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Solving the COVID Unemployment Tsunami: A Four-Point Plan to Upskill Our Country

The $3 trillion US bailout package was the perfect short-term fix and a wholly inadequate long-term fix. It provided liquidity to struggling businesses. It provided unemployment benefits to the staggering number of workers who are hitting the unemployment lines. But, it did nothing to help workers get back to work because many of those jobs are obsolete and gone forever.

Many companies are going bankrupt and aren’t coming back. Retail is getting crushed. You can bet that any position eliminated in the crisis that can be automated, will be automated. Beyond the obvious elimination of inefficient manual labor, there is a much more disturbing macro trend. For example, artificial intelligence can now read cancer on an x-ray better than a doctor can. 

In short, these “jobs of the past” are gone. The COVID unemployment tsunami is going to accelerate automation.  

If governments don’t immediately and massively shift focus to retrain these workers, we’re facing massive, structural unemployment at best. Think Appalachia and the rust belt, but 10x worse, and affecting white-collar workers. At worst, think mass societal frustration and unrest. This is not going to be pretty. And, another six weeks or six months of unemployment benefits will do nothing to solve this. 

This is Our Economic Pearl Harbor

Instead of mobilizing an army, we need to mobilize an army of digital workers. 

If you want to see what happens when industries automate and workers don’t upskill, just take a drive through my home state of West Virginia. Once thriving towns are shells with boarded up mainstreets. People who once earned solid middle-class wages are now working for subsistence wages in the service industry, if they can get jobs at all.

And the crazy thing? The population density of geniuses in West Virginia is the same as it is in Silicon Valley. So why the stark difference in economic outcomes? Education and training. West Virginia clung to the jobs of the past (coal) and failed to reskill their workforce on the jobs of the future. Skills like software development, analytics, AI/machine learning, digital marketing, product management, UI/UX design and cloud computing. 

If you want to see what tech investment can do to an economy, look at Austin, Boulder and Seattle. Boulder, for example, was largely considered a college town where students would attend The University of Colorado Boulder and leave upon graduation. Today, an influx of tech companies like Google, followed by efforts to train and retain local talent, boosted the city’s economy to help it rank among the top 20 most productive metro areas in terms of GDP. This is not an anomaly. 

“Right now, in the middle of the COVID-19 unemployment tsunami — governments and enterprises are missing a massive opportunity to reskill these workers, digitally transform the economy, and accelerate growth.”

These success stories show a clear roadmap to digitally transforming an economy. And it starts with training on tech-forward skills.

Each state and each national government is sitting on a goldmine of human talent. If we don’t invest in developing this talent, massive structural unemployment will put a drag on economic growth for decades to come. Conversely, if we do invest in upskilling on digital skills, we have the potential for an endless, boundless engine of higher GDP growth. 

And what is that talent doing today? Sitting at home collecting an unemployment check. What an utter waste of time and precious productivity.

So what should we do about this? I’m glad you asked. I’m putting forth today a tangible, actionable four-point plan that will enable nations to digitally transform their workforces.

Interested? Read on.

A Four-Point Plan to Digitally Transforming Your Workforce

The path forward really is quite simple and requires the participation of both governments and enterprises.

Point 1: Government repurpose of federal financial aid funds.

If we tried to upskill tens of millions of people through the university system, it would break the system and bankrupt our country. And, it would take these workers out of the economy for two to four years. That’s a terrible outcome, and yet, that’s where almost all of our federal dollars are going: to traditional university programs. Each year, the federal government spends about $30 billion in direct grants to university students and another $30 billion in tax credits.

There’s a much better, extremely effective, and fast solution here: Repurpose $5B of federal funding to support non-university, skills retraining programs. These programs would be in specific, future-proof, high-demand areas. A $1,500 per individual training credit for people unemployed due to COVID would enable the retraining of 3.3 million people in skills like software development, artificial intelligence, cloud computing, product management and digital marketing. Employers simply cannot hire enough people in these areas. Moreover, software development and AI skills are the foundational skills for the next generation of entrepreneurs who will radically reshape and accelerate our economy.

Point 2: Government tax incentives for private enterprise upskilling

While corporations are aggressively laying off workers with the skills of the past, they simply cannot hire enough high-skill workers of the future.  At the same time, Udacity’s proprietary data shows that it’s usually 90% cheaper to upskill existing workers into these high-demand jobs than recruit and onboard new workers.

Providing a $2,500 tax credit per upskilled worker would be transformational in giving corporations the incentive to rethink their “fire then hire” approach, and instead invest in training their employees.

Point 3: Enterprise-sponsored retraining to laid-off workers

Remarkably, private enterprises are making the same mistakes as governments. In the midst of laying off or furloughing millions of employees, these businesses are often giving modest “severance” packages of a couple of weeks’ pay. That does nothing to prepare these workers for their next job. Moreover, for furloughed employees, they are stuck sitting at home letting their skills (and market value) atrophy. 

We call on enterprises to embrace their corporate responsibility towards their former employees and coworkers. Give each terminated employee a severance benefit of a retraining credit up to $1,500. That’s enough to retrain them on a high-value, high-paying job and help them get back into the workforce. And, from a self-interest perspective, maybe with the same employer.

The case for furloughed workers is even more pronounced. Why not provide this benefit. And when they come back to work, they can move into those hard-to-fill positions in tech and analytics.

Point 4: Aggressive enterprise reskilling during the COVID work-from-home period 

Finally, there are literally billions of people today working from home. Some of them are fully productive. But many of them are not. Instead of paying for wasted productivity, engage them aggressively on skills development. This can have an almost immediate ROI. Here is a quote from one of our students at Nike:

“Right now, [a] sharpened focus on the highest priorities is more important than ever. In support, I’m stepping in to develop my team to accelerate progress against a global revenue/margin automation priority to increase capacity. This specific automation includes Alteryx development, SQL query writing/modifying both Oracle and Teradata, Seasonal Planning data understanding, and business and financial acumen, etc. 

“I felt comfortable reading SQL. Now, I am increasingly feeling more comfortable writing SQL. Specifically, I worked through and submitted the first project within the Programming for Data Scientists Nanodegree focused on exploring a database with SQL over the weekend and [I] am directly applying the knowledge on this priority. As much as I appreciate learning, I appreciate applying that learning even more.”

Summary and Call to Arms

Right now, in the middle of the COVID-19 unemployment tsunami — governments and enterprises are missing a massive opportunity to reskill these workers, digitally transform the economy, and accelerate growth.

Hundreds of millions of people are out of work. Billions more are in quarantine and unproductive. Governments and enterprises need to seize this opportunity, here are four initial steps:

  1. Repurpose federal financial aid funds to non-university upskilling for 3.3M people;
  2. Government tax incentives for private enterprise upskilling;
  3. Enterprise-sponsored retraining to laid off and furloughed workers;
  4. Aggressive enterprise reskilling of unproductive workers during the COVID work-from-home period.

If we ignore this crisis, at best, we will have structural unemployment for years and maybe decades to come, as these jobs of the past atrophy and a lack of qualified workers in the jobs of the future hold back our economy. And at worst, the mass sustained unemployment will make today’s cultural divide look like playtime in kindergarten.

Conversely, if we embrace this plan, we will come out of this crisis with a better-trained workforce that will carry our innovation into the future, and materially accelerate GDP.

Now is not the time to vacillate. Now is the time for bold action.

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Gabe Dalporto
Gabe Dalporto
Gabe Dalporto is Chief Executive Officer at Udacity. Prior to joining Udacity he worked at LendingTree, where he held several leadership roles, including Chief Marketing Officer and Chief Financial Officer. Gabe joined the LendingTree Board in 2017 and continues to be an active board member there, and he is also a board member of Guitar Center. Gabe holds a Bachelor’s degree in Nuclear Engineering from the University of Florida and a Master’s degree in Nuclear Engineering from MIT.