COLORADO SPRINGS — The world is facing a lot of economic challenges right now, from food supply issues to continued changes in energy consumption. Economic expert Tatiana Bailey says innovation may be the key to moving past some of these challenges.
According to Bailey, one of the challenges the global economy is facing is a demographic transition, particularly in the world’s advanced economies that have declining or stagnant birthrates, which is causing distortions in the labor market. Bailey points to the Diffusion of Innovation Theory, which argues that new ideas, practices, and products can quickly spread through society.
Supply issues coupled with the simultaneous labor shortages pose a unique challenge that Bailey says might just be solved by innovating. A prime example lies in the energy sector and the economic realities of a global energy transition. Few people realize that clean energy employs about three times as many workers as does work in fossil fuel extraction and generation.
We now have about 4 million American jobs employed in the energy sector, according to Bailey. Clean energy median hourly wages for are about 25% higher than national median wages. In fact, wind turbine technicians and solar panel installers are projected to be two of the fastest growing occupations between now and 2030. Electric vehicles also seem to be taking off – estimates are that 52% of the world’s new vehicle sales will be all electric by 2030.
The argument against innovation is often concerning the cost of pivoting to new technologies and job losses from legacy industries. Bailey points to how expensive computers used to be not all that long ago, such that very few people or companies had them.
This is the promise in innovation, Bailey says. The better we get at making something and the more of it that we make, the more marginal cost of production comes down. That’s when computers and electric vehicles become affordable to the average person.