The future of work may not look promising for everyone – but there are more ways to narrow economic gaps than you think

Anyone focusing on the workforce in the coming years should equally look at the time ahead for cities, towns and rural areas. The key to what makes them work better could prove extremely useful

Automation is by no means the only challenge (AFP)

We get the monthly update this week about the state of the UK labour market, but unless something dramatic has happened in June, the probability is that employment will have continued to rise.

With employment the highest ever and unemployment the lowest since the 1970s, the jobs boom looks secure. Much the same applies to the US, where unemployment is even lower.

This is a success, I feel – one that is insufficiently celebrated, and success of the economic system of this period of what, for want of a better expression, I’ll call “market capitalism”. But there are darker sides to the story, some of which were chronicled in work by the Resolution Foundation earlier this year.

For example, it notes: “The performance of younger workers, the relatively poor performance of rural areas and smaller urban areas, and the endurance of atypical work ... The employment boom has occurred alongside (indeed, likely partly in response to) the extremely poor performance of pay and productivity in recent years.”

I always question the productivity figures, because they are calculated in terms of output per person relative to GDP and don’t make allowance for the efficiencies of the communications revolution. As a result, we are under-measuring GDP.

For example: you are reading this column online. Had you been reading such a column in print as you would have been 20 years ago, GDP would have been higher because of the paper, ink, printing and delivery costs. So the shift to online has cut GDP, and the productivity of journalism. But actually, we probably write more words.

The shift to online journalism illustrates something else. Many jobs have gone, while others have been transformed. And that leads to the question: if there have been huge changes in the way we work over the past 20 years, what can we expect from the next 20?

A new study from McKinsey tackles this challenge. It looks at the future of work in America, taking in both the booming high-tech (and high-wage) cities and the struggling rural areas. There is the challenge of automation, but also the extent to which success has become embedded in some places and relative failure in others. So automation is by no means the only challenge.

There are some general observations, such as the better educated workers are, the better their job prospects. There are specific difficulties faced by both the young and the old. But I think the greatest challenge is how to reverse the divergence of different regions. What policies are there that might narrow the gaps – or at least stop them getting even wider?

The study’s authors come up with a number of ideas. These include making the labour market work more efficiently, matching people to jobs without them having to move across the country to so do, encouraging retraining, and improving social support. All these make sense. But I think the most difficult thing is to turn around cities and rural areas that for whatever reason have lost their economic dynamism.

How do you turn Detroit into San Francisco? At its peak in 1950, Detroit had a population of 1.86 million, and was the richest city in income per head in the US. Now it has only some 700,000. By contrast, in 1950 San Francisco had 775,000, falling to 680,000 in 1980, but now has nearly 900,000.

Here in the UK, we have not had such dramatic increases or declines in either population or wealth – and the north/south shorthand for slower-growing and faster-growing regions is misleading. But there is a huge and probably growing divide both between regions and within them.

For example, Manchester is booming (go there and count the construction cranes) but go 15 miles outside and see towns that are struggling. Equally, there are towns in the supposedly prosperous southeast that have some of the most troubling deprivation in the land.

Anyone focusing on the future of work, as this study usefully does, should equally look at the future of cities, towns and rural areas: what makes them work better?

We don’t know what the jobs of tomorrow will look like, any more than we knew 15 years ago that there would be an iPhone and the associated apps.

We do know that we have to educate people to be flexible. But helping struggling communities turn themselves round – creating jobs and training people to do them – is the biggest challenge of all.