academic categories of “routine” and “non-routine” work.
If you look at economic data, there are two definitions of “services”. First, there is the service industry, which the BLS defines as specific occupations in healthcare, financial services, education, commerce, leisure, hospitality and professional services. This industry group provides more than 70% of US employment, and its size and median wage have been growing at more than 5% per year (their share of jobs is increasing). Second, but more important, are “service jobs,” which are jobs that require human skills in design, communication, nursing, or service. This latter definition now accounts for more than 90% of jobs in the United States.
I speak to HR leaders all day, and we constantly hear conversations about the need for design thinking, empathy, management and leadership, and the increased demand for clinical care, engineering, design and logistics jobs. Each of these jobs is “non-routine” in its own way, and even the most demanding tech companies feel that pinch.
Consider that Facebook (Meta), Amazon, and Google now employ almost 40% of their workforce in part-time jobs curating content, moderating social media, and deciding or helping to decide how their systems will behave. The need to “train,” “moderate,” and “upgrade” our intelligent machines is greater than ever, and these jobs are vital, important, and well-paid.
A good example that we can understand is sales automation. As companies like Salesforce, Hubspot, Seismic, Gong, and others “automate the sales and marketing process,” the demand for salespeople has skyrocketed. According to the latest data from Lightcast, there are more than 12.5 million job openings in the United States today, of which more than 580,000 are in sales. Clinical jobs such as nursing, pharmacy technicians and other nursing jobs are similarly skyrocketing, with more than 650,000 open positions today.
This demand is not due to economic growth: these are “higher quality jobs” created by sales automation. Today, thanks to CRM tools, a sales rep spends time sifting through Salesforce, looking for qualified leads, and then composing interesting emails or phone calls to get people’s attention. Was the “sale” automated? Not really. It’s been “augmented and enhanced” with automation, but it’s still a human-to-human job.
Look at positions like Nursing (#1 job vacancy in the US), Management (600,000 vacancies), Customer Service (245,000 vacancies), and even Restaurant and Hospitality (275,000+ vacancies). None of these jobs have been “automated away,” but their demand has increased as more routine tasks are automated. (See our new GWI healthcare study for more information.)
So do we need technical skills to be successful?
And that brings me to my second point. Despite the endless number of articles and studies on the need for scientists, engineers and technical professionals (which are always in demand), the study also shows that technical careers, although crucial and vital to our economy, are also becoming “services”. develop. jobs too.
I know that from my own expirience. I was an engineer, sales engineer and analyst for many years. My engineering skills started with genetics (my father was a physicist) and I’ve always found engineering easy. But over the course of my career, I’ve always been “passed over” by people with more management know-how, ambition or relationship skills for bigger jobs. So, in my own case, over time I’ve learned how to be a leader, learned how to work well in teams, and learned a lot about group dynamics, teamwork, empathy, and development.
The same applies to the economy as a whole. Research from IBM and also from Bloomberg has found that CEOs don’t just want technical skills, they are desperate for people who are creative, can solve complex problems, lead large teams of people and are concerned with strategy, time management and organizational growth. While technical salaries increase with specialization, almost every salary study shows that “executives” earn 50-100% more, even in highly technical fields.
Figure 2: Fed Reserve research shows that “high social” and “high analytical” value jobs (blue) far outperform “technical only” jobs (green) over time.
Yesterday I spent a day at one of the world’s largest technology companies. Guess what their biggest challenge is? It’s not about technical know-how or hiring engineers, it’s about management, leadership and culture. And that makes perfect sense. Yes, it’s hard to hire and manage the world’s best scientists and engineers, but try to be the boss, leader or manager of these brilliant people. That is a Yes, really hard work.
And that leads me to my headline. we become one PowerSkills Economy: driven not only by technical skills but even more by empathy, design, communication and management. What do you think is the most in-demand skill on LinkedIn? It’s not software or data analysis: it’s “communication.” And that makes sense. If you’re not good at listening and sharing your thoughts, there’s not a lot of work you can really do.
Younger workers know this, by the way. As most young professionals enter the workforce with many technical skills, they want behavioral skills more than ever (right side of this chart).
Figure 3: Australian research shows younger workers believe behavioral skills are key to their success.
What are PowerSkills and how do we develop them?
So what are these magical PowerSkills? Here’s our best set, based on hundreds of conversations with psychologists and business leaders around the world.
As Brene Brown explains in her writings, our economy has evolved from muscles to brains to hearts.
- In the 1800s and early 1900s we were in the industrial age: the era of Muscle. We needed workers with strength, skill and physical endurance.
- In the 1960s to 2000s, we entered the information age: the era of brains. We were looking for employees with analytical skills, raw intelligence and mental processing power.
- Today, thanks to automation, we need employees with empathy: the era of heart. We face problems with focus, productivity and performance. We need employees with wisdom, empathy and heart.
What that means for business and the economy
What does it all mean? For me there are three lessons here.
First, we must focus our energies beyond “technical ability” in our education, training, development and recruitment. Educational institutions, policy makers and companies need to take PowerSkills (often referred to as SoftSkills) seriously because they are the “hard skills” of the future. You should define these skills, talk about them, reward them and continuously develop them.
Second, economic growth now depends on our ability to understand this change. An interesting study by the IZA Institute of Economics looked at these trends and found that the grow the slowest Economies actually had a much larger percentage of “routine-intensive role” jobs. In other words, if you don’t design and engineer jobs to move up to the right, your company and your country will suffer economic losses.
Third, low unemployment could persist. Traditional economics dictates that companies lay off workers when the economy slows. But this formula is beginning to change. Why? The economy is “constantly reinventing work,” creating new jobs while others become obsolete. Fertility and marriage rates are low, so fewer workers are being born – so the “demographic drought” is creating limited supply. So productivity will rise (as it did during the recession) and jobs will continue to be hard to fill.
Our new Healthcare Global Workforce Intelligence research explains this in detail. Healthcare providers who are thriving during this difficult time are those who can redesign work, automate “routine tasks” in their facilities, and spend significant time training and developing employees to use PowerSkills.
This is the future of work as I see it: not a world where technology replaces people, but a world where jobs keep getting better. Capitalizing on these trends is key to growth in the future.
The healthcare industry has a talent crisis: we found the cure.
Josh’s new book: Irresistible: The seven secrets of the world’s most enduring, people-centric organizations