AI and automation are projected to reduce demand for about 36 million U.S. jobs by 2035, while growth in other areas will create roughly 41 million new roles, according to a McKinsey Global Institute report.
The authors say the jobs will be there, but getting workers into them is the core challenge.
“The next decade’s challenge is mobility, not scarcity,” the report states.
In McKinsey’s base case, about 11 million workers—roughly 7% of the workforce—would need to leave their current occupations entirely, with a modeled range of 6 million to 16 million. That estimate is close to the firm’s 2023 forecast of 12 million career switches by 2030.
Most of those workers would have to move into wholly different fields, for example from retail to healthcare. McKinsey estimates roughly 770,000 people per year would need to make that kind of switch—about 3.6 times the historical average. By comparison, about 788,000 workers per year made similar moves between 2019 and 2022 during the pandemic without lasting harm, the report notes.
The scale of change would be significant for workers who already change employers less frequently than in the late 1990s and early 2000s, aside from a brief surge during the pandemic, the report adds.
Credential labor
Job losses are concentrated in office and administrative support, retail, and transportation—largely lower-paid roles. McKinsey finds lower-wage workers are 7.6 times as likely as higher-wage workers to need a new occupation. Job growth is strongest in healthcare, construction, and management.
Urbanist Richard Florida, author of The Rise of the Creative Class, told Fortune that comparable shifts have occurred before. “We used to have most people working in agriculture. Now 1% of the workforce works in agriculture,” he said. “We used to have most people working in manufacturing—50, 60% working in manufacturing. Now 5 to 6% of the workforce works in manufacturing.”
Florida, who was not involved in the McKinsey report, expects displaced service workers to land in what he called “a broad bucket” of wellness work, spanning fitness, dermatology and Pilates studios. “I think that there will be some displacement,” he said. “But I think this is also the area we’re going to create the most work.” He added that some old service roles could be transformed into higher-paying wellness jobs.
McKinsey’s analysis shows that some transitions will be hard for certain workers. Only one in seven displaced workers has a direct path into a growing job—one that requires little retraining and pays at least as much. Nearly half face what the report calls an “unpaved” path, blocked by large skill gaps or credential requirements. About 85% of growing jobs require a credential.
Florida said employers are already changing hiring criteria. “We used to be hiring really smart people because they’re smart, and then we just watch how they do, up or out,” he said. “Now we’re hiring to replace ourselves. So we’re hiring people who are not just smart but can build the business, work with customers, work with clients, work with others.”
Geography is another obstacle. McKinsey found about 76% of growing jobs cannot be done remotely, including roles in hospitals, on construction sites, and in data centers.
Florida’s research has long shown that different types of work concentrate in different places. “There’s manual work, which is like farm work or factory work, and that tends to be distributed almost ubiquitously over space,” he said. “Then there’s cognitive work, which tends to concentrate in big cities.”
Cities take the lead
Florida said people are already willing to relocate for opportunity, even to places whose politics they dislike. He pointed to Canadians moving from Toronto to Miami. “They don’t necessarily like political conservatism. They don’t necessarily like Donald Trump,” he said. “But they like that Miami is a nice place to live and offers low taxes and has a lot of economic opportunity.”
People moving to Nashville, where he now teaches, tell him “it’s good to live in a blue city in a red state. I pay less taxes. I can still live in a kind of interesting city, but I saved a huge percent of my income.”
Reflecting on his 2002 book, Florida said he did not foresee how technology would let people spread out. “I certainly didn’t talk about the rise of AI and AI technology and the way it would allow people to distribute.”
Cities are also trying to attract talent by building universities. Citadel founder Ken Griffin, who moved the hedge fund from Chicago to Miami in 2022, committed $3 billion to Carnegie Mellon University on Sept. 30; $2 billion of that will fund a new Miami campus that plans to enroll its first students in 2028. Vanderbilt is building a graduate campus in West Palm Beach focused on business, AI, and data science, with $50 million from developer Stephen Ross leading fundraising.
Florida, who joined Vanderbilt’s faculty this fall, said wealthy people who moved to South Florida initially “figured out they didn’t have to bring their companies with them. They could just bring their boats and their family office.” He added that Griffin “realized that it has to be a talent anchor.”
This story was originally featured on Fortune.com.
Source: fortune.com
