Automation Could Lead To Further Concentrations of Growth

Automation Could Lead To Further Concentrations of Growth

Urban and rural economies across the U.S. have been on diverging trajectories for years, and unless well-targeted interventions are undertaken, automation could further concentrate growth and opportunity, while causing job displacement in rural areas and smaller cities, a recent report published by the McKinsey Global Institute warned.

“The future of work in America: People and places, today and tomorrow,” was published in July 2019. The analysis of 315 cities and more than 3,000 counties showed that the United States can be viewed as a mosaic of local economies, with widening gaps between them.

The report found that 25 megacities and high-growth hubs, which account for around 30% of the U.S. population, have generated most of the job growth in the country since the Great Recession, with the high-growth industries of high tech, media, health care, real estate, and finance making up large shares of these local economies. The study also identified 54 trailing cities and around 2,000 rural counties, which collectively account for roughly 24% of the U.S. population, that have older and shrinking workforces, higher unemployment, and lower educational attainment. Between these extremes the analysis identified thriving niche cities and a larger “mixed middle” with modest economic growth, which together account for around 30% of the U.S. population. The remaining 16% of the population were categorized as residents of extended suburbs of U.S. cities, or the urban periphery.

According to researchers, these different starting points are likely to determine whether communities will have the momentum to cope with automation-related displacement. They projected that the 25 cities and peripheries that led the post-recession recovery will capture 60% of U.S. job growth through 2030, while the mixed middle and trailing cities will see modest job gains. By contrast, the analysis showed, rural counties are likely to experience a decade of flat or even negative net job growth. Researchers added that these shifts are occurring at a time when geographic mobility is at historic lows: while 6.1% of Americans moved between counties or states in 1990, this figure had declined to 3.6% by 2017.

The report also found that although the next wave of automation will affect occupations across the country, displacing many office support, food service, transportation and logistics, and customer service roles, the U.S. economy will continue to create jobs, particularly positions in health care, STEM fields, and business services, as well as roles requiring personal interaction.

Researchers observed that the challenges employers will encounter as a result of these trends will vary depending on the nature, mix, and geographic location of their workforce. For example, researchers noted, the challenges facing a retail or food chain with a distributed customer-facing workforce are not the same as those facing an employer with a geographically concentrated white-collar workforce.

“All employers will need to make adept decisions about strategy, investment, technology, workflow redesign, talent needs and training, and the potential impact on the communities in which they operate,” the report concluded.

Optimism About the Economy Shows Signs of Declining

Optimism About the Economy Shows Signs of Declining

The level of optimism about the outlook for the U.S. economy declined among business executives in the fourth quarter of 2018, but most of these leaders continue to hold a strongly positive view of their own company’s prospects, the results of a quarterly survey of executives and senior financial managers at U.S. companies conducted by the American Institute of CPAs (AICPA) indicated.

The survey, which was conducted November 7-28, 2018, included 938 responses from certified public accountants who hold a leadership position in their company, such as CEO, CFO, or controller. While 57% of survey respondents expressed optimism about the U.S. economy over the next 12 months, researchers noted that this share was down 12 percentage points from last quarter, and represents a steep decline from the post-recession high of 79% set at the start of 2018.

When the respondents who said they have a negative view of the U.S. economy were asked about their reasons for pessimism, they cited concerns about trade issues, rising interest rates, the U.S. deficit, and underlying issues such as corporate and personal debt levels. Meanwhile, the respondents who expressed optimism tended to cite the continued strength of a broad range of economic indicators.

However, when asked about the outlook for their own company, the share of respondents who reported having an optimistic outlook held relatively steady at 69%, down just a single percentage point from the third quarter. Similarly, the percentage of survey respondents who said they expect their company to expand in the next 12 months fell only slightly, from 70% to 67%. Researchers pointed out that from a historical perspective, this rate remains high.

The results of the fourth quarter survey also indicated that the availability of skilled personnel is the top challenge respondents face, followed by employee and benefit costs. Almost half of respondents (48%) said they plan salary, wage, or commission increases in the next 12 months to improve their company’s chances of recruiting and retaining employees in the tight labor market, while 18% said they intend to improve their company’s benefits. A majority (62%) of respondents who said they plan to increase compensation indicated that they expect the increases to be in the 3% to 5% range.

In addition, the survey showed that hiring plans continue to be strong, although many of the executives reported facing a scarcity of candidates with the right skills and experience. Around half of respondents said their company currently has the right number of employees. Of the 42% of respondents who indicated that their company has too few employees, 14% reported they are reluctant to hire, while 28% said they intend to start hiring immediately.

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2019 Liberty Publishing, Inc. All rights reserved.

Global CEOs Optimistic About Prospects for Growth In 2018

Global CEOs Optimistic About Prospects for Growth In 2018

A majority of global CEOs are optimistic about the economic environment over the coming year, and plan to hire more workers in 2018, the results of an annual survey of business leaders conducted by consulting firm PwC suggest.

The survey findings, which were released at the World Economic Forum Annual Meeting in Davos on January 22, 2018, are based on 1,293 interviews with CEOs in 85 countries conducted between August and November 2017. The results showed that 57% of respondents believe global economic growth will improve in the next 12 months, up sharply from 29% of the executives who participated in the previous year’s survey.

Broken down by country, the 2018 survey found that optimism about global growth has more than doubled among business leaders in the U.S. between 2017 and 2018, from 24% to 59%; and that even among some of the less optimistic countries, confidence in global growth has more than doubled since last year. For example, 38% of respondents in Japan said they are optimistic about the outlook for global growth over the coming year, up from 11% in 2017.

The business leaders surveyed expressed more modest levels of confidence in their own company’s prospects for the coming year: 42% of all respondents said they are very confident in their own organization’s growth prospects over the next 12 months, compared to 38% in 2017. But business confidence appears to be especially high in the U.S., where the share of respondents who said they are very confident in their company’s 12-month outlook jumped from 39% in 2017 to 52% in 2018. Broken down by industry, the sectors with the highest shares of respondents indicating they are very confident in their organization’s prospects in 2018 are technology (48%), business services (46%), and pharmaceutical and life sciences (46%).

When asked about their strategies for growth, the CEOs surveyed were most likely to cite organic growth (79%), followed by cost reduction (62%), strategic alliances (49%), mergers and acquisitions (42%), and partnering with entrepreneurs and start-ups (33%).

Researchers observed that confidence in short-term revenue growth appears to be feeding into jobs growth: 54% of the CEOs surveyed said they plan to increase their headcount in 2018, while just 18% said they expect to reduce their employee numbers. By sector, the respondents most likely to indicate they intend to recruit more workers in 2018 are in health care (71%), technology (70%), business services (67%), communications (60%), and hospitality and leisure (59%).

Despite their overall optimism about the global economy, the CEOs surveyed reported feeling anxious about a range of business, social, and economic threats. Significant shares of respondents said they are extremely concerned about over-regulation (42%), terrorism (41%), geopolitical uncertainty (40%), cyber threats (40%), the availability of key skills (38%), the speed of technological change (38%), an increasing tax burden (36%), populism (35%), and climate and environmental change (31%).

The results further showed that two-thirds of the business leaders surveyed believe their company is responsible for helping employees retrain when their roles are replaced by digital technology or automation. CEOs in the engineering and construction (73%), technology (71%), and communications (77%) sectors were especially likely to report that they are helping employees retrain. The survey also found that respondents in the financial services sector were more likely than those in other sectors to say that they anticipate workforce reductions as a result of technology and automation.

From Benefit Trends Newsletter, Volume 61, Issue 3

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Employment Outlook Shows Signs of Improving

Employment Outlook Shows Signs of Improving

U.S. employers are reporting a slight seasonally adjusted increase in their hiring plans between October and December 2016, according to the results of a quarterly survey conducted by staffing agency Manpower released on September 13.

The latest survey, which regularly asks more than 11,000 U.S. employers about their hiring intentions, showed that 22% of respondents anticipate increasing staff levels in the fourth quarter (Q4) of 2016, down 1% from Q3 2016 and up 1% from Q4 2015. Meanwhile, 6% of respondents said they expect to reduce their workforce, 69% said they anticipate no changes in hiring levels, and 3% said they are undecided about their hiring intentions in Q4 2016.

After taking seasonal variations into account, researchers concluded that the nationwide net employment outlook for the fourth quarter of 2016 is +18%—a figure that is three percentage points higher than the corresponding level in the previous quarter, and that matches the strongest post-recession outlook level reported in Q4 2015. The net employment outlook is derived by taking the percentage of employers anticipating an increase in hiring activity and subtracting from this the percentage of employers expecting a decrease in hiring activity.

The findings also indicated that employers in all of the 13 industry sectors covered in the survey expect payrolls to increase during Q4 2016, with employers in leisure & hospitality (+30%), wholesale & retail trade (+22%), transportation & utilities (+20%), and professional & business services (+17%) reporting the strongest hiring intentions. Relatively stable hiring plans were reported by employers in the following sectors: construction (+14%), information (+14%), nondurable goods manufacturing (+15%), education & health (+13%), and other services (+10%).

Broken down by region, the survey found that net employment outlooks in all four of the U.S. regions surveyed are either improving or holding steady. The results indicated that hiring prospects in Q4 2016 are up slightly from the preceding quarter in the Northeast, the South, and the West, and are relatively stable in the Midwest. Compared to Q4 2015, hiring plans in Q4 2016 were reported to be slightly stronger in the West, and to be relatively stable in the Midwest, the Northeast, and the South.

Researchers also cited the results of a global survey of nearly 59,000 employers in 43 countries. The survey showed that staffing levels are expected to grow by varying degrees in 42 of the 43 countries covered in Q4 2016, with only employers in Brazil saying they expect payrolls to decline in the October-December time frame. Generally, researchers observed that uncertainty associated with the slowdown of the global economy, the Brexit referendum, and continued financial market volatility appears to have had little impact on employer hiring confidence.

From Benefit Trends Newsletter, Volume 59, Issue 10

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Tech Executives Express Optimism about Revenue and Employment Growth

Tech Executives Express Optimism about Revenue and Employment Growth

While technology executives report that they are ramping up deployment of automation and machine learning across several functions of their company, they also claim they are planning to hire more people over the next several years, according to the results of a survey of U.S. technology CEOs by accountancy firm KPMG.

Released on July 11, the findings of a survey of 138 U.S. technology industry chief executives from internet, hardware, software, cloud, and IT services companies showed that around three-quarters of the respondents believe that automation and machine learning are likely to replace at least 5% of their manufacturing, technology, sales, and marketing workforce over the next three years. At the same time, more than half (55%) of respondents said they expect their company’s headcount to grow at least 6%.

Almost 60% of the CEOs surveyed said they expect annual revenue growth for their organization over the next three years of between 2% and 5%, while 17% said they anticipate growth of between 5% and 10%. The findings also indicated that 97% of the CEOs surveyed are confident about U.S. revenue growth prospects over the next three years, and that nearly 90% are confident about global growth as well.

When asked about their strategic priorities in the coming 36 months, the top response of the CEOs surveyed was digitization of their business, followed by a stronger client focus, implementing disruptive technology, minimizing cyber security risk, and talent development.

The survey also found that almost half of the respondents describe their approach to innovation as accelerated. When asked how they plan to accelerate the execution of their strategies, 80% of the CEOs surveyed said they are using disruptive technologies to improve products and services, 60% said they are hiring new talent, and 49% said they are forming new partnerships and alliances. The findings further indicated that around 80% of the executives polled see growth through partnerships or collaboration with other companies as the way to drive shareholder value for the next three years.

In addition, the results revealed that the leading concerns of the tech CEOs surveyed are product relevancy three years from now, the impact of global economic forces on their business, and how millennials and their differing wants/needs will change their business. When asked about risk, the CEOs polled said they are most concerned about cyber security, regulatory risk, and reputational risk. However, 90% of the respondents agreed that the need for security is generating innovation in products and services.

From Benefit Trends Newsletter, Volume 59, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.