Cost to train 1.4M displaced US workers could exceed $34B
- Nearly 1.4 million U.S. workers could lose their jobs over the next decade due to technological change and other global trends, and private-sector employers may only be able to provide 25% of the reskilling needed to keep them in the workforce, according to a report released Tuesday by the World Economic Forum (WEF). This could increase to 45% by collaborating with stakeholders to reduce the time and cost of of training, the report's authors said.
- The report said the cost of retraining workers from current roles to new, viable, desirable and growing roles would be $34 billion in total, or $24,800 per worker on average. The report defines "viable" jobs as those that have similar requirements and manageable reskilling needs. "Desirable" jobs were defined as those that would both offer long-term employment stability as well as the opportunity to maintain or improve a job mover's current standard of living.
- Public-sector entities will need to provide training for those who can not be profitably upskilled by the private sector, WEF said, adding that government could assist as many as 77% of all at-risk workers. But the report said neither public- nor private-sector entities will be able to upskill another 18% — or 252,000 — of at-risk workers due to costs outweighing economic returns. For the remaining 5% of displaced workers, a similarly skilled and higher-wage career change would not be available.
The promise of a "Fourth Industrial Revolution," a termed used by WEF and other organizations, has led to speculation about how technological changes will impact employment practices. Technologies ranging from artificial intelligence to robotics to e-commerce tools have already reshaped entire industries and job markets, even at the community level.
Not all predictions are equal, however, even though many observers agree that a significant number of workers are likely to be displaced from their current roles. Employers have responded in turn, indicating that skills-based hiring will be a priority moving forward. Although companies are struggling to find skilled talent in the current labor market, a 2018 WEF report showed nearly 50% expect automation to lead to a reduction in their full-time workforce by 2020. A ManpowerGroup study, however, showed the majority of employers plan to respond to the changes brought on by automation by hiring more staff, not less.
Under the Trump administration, the federal approach to bridging skills gaps has to been to rely on training pledges by top companies and trade associations. A notable example of this strategy is President Donald Trump's "Pledge to America's Workers," an effort launched in 2018 that has since earned pledges from the U.S. business community to create 6 million training opportunities. The U.S. Department of Labor has since announced $100 million in grants for training and career service programs to help displace workers, and congressional Democrats have put forward their own proposals to help unemployed people looking to enter new careers.
But even as the administration was rolling out its pledge initiative, experts cautioned that workers are unprepared for changes to their jobs, and that the government's recent efforts were only a beginning. Displacement in industries that provide vast numbers of entry-level jobs, like retail and food service, may prevent workers from learning even basic skills needed to advance their careers.
Employees have reported in surveys a willingness to upskill, though many also said their employers lag behind in providing needed training. The types of "multistakeholder" partnerships mentioned in the WEF report could include ongoing experiments in employee training between educational institutions, employers, and state and local governments. Companies like Amazon have chosen private partners to create career development programs to provide training for workers, even if that training doesn't apply to current or future positions at the same organization. HR may need to raise awareness in the C-suite of these developments should any provide a pathway to keeping workforces competitive.
Correction: This article was updated to correct the total estimated cost of retraining workers.
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