The Digital Jobs Gap Is Growing

Jobs requiring a high degree of digital skills are rapidly increasing -- but not everywhere. That could be a big problem for some local economies.
by | November 15, 2017
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The introduction of computers and digital technologies into the workplace has altered just about every job in some way. A report released by the Brookings Institution today chronicles how “digitization” has played out across different occupations and regional economies.

Using Labor Department data that assesses how much computer skills and knowledge more than 500 occupations require, researchers assigned regions digital scores.

Not surprisingly, the larger regions with the highest scores -- San Jose, Calif., and Boston being at the top -- are home to big tech firms or large universities. Meanwhile, regions with the lowest scores tend to employ more workers in retail sales and food service where the need for digital skills is still fairly minimal.

Many of the lower-scoring metro areas, though, did see their average digital scores climb significantly between 2002 and 2016, the time period analyzed in the report. That’s largely a function of them starting from lower levels than other places.

This plot shows that the biggest overall average changes have come in regions with the lowest 2002 scores.

 

 

The more troubling finding is that, when only occupations requiring a high level of digital skills are considered, the jobs are becoming increasingly concentrated in a select group of regional economies. These prized jobs come with significantly higher salaries and are thought to be more resilient to industry changes, meaning they could be critical to the long-term health of local economies.

Regions with already high numbers of these highly digital jobs in 2002 saw their concentrations increase much more than in other areas.

“The nature of different technologies is driving toward divergence and the superstar economies,” Brookings’ Mark Muro says. “The usual suspects look very good.”

Consider the San Jose and San Francisco metro areas, which had well-above average shares of high digital skill jobs back in 2002. Growth in concentrations of these jobs in Silicon Valley far outpaced other regions since then.

 

 

There were a few outliers among smaller metro areas where high-skill digital jobs were once scarce but have since seen huge gains. They include Cedar Rapids, Iowa; College Station-Bryan, Texas; Jackson, Mich.; and Lansing-East Lansing, Mich.

Still, the overall trend is a cause for concern.

Muro says part of the diverging paths metro areas find themselves on can be explained by what technology and the internet enables companies to accomplish today. With relatively few employees and marginal costs, they can multiply their offerings infinitely and secure huge returns on investment.

Not only do regions with more high-skill digital jobs benefit from higher wages, but their workforces may also enjoy greater longevity in the face of automation. The Brookings researchers compared occupations’ digital scores with separate estimates by the McKinsey Global Institute assessing the extent to which their tasks could be automated. What they found was a negative correlation, suggesting digital jobs in fields like computers, engineering and mathematics are generally less susceptible to automation than other occupations. 

It may also not be just digital skills that give these workers an edge in the long run. Muro points out that the same employees generally possess other key traits, such as soft skills, increased cognitive abilities and the ability to manage complex problems.

One potential strategy for regions on the low end of the tech spectrum is to import talent, particularly young college-educated individuals.

The report also emphasized the digital knowledge for “middle-skill” jobs, or those supporting middle-class families that don’t require four-year degrees. Just under half of these jobs required at least a medium level of digital skills in 2002. That share has since increased to 88 percent, a notably bigger jump than other areas of the labor market, according to the analysis.