the bay area future of jobs · • service-sector jobs have grown both knowledge-sector jobs as...

The Bay Area Future of JobsHorizon Perspective Paper #4

May 20, 2019, San Mateo Public LibraryAksel Olsen, Senior PlannerCynthia Kroll, Chief Economist / Assistant DirectorABAG / MTC

Perspective Papers Overview

2Overview

1) Autonomous Vehicles 2) Toward a Shared Future 3) Growth Strategies

4) The Future of Jobs 5) Bay Crossings 6) Sea Level Rise

Priority strategies from Horizon will be considered for inclusion in Plan Bay Area 2050 – starting in

September 2019.

MotivationRegional Agencies ABAG and MTC

• Charged with 20+ year land use / transportation investment plans

• Last plan (2017) projected • Hollowing out of middle income

households over by 2040• Housing crisis could be seen as

income crisis• Plan Short Term “Action Plan”

• Housing (CASA)• Economic Development (CEDS)

• Question: did we think about the robots?

3

Perspective Paper 4: The Future of JobsPurpose

Review key trends affecting the regional labor market and job prospects of Bay Area residents

How will these trends affect the region and its diverse communities?

Identify priority strategies on the state, regional, and local levels to address planning challenges associated with a changing regional economy

Continue the conversation related to the emerging economic development role of the regional agencies in preparation for Plan Bay Area 2050

4Overview

Background: Economic Foundations

5

https://st.llnl.gov/?page=1

Productivity Grows at Faster Rate than Jobs

0

50

100

150

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Jobs and Economic Output Trends – Bay Area (compared to 2001 base year)

Jobs

Economic Output

6Overview

Sources: Bureau of Economic Analysis, 2001 to 2017

Knowledge-Sector Jobs Continue to Grow, Particularly in the Tech Sector…

7Overview

0

50,000

100,000

150,000

200,000

250,000

300,000

1990 1995 2000 2005 2010 2015

Technology Job Trends – by County

San Francisco

San Mateo

Santa Clara

Remaining Counties

Alameda

Source: QCEW, 1990 to 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1970 1980 1990 2000 2010

Share of Jobs by Occupation – Bay Area

Management & Professional

Service

Sales & Office

Construction & Extraction

Production & Transportation

Source: PUMS, 1960 to 2016

… While Industrial and Manufacturing Jobs Continue to Decline.

• Jobs requiring physical labor have

declined in recent years, including

industrial and construction jobs.

• Service-sector jobs have grown both

knowledge-sector jobs as well as

personal and food services.

• Missing middle hollowing out in action?

8Overview

Select Occup. Changes in Bay Area Jobs: 2000 to 2017

+88,000

+47,000

+42,000

+27,000

+24,000

-16,000

-16,000

-45,000

-51,000

Food preparation & serving

Business & financial operations

Healthcare practitioners and technicians

Arts, design, sports entertainment & media

Personal care & service

Construction & extraction

Transportation & material moving

Office & administrative support

Production

Source: BLS OES

Bay Area Future of Jobs: Four “Lenses” of Change

TECHNOLOGY ORGANIZATION

COMPENSATIONLOCATION

9Overview

• Decline of “standard” jobs• Emergence of the “gig

economy”• Changing employment

conditions

• Automation and digitization of tasks

• Complex division of labor

• Shared workspaces• Virtual workspaces• Benefits and drawbacks of

concentration

• Bifurcating wage structure• Variable & unpredictable

income streams

Jobs Are Changing in Several Ways…



10



conditions




concentration


income streams

“For [the Bay Area], I see nothing but continued future

growth pressures. And they will be exacerbated because

it’s the lower level “routinized” jobs that can be most

easily automated and replaced by AI in the future.”

- Managing Director, Strategy + Innovation, real estate

service firm

11Next Steps

Automation Creates Both Opportunities and Risks

• Vexing for regional economists and

planners

• Grows the economy in the

aggregate, while issuing pink slips

• Balancing act: Speed matters

• Fate of regions tied to the success

of their economies

12

TECHNOLOGY

http://digital.library.louisville.edu/cdm/singleitem/collection/cs/id/1347/rec/10

https://en.wikipedia.org/wiki/Tesla_Model_S#/media/File:Tesla_auto_bots_(cropped).jpg

New wave(s) of automation

• Big data, distributed computing power and

deep learning neural networks: pattern

recognition at scale

o Classifying legal documents, finding flaws in

contracts, analyzing health records, scoring

credit risks

• Complement or competition? Likely both.

• Challenge: Embrace digital innovation,

automation but support labor markets,

communities

13

TECHNOLOGY

https://www.cmcmachinery.com/portfolio-item/ecommerce1-cmc-cartonwrap/; https://en.wikipedia.org/wiki/Boston_Dynamics#/media/File:Atlas_from_boston_dynamics.jpg; https://www.computerworld.com/article/3318118/ibm-to-move-watson-health-to-a-hybrid-cloud.html ;

Scale Question: What kind of automation will AI be?

14

TECHNOLOGY

http://www.assiniboine.com/property-maintenance/fall-yard-clean-up/

https://idtxs3.imgix.net/si/30000/F4/FA.jpg?w=1024&h=450fit=fill&bg=ffffff&border=0

Alameda 288,000 135,300 235,300

Contra Costa 178,600 95,400 166,000

Marin 50,400 21,600 35,000

Napa 20,300 10,600 24,900

San Francisco 188,900 83,300 131,200

San Mateo 146,900 68,600 110,900

Santa Clara 378,900 148,800 256,900

Solano 57,900 35,300 74,000

Sonoma 75,200 41,100 89,900

<30 pct 30-70 pctAutomation Score

>70 pct

Bay Area Automation "Risk", by County

80,000

160,000

240,000

320,000

• Strategic development functions and skills highly concentrated here-likely to continue, even increase

• North Bay Counties: more workers in high risk category,

• South Bay, West Bay: Lower, middle

Which areas are most at risk?

Source: Automation Data From Frey & Osborne 2017; Demographic Data From US Census ACS PUMS 2015-2017

<30 pct >70 pct30-70 pctAutomation Score

Less than high school

High school or equiv

Some college

Associate's degree

Bachelor's degree

Postgraduate degree

43,200 93,500 171,300

110,400 130,200 265,500

200,900 134,900 303,200

89,600 42,800 89,300

502,900 125,800 229,200

438,300 112,900 65,800 80,000

160,000

240,000

320,000

400,000

480,000

Bay Area Automation "Risk" by Education

Source: Automation Data From Frey & Osborne 2017; Demographic Data From US Census ACS PUMS 2015-2017

Education and risk

• Education reduces risk

• For many education groups, workers in low or high risk groups, less in middle




17



conditions




concentration


income streams

“This whole idea of an “API economy” is a big deal. …

Companies can now seamlessly outsource many pieces of their

business. They can get access to programmers through the gig

economy roles. There's no doubt that this will continue to

play out in the world of big companies as well.“

- Managing director, executive search firm

18Next Steps

• More fluid labor markets (agency temp, contract, short term)

• Independent work opportunities are expanding, accelerated by new technologies, organizational changes

• Advantages include:o More choices on how to worko Flexibility on when to worko Cash on the side

• At the same time, there are challenges:

o Less obvious career ladder jobso Income instabilityo No guaranteed benefits (e.g., medical)o No pensions/retirement benefits

ORGANIZATION

Alternative WorkArrangements

Bay Area: Nontraditional Employment Outpaced Wage + Salary Employment

20

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Remaining Industries

Professional, Scientific, and Technical Services

Other Services (except Public Administration)

Transportation and Warehousing

Real Estate and Rental and Leasing

Health Care and Social Assistance

Administrative and Support and Waste Management and RemediationServices

Arts, Entertainment, and Recreation

70

80

90

100

110

120

130

140

150

160

Wage & Salary Jobs and Nonemployer Establishments (2001: Index 100)

Nonemployers Wage & Salary Workers

Ride Sharing More Common in Bay Area than CA, US

21

0%

1%

2%

3%

4%

5%

6%

7%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Share of Sole Proprietors, CountTaxi and Limousine Service

Bay Area California US

Source: US Census, Nonemployer Statistics

ORGANIZATION

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Receipts per WorkerTaxi and Limousine Service

Bay Area California US

For Types of Independent Workers

• Just under half of independent

workers have it as primary

source of income

• “Casual earners” are the

largest demographic,

accounting for 4 in 10 workers

(US data)

ORGANIZATION

Source: US data, Manyika et al. (2016)

Primary

By choice

Out ofnecessity

Supplemental

FREEAGENTS22 million 32%

RELUCTANTS10 million 14%

FINANCIALLYSTRAPPED

9 million 14%

CASUALEARNERS

27 million 40%

46% 54%

28%

72%

22




23



conditions




concentration


income streams

“One contributor to wealth inequality is being driven by digital

transformation – as the Superstars become bigger Superstars; and

some Superstars become Supernovas. ”

- Managing Director, Strategy + Innovation, real estate service firm

24Next Steps

Incomes are Growing – but Not for Everyone

COMPENSATION

• Wages are bifurcating, with growing

incomes for the wealthy while lower-

income households’ earnings remain

relatively stagnant.

• Returns to skill: Technology has favored

grads

• Income inequality has been rising

since the 1970s; just over 10 countries

are more unequal than the Bay Area. $-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

1960 1970 1980 1990 2000 2010 2020

Household Income Trends – Bay Area (in today’s dollars)

20th

Percentile

50th

Percentile

80th

Percentile

90th

Percentile

10th

Percentile

Source: iPUMS, 1960 to 2016

25

Part of story is education

COMPENSATION

Bay Area 2017 Wages (>32 hours/week) by Educational AttainmentBay Area: 25th Percentile to 75th Percentile

Source: Us Census Bureau, ACS PUMS (1-year), 2017

26

• Education is the typical road to higher wages—but it may not be enough – more agile training and funding needed.

• Occupational shifts also loom large with rise in low pay service sector work

• Securing livelihoods may require intervention—particularly as low skill work may be less valuable in the future




27



conditions



• Shared and virtual workspaces

• Industry sorting• Benefits and drawbacks of

concentration


income streams

“The city is a living laboratory which I think is critical to the

operations of a lot of small to midsize tech firms; whether it's a

delivery service or something fashion based … they thrive off the

energy of the city and it [offers] the ability to implement beta

versions of whatever it is they're doing within mere blocks of

where they operate.”

- Industry Lead, Architectural Services Firm

28Next StepsImage Credit: Nic Lehoux

A Changing Regional Landscape?

LOCATION

• Urban Space or Cyberspace: Paradoxically, automation enhances growth in city centers as face-to-face interactions remain valuable.

• Decline of manufacturing: Transition to more dense, amenity rich employment centers: SF, South Bay hold more workers in the same buildings: new modes / spaces of working.• Many suburban office parks repurposed,

made more amenity rich. More like cities

• Long term impacts to transportation, housing

• Lower barriers to entry: Flexible work sites concentrate in existing job centers.

29

Office in-fill, BIG’s proposed Google offices in Sunnyvale

https://www.dezeen.com/2018/01/04/big-google-caribbean-terraced-office-buildings-sunnyvale-california/

Changing Geographies of Work

30

Source: Census 1982 of Retail; LEHD LODES

LOCATION

• Different industries “prefer” different types of locations, amenities, workers

• New technologies could allow for greater decentralization via telecommuting –e.g., virtual reality. So far, information sector most prone to centralization.

• Retail has lost jobs in the middle band but gained in the core. Can it continue to be a career ladder in the periphery?

Priority strategies will be considered in the context of three “what if…” scenarios developed for use in Horizon.

Priority strategies are intended to be long-range planning concepts to move the Bay Area in a more sustainable direction.

Priority strategies are not intended to be specific short-term legislative proposals or calls-to-action.

31Overview https://www.insidehighered.com/sites/default/server_files/media/apprenticeship_opportunities.jpg

32

Overview of Potential Priority Strategies

Technology Organization Compensation Location

Priority Production Areas

State Training Fund for Displaced Workers

Lifelong Learning and Training Accounts

Portable Benefits

Increased Childcare Support for Families

Wage Insurance

Universal Basic Income

Incubator Programs in Distressed Areas

Means-Based Transit

Development Limits in Job-Rich Cities

Employment Incentives in Transit-Rich Areas

What’s Next for The Future of Jobs Paper?

Outreach to Stakeholders

Perspective Paper

Release

Strategy Testing via

Futures

Draft Preferred

Plan

33Next Steps

January-April 2019

May 2019Fall 2019 &Winter 2020Spring 2019

Moderator and Panelists:

• Cynthia Kroll (Moderator): Chief Economist & Assist. Planning Director, MTC/ABAG

• Stephen Baiter, Executive Director, East Bay Economic Development Alliance

• Laurel Arvanitidis, Dir. of Business Development, City and County of San Francisco

• Ofelia Bello, Executive Director, Youth United for Community Action

• Randy Howder, Managing Director, Gensler San Francisco

Panel Discussion

34Overview

Potential Priority Strategies

35OverviewImage Credit: Tabea Damm, https://unsplash.com/photos/9-xfYKAI6ZI

Priority Production Areas (PPAs) to Protect Key Industrial Lands

36

Strategy

DIVERSE VIBRANT

TECHNOLOGY

T1

Benefits

Primary Guiding

Principles

Identify critical areas to the regional industrial land base and establish a program to protect such areas, thus helping to stabilize land markets.

Supports local supply chains for regional economic clusters; supports local jobs and training.

Examples• San Francisco: PDR Zoning • San Jose: Framework for

Preservation of Employment Lands

HPA Architecture, https://www.northbaybusinessjournal.com/northbay/solanocounty/8829673-181/solano-fairfield-industrial-real-estate-construction

State-Level Training Fund for Workers Displaced by Automation

37

Strategy

DIVERSE VIBRANT

TECHNOLOGY

T2

Benefits

Primary Guiding

Principles

Establish a state-level fund for automation-induced displacement and distribute grants to regional programs working in partnership with county workforce development boards.

Equips displaced workers with skills needed to quickly reenter the workforce.

Examples• Colorado: Skillful Worker Training• Germany: Dual-System Work/School

Apprenticeship Program

By Steve Jurvetson - Flickr: Tesla Autobots, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=24819239

38

ORGANIZATION

Lifelong Learning and Training Accounts (LLTAs)

Strategy

VIBRANT

O1

Benefits

Primary Guiding

Principle

Confers rights to training to workers; useful for mid-career training.

Examples• Aspen Institute: $2,000 pretax with

matching funds for training• Singapore: $500 training credit

Establish LLTAs to address the decline of traditional single-employer jobs, resulting in a better trained workforce with greater flexibility to change careers.

Mirko Tobias Schäfer https://www.flickr.com/photos/gastev/9319066661/

39

ORGANIZATION

Portable Benefits

Strategy

VIBRANT

O2

Benefits

Primary Guiding

Principle

Decouple benefits from employment and address the rise of part-time employment by advancing a portable benefits system and creating a safety net for workers in alternative arrangements.

Ties employment benefits to the individual, instead of the employer.

Examples• Freelancers Union• New York: Black Car Fund

https://www.flickr.com/photos/statefarm/9734368418/in/photostream/

40

COMPENSATION

Increased Child Care Support for Low-Income Families

Strategy

C1

Benefits

Primary Guiding

Principles

Increased access to well-placed child care boosts labor force participation and eases drop-off and pickup

Examples

Provide low cost and accessible child care for low income communities to both remove barriers to working for women, while reducing driving to distant child care centers.

DIVERSE VIBRANT

Child Care Center near Multimodal Tamien Station

https://umanitoba.ca/faculties/education/media/2018-11-02-BEd-banner-image.jpg

https://www.facebook.com/BHTamien/photos/rpp.207530306067888/938566169630961/?type=3&theater

41

AFFORDABLE DIVERSE

COMPENSATION

Wage Insurance

Strategy

C2

Benefits

Primary Guiding

Principles

Ties earnings replacement to gains in experience; stabilizes households during transition.

Examples• United States: Alternative Trade

Adjustment Assistance Program• Canada: Earnings Supplement Project

Consider developing a wage insurance program to reduce the wages lost experienced by most re-employed displaced workers, while encouraging continued participation in the workforce.

https://i.pinimg.com/originals/ca/39/ce/ca39ce70d7f769f80235c1191d291dd7.jpg

42

COMPENSATION

Universal Basic Income

Strategy

C3

Benefits

Primary Guiding

Principles

Breaks negative feedback loops associated with poverty; makes communities more resilient.

Examples• Y-Combinator Research: UBI Pilot• Stockton: UBI Pilot• Finland: Universal Basic Income

Provide households with guaranteed, unconditional cash transfers, commonly referred to as a “universal basic income”, should jobs be disrupted at a scale well beyond individual control.

DIVERSE VIBRANT

43

LOCATION

Incubator Programs in Economically-Distressed Communities

Strategy

L1

Benefits

Primary Guiding

Principles

Encourages entrepreneurship beyond tech; spurs better business plans from participants.

Examples• San Francisco: La Cocina• The Bronx: Business Bridge Incubator• Philadelphia: iHub

Create incubator programs in economically distressed areas to create business and employment opportunities for low- and moderate-income individuals.

DIVERSE VIBRANThttps://upload.wikimedia.org/wikipedia/commons/1/13/20130307-OC-RBN-4104_%288577514545%29.jpg

44

LOCATION

Means-Based Transit Pricing

Strategy

L2

Benefits

Primary Guiding

Principles

Improves access to jobs for lower-income households.

Examples• Seattle: ORCA LIFT• Portland: Metro Fare Discount

Develop regional means-based pricing for public transit to help low-income workers overcome travel barriers to access economic opportunities in the region and provide for their families.

AFFORDABLE CONNECTEDhttps://www.clippercard.com/ClipperWeb/images/new_design/toolbox/Photos/HR/customers_tagging_card_hr/003_hr.jpg

45

LOCATION

Balancing the Jobs Side of the Jobs/Housing Imbalance

Strategy

L3

Benefits

Primary Guiding

Principle

Disincentivizes excessive job concentrations; provides funding for needed mitigations.

Examples• San Francisco: Proposition M (1986)• San Francisco: Transportation

Sustainability Fee (TSF)

Consider annual caps of commercial development or expansion of impact fees, thus internalizing costs to infrastructure and providing a funding stream for improvements.

CONNECTEDImage Credit: Shawn Clover, Flickr

46

LOCATION

Incentivizing Jobs in Transit-Rich Areas

Strategy

L4

Benefits

Primary Guiding

Principles

Increases transit ridership; potentially improves jobs-housing balance.

Examples• Contra Costa Centre TOD• PSRC “Transit-Supportive Densities

and Land Uses” promoting TOD jobs

Prioritize employment densification in PDAs and TPAs, with an emphasis on locations close to transit that currently have very low employment densities.

CONNECTED HEALTHYImage Credit: PCI Developments

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