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With technology on the rise, a college degree isn’t job insurance

A new study analyzes seven key skills for a changing economy

January 27, 2016

Conventional wisdom dictates that a college degree is a solid way to ensure a higher-paying job. But in an era of rapid technological growth, is a degree enough? What if you were replaced by a robot next year, or in five years, or in ten? How can we ensure that our jobs complement the inevitable march of technology rather than being stampeded by it?

Frank MacCroryPostdoctoral associate Frank MacCrory

Frank MacCrory, a postdoctoral associate at the MIT Center for Digital Business, has conducted targeted research to understand the role of technology in employment and wage growth. He authored the study “Identifying the Multiple Skills in Skill-Biased Technical Change” with MIT Sloan research scientist George Westerman and MIT Sloan Professor Erik Brynjolfsson.

A new way of considering skilled jobs
MacCrory hopes that the findings will help educators and policymakers promote pragmatic educational paths and help students tailor their studies toward sustainable careers with technology in mind.

“There’s been an oversimplification: ‘high-skill’ and ‘low-skill’ jobs,” he says. “If you go to school and get a degree, you're supposedly recession-proof. It is not that simple. It’s not like there’s one scale or thermometer going from low to high. Jobs have very different interactions with technology.”

His work operates from the perspective of skill-biased technical change, which is the shift in production technology that favors skilled over unskilled labor by increasing its relative productivity (and its relative demand).

Erik BrynjolfssonProfessor Erik Brynjolfsson

Understanding these shifts and how they relate to information technology is crucial in the current climate.

“We’re seeing a second industrial revolution,” says MacCrory. “In the first revolution, we were replacing muscles with machines. Now we’re replacing the simple function of minds with machines. It’s catching people by surprise: It’s not just low-skill jobs that are vulnerable.”

Education isn’t a foolproof solution, he says. Historically, skill-biased technical change has led to substantial real wage increases for those with at least a college degree and declines, on average, for those with less education. But skill-biased technical change isn’t a one-dimensional construct these days.

Seven dimensions of skill related to job growth
To this end, MacCrory’s team isolated seven dimensions of skill across 514 jobs with economically important affects on wages. Using U.S. Labor Department information, they analyzed how wages and employment data changed from 2006 until 2014 as they relate to technology across these skills.

Physical: Strength, stamina and dexterity. There are few jobs with absolutely no physical requirements, but many office jobs require little in this area.

Equipment: Technical know-how, selecting the right tools, and the ability to troubleshoot.

Supervision: Supervising people and also getting things accomplished through peers.

Awareness: Comprehending the environment, which is often important for working outside or in chaotic surroundings.

Perception: The ability to focus on details and the ability to find a signal among noise.

Teamwork: Being personable as well as dealing with stressful situations and difficult people.

Initiative: Sometimes called grit, this is the ability to start and complete things.

Notably, researchers found that above-average wages flow to occupations that require high skills in two or more dimensions simultaneously.

“This is not the time to be a relatively unskilled worker,” MacCrory says.

Certain skills lead to better compensation and resist automation

George WestermanResearch scientist George Westerman

The researchers found that equipment and supervision skills appear to be most rewarded when associated with increased computer use. Initiative, interpersonal, and perception skills are complemented by an optimal level of IT, but more isn’t necessarily better. Physical skills have an interesting relationship with IT, too: They’re generally not compensated well, but are least bad in occupations with very low or very high IT (e.g., groundskeepers and lab technicians, respectively). The researchers found that physical skills haven’t been well-compensated for a long time, and the situation grew even worse between 2006 and 2014.

What’s the best skill to have? Overall, initiative has been the most durable in terms of earning power.

“In an era of rapid change, adaptability and initiative can be perhaps the most valuable attributes one can bring to the market,” according to the study. So far, awareness, interpersonal, and supervision skills have resisted automation. Initiative and supervision appear positioned to complement advancing technology.

These findings should help policymakers and educators plan for the future.

“The complex interactions between skills and technology call for finer targeting of reskilling interventions than urging workers to earn a college degree,” according to the study. “Before long, it’s likely that the vast majority of industries will rise to what is today considered high-IT intensity, and more jobs will be either complemented or substituted by rapidly advancing technology capabilities.” A proper distribution of these skills will be necessary to compete.

Policymakers could use this study to promote long-range job growth. The push toward education is important, but it needs to be pragmatic, MacCrory says.

“Educators of all kinds, whether in a college or in a community center, should take a longer view when deciding how to train people for careers. There’s no point training someone for a job that isn’t going to exist in five years,” says MacCrory.

“Unsurprisingly, using blunt instruments like ‘get as many people into college as possible’ does not automatically get people into the places where they are the most valuable,” he says. “Since technology shows no sign of slowing down, it makes sense to encourage policies that will position people to complement those advances.”