Q&A with Nicole Smith: “Technology tends to create more work than it destroys”

CEW Chief Economist Dr. Nicole Smith discusses her path to becoming an economist, the economy during the pandemic, the infrastructure bill, and how she expects technology to shape work.

When did you decide to become an economist, and why?

I recall when I fell in love with economics as a discipline. I think I was about 14 years old. I was in a high school in Trinidad and Tobago that tracks students, so you had to make a decision for your career early on. Most of the classes that I was doing were in biology, physics, chemistry, and mathematics. One day, I wandered by mistake into one of the economics classes, and I enjoyed the class tremendously. It was the first class of its kind that I had done. I remember sitting in the classes and being really intrigued by behavioral economics, the way people made decisions, and rational choice theory. I decided to become an economist when I pursued my double major in economics and mathematics at the University of the West Indies in the 1990s.

How did you become interested in CEW’s research?

I was a microeconomist at American University, finishing my PhD on intergenerational mobility and education. My research then supported the finding that the United States is one of the least economically mobile countries in the Western Hemisphere. Your economic prospects are so closely related to your parents’ outcomes that there’s very little opportunity for upward mobility. In other words, if you don’t happen to be born into a family that’s highly educated or wealthy, the likelihood that you make it outside of your predetermined socioeconomic grouping is really low. We’re still maintaining dynasties in this country.

Jeff Strohl (CEW’s director of research) went to AU, and he reached out to the PhD advisor there to see which students were interested in working at CEW and whose work might coincide with what CEW was doing. I met with Jeff, and we had a cool conversation about econometrics. But what I did not realize at the time is that that was one of my primary interviews, and I would later meet with Tony Carnevale (CEW’s director) at a coffee shop in DC. (We were meeting at coffee shops because CEW did not have a physical location at the time.) We found that we had a lot of common interests, including intergenerational mobility. Because of my competencies in data work, I ended up doing projections of jobs and educational requirements as my first project with CEW.

Compared to other recessions, what stood out to you in the data from the 2020 recession?

One thing that stood out about this recession to me is just how many jobs we lost in the recession: 21 million as of April 2020. Phenomenal. You can’t really draw a graph to show the job losses because it was such a huge drop compared to previous months or years. Second, it’s taking us such a long time to recover those lost jobs. Sadly, many jobs were permanently lost, especially for small businesses that were unable to weather the COVID-19 storm. They couldn’t just close and wait until the recession ended to restart their business.

What do you think lies ahead for the economy as the pandemic persists?

With COVID variants and vaccine hesitancy, I’m agnostic about what’s going to happen in the near future. But long term, all of our macro projections are very, very optimistic. They talk about the rebirth of the economy, the growth of jobs and opportunities, and renewed demand for skill.

We’re seeing a very competitive labor market, which means that employers have to figure out how to encourage more people to get back into the labor force. For the first time in decades, people with less education are seeing the type of wage increases that they deserve, which could reduce the education wage premium. Some employers are also offering sign-on bonuses and childcare benefits to attract workers to their companies.

But the coming evolution of the labor force is also interesting to me. At one end of the age distribution, we’ve lost a significant part of our workforce due to possible permanent retirements. A lot of our baby boomers finally made the decision to retire during COVID. At the same time, we’re not seeing significant acceleration in college graduation rates that we would need to pick up the slack. In fact, the unprecedented negative impact that the pandemic had on student enrollments and persistence rates will likely exacerbate the situation. So I’m excited to see what’s going to happen with free college and any changes in Pell Grants that might create more opportunities for work-based learning. If we can accelerate the acquisition of credentials, more people can enter the workforce demonstrating their competencies.

What would you say are the strengths and weaknesses of the Biden administration’s infrastructure plan and the bipartisan infrastructure bill moving through Congress?

What I really liked about the original version of the bill is the administration’s decision to expand the definition of infrastructure to include some aspects of human infrastructure above and beyond roads, bridges, air, broadband, and what’s traditionally considered infrastructure. The human aspect is money for eldercare and childcare, wage gains for home healthcare workers, and training to make sure that people are prepared for infrastructure jobs.

Women really felt the brunt of the COVID-19 recession. For some time, they were calling it the “she-session” because of the number of women who lost jobs in the short run and the number of women who left the labor force voluntarily as well. Because of the way our society is structured, women are the ones who bear the brunt of the responsibility to care for our elderly and for our children. So a provision for childcare and eldercare would directly impact opportunities for women by freeing up many women to return to the labor force. To me, that’s a pretty forward-looking way of lending assistance to the vulnerable and of recognizing some of the challenges to improving the labor-force participation rate.

Provisions for training and work-based learning are also pretty forward-looking. There was a famous quote from Obama saying that some of his “shovel-ready” projects were not shovel-ready back when infrastructure was added to the 2009 stimulus package. He was talking about the fact that they just were not able to ramp up the number of workers they needed to fill infrastructure jobs. This administration seemed to be trying to avoid falling into the same trap.

For the most part, however, these more human provisions didn’t make it into the bipartisan bill that was recently passed by the Senate. Democrats are planning to use the budget reconciliation process to move forward with the Biden administration’s spending plan that includes additional provisions like workforce training and child care. So we have to wait and see what actually happens when the signatures are dry.

You are known for your work on job projections. What trends do you see leading up to 2030?

Technology will continue to be a significant complement to work. A lot of the discussion on the role of technology out there has often focused on the fact that technology substitutes for labor. While it’s true that technology has substituted for some labor, especially at the lower end of the education distribution, technology tends to complement the work people perform at higher levels of educational attainment. Technology also tends to create new tasks and roles, leading to net new increases in jobs. There’s going to be some destruction and some creation of jobs, but at the end of the day, we will come out with an economy that has more jobs. Technology tends to create more work than it destroys.

Those jobs will incorporate some of the trends we’ve seen in the past. Some of those jobs will use technology more intensely. Some of those jobs will require individuals to demonstrate their competencies. One way to do that is to present various credentials, such as degrees, test-based certifications, licenses, and certificates to the potential employer to show they have been “certified” to do what they claim they can do. We should be concerned about making sure that we continue to graduate enough people who are able to fill those positions.

Dr. Smith is chief economist and research professor at the Georgetown University Center on Education and the Workforce. CEW is an independent, nonprofit research and policy institute affiliated with the Georgetown McCourt School of Public Policy that studies the links among education, career qualifications, and workforce demands.

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