Autonomous and Connected Vehicles Likely to Impact Jobs, the Economy

CSG convened the Autonomous and Connected Vehicle Policy Academy June 12-14, 2017 in Detroit. A group of state policymakers from around the country attended the event. The academy included a June 13 panel looking at how autonomous and connected vehicles could reshape a variety of industries and the overall economy and the job impacts and other challenges that could lie ahead. Panelists included Maya Rockeymoore of Global Policy Solutions and Lewis Clements of the University of Texas. This summary also includes comments by Steve Boyd of Peloton Technology from an earlier session on June 12.

The Impact on Driving Jobs and the Future of Work

Many believe a future that includes autonomous and connected vehicles will have a profound impact on jobs in the trucking industry and other sectors that today rely on professional drivers. The Center for Global Policy Solutions issued a report this spring called “Stick Shift: Autonomous Vehicles, Driving Jobs and the Future of Work” that puts a number to that impact. The report models a scenario where the United States rapidly transitions to level 5 full automation, where vehicles can drive themselves under all roadway and environmental conditions.

“What we found is if there is a relatively rapid transition to level 5 technology, we would be looking at a situation where approximately 4.1 million professional driving jobs could be lost,” said Maya Rockeymoore, Ph.D., president and CEO at Global Policy Solutions.

The center’s report details who those job losses would impact. Ninety-three percent of professional drivers in the United States have less than a college degree, Rockeymoore noted. For the education level of these individuals, driving jobs are decently paying jobs. While most of the jobs would be lost by white men, African-Americans and Latinos are overrepresented in these jobs. Moreover, African-Americans, Hispanics and American Indians all earn more in professional driving jobs than they would in non-driving jobs. 

In addition, the report details where those job impacts would be felt the most.

“The most drivers live in the most populous states so you’ve got California, you’ve got New York, you’ve got Florida, you’ve got Texas and the most drivers live there,” Rockeymoore said. “But there are other states that have … an over-representation of their workforce regardless of background in driving jobs and those drivers actually earn a premium from those driving jobs, meaning that they earn more from working in driving jobs than they could in non-driving jobs.”

Those states include: Arkansas, Idaho, Indiana, Iowa, Mississippi, North Dakota, West Virginia and Wyoming, the report found.

Rockeymoore said that kind of potential economic impact means policymakers need to get ahead of the game now.

“We need policymakers to be leaders in terms of making sure that workers and their families aren’t left out in the cold without ways to actually support their families and themselves if they are displaced, if there are significant labor market disruptions due to autonomous vehicle technology,” she said.

Rockeymoore’s organization recommends a range of policy responses including automatic unemployment insurance in those states that would feel the most impact

“Policymakers at both the federal and the state levels really need to be looking at how to strengthen our social safety net in general and unemployment insurance specifically,” she said.

Worker retraining, education and apprenticeship programs could also be areas for improvement, Rockeymoore believes.

“If you add the impact of automation on top of the impact of globalization, we are looking at a double whammy for many of the places and the population groups that have already experienced a significant decline over the last 30-some-odd years and that is simply untenable,” she said.

In particular, Rockeymoore sees an expanded role for unions in deploying re-training opportunities. Policymakers also need to consider ways to make the cost of higher education more affordable, she said.

With many predicting massive job displacements not just from autonomous vehicles but automation in general, artificial intelligence, machine learning and other technologies in the decades to come, some in the tech sector and elsewhere have suggested a fundamental shift in the nature of work that could require a somewhat radical idea.

“They’re saying ‘why don’t we just give everyone a basic income’ so that the question of whether or not you are able to afford to live is taken off the table?” said Rockeymoore. “We call it progressive universal basic income and we build it off of our nation’s social insurance system, specifically the Social Security program.”

Social Security as we know it is currently three programs in one: the retirement program, disability and survivor benefits. Rockymoore suggests a fourth entitlement could be carved out of the program.

“What social insurance does is it protects workers against the risks of job loss due to old age, the risks of job loss due to disability and the risks of dying young and leaving dependents behind,” she said. “But we can think about job loss due to automation as another risk. And so a progressive universal basic income could be structured through the Social Security program. And it wouldn’t be everybody including Bill Gates getting the same amount. It would be progressively structured just like Social Security is to make sure that those with lower levels of wealth get a boost that makes sure that their basic income is adequate.”

While some of these policy options may be a heavy lift politically, Rockeymoore said policymakers need to have some response to the impending deployment of autonomous vehicles and their potential to impact the nation’s workforce.

“Whether or not we’re going to actually see a rapid deployment of level 5 technology … is going to depend on a lot of factors—politics, whether or not infrastructure is going to be ready for it, whether or not regulators are going to do their dance and all kinds of factors,” she said. “Nobody knows what the future of this deployment is going to actually look like. All of the variables are in play right now. At the same time, we do know that the nature of work is changing and that we need to get ahead of it.”

Impacts to Other Industries and Economy-Wide

Many are also predicting that autonomous vehicles will have an impact across a wide variety of other industries and across the economy as a whole. Lewis Clements, who was a research assistant at the University of Texas at Austin, did a research study of the macroeconomic effects of connected and self-driving vehicles last year. The study considered already-published literature including the work of consultancies in different industries and incorporated new analysis as well. Clements started with the most directly affected industries before moving into more tangentially affected markets. The study’s most-affected industries list included: automotive, electronics and software technology, freight transport, personal transport, auto repair, medical, insurance, law, construction/infrastructure, land development, digital media, police, oil & gas

“The automotive industry could be affected in different ways as far as vehicle sales go,” Clements told policy academy attendees. “We expect to see an increase in vehicle miles traveled. This increase would lead to more cars sold. This is a result of the increased accessibility of vehicles to the disabled, children and the elderly and also the decreasing cost and burden for each user so that traveling by vehicle will become a more attractive option. Alternatively if people choose to use shared autonomous vehicles … then you may see them not purchase their own vehicles and use (rideshare services) instead. Ultimately we think that the increase in vehicle miles traveled will dominate this relationship but it is still a little unclear.”

Auto repair shops and the medical industry are among the other industries that could see significant impacts.

“The volume of (auto) repairs may decrease but the cost per repair could increase as you are including increasingly complex technology and more valuable technology in vehicles,” Clements said. “You’ll see fewer crash victims. One interesting effect of this is that there may be fewer organ donors as a large percentage of organ donors are drawn from crash victims. Ultimately, this is a good thing because you’re directly saving the lives of those people who would otherwise be organ donors but that could present some challenges to the medical industry.”

Clements’ study considers how a shift in liability from individual drivers to automakers as a result of self-driving vehicles would impact the insurance industry. Lawyers who specialize in personal injury will see a decrease in their caseloads over time, which could result in $3.2 billion in losses, Clements said.

Perhaps some of the most intriguing changes autonomous vehicles appear likely to produce are in the area of land use development.

“If the (autonomous) vehicle is able to drop the user off at a location and go pick up a new occupant or return home, the demand for parking in dense urban centers decreases and this (freed-up) land could be repurposed for new commercial, residential areas or even public parks or green spaces so there’s a lot of value there that could be realized,” Clements said.

But Clements said it’s unclear whether autonomous vehicles will contribute more to suburban sprawl or less-car-centric urban environments.

“With the decreased burden of travel, you could see an increased movement even further out (from the urban core),” he said. “People will be more willing to travel longer distances because they can use that time to work on their own projects or as leisure. Alternatively, some people may be expected to move more centrally as they can forego owning a car and take advantage of shared autonomous vehicles … as their primary form of mobility.”

The rise of autonomous vehicles will also bring a significant reduction in the number of traffic violations, something that could hit some communities harder than others.

“There is around $15 billion in traffic fines brought in in the U.S. annually,” Clements said. “This is not a huge percentage of the budget for large cities—less than 1 percent in many cases—however, for small speed-trap towns, it can be as much as 90 percent of their revenue, so that could be a major challenge for those small towns.”

But the impact of autonomous vehicles will also be felt economy-wide in a number of significant ways, chief among them in the time savings the vehicles represent.

“The decrease in collisions and congestion will decrease travel times between two places,” Clements said. “Even bigger than that is the additional time that will be available in the vehicle. … This ultimately results in increased productivity and the value of this time is in the hundreds of billions (of dollars).”

The impact of autonomous vehicles on fuel consumption, which has an enormous impact for many industries and sectors of the economy not to mention the environment, is a bit tougher to call and could be dependent on several factors, Clements noted.

“(An) increase in (vehicle miles traveled) would increase the amount of fuel consumed,” he said. “However, there would be increased efficiency in the traffic system so this would ultimately result in a balancing out of these effects. The rise of electric vehicles would further decrease emissions. So there are definitely forces in each direction.”

Clements’ report also identifies a bottom line number on the overall economic impact of autonomous vehicles.

“I estimated that there will be around $1.2 trillion in annual value generated by (autonomous vehicles), which represents 7 percent of the U.S. GDP,” he said. “Part of that is the $488 billion per year within the value of decreased collisions. This includes the value of lives saved as well as the property damage that is not accrued. … And the $448 billion per year as a result of the increase in productivity and value of time gained.”

Trucking Industry Impacts

Some however are not convinced that the trucking industry will see significant job losses as a result of autonomous technologies that allow for the platooning of two or more trucks in convoys. A day earlier, policy academy attendees heard from Steve Boyd, co-founder and vice president of external affairs at Peloton Technology, a company working on platooning technology.

“There’s been a lot of hype about the idea that millions of jobs might be destroyed in the blink of an eye,” he said. “That’s complete hysteria and nonsense. In fact, what we think we’re going to see is improved interest by new workers coming into the economy—millennials who today are not very inclined to become truck drivers. We think there are new opportunities related to these more advanced technologies that can broaden to trucks and the rest of the freight system that will make it an exciting opportunity for growth both for the existing industry and for the creation of new parts of the freight industry.”

Boyd sees an improving role for the truck driver/freight operator as well as the addition of new jobs related to the maintenance and development of freight systems and operations. But he said a model of truck platooning that involves a human-driven lead vehicle and driverless following vehicles is still years away. Moreover, current workforce trends could limit impacts in the trucking sector.

“When we look at the sum picture of how the technologies are advancing … and then when you combine that with the existing driver shortage, which has risen now to about 100,000 driver slots a year and rising (and is) expected to be about 200,000 in the next couple of years, we think what we’re going to see is a reallocation of where the jobs are, not a destruction of jobs,” Boyd said. “So where you have a shortage right now, you could begin to address that.”

Asked to respond to Peloton’s vision of a future, more automated and more technologically advanced trucking industry, Rockeymoore said she remains concerned.

“A lot of people say that the destruction of jobs has historically meant that you don’t lose complete sectors (but) you see perhaps a transition to other types of jobs and even new jobs that come online,” she said. “But it sounds like what (Peloton is) arguing is that new jobs will be created that will require more skills. I just showed you a slide that showed that 93 percent of professional drivers have less than a college degree and I argued for education and worker retraining. … What is the vehicle for the upscaling to those new jobs? … I think optimistic visions are great but we have to make sure that we have the infrastructure to make sure that people get there.”

Rockeymoore said of particular concern is that current drivers on the cusp of retirement may not be able to transition easily into new jobs in the industry.

For his part though, Boyd said the learning curve may not be as steep for older or less educated workers as some fear.

“There’s an opportunity for these seasoned drivers … (to be) leading these chains in some cases,” he said. “The systems will be designed to not be user unfriendly. They’ll be designed to be robust and simple for operation. Even a driver who is nearing retirement perhaps could be one that could be using a system that has higher automation to it.”

Regardless of any potential impacts, Boyd said it’s important to keep an eye on the prize.

“We can’t let fear of destruction of jobs—when instead it’s going to be transformation—prevent us from improving safety,” he said. “We can’t forget that we lost 35,000 people on the highways as of the last study (in 2015) and about 4,000 of that was related to heavy trucks.”

Rockeymoore said it is the ramifications of another existential question that concern her.

“We need to also come to grips with what do we want the role of human beings to be in the future where autonomous technology is likely to have a larger grasp on our nation’s modes of productivity and means of productivity,” he said. “Are we okay with a future where (artificial intelligence) and technology takes over and human beings have a subservient role in the future of the labor market? … What we are seeing now I think may be unprecedented in scale in human history. … When you combine the challenge of advanced technology with the weaknesses of our social safety net and other infrastructures, I think we’re in a perfect storm and that perfect storm could actually leave many workers short and that would simply be devastating.”