Offshoring risk high in four regional counties

July 26th, 2017

By Doug LeDuc | Greater Fort Wayne Business Weekly

Some American occupations face much greater downsizing risk than others from offshoring or automation, and LaGrange County has one of the highest concentrations in the country of occupations subject to both types of threats.

Studies were conducted to identify the most at-risk occupations, and the Center for Business and Economic Research and the Rural Policy Institute’s Center for State Policy at Ball State University released findings last month comparing concentrations of those occupations within the nation’s more than 3,000 counties.

LaGrange was the only northeast Indiana county on a list of the top 25 facing the highest automation risk. But, it had some counties from the region - Kosciusko, Elkhart and DeKalb counties - on a list of the top 25 counties with the highest offshorability risk.

Based on the types of occupations identified in Alan Blinder’s study, “How Many U.S. Jobs Might Be Offshorable?” published in 2009 in World Economics, at least one third of the 11 member counties in the Northeast Indiana Regional Partnership have serious economic development work ahead of them to avoid a crisis.

“What it really comes down to with automation and offshoring is the mix of occupations the region has,” said CBER director Michael Hicks.

“Very dense urban areas are fairly safe from these job losses. Fort Wayne itself is not really at risk, but counties surrounding it have two-thirds of their jobs that could disappear within a generation.”

It is significant that LaGrange and Kosciusko counties share a border with Elkhart County and the northwest tip of DeKalb County meets the southeast tip of LaGrange County.

Because they are high-risk counties in close proximity to each other, if they face business trend headwinds at the same time, finding a replacement job for one lost within them might not be a simple matter of accepting what seems like a reasonable commute.

“In the places where there’s a high risk of offshoring or automation, if there was one county and the surrounding counties were low risk, it wouldn’t be much of a worry,” Hicks said.

There was not a lot of wage variation related to the offshoring risk, he said. The Ball State study found close to one in four American jobs will be subject to risk from foreign competition in the coming years.

“In automation it’s the other way around,” Hicks said.

About 10 percent of occupations with the smallest risk of automation make about $80,000 a year. Occupations with the highest risk of automation loss make $36,000, he said.

“The higher the income, the less risk that they’re going to be automated,” he said of highly paying jobs. On the other hand, the higher-risk, low-income households more likely to lose jobs through automation “are going to have less resources to respond to that turbulence,” Hicks said.

“We don’t want to be alarmist; we think technology is good in the long run. But, the transition period could be especially disruptive to some regions and to people with lower levels of education, typically,” he said.

“Schools need to equip students with the ability to relearn or adapt to technological changes that are going to happen at a continually fast pace.”

Occupations were identified for automation risk in “The Future of Employment: How Susceptible Are Jobs to Computerization?,” a study Carl Frey and Michael Osborne had published this year in Technological Forecasting and Social Change.

Research by David Autor at Massachusetts Institute of Technology found that jobs have high automation risk if they involve a lot of tasks that can be automated, but automation is likely to complement occupations where only some of their tasks can be automated.

For communities considering strategies to reduce automation and offshoring risk, “the best thing is to make yourself a place that’s so good to live in that households will want to live there,” Hicks said.

That is exactly what counties throughout northeast Indiana are doing with their many Regional Cities Initiative projects.