In the last decade, many articles and reports have claimed that the acceleration in AI and other exponential technologies will lead to massive displacement in the workforce. The next wave of scholars then came to clarify that it is very possible that just as many jobs will created as jobs will be automated away, but that the true challenge in the Future of Work will be overcoming the ‘Skills Gap’ — in that even if the supply and demand for labor is equal, there will be a gap between the skills that displaced workers have and the skills that they need to succeed in the new jobs that have been created.
While this gap in the labor market has (rightfully) received a fair amount of attention recently, there has been less attention paid to another important gap that could throw a wrench in the labor market of the future, even if supply and demand for labor are roughly equal: the ‘Geography Gap’.
The Geography Gap is a term I’d like to introduce to refer to the existence of a labor market (such as the US) in which there is demand for labor (employers) and supply of labor (people), but that the inefficiency in the labor market is the location of where the employee is and where the employers want the job to be done.
So Firstly, why will the Geography Gap emerge?
Across the country, the economies within individual cities and communities are shaped by vastly different industry makeups and labor market skillsets. As such, given certain occupations have vastly different susceptibilities to automation, communities themselves will be impacted by automation in vastly different ways.
As an example, routine and repetitive occupations within manufacturing and office administration roles are some of the most likely to be automated, and thus communities in some Heartland states that have workforces that are more specialized in these sectors are more vulnerable to being hit the hardest by the Fourth Industrial Revolution.
At the same time as some communities feeling a disproportionate amount of the job losses, others are feeling a disproportionate amount of job gains. For the last few decades, the benefits of increasing digitization and emerging technologies have tended to be realized most in specific geographic clusters — hubs such as Silicon Valley that have attracted both some of the most innovative employers and some of the highest skilled employees.
So when these trends are considered together, we may have an overall labor market where supply and demand of labor are5 equal (let’s say for simplicity sake), but where more excess supply exists in areas most impacted by automation, and where excess demand exists in high-growth hubs: A Geography Gap.
Secondly, what solutions will come into play to address this gap?
So if reskilling is the solution for the Skills Gap, what is the solution for the Geography Gap? There are multiple emerging trends that have the potential to chip away at this gap — all of them will likely comprise some portion of the end-state solution, but to what extent and in what way, remains substantially unclear:
1. The Rise of Remote
The first way to overcome the hurdle of geography is of course to not address the gap at all, but rather, to work through it. The number of remote workers continues to increase substantially, with remote working for non-self employed workers growing 159% since 2005, as well as the surge in freelancers, who are expected to make up the majority of the US workforce by 2027. Enabling remote work has allowed companies to access global talent, reduce office costs, and increase flexibility for employees.
Despite its benefits, working remotely continues to poise substantial challenges — with companies often times struggling with team cohesiveness, communication, and productivity. A number of companies have emerged in recent years to begin to tackle these challenges and make remote working a more viable option: from Andela facilitating the hiring of remote workers, to WeWork creating better remote workspace options, to Zoom offering better video communication technology, to Trello offering better digital collaboration tools.
I expect the number of startups in this space and the number of remote workers to continue to increase, pushing forward a virtuous cycle of one increasing the value of the other. But challenges will also continue to persist — and there will be many jobs that either simply cannot be achieved remotely or where the damage of remote to successful team collaboration is simply too great.
2. The Rise of Relocation
In situations where working remotely is not a viable option, and where individuals find themselves in communities with an excess supply of labor, there will be more interest in relocating to communities with higher demand for labor. While uprooting one’s life to move to another city can be a daunting and complex task, there are companies arising to decrease some of the challenges associated with relocation. One company, Placement, is actually proactively encouraging relocation (rather than waiting for inbound interest), advertising target salary increases of 30%, evaluating a person’s relocation options, preparing them for interviews, and finally facilitating the relocation itself.
I expect relocation in the labor market to increase, particularly in communities that are the most impacted by automation and where a nearby high-growth hub exists. More companies will emerge to try to create value in various stages of the relocation process, both working with employers who are seeking new sources of talent, and working with individuals who are seeking better income prospects.
While relocation will be a viable option for some, it will be much more challenging for others, particularly for families who may have additional complex considerations, such as a spouse’s current job, children’s current schools, or an aging parent’s current support system.
3. The Rise of More Nomadic Living Arrangements
The option of relocation currently may come with a negative connotation of the difficulty of ‘uprooting one’s life’, but there exists a possible future scenario (based off trends that already exist in the present) of more flexible, temporary living arrangements, which would require significantly less ‘uprooting’.
Broadly speaking, millennials tend to want to change jobs more frequently, travel to new locations more frequently, and purchase housing and other material goods less. When considering these preferences alongside the rising need of remote work, companies have began to take advantage of these trends’ potential to results in more nomadic lifestyles. WeWork, under its broader We Company umbrella, now offers WeLive — a living arrangement that allows individuals to access flexible leasing options right next to their coworking space. A co-living company called Common allows you to easily “transfer” your residence between any of their 20 locations across the country. And a new startup, Selina, is building a global community of hostels with coworking spaces and other experiences, betting on an increasing number of global nomads and a future where someone can pay $1,000/month and live anywhere in the world on any given night.
If this trend were to escalate, a scenario could be imagined in which, as jobs pop up in particular locations, an individual who is part of a national network of temporary housing options could much more easily shift to another location where their skills align with the current job market (in addition to capitalizing on remote jobs) — dramatically increasing the fluidity of the labor market. The We Company seems even more prepared to tackle this scenario when considering their WeGrow branch, which could address skills gaps as well.
Granted this possibility may be longer-term, but it is possible future that should not be ignored as we consider scenarios of how an emerging Geography Gap might be addressed.
4. The Rise of New Geographic Hubs
While the previous three trends all relate to how an employee does or does not move in relation to their employer, the fourth possibility is that employers increasingly move to locations that are closer to untapped talent pools.
Currently, millions of Americans are flocking to high-growth hubs in the Bay Area, New York, Los Angeles, and Boston where jobs are increasing the most, but many more are unable or unwilling to move, and those who do are sometimes met with the grim realities of falling affordability and rising inequality. In order to continue to fill open roles, employers may look to create new regional hubs that could attract talent from the surrounding communities. This trend could be accelerated by the parallel effort by communities that are most impacted by automation (and perhaps had previously relied on a large degree of manufacturing roles) that will be looking to revitalize their economies and diversify across higher-growth industries.
The combination of these value propositions is likely to lead to partnerships among employers, governments, and educational institutions to build new regional hubs that can create more jobs and then fill those jobs with local talent. There are companies like Bitwise who are already capitalizing on the need for these new partnerships to develop unique ecosystem-building solutions as communities grapple with their own labor market dynamics amidst vast changes in the workforce.
As AI and other exponential technologies continue to disrupt the workforce, we will have to grapple with the Geography Gap, and in many cases the combination of the Skills Gap and the Geography Gap, to maximize the efficiency of supply and demand in the labor market. Among the four possibilities outlined — remote work, relocation, nomadic living arrangements, and new geographic hubs — all will happen in some capacity, but to what extent, through what business models, on what timeline, and with what degree of success remains to be seen.