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Speaking of the Economy
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Speaking of the Economy
March 9, 2022

Human Capital Decisions and the Future of Work

Audiences: Business Leaders, General Public, Workforce Sector Leaders

Renee Haltom reflects on key insights from panelists at the District Dialogues event on Feb. 8, 2022. Panelists discussed how the nature of work and the skills required of workers have changed, and how workers have responded to those changes. Haltom is a vice president and regional executive at the Federal Reserve Bank of Richmond, and hosted the event.



Tim Sablik: Hello, and welcome to "Speaking of the Economy." I'm your host, Tim Sablik, a senior economics writer at the Richmond Fed. I'm joined today by Renee Haltom, vice president and regional executive at the Richmond Fed. Renee, welcome back to the show.

Renee Haltom: Thanks. It's great to be here.

Sablik: It's great to be able to get together and talk in person again. Renee and I used to work together in Publications. In fact, she used to be my boss not too long ago. So it's great to see you again. Looking forward to talking about what you've been working on these days.

Haltom: Yeah, it's great to be here with you and catch up with you. I've been following all the great things you've been publishing as well. This is a lot of fun.

Sablik: Great.

Today, we're going to be talking about a District Dialogues event that you hosted last month. For our listeners who might not be familiar with District Dialogues, can you tell us a bit about what it is and why the Richmond Fed decided to start this series?

Haltom: We wanted to create a way for community members to engage directly with experts on important topics. We first launched District Dialogues in COVID to talk about educational disparities, which was and still is, of course, a critical issue. District Dialogues has, unfortunately, been virtual since COVID, but we'll be moving to a hybrid format this spring.

Sablik: The last discussion that you hosted was this panel discussion on February 8, with three experts talking about human capital decisions and the future of work. Today, we're going to be hearing from each of them in this conversation.

I wanted to start by asking you to tell us a bit about why the Richmond Fed is interested in understanding the decisions people make around work, as well as some of the external factors impacting the nature of work in the economy.

Haltom: Sure.

Part of the Fed's mandate is to support maximum employment. One way, the most well-known way the Fed does that, is by setting interest rates in a way that influences the overall economy. But we also know that you won't get so-called maximum employment without focusing on barriers to work at the individual level as well. While the Fed doesn't have direct tools to address those barriers, per se, we do try to explore those barriers and solutions to them and shed light on what can be done about them. Reducing barriers to work and human capital formation can also make people more resilient to economic shocks, which also supports maximum employment. So, all this is very tied to the Fed's mandate.

Sablik: Yeah, absolutely.

Talking about economic shocks, the pandemic has certainly had a huge impact on the nature of work. What did you learn from the panelists about the way that the pandemic has impacted workers differently?

Haltom: One thing that has consistently stood out to me in COVID is the diversity of experiences among workers. Many people switched to working from home, but not everyone was able to do that.

During our District Dialogues event, Kristen Broady, the senior economist and economic advisor at the Chicago Fed and director of the Chicago Fed's Economic Mobility Project, talked about the divide in the ability to work at home, in particular by race.

Kristen Broady: Everybody is not able to work from home. There are certain jobs where people have to be there: cashiers, people who serve food and cook food, healthcare workers, people who take care of children and the elderly. There are many other jobs like that.

During the pandemic, we saw that, if you look at it by race, African American and Latino people were much less likely to be employed in jobs where they could work from home. They had to go to work. They were in jobs that were considered and are essential, putting them at higher risk of getting COVID. They were less likely to have health care benefits [and] less likely to have paid time off.

Where we saw that Asian and white workers were more likely to have jobs that could be done remotely, for those people that could work from home, they were less at risk of getting COVID because they were less likely to be interacting with people. So, we saw that divide increase. So, even though people will go back to work at some point, we will see that divide.

Sablik: We've all heard about labor shortages in recent months. If employers are unable to find workers, could that lead to greater automation of some jobs?

Haltom: Yeah, it certainly could. I hear employers talking about that every day. They're weighing the increasing cost and difficulty of finding the right workers with, in many cases, the longer-term costs of investing in automation and how to balance those two things.

Kristen talked about that in her research, breaking down which sectors are most vulnerable to automation. Many of the same workers who couldn't easily shift to remote work are also those most vulnerable to automation.

Broady: I wrote a paper on that very topic. I have the subset of the 30 jobs with the highest automation risk scores, according to Frey and Osborne, that employ the highest number of U.S. workers. So, I'll just give you a couple of them.

Cashiers — and this is from 2019 Bureau of Labor Statistics — 3,164,000 people with an automation risk score of 97 percent, meaning that in an eight-hour day, a machine or some type of technology can do 97 percent of the job; not the job will go away, but there is a technology that can do it. The second one is retail salespersons: 3.1 million people, automation risk score is 92 percent; secretaries and administrative assistants: 2.68 million; laborers, freight and stock movers: 2.23 million; construction laborers, and then waiters and waitresses.

If we were to look at these top jobs, the top 30, Black people are overrepresented in 11 of them. Hispanic people are overrepresented in all of those plus two more.

Sablik: In some sectors, like manufacturing, automation has been happening for some time. Have we learned anything about how workers can adjust to these changes?

Haltom: Yes, absolutely.

It's funny, one thing we've learned from history is that although we have been fearing that automation will reduce employment — you know, the robots take all our jobs — for well over a century, humans keep finding new ways of doing things and new higher skills and functions for people. That does provide reason for optimism, but it does come with some adjustment for workers.

What I hear everywhere — and certainly what we heard in District Dialogues — is the need for students and workers to cultivate a mindset of adaptability and critical thinking skills that support continual lifelong learning. Our panelist Anne Cress, who is the president of the Northern Virginia Community College, talked about how they help individuals develop the skills to adapt to changes from automation.

Anne Cress: If you think about the big manufacturing eras, you had lots of people and there was a really low threshold to entry in terms of skillsets. So, [the investment was] more in low-paid, frequently low-skilled workers, less in terms of capital investment. Now, when you think about the power of automation, it is an investment in systems and in capital. Whereas before in manufacturing you might have had 100 workers on a line, now you might have two and a piece of equipment that's in the millions of dollars. So, it really is about how that work is happening.

From our perspective at NOVA, we really think about it in terms of skilling, reskilling and upskilling. Especially when we're thinking about our students' ability to access those networks of economic and social mobility, we want to make sure that we're giving them the skillsets that will map to some high-skilled economic sectors so that they can continue to progress in jobs that are less likely to become automated [and] that they're not in some of the situations that Kristen just mentioned.

Sablik: It's not just workers who need to adapt. Education institutions also need to stay on top of changes in the workforce to ensure they're preparing students with the right skills.

Haltom: Yeah, absolutely. And it's more than just training students in specific technical skills. Jeff Strohl, director of research at the Georgetown University Center on Education and the Workforce, talked about the need for balancing general education with training for specific skills.

Jeff Strohl: A follow-up here is this whole idea about the balance between general and specific education. We've seen a pendulum swing in the United States from when I was younger, which was some time ago. There [were] those vocational high schools where other kids went to and then, all of a sudden, we had college for all. Now we're back with short-term PALS certifications and all these non-degree, short-term credentials focused on specific skills.

An overinvestment in technical skills in our economy holds us back from our production possibilities frontier. So, we have to be really cognizant of finding a sweet spot. Regretfully, this discussion is often very dichotomous, it's "either or" — either education or training. We don't really recognize that there is a sweet spot that's been underexplored, a complementarity between the two.

If you look at the data on the American worker, they have degrees mixed with certifications mixed with certificates and the whole pretty much unknown world of non-credit education that combines together. As we think forward, we need to find this balance as the immediate need — you don't have a job, you need a job; an employer doesn't have a worker and they need a worker. But we have to be careful about the overinvestment in the technical side of this.

Sablik: Should schools also be thinking about a multifaceted approach when it comes to developing job training programs in collaboration with business partners?

Haltom: Yeah, the current labor shortage is definitely encouraging employers to think along those lines. They simply have to work harder to find employees or, in some cases, grow them themselves.

You also see the workforce system adapting and the community college system is in the ideal position to help there. I was struck by something Anne Cress said about the programs at Northern Virginia Community College. She talked about how employers helped develop curricula and serve as faculty, allowing them to share their firsthand experience with their potential future employees and, in the process, addressing for what is, in many fields, a shortage of teachers and educators.

Cress: I'm going to come back to those employer partnerships. They need to go deeper than just people periodically coming together on an advisory board. What you're really talking about is some hand-in-glove work where the college — in our case, NOVA — is sitting down with employers around the curriculum. Maybe there are folks from those employers who also serve as faculty, so our students are seeing firsthand what happens when they get a job, whether it's in a healthcare setting in an IT setting. They're really talking to people who are right there on the ground. Again, I go back to the notion that that helps you understand where your curriculum needs to be going, what programs do you need to be thinking about today, because it will be employers who are seeing them come to fruition in three to four years.

It also brings a greater familiarity between potential hiring partners and the folks that they will likely be hiring. They can really start to see the potential, when you start to invest in folks who maybe have never been in a workplace like this before, that this is a real value-add, right, and you're going to get incredible return on this investment.

So, I think it really calls for a much deeper engagement and a deeper partnership between employers and higher education, whether it's at the two-year level, the four-year level, or even at the graduate level.

Sablik: Were there any other moments from the discussion that really stuck out to you?

Haltom: Yeah, I asked panelists about what advice they would give to students and workers trying to navigate this ever-changing job environment, which seems like it's going to be a permanent fixture. Anne made a good point about the importance of getting exposure to lots of different types of careers, even quite early in your educational path. It's hard to find the right fit if you don't know what options are out there.

Cress: Part of it is not just giving them advice about how to prepare for a career, but how to know what careers are out there. Often, the students that we see at NOVA don't know these careers exist because they don't have anyone in their neighborhoods and their families who have ever done them.

The example I always give is students who come to us to go to our Medical Education Campus. They typically know that there are two kinds of people who work in healthcare: doctors and nurses. And they think, "Well, I can't be a doctor, so I'm going to be a nurse." They don't know that there is a whole rainbow of careers out there.

I would give somebody the advice to find a counselor, reach out to a career coach, go to your local community college, ask for help. I think we box ourselves in very early because of what we know. We don't understand what's there for us. In fact, NOVA has completely redesigned the way we do career services and career coaching, recognizing that so many of our students are first generation. They don't have anyone to ask what to do going forward.

Sablik: Great. Well, I really appreciate you being here today, Renee, and taking the time to go through all these insights from District dialogues.

Haltom: It's a pleasure. Most of us at the Richmond Fed are pretty passionate about helping people make the most of their lives.

Sablik: For our listeners who want to hear more from this event or any of the District Dialogues, you can visit our website at or our YouTube channel.

Haltom: That's right. And don't forget, we have another District Dialogues event coming up on May 12 about racial wealth disparities and again, we're aiming for that hybrid format.

Sablik: Great. Looking forward to that discussion as well. Thanks again for coming on the show, Renee, and thank you everyone for listening.