Automation could increase economic divide between urban areas & rural communities

July 25, 2019

The continuing trend toward automation could widen the disparities between high-growth urban areas and rural counties at a time when workforce mobility is at historic lows, and the current economic health of urban, suburban and rural economies will impact their ability to adapt, according to a new report from the McKinsey Global Institute: The Future of Work In America.

The trend toward automation will have a growing impact on the economy and “the day-to-day nature of work could change for nearly everyone as intelligent machines become fixtures in the American workplace,” according to the report.

The report finds that many cities and their surrounding suburbs are better prepared for the increase in automation, while other cities and hundreds of rural counties could be left behind unless they adapt to the automation trend.

“But this is not a foregone conclusion,” the report states. “The United States can improve outcomes nationwide by connecting displaced workers with new opportunities, equipping people with the skills they need to succeed, revitalizing distressed areas, and supporting workers in transition. Returning to more inclusive growth will require the combined energy and ingenuity of business leaders, policy makers, educators, and nonprofits across the country.”

Affordable housing in the fastest-growing cities is vital and would enable workers to move to where the new jobs are being created. Life-long education and training, especially in the STEM sector is another key as low-tech jobs are replaced with high-tech jobs. “The old model of front-loading education early in life needs to give way to lifelong learning,” the report states. “Training and education can no longer end when workers are in their twenties and carry them through the decades.”

Another key is providing a social safety net for displaced workers as they transition into a new job. Many workers are currently living paycheck-to-paycheck, and even a brief period of unemployment can lead to an economic crisis and increased stress.

Job-training and social support can include: “Longer and more flexible income support programs during periods of unemployment, relocation assistance, training grants, and earned income tax credits,” the report states. “Portable benefits—tied to the worker rather than the employer—could offer stability to people who need to move between opportunities and geographies as well as covering the millions of Americans who are self-employed or independent workers.”

The McKinsey report analyzed 315 U.S. cities and more than 3,000 counties. It categorized every U.S. city and county into 13 archetypes based on economic health, business dynamism, industry mix, labor force demographics, and other characteristics.

workforce, rural, urban, report