What it All Means

November 2017

The Alliance and its Value of Jobs coalition partners demonstrate and amplify the importance of private-sector job creation to the overall well-being of the economy. As we work to influence the development of sound public policy, fiscal reforms and relevant workforce development programs, the findings of this report provide new perspective about the challenges and opportunities ahead, as technology transforms industry sectors.

Setting a policy course is challenging when the outlooks are bound by a gradual expansion of today’s labor force on the one hand, and potential mass unemployment on the other. Always keeping the possibility of unprecedented disruption in mind, policymakers should embrace the opportunities and challenges that are right in front of them. Our posture toward job growth, housing, education and social safety net policies will play a significant role in determining whether the state is prepared for the approaching changes in the economy and workforce needs, or whether we face a future of lost opportunities and larger shares of the population out of work and living on the margins.

What are the policy recommendations that will move our state in the direction of embracing opportunities presented by automation and ensuring Oregonians can thrive?

The next wave of automation is sometimes described in dramatic, frightening terms, so it would be natural to build barriers to slow or prevent it. Oregon should go the other way and embrace companies investing in automation. To thrive, they need great local talent, a strong education system and predictable taxes that favor export activity.
We must support Oregon’s innovators that operate in the traded sector, and selling goods and services across the country and world. Oregon also has unique opportunities with programs like the Oregon Manufacturing Innovation Center in Scappoose, the University of Oregon’s Phil and Penny Knight Campus for Accelerating Scientific Impact in Eugene, Oregon Health & Science University’s Knight Cancer Institute in Portland and others to support world-class research that will lead to innovation and job creation. Few states are as well positioned as Oregon to attract and keep engineering and scientific talent.

We must support local governments and policies that embrace the future, like Portland Mayor Ted Wheeler declaring Portland “open for business” in the testing autonomous vehicles. Much of the automation that’s poised to affect our physical environment requires government to act while still maintaining an environment that allows companies to innovate and nascent technologies to mature.
Labor markets, thick with engineering and scientific talent, will lead the next era of automation. Oregon has proven to be an attractive destination for top talent during the current economic expansion, but housing supply hasn’t kept pace with subsequent demand, resulting in increasing home prices and rents throughout the state, which will serve as a talent repellent. The challenges automation will create in the workplace could exacerbate the issue, especially for households on the low end of the wage scale.
We must increase housing stock for all income levels in every corner of the state. There must be adequate land supply and zoned capacity for growth in housing to match the unparalleled growth in population, and a regulatory environment that encourages housing development rather than create disincentives by increasing development costs or otherwise discouraging housing availability.

We must deploy public rental assistance for families facing financial challenges, which has been a critical and economical tool to keep families in stable housing, versus serving them in a crisis capacity once they become homeless. Public housing for very low-income individuals should be pursued throughout the state.

The U.S. responded to technology’s elimination of farm work by creating mandatory high schools and encouraging skills required in industrial settings. More high school graduates led to more college graduates and, for much of the 20th century, the rate of skill development kept pace with technological advances. Since 1980, educational gains have slowed, the progress of technology has continued and the education wage premium has grown. Education lost the race with technology. With the threat of technology to labor accelerating, the policy prescription is the same as it was in the 1910s: We must rapidly improve workforce skills.
We must support Oregon’s 40-40-20 education goal, and provide more access and opportunity for technical and post-secondary education, recognizing that there has been little progress on the goal since it was adopted in 2011. Progress would require higher enrollment levels coupled with improved counseling and guidance in post-secondary institutions — especially at community colleges — to develop the necessary skills.

We must support expanded Science, Technology, Engineering and Math (STEM) and Career and Technical Education (CTE) programs to support the skills needed in the future workforce, paired with training in social skills as employers are increasingly demanding teamwork and problem-solving skills, which are often developed or refined in post-secondary settings.
Economic projections suggest the economy will continue to produce low-wage work not subject to automation: Building and grounds maintenance, janitorial work, housekeeping services, health care support, protective services and caregiving occupations. In the near-term, a sizable supply of candidates will depress wages. Oregon has tried to address this issue by gradually increasing the minimum wage. The state has probably stretched that policy as far as it can go and, moving forward, tax policy may be a better way to boost low-wages.
We must support the continuation and expansion of the Earned Income Tax Credit (EITC), which increases the paychecks of low-wage workers, and has been shown to increase labor force participation and strengthen education and health outcomes.
Embracing innovation and being proactive will ensure Oregon can not only weather the changes that will undoubtedly occur as a result of automation, but actually benefit from them.

Now is the time to prepare.