Stanford Social Innovation Review

Automation and altruism

Just as many businesses will have to reinvent themselves to cope with automation, so will the social sector. “Philanthropy as usual” will not cut it, write James Manyika, Manisha Shetty Gulati, and Emma Dorn in Stanford Social Innovation Review.

Automation has been transforming work since the industrial revolution. The latest wave of automation technologies—spurred by increases in computing power, advances in robotics, and the rise of artificial intelligence—touches new realms of work and may change the world as we know it. Some predict a dystopian world run by robots; others envision a utopia of leisure. Meanwhile, a recent report by the McKinsey Global Institute (MGI) called “Jobs Lost, Jobs Gained” suggests that while automation technologies will continue to lift global productivity and economic growth, they will also cause significant disruptions to labor markets as workers need to transition to new jobs with different skills.

Philanthropists have an opportunity to improve the outcomes of this transition by increasing the overall level of giving to support workers navigating these transitions and by creatively leveraging the very technologies causing this change to help fix some of its problematic side effects.

Automation of work activities poses a global challenge, but its effects will be most pronounced in advanced economies. Here, we focus on the United States, as it is one of the largest advanced economies, will be significantly affected by uptake of automation technologies, and has the most-sophisticated and well-funded philanthropic sector. MGI estimates that up to a third of American workers will have to switch occupational categories—not just to an adjacent role but to an entirely new type of work requiring new skills—by 2030 (see chart below). Our research suggests that the largest disruption will occur among middle-income workers without a college degree (such as machine operators and back-end office workers). Occupations at the high end of income distribution that require applying expertise (such as managers and executives) will flourish, as will some traditionally lower-income occupations that require social interaction and empathy (such as nursing assistants and childcare workers). Automation could therefore exacerbate existing income polarization as middle-wage jobs are squeezed out.

Business and government are beginning to address the worker transitions automation is bringing about, but they have limitations. Corporations need to deliver the bottom line and are industry focused, so they are less likely to think across occupational shifts; governments struggle to react quickly and take necessary risks.

The philanthropic sector, however—unhampered by quarterly earnings calls or the voting cycle—can be independent, take a long-term view, and risk using innovative new approaches that might fail. And while so far efforts to support workers dealing with automation have been limited in scope and don’t yet have proof of outcomes, it is becoming apparent how philanthropy can step up. Specifically, we see four areas where it could make a difference.

Reskilling the workforce. People doing repetitive tasks—such as machine operators, truck drivers, food preparation and back-office workers—are particularly vulnerable to losing their jobs to automation. And while many new jobs are emerging in fields such as health care, engineering, IT, management, and the creative professions, they generally require a higher level of education.

Two types of reskilling will therefore be necessary: training workers to use new technology in their existing workplace and reskilling workers who need to change fields. Existing workforce retraining programs will not be able to meet this demand.

Google’s work initiative—part of the company’s $1 billion-plus charitable arm,—aims to use technology to retrain more people for the future workforce. One of its grantees, Social Finance, plans to use a pay-for-success (PFS) model to help locally embedded nonprofits across the country scale up job-training programs. They are currently identifying high-quality innovative vocational programs and defining relevant success metrics (graduation, job placement rates). These programs will then be matched with impact investors who can support their growth.

Improving labor market dynamism. Job seekers and employers often have difficulty finding each other. Employers complain they can’t determine prospective employees’ real skills based solely on academic credentials. Job seekers complain they don’t know what hiring managers are looking for, and they can’t find jobs to fit their skills and interest. One area ripe for philanthropic experimentation, then, is using technology to improve job matching.

The Markle Foundation’s Rework America Task Force is doing this by bringing together CEOs, academics, and foundation and nonprofit leaders to shift hiring practices toward a more skills-based model. Working initially with the state of Colorado, Microsoft’s philanthropic arm, and LinkedIn, Markle’s Skillful initiative is piloting labor market interventions aimed at middle-skilled individuals. The effort helps businesses define what skills (not just academic degrees) they need to fill a job, and then shares that data with education providers to help them create and adapt programs to the changing labor market. It is also running an eight-month, field-and forum program for coaches at workforce centers and nonprofits to equip them with the necessary leadership skills, information, and tools they need to advise individuals on career paths and training opportunities. Finally, 20 Governors have signed up to the Skillful State Network to access a playbook of workforce best practices and tools, receive advice from Skillful staff, and share their experiences in creating a skills-based labor market.

Philanthropy can also work alongside business in new ways. The Walmart Foundation, for example, is funding the creation of new, industry-wide credentials for frontline retail workers in topics like store operations and merchandising. These transferable credentials recognize worker skills and provide a pathway for mobility, while fostering a better-trained workforce. And another grantee, the nonprofit Bayes Impact (whose motto is “data for good”), is applying machine learning to generate better job-search recommendations. Google is providing both money and expertise.

Testing policy solutions to support transitioning workers. Some of the millions of workers who will need to transition across job categories by 2030 may not be able to develop new skills quickly enough; others may end up moving from formal employment into independent work. Governments will have to take the lead in providing transition and income support to these workers, but philanthropy can play a useful supporting role by testing different approaches and developing the knowledge base to create sound government policies and programs.

The Economic Security Project, for example, is funding research about the efficacy of unconditional cash transfers—either to specific displaced workers or to broader populations—by expanding the Earned Income Tax Credit, among other things. And the Aspen Institute’s Future of Work initiative, in partnership with the Rockefeller Foundation and Cornell University, is launching the Gig Economy Data Hub to collect reliable information on workers who shift into independent work.

Experimenting with education. To prepare for the work of the future, students will need to master technical skills such as coding and data analytics. But softer skills, such as teamwork, communication, time management, and critical thinking will also become more important. Philanthropists can help support existing school systems, community colleges, and universities as they explore how to best teach the skills required in the new economy. They can encourage experimentation beyond traditional degree programs to better meet the needs of low-income and first-generation students especially—including more-modular courses that provide interim credentials and competency-based qualifications, and reward demonstrated skills versus credit hours. They can also incubate new models of vocational training that provide industry-specific skills to young people aligned to local labor-market demand.

NewSchools Ignite Future of Work Challenge, for example, is funding entrepreneurs who work with middle- and high-school students to prepare them for the new world of employment. Efforts include providing internships, creating career-related credentials, assisting with college and job applications, and funding related technologies. The nonprofit Generation is meanwhile partnering with employers to identify the skills required in growing professions, to design and deliver targeted vocational training programs, and to place graduates directly with partner employers.

Just as many businesses will have to reinvent themselves to cope with automation, so will the social sector. “Philanthropy as usual” will not cut it. The sector needs to become expert in using digital tools and technologies, and rethink its terms of engagement with the private sector. But first, it should recognize that this is an area where the United States wants—and needs—the efforts and investments of philanthropy’s best and brightest.

This article appeared first in Stanford Social Innovation Review.

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