Rural Minnesota & the Automation Revolution: Part 1

This series of blog posts widens the focus on the impacts automation will have on overall employment in in Greater Minnesota, and in particular, West Central Minnesota.  In part one, we examine the nature of the automation revolution and which economic sectors in Greater Minnesota are most vulnerable.  Part two will explore the potential impact in more detail by comparing the amount of jobs across the key job sectors in the West Central region to employment in Minnesota as a whole.  The final installment will explore key factors that affect the pace of automation adoption, as well as key rural traits, and suggests that automation will likely come more slowly to rural Minnesota, but that many small towns still may experience significant economic disruptions from automation.

Part 1: What’s Going On?

The Contrast: Recent Years of Job Creation & a Future of Job Destruction

Employment reports from both the national and state level have offered a steady stream of positive news in recent months.  The May 2017 jobs report by the Bureau of Labor Statistics showed a national unemployment rate of just 4.3%, the lowest level in nearly 10 years, while the rate across Minnesota, according to the Department of Employment and Economic Development (DEED), has floated between 3.8% to 4.0% over the past two and one-half years. That said, it’s not all good news.  

While this job expansion has continued, there has also been a steady stream of studies and news reports about the impending disruption in job creation created by the automation revolution—that is, new technologies in robotics, artificial intelligence (AI) and deep machine learning applied to the workplace. The tenor of reports about automation’s impact in the not-so-distant future range from quite optimistic—automation will fill the upcoming shortages in labor due to aging, or eliminate the most unpleasant and dangerous kinds of work—to downright apocalyptic—a robot “takeover” of high percentage of decent paying work, leaving careers for only the most skilled, adaptable and creative people.¹

Despite the enormous attention given to this automation revolution, news reporting and research studies relevant to Greater Minnesota and all rural areas has been limited to the farming and mining industries, which constitute only a small fraction of all rural jobs.²  This series of posts will explore some of the way that the automation revolution may affect Greater Minnesota.

What is the Automation Revolution?

One can think of the automation revolution as the increasingly rapid adoption of advanced technology in the workplace, primarily for the purpose of making jobs tasks more efficient and less reliant on human input.  

Automation, and it’s disruptive effects, have a very long history.  Textile workers, notably the Luddites of England, rebelled against new weaving machines in the early Industrial Revolution. Mechanized farm equipment replaced labor in the US beginning in the 1830s. Cars and trucks displaced horses by the 1910s, and early mainframe computers replaced human computers in the 1960s. But the rapid economic and productivity growth in the 19th and 20th century meant that most displaced workers eventually found work in other jobs and sectors.

In the 21st century, automation centers upon advances in computer and software capability. The McKinsey Global Institute’s extensive analysis of automation across work sectors, titled A Future that Works: Automation, Employment & Productivity, focuses on current technologies in three areas that will alter many kinds of work: 1) robotics, in which machines conduct specific, often repetitive tasks as often found in factory production; 2) artificial intelligence software that fully operates existing machines like vehicles; and 3) machine learning, in which the software design allows the programs themselves to learn, adjust and improve the performance of tasks (as seen in Skype’s language translation software).

We are now living the initial phase of the current revolution.  Robotics and artificial intelligence have already impacted several sectors, including mining, data collection and data processing, taxi and limo services, mass media and retail sales.³

The central argument of technological futurists is that these technologies will impact far more areas of work and more deeply than previous mechanical advances.  For example, the arrival of self-driving vehicles alone will deeply impact overall US employment across multiple sectors.  Roughly 2.7 million Americans, mostly male, now earn a living driving light or heavy trucks, while about 380,000 drive taxis, limos and public transit vehicles (and are already under siege from ride-sharing software), and another 600-700 thousand people drive school buses, specialty vehicles or are self-employed drivers.

Jobs vs. Job Tasks

Not surprisingly, our tendency is to focus on automation’s potential for job losses. But the McKinsey report argues that we should focus less on jobs lost and more on how much of a job’s activities or tasks potentially could be replaced by automation. Any work that involves highly repetitive physical tasks (e.g., driving, package sorting) or the collecting and processing of simple information or data (e.g., insurance application processing) will see more of its tasks automated rather soon, primarily because automation tools already exist for such job activities.  In contrast, technology is significantly less developed or is more difficult to deploy for work activities in unpredictable physical settings (think of plumbers in residences).  Likewise, work involving managing and interfacing with people, as teachers or social workers do every day, or that calls for analytical expertise or creative activity, as found in various skilled professions, will see fewer of their tasks automated.

Collectively these technologies will impact some of the tasks in at least 60% of all jobs in America in the decades ahead.  As the figure below from the McKinsey Global report estimates, 60% of occupations could have at least 30% of their tasks automated. About 5% of all jobs will be mostly or entirely automated, while 5-10% will have almost none of their tasked automated by current technologies.

 

Automation Graph

Changes already in Greater Minnesota

Automation has already hit some parts of Minnesota squarely.  Most conspicuously, the Iron Range has experienced a dramatic decline in employment.  Most of these losses stem from the closure of mines, but automation has cut the need for miners and likely means less job expansion as new operations open or existing firms expand.

 The proposed PolyMet copper-nickel facility in Hoyt Lakes, for example, expects to employ 300 people if it is approved and is operating at full capacity. However, that’s just 10% of the workers that the Erie Lakes iron-ore mine in the same area employed before it shut down in 2001. Fully automated mining operations in Australia and Chile suggest the future may bring further employment reductions. And people working in agriculture are familiar with the current use of drones for tracking soil and field analysis, crop spraying, precision crop monitoring and assessment of crop health.  Automated trucking to serve increasingly automated farms is also in the not so distant future.  

Ultimately, the outlook of the effects of automation on rural Minnesota depends on whether one is optimistic or pessimistic about automation–does it eliminate ever increasing areas of human work, or does it complement existing work, freeing people to pursue new tasks connected with their jobs?

While the future is “here” in some MN industries, our next post will turn from the farm and mines to consider the prospects for automation across the wider range of jobs in Greater Minnesota.

As always, CST would love to hear your perspectives in the comments below!

 


ENDNOTES

¹ See the Pew Research Center’s The Future of Jobs and Jobs Training for a particularly wide range of expert opinion.
² For examples of farm and mining reports, see the Guardian’s report on the global impact of automation on farming, CNBC for the market and application for farm automation, and Brookings’ report on jobless recovery in mining.
³ Some examples. New media studios—prominently Netflix and Amazon—release their content entirely online and outside the traditional seasonal release schedule. Major news organizations like Vox.com, Huffington Post, and Breitbart began online and have no print outlet, and simple news stories about finance, sports and entertainment are increasingly written entirely by software programs. Firms in the insurance, investment and banking sectors increasingly exist entirely online, opening accounts and processing orders with little or no human involvement, while long established financial firms all try to move more of their operations to an online platform.  In retail, online shopping has taken 1-2% of market share each year for the past 15 years, led by Amazon with its robotics-driven warehouses and web services division, expanding rapidly and recording record profits. In terms of technology deployed, it is worth noting that no area of activity has undergone more automation than military warfare. Developments in the so-called revolution in military affairs (RMA) have been discussed for over 30 years, and we now see that the much of US warfighting against terrorist organizations is automated and remotely operated using high technology surveillance and drone missile strikes.
⁴ Though closures and automation have dramatically shrunk the Iron Range workers in mining– from a high of about 16,000 in 1979 to about 4,500 today—the average yearly pay of $90,000 for remaining jobs still gives the region great incentive to help create even a modest number of new positions.  (Minnesota Public Radio, 4/27/2016).

Roger Rose is Center for Small Towns Director and an associate Political Science professor for the University of Minnesota – Morris.

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