Businesses are kind of looking and seeing that humans can get sick from COVID, but machines can't. People are going in to the office for different reasons than they were pre-pandemic. When you had the time off and you were sitting home collecting the unemployment, they took the time to find other careers. There's always going to be a need for the office.
It just might not be for everyone, all day long, the way it was pre-pandemic. Quiet quitting is part of the great resignation story. Telecommuting all comes down to trust. One of the biggest problems for people who work at home is turning it off.
Americans are reassessing the way they work, according to an August 2021 poll. More than half of workers surveyed said they plan to look for a new job in the coming year. 56% of respondents said adjustable working hours and remote work were a priority. And while some people have left the workforce entirely, job security and better pay are also top concerns for employees. It's time to find something that is going to be better for my family, something more stable, something that I can provide where I don't have to go to work and be like, Oh, is he going to, you know, am I going to get fired today? Or is he not going to be happy with the service? In August 2021, almost 4.3 million Americans
quit their job. The resignation rate hit a 20 year high of 2.9%. Working women have faced an even heavier burden juggling childcare duties, virtual schooling and their careers.
We're all able to take a step back in the last year and spend more time doing other things and really question the value of what we're doing at work. A number of people have made the decision: I need to make a change. I need to. I need to simplify.
Dubbed the Great Resignation, the exodus of workers has left millions of jobs unfilled and created hiring challenges for companies. So what does the realignment of the workforce mean for employees and businesses, and what steps should you take before quitting your job? U.S. workers are leaving their jobs in droves. In August 2021, almost 4.3 million Americans handed in their resignation, including 971,000 people working in the leisure and hospitality industry, which includes hotels and restaurants. Another 1.3 million workers were laid
off or discharged by their employer. Jessica Thomas is one of those workers. She spent nine years in the restaurant business in northern New Jersey before Covid hit. With cases surging and customers avoiding dining out, the bar where she worked temporarily shut its doors in the spring of 2020, leaving her without a job and a paycheck. But also in that industry if you're not working, you're not making money.
So there are no sick days, there's no vacation time. There's no health insurance. Uncertain when her job would restart, the mother of three found herself at home relying on unemployment benefits. Her husband, Derrick, who works as a bartender, faced a similar dilemma. A lot of people took the time that when you had the time off and you were sitting home collecting unemployment, they took the time to f ind other careers. I didn't hear anything from the owner until I think it was a day before when he was going okay, we're reopening. There was no communication, nothing.
So for me that kind of just made me want to get out of that industry. In August 2021, the separation rate for hotel and food service workers, which includes quits, layoffs and retirements, increased to 8.3% from 6.7% the month prior. And while the pandemic has caused a severe blow to employment overall, it has especially impacted working mothers. As of January 2021, there were 18.5 million U.S.
mothers living with their school-age children while actively working, 8% less than a year earlier. On the advice of her brother in law, Jessica applied for a job at the Port of Newark, New Jersey, home to the East Coast's busiest port. When I went in, the gentleman at the door said, You know, you're at the wrong building. And I said, No, no, I'm at the right place. He goes, No, no, the nurse is for the Covid testing is the other building. I said, No, no, I'm here to apply to be a longshore woman.
In Jessica's new job as a longshore woman, she helped load and unload cargo ships that bring in electronics, apparel and consumer goods from around the world. One day I drove 1700 Toyotas off of a ship. We got there at 7 a.m..
We got done at five. And you drive the car off, get back in the van, go back up, drive the car off until the ship is done. Nobody leaves until the ship is complete. Her new job also gave her a salary boost, double the pay of her previous job at the restaurant with benefits ranging from paid vacation to health insurance. And according to a May 2021 survey, Jessica is not alone. Almost half of workers polled said
they are rethinking the type of job they want in the future. More than half said they would retrain for a new career if they had the opportunity. I feel like I'm always trying to find balance in my life, balancing with working and all the kids stuff. My relationship with my husband. Every day, it's like, okay, how am I going to do this? How are we going to get through this? According to an August 2021 study, almost a third of workers at large U.S. companies said they are likely to change jobs in the coming year. Younger workers are even more
likely to uproot their careers. Half of Gen Z workers, particularly those struggling with productivity and time pressure issues at work, plan to switch jobs in the coming year. According to one financial planner, there are three solutions to remedy a non-ideal work situation. For starters, small changes can make a
big difference. The easiest and least disruptive way forward for you and your company is to tweak the job you already have. So I would encourage employees to go have what I would call a job crafting conversation with their manager and say, I love the 60%. This 40% not so much. What can we do? And that could be everything from maybe you just cut back to three days a week and your job becomes a smaller job. Volunteering or a side hustle could be another way to cultivate experience and explore new industries. Another benefit: after a couple
of months, you can stop, continue, or test out something else. And finally, if you're in a job that is mentally or physically trying, has a poor work life balance or limited growth opportunities, that may be a signal it's time to look for a new job. But before quitting, financial planner Roger Ma advises to take a look at your financial situation and find out how much it costs to fund your lifestyle.
And then once you know that number, let's just say that your expenses are $50,000. And to be able to fund that, you need to make $80,000. Then you can start to look at what are the roles, what are the positions, what are the industries that pay that amount.
It might be roles in a similar industry that you're in, or maybe you've been in your industry for a while and you're looking to pivot. While searching for a new gig, financial advisers say it's easier to find a new job if you already have one, and it also puts you in a better position to negotiate your salary. Leaving on good terms is another tip. Even though you may think I will never come back to this company again, a little insurance policy would be leaving on the best note possible. So maybe you leave that door open to boomeranging back at some point in the future.
The U.S. has seen a record number of people quit their jobs. But what's led to the boom in resignations? Several factors, according to Anthony Klotz, associate professor of management at Texas A&M University. For starters, the pandemic forced Americans to take a hard look at their lives and reevaluate their careers. But as a result of the deep thinking that people did during the pandemic, I reasoned that a number of them would plan life pivots coming out of that. Sometimes those life pivots would not
involve a job change, but in many cases, because of how central careers are to our lives, it would necessitate a career change. Working from home was another factor. According to Klotz, a number of people who worked remotely at the start of the pandemic have been unwilling to give up their autonomy.
I think what we're finding is a number of employees who worked remotely felt like they could be more of themselves than they could in the office, and maybe in some cases they felt like there was less harassment, less microaggressions. wear the clothes that they want, their hair the way they want. Burnout and mental health are another component.
According to one survey, longer workweeks have become even more embedded in business culture, and the boundary between work and personal life has shrunk. More than 40% of workers at large U.S. companies said they had difficulty setting work and personal life boundaries, and almost 45% said they felt pressure to be reachable at all times.
There were lots of reports that burnout was at all time highs for individuals, and burnout is a pretty clear predictor of people quitting their jobs. Increased economic independence has also led to the rise of resignations. According to an August 2021 study from Oxford Economics, Americans saved an additional $4 trillion during the Covid pandemic. While about 70% of that gain went to the wealthiest 20% of Americans, analysts say the economic uncertainty of 2020 forced many people to delay their retirement plans until 2021. My sense is early retirements are up. People taking a break from the workforce like their own sabbatical is up.
And that's supported by 2020 was only the second year in the last 35 years where American household debt actually went down. Businesses across the U.S. are struggling to find workers. In August 2021, there were 10.4 million job openings across the country. According to a Q3 2021 CNBC survey, half of small business owners say it's harder to find competent people to hire than a year ago, and nearly a third said they have jobs they haven't been able to fill for at least three months.
But while the number of job openings has reached historic proportions, it might not be an entirely new phenomenon. Since the Bureau of Labor Statistics began tracking this back in 2000, the rate of employee resignations per month has gone up fairly steadily over the past 20 years. To entice workers back, employers have come up with incentives ranging from college tuition to signing bonuses. In August 2021, Target announced a program to pay 100% of its workers college tuition. The big box retailer said that in addition to tuition, it would cover textbooks and fees for employees pursuing 250 college programs and more than 40 institutions.
Chipotle, Starbucks and Walmart offer similar debt-free education programs. Other companies have boosted pay. McDonald's announced in May it was raising hourly wages at company-owned restaurants. Walmart,
Under Armor and Walgreens have announced similar pay hikes. And according to analysts, hiring new employees is only half the battle. Companies face a steep penalty if they are unable to retain employees they already have. I think it's incredibly expensive to lose talent and especially a lot of talent. And so you've got the loss of maybe this person has been thinking about it for some time. They're unhappy, so you're not
getting the most out of them while they're there. And then, you know, eventually when they decide to leave, you might have to spend several months to be able to attract new talent. According to a 2017 study by the Work Institute, based on a median U.S.
salary of $45,000, the average cost of turnover per employee is $15,000. That figure includes direct costs like exit processing and relocation expenses, as well as training costs and lost productivity. According to the group, the cost to U.S.
employers from worker resignations in 2016 alone was $536 billion. But despite these issues, analysts say that the wave of resignations we are experiencing could ultimately lead to an improvement for the lives of both workers and the organizations that employ them. I think the one silver lining out of this is that the pandemic has gotten people to review or question things that they've done in the past.
And maybe if you have been on autopilot, it's given you that kick to say, you know, this job, I've been on autopilot, this doesn't really align with my interests or my long term goals, and I'm going to make a change. With this many resignations. That means there's lots of talented employees who aren't working right now for any number of reasons. And so a lot of organizations see that as an opportunity as well to improve their organization and improve their talent pool. This is one example of quiet quitting, a trend that has been dominating social media and especially TikTok.
In July, Zaiad Khan, a 24-year-old engineer from New York, posted a video about quiet quitting and it went viral. Since then, the trend has spread like wildfire with hashtags like quiet, quitting, quitting and quieting. Does anybody want to work anymore? Then the mainstream media began covering it. Like working overtime.
No, thanks. Late night emails? Ignore those quiet. Quitting is a really bad idea.
If you're a quiet quitter, you're not working for me. The world is changing and the way of work is changing. Even people saying, I'm not going back to the office.
And if I do, I'm definitely quite quitting until I find a job that is a lot more flexible. Covid was the ultimate reset. Covid was that moment where people started to ask a bigger question: What do I want from my life? Do I want to continue working the way that I have? Or do I want something different? Do I want to continue to work, which is awesome, but do I also want to be able to enjoy my family? Do I also want to be able to enjoy my life? So I think all of these things are coming in stages and I think quite quitting is just the trend that's come as a result of the ultimate reset, which is Covid. Something like 40% of workers are now saying they plan to change jobs this year. The pandemic also triggered the great resignation. To retain people, but they're really running scared. Millions of Americans quit their jobs
in 2021, some for better opportunities, some for a career break. The pace of quitting continued well into 2022. This chart tracks job openings and labor turnover in the U.S. economy. JOLTS for short. We do think that quitting is part of the Great Resignation story, so it fits into the general story of having a high level of quits over the past year, year and a half, and certainly a very tight labor market. And in that type of a labor market, it makes a lot of sense that workers may not be willing to to work as hard as they have in the past because it's very easy to get alternative employment.
So the question is what is quiet quitting? Quiet quitting is referring to a situation where employees are making a choice to not necessarily go above and beyond what they're being asked to do. It doesn't mean that they're not doing their job. They're just not going above and beyond. Back in my day it was called coasting.
For me, my last time quiet quitting was five years ago. I used to be in tech sales. What I did was work less. I wasn't putting in the 40 hours anymore. I wasn't giving in to the drama anymore. I wasn't giving into work gossip anymore.
I wasn't answering emails or texts or Slack messages, you know, DMs after the workday. So weekends were free. They were mine. Even though it's millennials and Gen Zers who are a ctively talking about it on social media, quiet quitting has been happening amongst Gen Xers, which I'm part of, the Gen Xers for the better part of 2 to 3 years. The anti-work movement is not a new trend.
In 2021, the Lying Flat or Tang Ping movement took off in China. Many viewed it as an anti-work phenomenon. This is a labor protest movement in China against the country's relentless work culture. Some argue that quiet quitting is similar to the Lying Flat movement . In the U.S., quiet quitting could also be a
backlash to hustle culture. The 24/7 startup grind, popularized by figures like Gary V. and others. I think it is almost direct resistance and disruption of hustle culture, honestly, and I think it's exciting that more people are doing it.
When it comes to hustle culture and quiet quitting, we're seeing from Gen Zers especially that they're really focused on ensuring that they have that work- l ife balance and really mission-driven purpose when it comes to work. And we see this across millennials as well. People are being more honest about the fact that they just don't want to give beyond the 40 hours of work that they normally would give because they're tired. There has been a tsunami of job resignations. In 2021, the Great Resignation dominated the economic news cycle.
Or need to remain in their roles. So In the second quarter of the same year, U.S. productivity data posted its biggest ever annual drop, and some economists blame workers leaving jobs or not trying hard at their current jobs for the hit to productivity.
Quiet quitting is probably part of the reason for the slowing in labor productivity. It's hard to tell from aggregate data exactly why labor productivity has slowed so much over the course of the pandemic. But it is certainly one of the reasons that you would expect to be weighing on labor productivity right now. Employee engagement also appears to be declining. A recent poll from Gallup showed employee engagement in the U.S.
dropping for the first annual decline in a decade, dipping from 36% engaged employees in 2020 to 34% in 2021. Disengagement, not being engaged, that's affecting the productivity. Mentally they're just not there and they really aren't giving it their all anymore, and they are just trying to stay under the radar and they are disengaged. That's very much going to impact productivity. I do think quiet quitting is a part of the Great Resignation.
People are so burnt out, we've just gone through and are still going through a pandemic. We are recognizing that life can be so fleeting and so short and we want to spend it doing something we love. And that doesn't mean work has to be our dream job. I think that myth of the dream job is slowly or rapidly dying. People that shut down their laptop at five want that balance in life. Want to go to the soccer game.
9 to 5 only. They don't work for me. I can tell you that.
Labor demand remains red hot in 2022. That's despite the looming risk of a recession. An economic downturn could make quiet quitting a short lived trend. Well, if the labor market were to turn, you'd imagine that quiet quitting would become less of a phenomenon.
Well, the risk, if you're a quiet quitter, is that the economy would slow and you could find yourself in a situation where you're in a job, where you haven't been giving the most effort that you can, and it puts you at a disadvantage in terms of moving forward at that job. If others have been giving more effort, they're more likely to have greater job security than otherwise. So certainly as the labor market slows and if we were to go into a recession, could potentially put those workers at a disadvantage.
In addition to talking to thousands of employees per year, I talked to thousands of leaders per year, all the way from your supervisor, all the way up to your C-suite CEOs. And I will tell you that they are bothered by this trend because it speaks one of two things. One, we have employees who are doing their job, but they're not going above and beyond.
Two, what have we done as an organization to these employees to make them feel like they can't give their best effort? We're evolving as a culture, we're evolving as a people, and the work place is evolving and we need to be okay with it because it's the same concept for me as people saying "just because I didn't have it means you shouldn't have it too. You should have to work hard." Just want to be careful about just saying that quiet quitting is the Gen Zs and the Gen Ys. I think that it can be happening all over the place. And the more we stay engaged and connected and share our purpose, the less of an issue disengagement will be. And then hopefully the quiet quitting term will start fading to the background and we'll see both employees being productive and well engaged and employers being very successful.
New alarm bells ringing tonight on the coronavirus outbreak in this country. Doctors say the virus is spread through droplets when someone coughs or sneezes. And I think the business community, it's in their interest that people actually stay home and stop the spread. For a business that can allow more employees to telecommute. We want you to do that. Hey, my name is Lindsey Jacobson. I'm a senior producer with CNBC.
We've been working from home for about a week now and it's going okay. I'm very lucky in that I have a separate space where I can work. My partner works at home full time. So I've been invading his space a little bit. But so far, so good.
I did some research on how the U.S. economy can perform while we're all dealing with the coronavirus outbreak and how productive the American workforce can be while working remotely . 50% to 60% of the workforce holds a job that's at least partially compatible with remote work. As of 2017, the U.S. Bureau of Labor Statistics estimated the civilian labor workforce at about 160 million employees. If 56% of those people are eligible for remote work, that means over 89 million people could potentially work from home. Of course, that leaves out 44% of the American workforce, but does provide alternative opportunities for a lot of people.
For us, the obvious choice was to really strongly encourage our employees to work from home. The technology is here n ow that enables remote working to be really effective and productive . While not all employees are eligible for remote work, the emptying of offices and mass transit limits exposure for those who still need to go to the office, like doctors, cleaning staff, police officers, firefighters, gig workers and other service-related professionals. With the vaccine for Covid-19 still in the distant future, U.S. companies are individually taking steps to enable their remote workforces.
It's been really interesting to see the s pike in usage that has actually followed, unfortunately, followed the spread of coronavirus. With the coronavirus pandemic shuttering offices nationwide can employers and employees adapt to a culture of remote work? Can the U.S. work from home? With many states, including Washington, New York and Florida and the federal government declaring states of emergencies, many companies are attempting to follow the trend of allowing remote work. However, telecommuting, remote work and working from home, which all entail similar experiences, have been on the rise for a while. There's a lot of different things.
It's called telecommuting, remote working, the future of work. It's absolutely something that is gaining in momentum. The federal government has been required to every employee to work at home to the maximum extent possible since the year 2001. Regular work at home has grown 173% since 2005. The drivers tend to change with the economy, with whatever's going on in the world.
So during the recession it was about saving money and that's what was driving CEOs to it. They found that if people were not in the building, they didn't have to pay as much for real estate. Right now, it's about attraction and retention of talent. There's a talent shortage and people want flexibility, in some cases more than salary.
This past week, it has been continuity of operations and the coronavirus. Over the course of the last really couple of years, we have been moving to a more distributed workforce. Gallup's State of the American Workplace Study found that 43% of employees work remotely with some frequency. Global Workplace Analytics found that 5 million employees or 3.6% of the workforce works at home at least half of the time.
Research indicates that during a five day workweek, working remotely for 2 to 3 days is the most productive. That gives employees 2 to 3 days of meetings and interaction and collaboration with an opportunity to focus on just the work for the other 2 to 3 days of the week. I think there's really four things that's driving it. Number one is, frankly, an increased focus on sustainability.
People in the United States who wanted to work from home, and that's about 80% of the population say they'd like to do it, at least some of the time, did at least two and a half days a week, half time, it would be the greenhouse gas equivalent of taking the entire New York state workforce off the road permanently. The other thing that it does is obviously on the cost side, and there's a lot of costs associated with business travel and so it helps companies a ddress the cost. We calculated that a typical company saves about $11,000 per half time telecommute or somebody that's doing it two and a half days a week for a year. However, not all companies agree that working remotely cuts costs. Cost savings has never been a driver for us to distribute our workforce. If you reduce
food service, for example, because not as many people are coming into the office. What I think that will allow us to do is shift resources to to allowing more support for people in their home office setup. Where you might save costs from an office perspective, I think if you're going to do it the right way, you've got to reinvest in other things. There's another interesting thing that the millennials are not the ones that are working at home, but they're the ones that asked for it.
I would say the thing that we've seen in the last two years would be a change in the w orkforce itself. Almost demanding workplace flexibility, the ability to work where they want to work, when they want to work. That workplace flexibility has also allowed for a more diversified talent pool. So it's been more about talent and flexibility and being able to attract and retain the right folks for us. So spreading our our teams out, not being as concentrated in San Francisco for a number of reasons, in part to tap into broader pools of talent across the globe and not just hire people who are only willing to work in San Francisco.
New England and mid-Atlantic region employers are most likely to offer telecommuting options, and full time employees are four times more likely to have remote work options than part time employees. A typical remote worker is college educated, at least 45 years old, and earns an annual salary of $58,000 while working for a company with over 100 employees. A lot of people think it's the millennials. A lot of people think it's moms.
Both of those are wrong. It's about equal men and women. But it is skewed at the older, more experienced, more tenured, higher salary end of the spectrum. Actually, it's a little bit polar.
There's this area at the very low end of the spectrum, the low income call center agents, that kind of thing. And then the sort of senior managers. And so it used to be a perception that only particular jobs are able to work from home because everyone was essentially coming back using applications that were sitting behind a firewall. Now, a lot of our applications are available just through an internet connection in the cloud. As businesses evaluate how to properly protect their employees from the recent Covid-19 outbreak, many are basing their decisions on guidance from the Centers for Disease Control and Prevention, or CDC.
The CDC recommends sick employees stay home from work until the criteria to discontinue home isolation are met. Employers should also ensure that sick leave policies are flexible and consistent with public health guidance. The CDC recommends that employers not require a doctor's note for employees who are sick as health care provider offices may be extremely busy. The CDC also recommends employers
maintain flexible policies to allow employees to care for sick family members. Employees who come to work sick should be separated from other employees and sent home immediately. The CDC is a premier public health agency, and so it's important that they're able to spread their recommendations appropriately. We have to make it possible for people to follow those r ecommendations. To help employees follow the guidelines for social distancing, many companies are implementing their business continuity plans, which incorporate a work from home policy.
Companies like Twitter are requesting all employees work from home . So people are just really thinking thoughtfully about how to get the same work done in a different way. Some companies are installing a biweekly work from home policy. In that case, at least a portion of the workforce has their exposure limited, while work is still able to continue. Depending on an employee's role, companies are allowing remote work and testing its feasibility. We're actually doing a r olling shutdown of offices around the world and testing, stress testing if you will, to make sure we have business continuity in place, that we don't cause disruptions for our customers or our employees.
Remote work seems like a logical precaution for many companies that employ people in the digital economy. However, not all Americans have access to the internet at home or work in industries that require in-person work. According to the Pew Research Center, roughly three quarters of American adults have broadband internet service at home.
However, the study found that racial minorities, older adults, rural residents and people with lower levels of education and income are more likely to not have broadband service at home. In addition, one in five American adults only access the internet through their smartphone and do not have traditional broadband access. We did an analysis several years ago looking at the Bureau of Labor Statistics data in terms of what industries have components of remote work now, and it was virtually every industry. So construction, agriculture, there's some component of many, if not most jobs now that involves sitting in front of a computer, talking on the phone, whatever. Certainly there are some industries that are leading like the tech industry, of course.
Health care might surprise you. Banking and finance. However, there are many jobs that simply cannot be performed outside of the office.
So allowing employees who can work remotely to do so protects those employees who need to commute to the office. For health care providers, for educational schools, h ospitals, municipalities and nonprofits dealing with coronavirus, we're actually giving away what we call emergency remote work kits, which enable those companies to stand up workers really quickly. This means LogMeIn, like other organizations, is offering its software services, including video conferencing and I.T. support free of charge to eligible groups during the coronavirus pandemic. Other digital connecting sites like Slack and Skype have always had free versions available.
This outbreak is testing the abilities of both software and broadband companies. Many people also do not enjoy working from their own home. From their own couch. They can find it hard to concentrate, difficult to work in their home environment, be easily distracted and have members of their family or neighbors not respect their time. Of course, all of these are heightened by the outbreak. Children have been kept home from schools and many employees agreed to work from home without much notice or time to prepare. We wouldn't have rolled it out in this accelerated pace. We would have taken it in
more of a tiered approach and wouldn't have rolled out virtual onboarding, for example, until we had it in a place where we thought it was in great shape or better shape. That said, I do think this is just accelerating the direction we were going anyway. Coronavirus is going to be a tipping point. We plodded along at about 10% growth a year for the last ten years, but I foresee that this is going to really accelerate the trend. Adapting to working remotely or from home can be an adjustment for both employees and managers.
I think one of the most important things is having a door, having a place in your home where you can close the door, lock out the kids, lock out the dogs and just concentrate. You have to be comfortable with technology. Knowing how to not just use GoToMeeting or Skype, but all of the tools, because you're going to be talking to people that are using different platforms and you can't let that scare you.
So there always is that fear. Are you working? Are you doing are you doing what you're supposed to be doing? And so stay in touch with your boss and your colleagues more. You need to replace those water cooler conversations with greater rigor around management and engagement. You have to force yourself to make sure that you're connecting with your team every day. There's managers who are skeptical that are now starting to believe.
I think there are employees that weren't sure that they could be productive or show up the right way if they were they were remote that now like that flexibility and want to continue it. When you have this kind of environment where everybody is remote, you feel like you're on this kind of level playing field. We've actually seen companies have a site leader for remote workers. Someone who represents the needs and expectations of remote workers to management. If they're going to work hard in the office, they're going to work hard at home.
If they're going to slack off in an office, they're going to slack off at home. I don't think people fundamentally change who they are as a human just because they're working from home. Telecommuting all comes down to trust. Study after study, academic, practical shows that they're more productive. In fact, they give back about 60% of the time they would have otherwise spent commuting to working. In fact, one of the biggest problems for people who work at home is turning it off. At some point we will return to normal.
And once the countrywide stress test of remote work is over, some company cultures may change to be more open to telework. I don't think we'll go back to the same way we used to operate. I really don't. Automation is coming for your job. At least that's the fear among many workers from burger flipping bots to car building robots, not to mention high powered software taking on more and more administrative tasks it seems like hundreds of skills are rapidly becoming obsolete in the U.S. economy. A McKinsey study found that A.I. and deep learning could add as much as 3.5
trillion to 5.8 trillion in annual value to companies. 80% or more of the jobs that make $20 an hour or less, are at least p otentially subject to automation. The economic shock of the pandemic hasn't helped. Human workers are vulnerable to diseases that robots aren't, making it much easier and now cheaper to have a robot on staff that doesn't require health care.
Businesses are kind of looking and seeing that humans can get sick from Covid, but machines can't. You can eliminate the health care costs, the labor and wage tag that comes along with those folks, and particularly in services, that's a big competitive advantage. To put the increase in robotics in perspective, the U.S. had 0.49 robots per thousand workers in
1995, which rose to 1.79 robots per 1000 workers in 2017. But automation isn't just a robotics revolution. The rise in information technology and artificial intelligence, or A.I., has also become an enabler of automation. A.I. can help navigate difficult challenges that
previously only a human operator could handle. Of course, if you've encountered automated phone systems, it's likely you personally experienced that automation still has a long way to go. There is nothing wrong with automation as long as it is part of a portfolio of technological changes, but its specific effects are not super good for labor. But the pace of technological change is accelerating, and the C ovid-19 pandemic could have acted as the accelerant. The Urban Institute estimates more than 8 million low income jobs have been lost during the pandemic.
One of the reasons we have friction in our labor force is that when people get laid off, they have a harder time finding a new job. And that's been especially true in the last 20 years. High skill jobs such as finance managers, payroll managers and accounting roles face a 56% chance of being automated in the future. And according to Consulting.ca, up to 30%
of oil and gas jobs could be lost to automation by 2040. One Major problem in the U.S. for workers is that workers are a tax burden for employers, whereas machines are actually subsidized. U.S. tax code has been very automation friendly. The United States has always taxed capital more likely than labor.
I think the government's going to have to be more aggressive going forward than just simply relying on a growing economy. Automation was progressing before the pandemic hit, but the sudden financial pressure that businesses in the U.S. encountered created the perfect storm to turn to automation.
In previous recessions, enterprises looking to streamline their business practices turned to automation, and in some cases, the recession simply sped up what was already a long desired change. The conventional wisdom about the pandemic is that it has greatly accelerated all kinds of trends. A.I., artificial intelligence, robotics and things like that. The movement toward those is certainly going to be accelerated post-pandemic. For a simple reason: robots don't get sick.
In food service industries, industrial machines that help with food packaging, preparation or even serving have helped to ease the burden on human employees who are susceptible to disease. Companies are looking to vaccinate their supply chains to make them more efficient. Automation of processes helps to eliminate the need for more administrative staff and a less human labor-reliant warehouse system means that when a coworker calls in sick, half the office isn't quarantined.
Among those who are actually employed in some of these low wage occupations, in the future, there'll be downward pressure on their wages, right? Because they'll be competing with machines. And so I think there will be some competition there. If we're not able to retrain people for new things, then the historical pattern has been that the people that benefit the most from automation are people that have IT skills. In the post-pandemic world, if
you don't have some I.T. skills, you're at greater risk of being disrupted and having your wages fall relative to other people. Both the Trump administration and the Biden campaign have proposals to advance job gains for workers that have become affected at least in part by automation. Whether your predictions are true about automation and self driving trucks, these folks aren't stupid. They listen. They understand.
And they're scared to death. The Biden campaign has proposed making community college free and also providing money for apprenticeships. The Trump administration has advocated more money for apprenticeships and so forth. But I think as a society, the need to help people transition to new jobs is going to be much greater in the post-pandemic world than the one that existed just six months ago. The key to a post-pandemic world is a vaccine for Covid-19.
Recent vaccine candidates have continued forward in clinical trials, and there is hope that if the U.S. can field a vaccine quick enough, the economic recovery could slow down some automation trends that have spiked due to the outbreak. But I don't think enough thought has been given to how to get enough people, and I think it may take as many as 80%, enough people in the population to take the vaccine so that we can get herd immunity and get our economy back to normal. And then these trends that we're talking
about, the A.I. trends and automation, they'll kick in later. But we need to get back to normal before we even get to the so-called longer term trends. The clock can't be turned back on technological advancement. A.I. research is steadily increasing, and U.S. investment ranged between $15 billion to $23 billion in 2016 alone.
In the long run, you know, better productivity leads to more economic growth, leads to higher wages for everybody. So there's really no doubt in the long run automation, the story of it for the past 300 years has been a happy one. In the short run, for workers who are displaced, we generally don't see wages recover and certainly not quickly. We see more effects transmitted to their families as well, more problems finishing school or behavioral issues. According to a Deloitte study, 50% of all jobs are potentially open to automation in the coming decades. And according to McKinsey, 400 million workers could be replaced by automation by 2030, which is about 15% of the global workforce.
Automation isn't all doom and gloom. Some are hopeful that if automation takes over lower skilled tasks, it could open up opportunities for fewer work hours and more free time that could be focused on creative pursuits that could actually result in even more economic growth. There's certainly ways that the government can kind of step in and actually support the reskilling of workers who've lost their jobs. Right? You know, they can form public-private partnerships, support people going back to school or investing in more specialized skill sets within industries, help them move across industries from areas that have been hit hard by the pandemic to sort of more emerging areas. So that's one set of policies. The other set of policies is to actually provide incentives for firms to actually do a lot of this work themselves.
Well, in general, automation is important because it brings higher productivity to workers and it allows us to do more at lower cost. And so in general, on average, it's going to be a great boon to us. The challenge, I think, is during the transition, both for individual workers and the communities in which they live, you could see some disruption from this, particularly I think, among lower income or less well trained workers who have fewer skills to transition in an automated environment.
One proposal to help offset job loss from automation is the concept of universal basic income or UBI. The Freedom Dividend makes the case to our fellow Americans that we all have intrinsic value as people, as citizens, as human beings. Some UBI plans include a roughly $1,000 monthly payment to every adult in the country with no strings attached. Detractors have argued that UBI would cause a drop in economic activity because it would disincentivize work.
Other arguments contend that it is not feasible financially for the U.S. government to dole out large sums of money to such an extreme number of citizens. We've done sort of a temporary UBI in the course of this pandemic. We sent out the $1200 check or, as we talk now, Congress is debating whether to send out another one. I don't think that's permanently sustainable from a fiscal point of view.
Finland recently ran a UBI study and concluded that it did not create a disincentive for citizens to work. The study compared 2000 people on UBI versus 173,000 on unemployment benefits over a two year period. People who were on UBI reported feeling better mentally about their well-being compared to those on unemployment benefits. Researchers also noticed that those on UBI saw a higher increase in employment, but remained unsure on the causes behind that trend. I think handing out money to everyone, regardless of their circumstances, is simply going to cost too much, especially in the light of all the additional debt that we've taken on. We might get a better bang for our buck than just giving out checks every month to people who haven't lost their jobs because there's also externality effects associated with that, right? Most people, I think, want to work.
They want to build human capital, and that's building our productive base going into the future. So as a short term static issue like during the pandemic, yeah, I'm fine with that. Having a short run, sort of universal basic income because people can't work because of the pandemic makes sense. I'm not sure yet. I mean, I don't think the evidence is quite in that this is a very viable long term strategy relative to some of the other ways that we could invest that money. I think it's too late to reverse job losses from automation. In the same way that it's too late to
reverse the job losses that happened from, say, import competition from low wage firms from China. But we can be forward looking and have a better strategy for dealing with the continuation of this. Older workers appear generally less able to pivot into new careers that require learning new skills.
The challenge that we see is in the 23 year old learning new technology, it's a 43 or 53 year old. Part of the problem could be the way our educational system is designed. I think a bigger challenge, one that's going to be more long term, though, is to address educational issues early on. So the ability to transition tasks for adult workers is really a matter of middle school math and language arts. And so if you focus on those sorts of skills to make sure that children don't go into their high school years unprepared, I think you're really creating a class of workers that are better able to adjust to new technology. Up to 14% of the global workforce may be forced to change careers by 2030 because of automation.
I'm an advocate of lifetime training accounts so that people could borrow and then pay back based on their income in order to get training certificates or certificates to qualify them for new jobs and so forth. And 66% of respondents to a McKinsey survey of executives said that addressing skills gaps among workers was a top ten priority due to technological change. Right now, our tax code sort of supports the investments in capital, right, and not labor. And so if we could, you know, put some policies on the books that actually provide firms the incentive to actually invest in labor rather than capital, that might actually help as well. The future of the American worker is far from written. As automation grows,
political solutions could be used to stem the economic pain of a workforce facing an uncertain future. I think the focus was wrong. I mean, the focus of the fear of automation should really be a focus on the educational deficits of a portion of our workforce. So we shouldn't be afraid of automation. It's going to come whether or not we like it, we should embrace it. The real public policy challenge
is not to stop automation. It's not to be worried about it. It's to be worried about making sure that all of the citizens of the country, all of our workforce, every family, has the skills to maneuver effectively in a world that's more automated or sees more productivity growth, which affects labor demand. Both Trump and Obama administrations relied heavily on just having a growing economy absorbing new workers, and eventually, the tighter the labor market became, wages started to go up because employers were bidding for them. And I don't think that there were a lot of super special efforts to accelerate the transition. I think both administrations relied heavily on just a growing economy in general. I don't think that's enough, especially
in the post-pandemic world. We're going to need much more affirmative, more active government assistance to get people in the new jobs. There is a notion that has developed over the last several decades that technology is the inevitable path.
That we're just following that path and anything else we try is futile. And I think that's deeply mistaken and misleading. Technology is what we make it to be. We have a technological problem platform and a knowledge accumulation, and we can use these for creating different types of technologies. Automation is just one of them.
Automating everything and making machines produce everything and sidelining humans is just one very peculiar path. We don't have to follow that path. That doesn't mean turning our back on AI, it doesn't mean turning our back on digital technologies, but it means that looking forward, we have to take ownership of the path of technology. The pandemic changed how we work. And while some companies are reverting to a pre-pandemic workweek, 81% of executives say they are adopting a more flexible workplace.
But getting employees to return to the office hasn't been easy. You can't insist anymore that employees come in for a five day week. Clive Wilkinson is one of the architects being called on by the tech sector and others to help build workplaces that accommodate the changes of a post-pandemic world. They'll come in because they want to, not because they're told to or that they have to.
They'll come in because they want the benefits that the workplace will give them. People are going in to the office for different reasons than they were pre-pandemic. There's always going to be a need for the office. It just might not be for everyone all day long the way it was pre-pandemic. Wilkinson is no stranger to thinking outside the box. He's designed and built offices for some of
the biggest names in tech. We were lucky enough to win the job to do the Google headquarters back in 2004. The Googleplex.
Sergey Brin once walked into the meeting and said, I would like a forest in the middle of the building. And just as Google and Silicon Valley influence common trends in the modern workplace, it is once again reinventing the office for hybrid work. We're in a different model where employees are going to be much more purpose driven.
And so we're unwinding that idea of a worker being attached to a very specific spot of real estate within the company. Pre-covid, there was a lot of emphasis on individual space. We're really pivoting that to make sure that we're building in more collaboration spaces.
With these changes, employees are having a bigger say in what their offices look like. We surveyed a lot of our employees about what they're looking for in the next collab office. It's really important that we understood what our employees wanted most in the next office and we built that into the design. The employers of the world are really having to listen to what makes a great workplace. It has to fill the gaps that work from home can't fill.
Remote work introduced more flexibility to people's lives. Working from home saved an average of 40 minutes daily from commuting, and 77% of workers say they were more productive. But the need for in-person business has remained unchanged. There was a lot of benefit and a lot of goodness that came from working from home. But there was a lot of things that were missing, too, right? People missed their colleagues. We don't have that spark of innovation from meeting someone face to face.
The tax and accounting software giant Intuit is one of Clive Wilkinson's clients, and it is going all in on the hybrid model. Employees come in between 2 to 3 days in person, but that amount is up to each team. On days where you might be doing a lot of individual work or heads down work.
Working from home may be the right answer, but when teams need to come together to collaborate, build that relationship, to innovate and move faster, we think those are what really will draw people back to the campuses. Wilkinson has designed two buildings for Intuit. One was completed in 2016 and the other is expected to be finished next year.
We did the first building with them. A lot of kind of great collaboration space, town hall space, really kind of a well-evolved working environment. We were about to repeat that more or less in a new building when the pandemic hit.
With the second project under construction during the pandemic, Wilkinson and his firm redesigned the interior to reflect into its new hybrid model. The initial plans for into it were very workstation centric. Coming through the pandemic, there was an acknowledgment that people are going to be working differently, and so the architecture needs to change functionally to better suit the wide variety of new reasons why people are actually going into the office. We needed to kind of selectively reconfigure that space and create environments like there's a library, there's more collaborative hubs. What we wanted to review with you today was the progress on the Intuit blended neighborhoods. So if you recall previously we had all workstations throughout the entire open office space. And what we have moved forward towards is
indicating certain locations for open collab. We're in a time period where buildings have to be super flexible. They have to be able to expand and contract. We redesigned this building. This was actually an open office environment, so it looked just like this, but it was really siloed and so we thought that this really lended itself to a quiet library program.
But Intuit is asking that we really future-proof this space and consider what this could be day two if they need to max out the building, remove that library, and then bring back those workstations. I like how these different pieces can act as testing grounds, little beta testing pieces, and then they can see how that works over a period of time and adjust the rest of the building. Intuit's new office layouts revolve around regions it calls the neighborhoods. The neighborhood concept is one where you take an entire floor plate, which can serve hundreds of people, but then it's broken down into smaller compartments.
Putting teams together, but with a variety of space types, some seated, some conference rooms, some bookable, some non-bookable, but all in service to the way the groups are going to need to work, especially in a hybrid world where not everybody may be there. Just come in and check in to the desk. It's surrounded by other support spaces.
So there's some two-team rooms down at the end as well as different drop-in rooms along the side. And those are really for focus work. So this is an example of what we're calling our library. The concept was really to ensure that our employees had choices, particularly the engineers who needed some additional spaces to do the heads down and focus work. This is an area that we've actually already set up, and one of the things we know that we needed to incorporate is lockers.
Video conferencing tech is everywhere, helping bring remote and in-person workers together. I am talking to you today from our Mountain View campus. Mountain View is our headquarters and we have upwards of 1000 video conferencing spaces on campus. You can Zoom, it has a couple of
presets. The upgraded rooms that we're working on have what we call auto framing. And we heard really loud from our employees that their concern is they want to be seen and be able to be seen in the room, whether they're joining v irtually or in the room. This is an example of one of the experiments that we're doing in collaboration spaces to really look at when people are coming back and they're not constantly looking at their laptop. The visuals and the content that might be shared in a Zoom call is close enough so that you can see it. Another one of Wilkinson's clients is Collab, which is a social media creator tech company.
Even though about half of our team is in LA and we're expecting them to come in to the new space 1 to 3 times a week. But the majority of the team is going to continue to work remotely. So it's really important that the new space that we design really works well for both in-office team members and remote team members. It has also taken learnings from hybrid work to influence the design of its new headquarters in Los Angeles.
Having employees come back to the office, we're competing with the comforts of home, so we have to make the space really inviting and comfortable and fun to visit. And thinking about an office for them, it really was all about visitors and the opportunities of having multiple settings for photo ops and shooting video and things like that. We have a whole number of different collaboration settings and it's mostly around collaboration and a little bit proportionally about actual focused work by their staff or their visitors. These days, of course, Zoom and video conferencing is a huge thing, so you'll see multiple dotted around the place, a little smaller Zoom rooms, but also more collaborative, larger ones so that bigger groups can actually connect digitally. Most of the furniture is reconfigurable and all you've really got are these kind of sets and they do feel a little theatrical and they are intended as being a little theatrical. And I do think also over time they're going to be able to change and evolve those sets.
There is no workstations necessarily. It's really open collab space. There's some enclosed meeting rooms and the idea is that it is truly just a co-working space where creators can come in, but also employees and they can work together. It was about creating a space that the creators and the employees wanted to come to every day. To see the workplace having to transform. If you really just think of the big picture, it's super exciting.
Like, we don't know what it's going to be like in five years time. I personally find that incredibly exciting. This is really a very simple equation: make spaces that people want to be in and work in and collaborate in.
We're starting to gain a deeper understanding of what people are looking for in their workplaces and what are the things that are missing about working from home that the office can fill in the gaps for? And companies aren't just rethinking how to organize their physical offices. We are definitely in discussion with clien
2023-04-16