Since 2002, the share of jobs requiring extensive and mid-level digital skills has surged from 45 to 71 per cent of the total, write Mark Muro and Sifan Li

Liu, Sifan

Muro, Mark

LSE Research Online

The	digitalisation	of	everything:	How	the	USeconomy	is	going	digital	at	hyper	speedSoftware	is	eating	the	world,	goes	the	quip.	So	rapid	are	the	developments,	in	fact,	that	while	the	“digitalisation	ofeverything”	has	become	a	hallmark	of	tech’s	promise	of	individual	and	business	empowerment	so	has	it	begun	toprompt	anxiety,	including	among	workers	who	worry	about	their	future	in	a	world	of	brilliant	machines.	And	yet,	forall	the	evidence	that	big	changes	are	underway,	surprisingly	little	data	exists	to	quantify	the	spread	of	digitaladoption	across	industries	and	into	local	workplaces,	labor	markets,	and	regions.	In	the	absence	of	suchinformation,	the	digitalisation	trend,	as	all-encompassing	as	it	obviously	is,	remains	diffuse	and	hard	to	pin	down.Which	is	why	the	Brookings	Institution’s	Metropolitan	Policy	Program	has	just	released	a	new	report	on	theprogress	of	“digitalisation”—	the	diffusion	of	digital	technology	into	nearly	every	business,	workplace,	and	pocketin	the	U.S.	Designed	to	help	address	the	shortage	of	data	on	the	topic,	the	new	assessment	builds	on	a	detailedanalysis	of	changes	in	the	digital	content	of	545	occupations	covering	90	per	cent	of	the	US	workforce	in	allindustries	since	2001.	Using	that	we	provide	a	fresh	look	at	how	technology	is	remaking	both	the	US	economyand	the	world	of	work.		Specifically,	by	deploying	detailed	occupation-specific	survey	information	from	theDepartment	of	Labor’s	Occupational	Information	Network	(O*NET)	Brookings	has	been	able	to	create	a	100-pointtiered	rating	of	hundreds	of	jobs’	changing	computer	content	that	we	then	use	to	analyse	what	the	level	andchange	of	those	scores	says	about	the	speed	and	extent	of	digitalisation	over	the	last	15	years.What	have	we	found?		Here	are	five	takeaways	(followed	by	a	few	notes	about	what	it	all	means):1.	The	US	economy	is	digitalising	at	hyper	speedThe	first	takeaway	from	the	analysis	is	that	between	2002	to	2016	the	shares	of	US	jobs	and	employment	thatrequire	substantial	digital	knowledge	rose	rapidly,	whether	because	of	changes	in	the	digital	content	of	existingoccupations	(the	largest	effect,	by	far)	or	thanks	to	shifts	in	the	mix	of	occupations.Figure	1.	Employment	by	level	of	job	digitalisation,	2002	and	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 1 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/	Source:	Brookings	analysis	of	O*NET	and	OES	dataThe	changes	have	been	striking.		Since	2002,	the	share	of	all	US	jobs	that	require	extensive	and	mid-level	digitalskills	has	surged	from	45	to	71	per	cent	of	the	total.		Since	2010,	meanwhile,	nearly	4	million	of	the	nation’s	13million	new	jobs	created	—	30	per	cent	of	them	—	have	required	high-level	digital	skills.3.	Digitalisation	has	been	ubiquitous	but	its	degree	and	pace	varies	widely	among	occupations	andacross	industriesLooking	broadly	across	the	job	rolls,	digitalisation	scores	rose	in	517	of	545	analysed	occupations	from	2002	to2016.	The	average	digitalisation	score	across	all	occupations	rose	from	29	in	2002	to	46	in	2016,	a	57	per	centincrease.	Overall,	the	most	significant	computerisation	occurred	around	the	lower	and	middle	tiers	of	the	scalewhere	the	digital	scores	of	many	large	and	accessible	occupations	underwent	radical	increases	as	basic	tech	wasintroduced	in	low-tech	industries.Digital	scores	rose	50	per	cent	or	more	across	dozens	of	mid-digital	occupations	such	as	automotive	servicetechnicians	(39	to	55),	registered	nurses	(38	to	55),	and	human	resources	specialists	(37	to	60).	Likewise,	thescores	of	many	lower-score	occupations,	including	home	health	aides	(score	rise	from	3	to	23),	welders	(3	to	23),and	heavy	truck	drivers	(7	to	30),	saw	their	scores	triple	or	more.Table	1.	Selected	occupations	by	2016	digital	scoreLSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 2 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/	Source:	Brookings	analysis	of	O*NET	and	OES	dataAdd	these	trends	up	for	industries,	and	it	becomes	clear	that	the	entire	U.S.	economy	is	digitalising	rapidly	butunevenly.	Virtually	all	industry	groups	saw	their	mean	digital	scores	increase	between	2002	and	2016,	but	thelevel	and	speed	of	digital	adoption	vary	significantly,	suggesting	wide	variation	in	industries’	and	firms’	ability	toimprove	their	operations,	productivity,	and	results.Table	2.	Industry	mean	digitalisation	scores	and	change,	2002	and	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 3 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/	Source:	Brookings	analysis	of	O*NET	and	OES	data3.	Digitalisation,	which	is	a	form	of	automation,	is	associated	with	increased	pay	and	job	resiliency	butalso	“U-shaped”	job	creation	patterns.Digitalisation	is	a	key	pathway	to	increased	earnings.	All	across	the	skills	continuum	employees	are	rewarded	forthe	depth	and	breadth	of	their	digital	skills	through	increased	wages.	Workers	in	occupations	with	medium	or	highdigital	skills	in	2016	were	paid	significantly	more	than	those	in	low-digital	occupations.Figure	2.	Mean	annual	wage	by	digitalisation	level,	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 4 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/Source:	Brookings	analysis	of	O*NET	and	OES	dataThese	pay	differentials	are	important	not	just	in	themselves	but	also	because	they	point	to	the	durability	of	work	inthe	era	of	automation.	To	explore	this,	we	compared	occupations’	digital	scores	to	their	potential	to	besuperceded,	as	quantified	by	the	McKinsey	Global	Institute’s	estimates	of	the	share	of	an	occupation’s	overalltask	content	that	could	be	done	away	with	by	adapting	currently	demonstrated	technology.	These	comparisonsrevealed	a	modestly	strong	negative	correlation	between	an	occupation’s	increased	digital	content	and	the	shareof	its	tasks	vulnerable	to	automation.	Digital	skills	can	be	a	stay	against	worker	displacement.Focusing	on	patterns	of	job	creation,	finally,	the	digitalisation	of	the	U.S.	economy	appears	to	be	contributing	tothe	hollowing	out	and	polarisation	of	employment	and	wage	distributions	noted	by	the	MIT	economist	David	Autorand	colleagues.	These	occupational	patterns,	meanwhile,	are	also	contributing	to	parallel	patterns	of	industryperformance.		For	the	most	part,	industries’	output,	productivity,	and	wage	growth	tends	to	reflect	industry-leveldigitalisation	levels.	The	more	digital	the	industry	the	better	its	performance.Figure	3.	Compound	annual	growth	rate	of	employment	by	occupation	group,	2010-2016.	Occupation	groups	arrayed	by	2016mean	digital	scores.LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 5 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/	Source:	Brookings	analysis	of	O*NET	and	OES	data.	Note:	farming,	fishing	and	forestry	occupations	are	excluded	due	to	smallemployment	size4.	The	extent	of	digitalization	also	varies	widely	across	places	and	is	strongly	associated	with	variationsin	regional	economic	performance.	In	geographical	terms,	digitalisation	is	happening	everywhere,	but	its	progress	varies	widely	across	the	map.	Justas	the	diffusion	of	digital	technology	and	processes	has	been	uneven	across	occupations	and	industries,	it	isproceeding	unevenly	across	space.	(To	view	the	digital	status	of	a	state	or	metro	area	check	out	this	file).The	data	for	metropolitan	areas,	meanwhile,	reveals	more	variation.	Large-metro	mean	digitalisation	scores	for2016	range	from	47	in	San	Jose,	Calif.	to	36	in	Las	Vegas.	Following	San	Jose	at	the	top	of	the	digitalisationrankings	comes	a	“who’s	who”	of	higher-tech	advanced	industry	centres	ranging	from	Boston;	Austin,Texas;	Hartford,	Conn.;	Salt	Lake	City;	Raleigh,	N.C.;	Seattle;	San	Francisco;	and	Madison,	Wis.—all	withmean	2016	digitalisation	scores	above	43.Figure	4.	Mean	digital	score	and	share	of	high	digital	jobs	by	metropolitan	area,	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 6 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/Source:	Brookings	analysis	of	O*NET	and	OES	dataIn	almost	all	cases,	meanwhile,	metros	saw	their	mean	digitalisation	score	increase	by	12	to	18	points,	meaningthat	for	the	most	part	digital	laggards	among	metros	were	catching	up	to	the	digital	leaders,	allowing	for	metrodigital	scores	to	converge	somewhat.With	that	said,	though,	when	mapped	for	their	shares	of	employment	in	high-digital	occupations,	metros’	digitalskills	vary	more	widely	and	are	diverging.	In	this	regard,	the	digital	rich	are	getting	richer.	As	to	the	implications	ofthese	variations	for	regional	economies,	they	follow	directly	from	the	strong	correlation	of	digitalisation	withworker	compensation	and	industry	performance.	The	more	digital	a	metro	the	higher	its	mean	annual	wage.	Figure	5.	Correlation	between	metros’	mean	annual	wage	and	mean	digital	scores,	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 7 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/	Source:	Brookings	analysis	of	O*NET,	OES	and	Moody’s	dataThese	trends	underscore	a	key	point	about	the	influence	of	digitalisation	on	regional	prosperity:	variations	in	thedigital	skills	of	the	local	workforce	may	be	contributing	to	the	polarisation	of	cities’	economic	fortunes.Digitalisation,	in	that	vein,	appears	at	once	to	reflect	and	reinforce	the	polarisation	of	workforce	skills	acrossplaces	that	is	improving	pay	for	many	people	and	places	while	widening	the	divide	between	the	leading	cities	andthe	laggards.5.	Digitalisation	is	changing	the	skills	workers	need	to	access	economic	opportunity	while	creating	newrace-	and	gender-based	training	challenges.Digitalisation,	finally,	is	changing	the	skills	less-advantaged	workers	need	to	secure	good	jobs.	Given	that,	thespread	of	digital	tools	is	underscoring	the	importance	of	digital	competencies	in	helping	less-educated	workerssecure	basic	opportunity	even	as	it	throws	into	relief	sharp	disparities	among	particular	groups’	digitalpreparedness.To	see	this,	look	at	changes	in	the	nature	of	what	have	been	called	by	turns	“good	jobs”	or	“middle-skill”	jobs	—jobs	that	have	the	potential	to	help	workers	without	a	four-year	college	degree	earn	enough	to	supportthemselves	and	begin	to	move	toward	the	middle	class.	That	these	decent	but	accessible	jobs	are	digitalisingeven	more	rapidly	than	other	jobs	suggests	that	millions	of	workers	could	be	shut	out	of	decent	middle-skillopportunities	if	they	lack	the	requisite	skills.Table	3.	Share	of	jobs	by	digital	score,	2002	and	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 8 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/Source:	Brookings	analysis	of	O*NET	and	OES	dataAnd	here	is	another	issue:		The	mean	skills	ratings	of	the	jobs	occupied	by	workers	in	major	demographic	groupsvary	in	ways	that	almost	certainly	contribute	to	those	groups’	uneven	access	to	opportunity.	Women,	with	slightlyhigher	aggregate	scores	as	a	group	than	men,	dominate	employment	in	many	of	the	largest	medium-digitaloccupational	groups,	such	as	in	health	professions,	but	by	contrast,	remain	significantly	underrepresented	in	suchhighly	digital	positions	as	computer	and	mathematical	occupations	and	engineering.	Equally	sharp	variationcharacterises	the	employment	profiles	of	the	nation’s	racial	and	ethnic	groups.Table	4.	Over-	and	under-representation	of	gender	and	racial	groups	by	occupation	group,	2016LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 9 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/Source:	Brookings	analysis	of	O*NET	and	CPS	data.	Note:	Blue	and	red	highlighting	represent	over-	and	underrepresentation,respectively,	in	particular	occupational	groups.In	this	regard,	while	digitalisation	holds	out	significant	opportunities	for	less-educated	or	historically	marginalisedworkers	or	groups	to	move	up	the	employment	ladder,	too	few	of	them	as	yet	appear	to	attaining	that	progress.What	to	do?Digitalisation,	in	sum,	is	transforming	the	world	of	work.		Workers,	firms,	and	industries	as	well	as	entire	regionallabor	markets	are	all	being	dramatically	affected,	with	the	possibility	of	new	opportunities	and	the	threat	ofbecoming	irrelevant.		As	such,	the	spread	of	digitalisation	underscores	the	need	for	new,	widespread,	and	morecreative	initiatives	to	improve	workers,’	firms,’	and	regions’	access	to	relevant	digital	and	related	“soft”	skills.	Tothis	end,	then,	two	distinct	priorities	(and	one	cross-cutting	vision)	appear	urgent.		First,	firms,	industryassociations,	educational	institutions,	and	governments	must	work	urgently	with	workers	and	students	to	expandthe	high-skill	IT	talent	pipeline.	And	second,	governments,	businesses,	and	others	need	to	greatly	expandbasic	digital	literacy,	especially	among	underrepresented	groups.LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 10 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/To	the	first	priority	agenda,	the	onrushing	spread	of	demand	for	tech	workers	in	dozens	of	large	“tech-using”industries	ranging	from	health	and	education	to	professional	services	means	that	cities	and	businesses	will	likelyexperience	even	sharper	demand	than	they	do	now	for	skilled	digital	workers.		They	will	need	to	invest	urgently	insmart	competency-	and	work-based	training	solutions	as	well	as	strengthening	the	university-level	IT	talentpipeline.	Much	more	coding	will	need	to	be	taught,	in	many	more	contexts	and	formats,	from	online	tutorials	toaccelerated	bootcamps	to	apprenticeships.To	the	second	end	priority,	the	data	here	underscore	that	when	it	comes	to	the	nation’s	broader	economic	healththe	larger	impact	on	US	prosperity	may	come	from	efforts	to	expose	large	numbers	of	less-educated	workers	tothe	basics	of	“everyday”	software	—	spreadsheets	and	word	processing,	programs	for	medical	billing	andenterprise	management.	Such	efforts	are	also	urgent	as	even	the	most	accessible	decent	jobs	see	their	digitalcontent	soar.	Regions	and	nations	need	to	make	sure	this	basic	degree	of	entry-level	tech	skill	becomesuniversal	in	the	next	few	years.Otherwise,	on	both	fronts,	an	effort	must	be	made	by	education	and	training	programs	to	cultivate	durablehuman	qualities,	not	just	rote	skills	better	done	by	machines.	In	this	regard,	humans	—	even	while	learning	towork	better	with	computers,	whether	in	the	higher-end	IT	pipeline	or	in	the	world	of	everyday	software	—	need	tothink	much	more	seriously	about	what	they	can	do	that	computers	can’t.	Computing	will	soon	be	virtuallyeverywhere,	which	prompts	jitters,	yet	that	amounts	to	an	incredible	opportunity.	People	will	be	freed	up	to	givethe	rote	work	to	the	machines	and	use	their	uniquely	human	qualities	to	solve	pressing	problems	and	leadunimagined	advances.	People	of	all	walks	of	life	should	get	started	with	that.♣♣♣This	blog	post	is	based	on	the	authors’	Digitalization	and	the	American	workforce,	a	report	of	the	MetroProgram	at	the	Brookings	Institution,	co-authored	with	Jacob	Whiton	and	Siddharth	Kulkarni.	The	post	gives	the	views	of	the	authors,	not	the	position	of	LSE	Business	Review	or	of	the	London	Schoolof	Economics	and	Political	Science.Featured	image	credit:	Computer	city,	by	ItNeverEnds,	under	a	CC0	licenceWhen	you	leave	a	comment,	you’re	agreeing	to	our	Comment	Policy.Mark	Muro	is	a	senior	fellow	at	the	Brookings	Institution’s	Metropolitan	Policy	Program	and	leadsits	Managing	Disruption	activities.		His	work	focuses	on	the	advanced	technology	economy,regional	ecosystems,	and	city	variation.		Sifan	Liu	is	a	research	assistant	at	the	Brookings	Institution’s	Metropolitan	Policy	Program.		Herresearch	focuses	on	advanced	and	inclusive	economy	activities	in	cities.	Sifan	holds	a	master’sdegree	in	public	policy	from	Georgetown	University	and	a	bachelor’s	degree	in	economics	fromShanghai	Jiao	Tong	University.LSE Business Review: The digitalisation of everything: How the US economy is going digital at hyper speed Page 11 of 11		Date originally posted: 2017-11-22Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/22/the-digitalisation-of-everything-how-the-us-economy-is-going-digital-at-hyper-speed/Blog homepage: http://blogs.lse.ac.uk/businessreview/

The digitalisation of everything: How the US economy is going digital at hyper speed

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