“The COVID-19 pandemic disrupted labor markets globally during 2020,” said a February 2021 McKinsey report on “The future of work after COVID-19.” “The short-term consequences were sudden and often severe: Millions of people were furloughed or lost jobs, and others rapidly adjusted to working from home as offices closed. Many other workers were deemed essential and continued to work in hospitals and grocery stores, on garbage trucks and in warehouses, yet under new protocols to reduce the spread of the novel coronavirus.”
Two and a half years later, a recently published report by the McKinsey Global Institute (MGI), “Generative AI and the future of work in America,” paints a radically different picture: “the US job market has come roaring back from its sudden drop. The nature of work has changed as many workers have stuck with remote or hybrid models and employers have sped up their adoption of automation technologies. More recently, the accelerated development of generative AI, with its advanced natural language capabilities, has extended the possibilities for automation to a much wider set of occupations.”
The US labor market is now undergoing a rapid evolution in the way people work and the work people do. “Some 8.6 million occupational shifts took place from 2019 through 2022. Now even more change is in store. We expect an additional 12 million occupational shifts by 2030.”
Throughout the Industrial Revolution there were periodic panics about the impact of automation on jobs, going back to the Luddites, - textile workers who in the 1810s smashed the new machines that were threatening their jobs. But each time those fears arose in the past, technology advances ended up creating more jobs than they destroyed. Automation fears have understandably accelerated in recent years, as our increasingly smart machines can now be applied to activities requiring intelligence and cognitive capabilities that not long ago were viewed as the exclusive domain of humans.
“One of the biggest questions of recent months is whether generative AI might wipe out jobs,” said the MGI report. “Our research does not lead us to that conclusion, although we cannot definitively rule out job losses, at least in the short term. … The biggest impact for knowledge workers that we can state with certainty is that generative AI is likely to significantly change their mix of work activities.”
Drawing on its large body of research on the future of work, MGI expects “the employment mix to change significantly through 2030, with more healthcare, STEM, and managerial positions and fewer jobs in customer service, office support, and food services. … While our analysis shows a decrease of 1.1 million jobs in the two lowest wage quintiles by 2030, jobs in the highest wage quintile could grow sharply, by 3.8 million.”
Let me summarize MGI’s detailed findings for different occupation categories:
First are those occupations that grew during the pandemic, from 2019 to 2022, and are expected to continue to grow through 2030:
- Health professional: from 6.5 million in 2022, to 8.5 million (30% growth) by 2030;
- Health aides and technicians: from 11.6 million in 2022, to 15 million (30%) by 2030;
- STEM professionals: from 7.9 million in 2022, to 9.7 million (23%) by 2030;
- Managers: from 9.7 million in 2022, to 10.8 million (11%) by 2030;
- Transportation services: from 5.6 million in 2022, to 6 million (9%) by 2030; and
- Business and legal professionals: from 16 million in 2022, to 17 million (7%) by 2030.
A related category are occupations whose growth stalled during the pandemic, 2019-2022, but are also expected to grow through 2030:
- Builders: from 7 million in 2022, to 7.8 million (12% growth) by 2030;
- Creatives and art management: from 2.2 million in 2022, to 2.5 million (11%) by 2030;
- Property maintenance: from 4.6 million in 2022, to 5 million (10%) by 2030;
- Mechanical installation and repair: from 6.6 million in 2022, to 7 million (7%) by 2030;
- Community services: from 6.8 million in 2022, to 7.3 million (7%) by 2030;
- Education and workforce training: from 9.9 million in 2022, to 10.2 million (3%) by 2030; and
- Agriculture: from 2.1 million in 2022, to 2.04 million (2% growth) by 2030.
The final category are occupations that declined during the pandemic, (2019-2022), and are expected to continue to decline through 2030:
- Production work: from 13.3 million in 2022 to 13.17 (-1%) by 2030;
- Food services: from 13.7 million in 2022 to 13.4 million (-2%) by 2030;
- Customer service and sales: from 14.7 million in 2022 to 12.8 million (-13%) by 2030; and
- Office support: from 20.1 million in 2022 to 16.5 million (-18%) by 2030.
“Helping workers in lower-wage, shrinking occupations move into better-paying jobs with more stability will require widespread access to training programs, effective job matching, different hiring and training practices by employers, and better geographic mobility. The overall labor market will have higher demand for social-emotional and digital skills. Although the demand for basic cognitive and manual skills is likely to decline, physical work is not going away. It may still account for just under 31 percent of time spent, driven by growth in sectors such as transportation services, construction, and healthcare.”
Three major forces are driving the expected changes in the US labor market: automation, a trend accelerated by the emergence of generative AI; federal investments in infrastructure and in the transition to green industries; and long-term structural trends such as aging, continuing investment in technology, and the growth of e-commerce and remote work.
Automation will continue to reshape the labor market. Automation has taken a leap forward with the recent introduction of generative AI tools,” said the report. “Although generative AI is still in the early stages, the potential applications for businesses are significant and wide-ranging. … All of this means that automation is about to affect a wider set of work activities involving expertise, interaction with people, and creativity.” With generative AI added to the picture, 30% of hours worked across all sectors could be automated by 2030, up from 22% today without GenAI.
Occupations where McKinsey estimates that GenAI automation could have a large impact (9% to 16%) by 2030:
- STEM professional: from 14% without GenAI, to 30% with GenAI by 2030;
- Education and workforce training: from 7%, to 23% with GenAI by 2030;
- Creative and arts management: from 10%, to 25% with GenAI by 2030;
- Business and legal professionals: from 16%, to 30% with GenAI by 2030;
- Managers: from 13%, to 22% with GenAI by 2030; and
- Community services: from 17%, to 26% with GenAI by 2030.
Federal priorities are driving investment that will affect jobs, such as reaching the net-zero emissions goal. “Some 3.5 million jobs could be displaced through direct and indirect effects across the economy. But at the macro level, these losses should be more than offset by gains of 4.2 million jobs, primarily led by capital expenditures on renewable energy. The net-zero transition will likely be a net positive for jobs, but those jobs may be located in different places and require different skills.”
Infrastructure projects. “[M]ajor investment in infrastructure projects across the country will bolster construction jobs, which could see employment growth of 12 percent from 2022 through 2030. However, the sector already had some 383,000 unfilled positions in April 2023. This shortage will have to be addressed to bring infrastructure projects to life from coast to coast.”
Semiconductor manufacturing and scientific research. The CHIPS and Science Act provides around $280 billion in new funding to boost semiconductor manufacturing in the US as well as R&D and scientific research. “This comes at a time when some companies have been adjusting their supply chains, leading to an uptick in domestic manufacturing.” However, jobs in the manufacturing sector are becoming more high-tech, with fewer traditional production jobs and more workers with technical and STEM skills.
Long term structural trends. Finally, an aging population will needs more investments in healthcare, including the training of healthcare workers, while the continuing digitization of the economy will require continuing investments in technology and in the education of tech workers across every sector.
“The US labor market has been remarkably resilient in the face of recent challenges and rapid changes,” said the McKinsey Global Institute report in conclusion. “That kind of adaptability is exactly what it will take to navigate the next chapter as well, supporting individuals while helping businesses meet their talent needs so they can continue driving growth.”
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