“Over the past half century, wave after wave of digital innovation has ensured that digitalization - the diffusion of digital technologies into nearly every business and workplace and pocket - has been remaking the U.S. economy and the world of work,” said the Brookings Institution in Digitalization and the American Workforce. The digitalization of everything has both increased the potential of individuals and societies while contributing to widespread anxiety about its impact on jobs and economic inequalities. “And yet, for all of the evidence that big changes are underway, surprisingly little data exists to track the spread of digital adoption.”
The Brookings report quantified the spread of digitalization by analyzing the changes in the digital content of 545 occupations between 2002 and 2016 based on O*NET, the most comprehensive data on US occupations sponsored by the US Department of Labor. O*NET includes highly detailed, task-level information on hundreds of occupations, and includes quantitative measures of knowledge requirements, skills, tools, education, training and work activities. In addition, the report collected information on the occupations’ particular industries, pay, growth rates, geographical locations and distribution across educational and demographic groups.
Each of the 545 occupations, - which encompassed 90% of the US workforce, - was assigned a digital score between 0 and 100 based on the required digital skills. High digital occupations are those with scores over 60. They include software developers - with a score of 91; computer system analysts - 79; and financial managers, - 61. Medium digital occupations scored between 33 and 60, and include lawyers - 58; automative service technicians - 55; office clerks - 55; and registered nurses - 55. Low digital occupations have a score below 33, and include security guards - 31; restaurant cooks, - 18; construction laborers - 17; and personal care aides - 14.
Let me summarize the report’s five key findings.
The digitalization of the US economy has been proceeding quite rapidly since the early 2000s
In 2002, 58% of jobs required low digital skills, 40% required medium digital skills and just 5% required high digital skills. A lot had changed by 2016, with the share requiring low digital skills falling almost in half to 30%, medium digital skills requirements rose modestly to 48%, and the share of jobs requiring high digital kills more than quadrupled to 23%
These digitalization changes have not been evenly distributed across occupations and industries
Digital scores rose in 95% of the 545 analyzed occupations, with the average score across all occupations rising from 29 in 2002 to 46 in 2016. However, digitalization has proceeded at varying rates across different occupations.
Many highly digital occupations became even more digital, including electronics engineers, - which increased from 69 to 90, aerospace engineerings - 65 to 77, and statistical assistants, - 66 to 73. A number of previously middle-skill occupations became high-digital with scores in the 60s which contributed to a slight decline of the mean score of high-digital occupations from 78.6 to 76.6. Financial managers, for example, went from 41 to 61, supervisors of administrative workers rose from 39 to 64, and chemical engineers, - 47 to 69.
The biggest advances in digitalization between 2002 and 2016 were seen in medium- and low-skill occupations. The mean medium-skill digital score rose from 43 to 55. Many moderately digitalized occupations saw a considerable increase in their digital scores, such as automotive service technicians - 39 to 55, registered nurses - 38 to 55 -, and human resources specialists - 37 to 60.
The mean low-skill digital score more than doubled, from 14 in 2002 to 36 in 2016. “By 2016, no fewer than 229 initially low-digital occupations, or 48 percent of them, employing 33 million workers in 2002, had exited the low-digital category and become medium-digital or even high-digital occupations, marking the steady upskilling of even lower-end jobs.” These included tool and die makers - 3 to 51, social and human service assistants - 17 to 54, bus and truck mechanics - 17 to 48, and audio equipment technicians - 30 to 75.
Digitalization is increasing job creation and wages in occupations at the high and low ends while helping to hollow out those in the middle
The mean annual wage in 2016 was $72,896 in highly digital occupations, $48,274 in middle-level ones, and $30,393 in low-digital occupations. Statistical analysis of the O*NET data shows that there’s a positive correlation between digitalization and educational levels, and that there is a distinct wage premium for digital skills among occupations requiring the same educational level.
“In 2002, a one-point increase in digitalization score predicted a $166.20 (in 2016 dollars) increase in real annual average wages for occupations with the same education requirements. By 2016 this wage premium had almost doubled to $292.80. In sum, workers with superior digital skills are more and more earning higher wages (all other things being equal) than similarly educated workers with fewer digital skills.”
In addition, as MIT economist David Autor and others have long pointed out, the increased digitalization of the US economy has contributed to the polarization of employment and wage distributions over the past two decades. Job opportunities have expanded in both high- and low-occupations while contracting in middle-skill white-collar and blue-collar jobs. Automation has been most successful when applied to tasks that follow precise, well-understood procedures that can be well described by a set of rules, and such tasks generally predominate in middle-skill occupations.
Digitalization varies widely across places and is strongly associated with variations in regional economic performance
Between 2002 and 2016, the mean digitalization score across all states rose by 18 to 22 points while showing extensive variations. The District of Columbia had the highest mean digital score at 51; Massachusetts, Maryland, Virginia, and Connecticut all had scores exceeding 47; Hawaii, Wyoming and Louisiana had scores below 43; and Nevada had the lowest score at 41.
Metropolitan areas showed even more variations in mean digital scores, ranging from San Jose at 47 and Boston at 44 to Nevada and Bakersfield, CA at 36. Moreover, the metro areas with the highest mean digital scores also had the highest educational levels and wages. “In short, digitalization appears to be associated with several important economic benefits for cities but also with the widening inter-metropolitan performance and wage gaps.” For the foreseeable future, superstar cities offer the best job opportunities for highly educated, highly skilled workers.
Digitalization is changing the skills less advantaged workers need to secure good jobs
Finally, the report defined mid-skill good jobs as those with the potential to help workers get a good well-paying middle class career without a four-year college degree. An analysis of the skill profiles of the 14 million or so American good jobs showed that their mean digital score was 50 in 2016, almost double their 2002 score of 29. “Put another way, where 49 percent of these attainable full-time jobs required medium or high levels of digital competence 15 years ago, 87 percent of them do now.”
“The spread of digital tools is underscoring the importance of digital competencies in helping less-educated workers secure basic opportunity even as it throws into relief sharp disparities among particular groups’ digital preparedness.”
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