Ball State study: Automation, offshoring may extend job losses beyond the factory floor

A new report that focuses on the manufacturing sector shows that hundreds of communities across the U.S. with large numbers of residents armed with only high school degrees or earning low salaries working low skilled positions are at risk of losing many jobs to automation and offshoring, including several Arkansas counties.

The study by Ball State University Center for Business and Economic Research (CBER) and the Rural Policy Institute’s Center for State Policy (How Vulnerable Are American Communities to Automation, Trade and Urbanization?) takes an in-depth look at how the rise of automation and offshoring could extend such job losses beyond the factory floor.

The comprehensive study, which uses U.S Census Bureau data from every county in the U.S. to delve into the impact on job losses due to offshoring and automation, found that roughly one in four of all American jobs are at risk from foreign competition in the coming years. Not surprising, the study shows that low risk of automation is associated with much higher wages averaging about $80,000 a year, while occupations with the highest risk of automation have incomes of less than $40,000 annually.

“Automation is likely to replace half of all low-skilled jobs,” said Michael Hicks, CBER director of Ball State. “Communities where people have lower levels of educational attainment and lower incomes are the most vulnerable to automation. Considerable labor market turbulence is likely in the coming generation.”

According to Hicks, a number of recent studies have sought to identify the relative effect of automation and trade on manufacturing job losses over the past few decades. Using past data, the Ball State researchers crafted maps that highlight potential employment risk from automation and the “offshorability” of U.S. jobs. In assessing the impacts of the jobs losses in all 50 states, each county is given a score based on the percentage of occupations that could be replaced by a robot or other automated process or replace by an overseas worker.

For example, a weighted score of 67.00 means that two-thirds of jobs are at 100% risk of automation, and the remaining third at 0% risk, or that the average job is at a 67% risk of automation loss. For offshorability, the number represents a weighted share of jobs that could be offshored. In most U.S. communities, most jobs are increasingly seeing more jobs threatened by automation and technology-related changes such as robotics, 3D printing and artificial intelligence, the report notes.

“We cannot know the pace or the depth of automation and offshoring, but it is clear that large swaths of the American economy are likely to face these changes,” Hicks said. “Both trade and automation-related economic growth are hallmarks of a vibrant economy. But the social and political unease that accompanies large shocks felt by the workers is real.”

The report lists the top 25 areas most vulnerable to automation, leading off with Aleutians East Borough in Alaska, Quitman County in Georgia, Aleutians west central area in Alaska, Buena Vista City in Virginia and Chickasaw County in Mississippi. On the other hand, the top 25 areas most vulnerable to offshoring were Aleutians East Borough in Alaska, Pontotoc and Tippah counties in Mississippi and LaGrange County in Indiana.

Aleutians East Borough, which ranked at the top for potential job losses due to both automation and offshoring, had scores of 67% and 30.69%, respectively. Although no Arkansas counties made the top 25 of either list, at least 26 counties had automation and offshore risk scores above 60% and 25%, mainly across the Delta region and in areas with high concentrations of factory jobs.

Emily Wornell, a rural sociologist with the Muncie, Ind., university’s Rural Policy Research Institute’s Center for State, said job displacement from automation or offshoring has long-term consequences for individuals, families and communities.

“On a very basic level, long-term job instability and depression of wages has a direct impact on well-being,” said Worrell. “The impacts of job displacement go beyond economics, affecting health, family stability, educational outcomes and social integration.”

Following are other key finding by the Ball State University’s economic research group.
• The 10 most offshorable occupations include computer programmers, data entry keyers, electrical and electronic drafters, mechanical drafters, and computer and information research scientists.

• The 10 more automatable occupations are data entry keyers, mathematical science occupations, telemarketers, insurance underwriters and mathematical technicians.

• The 10 least offshorable and automatable occupations include recreational therapists, emergency management directors, mental health and substance abuse social workers, audiologists, and first-line supervisors of mechanics, installers and repairers.