Will More Workers Have Nontraditional Jobs as Globalization and Automation Spread?

WP#2019-10

Abstract

Recent research has called attention to alternative employment arrangements that often leave workers without retirement and health benefits and with income instability.  At the same time, workers are facing increasing competition from automation and globalization.  This competition is of special concern for older workers, who increasingly need longer careers to secure an adequate retirement and jobs with benefits to enable saving and access to affordable health care.  The question is: are these “nontraditional” jobs more prevalent in areas more exposed to such competitive pressures and are older workers more likely to hold them?  The study uses the 1996-2008 panels of the Survey of Income and Program Participation to track the share of workers in nontraditional work arrangements – defined based on characteristics of the job including retirement plan coverage, health insurance coverage, and hour or wage instability.  It then estimates whether workers are more likely to be in nontraditional arrangements, or transition from traditional to nontraditional work, in areas with greater exposure to trade and automation.  The findings suggest that globalization does not have a major effect, but automation does; a 1-standard deviation increase in the use of industrial robots is associated with an 11-percent increase in nontraditional employment.  This relationship is even stronger for older workers: a 1-standard-deviation increase in automation is associated with a 17-percent increase in nontraditional work at ages 50-62.  As automation continues to increase, jobs that offer retirement savings, health insurance, and stable income may continue to decline, and the impact is likely to be particularly felt by older workers who may need these benefits the most.