Ford CEO Jim Farley: The Essential Economy’s Productivity Gap Should Worry Us All

I put myself through business school working at Hill and Vaughn, a classic-car restoration shop founded by America’s first Formula One champion racer Phil Hill and collector Ken Vaughn. There, I worked mostly on interiors, sewing frog skin, buffalo hide, and every material you could imagine. But I also was a mechanic, rebuilding engines and repairing the many parts and systems that have made cars run since Henry Ford’s day. Like many Americans, I learned by doing with my hands. As a CEO today, I hear every day about how new technologies like A.I. are going to transform our economy. But I can’t help thinking about the work A.I. can’t replace: the millions who primarily work with their hands. That includes tens of thousands of Ford hourly employees and skilled tradespeople who make our manufacturing system run every day and the millions who use our commercial trucks and vans to get their work done. Whether you are a first responder inserting an IV line in a speeding ambulance to a plumber snaking a drain, A.I. can’t do your job.  These hands-on workers are part of what we call America’s “Essential Economy.” This 95-million-strong workforce powers the critical industries we rely on to keep our economy running—industries whose jobs have long been springboards to the middle class and foundations for strong, stable communities. Sectors like construction, agriculture, skilled trades, transportation, energy, and manufacturing sustain 3 million businesses and deliver $12 trillion in GDP. The Essential Economy is the backbone of this country. And it’s in danger. Over the past eight years—thanks to technologies like cloud computing, mobile apps, and faster teleconferencing—productivity in the white-collar economy surged 28%. But productivity in the Essential Economy declined over the same period, according to a recent study by the Aspen Institute. That’s what’s concerning me as we approach Labor Day, because productivity is one of the most effective tools to drive higher profits for businesses, higher wages for workers, and a higher GDP for our country. How to close the Essential Economy’s productivity gap So, how do we close this gap?   First, we need to get serious about workforce development. America is suffering major workforce shortages in essential industries. In my own industry, we’re going to need over 400,000 new auto techs over the next three years just to keep pace with demand. The construction industry is short half a million workers today, and manufacturers need 419,000 more workers for expanding factories. I predict that demand for trained, skilled Essential Economy workers will only grow in the years ahead. For too long, we’ve treated workforce development programs as a form of welfare for the recently unemployed. Instead, as a new Aspen Institute research paper released this week argues, we should learn from the successful model of federal R&D funding—and see workforce development as a powerful investment in the Essential Economy. Right now, we spend less on vocational training than nearly every other industrialized nation—just 0.1% of our GDP, according to the new research. This needs to change. Nearly a century ago, workers could train at private institutions like the Henry Ford Trade School or through government programs like the Works Progress Administration. Both of these shut down by 1952. Public colleges offering two-year degrees and skilled-trade certificates were—and still are—a launchpad to a stable middle-class life. We need a culture shift around workforce development in America that breaks the stigma that these careers aren’t worth our young people pursuing. The 2050 labor market When we train workers, we should prepare them for the economy of 2050, not 1950. New tools like augmented reality and robotics can boost productivity for an auto tech in much the same way cloud computing did for an office worker. Right now, we have an opportunity to spur a “digital” revolution for the ten digits that matter most to those with hands-on jobs. In order to achieve these goals, we need to cut red tape at the federal, state, and local levels. Too often, infrastructure and manufacturing-development projects die because of preventable and costly permitting delays. We can find ways to ensure safety, protect the environment, and listen to input from stakeholders while still completing projects faster. I know there are plenty more good ideas out there. Later this month, Ford is convening a first-of-its-kind summit on the Essential Economy in Detroit. I’m inviting leaders in business, technology, and government—and, of course, workers and entrepreneurs on the Essential Economy’s front lines. I’m confident we’ll have an impact, because ideas born in Detroit rarely stay here. What happens if we continue to ignore the Essential Economy? Too few construction workers will make housing even more expensive. A shortage of agricultural workers? We’re all paying more for groceries. So, as we approach Labor Day, I’ll be celebrating Ford’s frontline heroes and skilled tradespeople for their work every day to keep millions moving. And I’ll be looking for ways to close the productivity gap that affects all the Essential Economy workers building and sustaining this country and our communities. Let’s make the Essential Economy a national priority—because all of us have a stake in its success.