Automation, offshoring may increase job losses beyond the factory

Jun 21, 2017

Ball State University report finds that communities whose residents have only high school degrees or earn low salaries are at risk of losing jobs to automation and offshoring.

The report, named “How Vulnerable Are American Communities to Automation, Trade and Urbanization?” also found that the rise of automation and offshoring could extend such job losses beyond the factory floor. The report was prepared by the Center for Business and Economic Research (CBER) and the Rural Policy Institute’s Center for State Policy at Ball State University.

The study found that low risk of automation is associated with much higher wages, averaging about $80,000 a year. 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,” says CBER director Michael Hicks. “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.”

The analysis also found that roughly one in four of all American jobs are at risk from foreign competition in the coming years.

The report lists the top 25 areas most vulnerable to automation, top 25 areas most vulnerable to offshoring, 10 most offshorable occupations, 10 more automatable occupations and 10 least offshorable and automatable occupations.

Job displacement due to automation or offshoring has long-term consequences for individuals, families and communities, the report found.

“On a very basic level, long-term job instability and depression of wages has a direct impact on well-being,” says Emily Wornell, a rural sociologist with the Rural Policy Research Institute’s Center for State Policy.  “The impacts of job displacement go beyond economics, affecting health, family stability, educational outcomes and social integration.”