Automation and the Worker of the Future

Construction is facing a skilled labor shortage; could automation fill in the gaps?

As most construction companies already know, the labor shortage is causing a ripple effect that is hitting nearly every business. The lack of skilled labor is impacting productivity, schedule performance, and safety on the jobsite. According to the U.S. BLS (Bureau of Labor Statistics), www.bls.gov, Washington, D.C., there were nearly 400,000 job opening in the construction industry in December—up from 294,000 in November. The number of vacant positions continues to skyrocket, as the labor shortage surges.

The good news is technology can help take some of the burden off workers. Everything from wearables, to BIM (building information modeling), to drones, to the IoT (Internet of Things), to AI (artificial intelligence) can help address the shortage of workers.

Forrester Research, www.forrester.com, Cambridge, Mass., calls automation central to the next phase of digital transformation, because it’s driving value in terms of faster product delivery, better product quality and higher dependability, and more personalization and convenience. Alongside all the excitement about automation and the future of work, however, is fear about job displacement. Certainly, the rhetoric surrounding automation can be a bit harsh—e.g., Robots will do your job better, faster, and for less money!

Forrester takes a cautious and balanced approach to its predictions related to automation and the future of work. Its research suggests 10% of jobs will be lost to automation, but 3% will be created. In the 21st century, automation, the IoT, and technology in general will shift how work is done and even what types of work needs to be done, but this won’t be the first-time technological innovation has done so. As economists often preach, technological progress has two effects on employment—the displacement effect and the productivity effect.

A key implication of digitization, automation, and artificial intelligence in the next several decades will be the need to reskill and retrain workers, especially those midcareer individuals in industries likely to be most impacted by automation. In industries such as construction, companies should start considering now how the age of automation and various skills gaps will shift the future of work in their industries.

Shifts in Occupational Utilization

For the decade between 2016 and 2026, the U.S. BLS predicts slow labor force growth and moderate economic growth. Automation will be an important force affecting occupational utilization, but it’s one of several forces.

Just how big of a factor will automation be? Cristian deRitis, deputy chief economist for Moody’s Analytics, www.moodys.com, New York, N.Y., says it depends. “First, we need to consider the time horizon,” deRitis says. “The impact of new technologies tends to be overstated in the short term and understated in the long term. This time will be no different, as it takes time for both employers and employees to adapt to new technologies. Employers need to change their processes and business models. Employees often need training or new skills to fully leverage new technologies. Once we reach a tipping point, then adoption will spread quickly.

Second, we need to consider the impact of technology in combination with other trends in the economy, such as demographics and globalization. With lower birth rates and an aging population, automation may actually allow individuals to remain in the labor force rather than being forced out prematurely due to technology. We already see some evidence of this in Japan where robots complement workers and exoskeletons allow workers to perform physical labor for longer.”

Although automation will cause shifts in the demand for workers and the skills demanded, deRitis makes a point to say the effects will not be purely substitutional. “The big fear is that automation will replace all existing jobs,” he explains. “These same fears arose with the inventions of the steam engine, the internal combustion engine, the telephone, and the personal computer. If previous technology cycles are any indication, automation will complement human workers and create more jobs than it replaces in the long run.”

What types of jobs will be created to replace those lost to automation? New jobs may emphasize uniquely human skills, such as creativity, problem solving, adaptability, and judgment. “Automation can replace routine, repeatable tasks but has a hard time dealing with new or unique situations,” says deRitis. “Demand for individuals with technology-producing skills like computer programming, machine learning, AI development, 3D printing, nanotechnology, genetic engineering, etc., will remain high.”

McKinsey, www.mckinsey.com, New York, N.Y., likens the expected shift in occupational utilization due to automation in the 21st century to the historical shift out of agriculture to manufacturing in the early 20th century in North America. Perhaps unique to this century’s expected shift is the speed at which the workforce will need to transition to keep up with the digitization of industries. In other words, what took place over the course of many decades before may happen more quickly this time around.

Workforce transitions may include changing educational requirements for jobs, new demanded skill sets for jobs, or the need for workers to switch occupations altogether. Expanding on this last category, McKinsey’s research suggests 75-375 million people may need to switch occupational categories by 2030 thanks to the rapid adoption of automation. For those who stay in their fields, the priority will be reskilling or retraining.

“The impact of new technologies tends to be overstated in the short term and understated in the long term.”
–Cristian deRitis, Moody’s Analytics

Industry Drilldown

Construction is facing a skills gap, but in this case, it’s mostly due to baby boomer retirement. In response, construction firms are increasingly looking to adopt technologies and techniques that can help them do more with less. The rise of modular construction techniques for higher-end and multi-family projects is one example of how this trend is playing out. Automation is playing a role here too, just in a different way; instead of adding to the skills gap, for the most part, it’s helping the industry narrow the gap.

Steve Glenn, CEO of Plant Prefab, www.plantprefab.com, Rialto, Calif., a manufacturer of custom single and multi-family homes, says if you look beyond U.S. borders to countries like Japan and Germany, prefabrication is highly automated, and this has major implications for construction costs. “(Japan and Germany) are both areas where labor rates have historically been much higher than ours, so I think the impact is dramatic there as a result,” Glenn says. “Construction costs in the U.S. have dramatically increased over the last decade/decade and a half—land costs, labor rates, material costs—so I think automation can have a very big impact here as well.”

Prefabrication allows construction to build offsite, often allowing them to build faster, for instance, by building components in parallel and avoiding weather delays typical on traditional jobsites. Glenn says automation in prefab will reduce the need for human workers in some roles, but it will also offer opportunities for human workers in other roles. “Until there are robots that can do everything, including the work that happens onsite, there will be lots of (human) workers involved,” he says. “To the extent that there’s more work going on, that should increase opportunities for people with skills, not decrease it.”

Technology can play a role in solving skills gap-related problems, for instance, by allowing older workers to stay in the workforce longer while younger workers catch up, or by codifying older workers’ knowledge and skills into algorithms and facilitating the transfer of knowledge. “To the extent that younger workers shun certain occupations, the economic incentive to automate those occupations will only increase,” explains Moody’s Analytics’ deRitis. “For example, there is a concern among some homebuilders that many younger workers don’t want to work in construction. As a result, we are likely to see an increasing number of homes built with modular sections that can be built in factories leveraging automation and assembled onsite with a minimal amount of human labor.”

The fact that many industries are dealing with skills shortages and gaps in addition to adjusting to automation and other technology innovation underscores the difficulty in making firm economic predictions. However, the idea that automation is having and will continue to have far-reaching consequences in current and future job markets across industries and occupations is well accepted. Naturally, some industries will feel the effects of automation more than others, but economists, technologists, and futurists all seem to agree that automation technology will affect every existing industry in one way or another. And, while this reality is often wrapped in rhetoric that induces fear and shock, it’s important to spread the message that automation will bring many more possibilities to the table. In the meantime, companies must prioritize reskilling, upskilling, and/or retraining to get existing workforces ready for’ future needs.