Report Summary: Generative AI and the future of work in America

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In this timely update on the future of work in the United States, researchers from the McKinsey Global Institute examine the trends that have emerged since their 2019 study on automation and US workplaces. They catalog the forces shaping their forecast, including lasting pandemic effects, federal investment and technological advances, particularly AI. In the post-pandemic landscape, the emergence of generative AI tools like ChatGPT raises job loss concerns. The researchers emphasize the likelihood of significant shifts in occupational demand, urging you to prepare for job transitions amid ongoing uncertainty as companies work to build an inclusive, productivity-driven economy.

Take-Aways

• The pandemic changed the US job market and increased the demand for better, higher-paying jobs.
• The United States faces a labor shortage, especially in lower-wage occupations.
• AI will shape the US employment landscape through 2030.
• AI will alter the ways people work.
• Climate change will affect what kinds of work will be in high demand.
• Low-wage workers will feel the largest impact from job-shifting trends.
• Upskilling and reskilling are necessary to ensure fair and equal workforce opportunities.
• The future may provide workers with more time for creativity and innovation.

Summary

The pandemic changed the US job market and increased the demand for better, higher-paying jobs.

Examining the job market that experts believe will develop in the United States in the decade leading up to 2033 requires considering its current trajectory. After COVID-19 setbacks, the US job market rebounded strongly, maintaining an unemployment rate below 4% for more than a year, dating from early 2022. Significant occupational shifts occurred during this tight labor market, as people quit their jobs to pursue better prospects and higher pay in both 2021 (48 million people) and 2022 (51 million people).

“The future of work is no longer something to look for over the horizon. We’re already in the midst of it.”

Managers and professionals who make essential contributions in business, law and STEM fields thrived due to remote work. These sectors collectively added 3.3 million jobs between 2019 and 2022. The surge in e-commerce bolstered transportation services, notably warehousing, resulting in more than 30% growth in jobs for workers handling stock and filling orders, and around 15% growth in shipping, receiving and inventory clerking. Researchers expect similar trends to persist into the future.

The United States faces a labor shortage, especially in lower-wage occupations.

As of May 2023, labor force participation remained below pre-pandemic levels. Today, the United States has roughly 1.9 million fewer workers and approximately 10 million vacant positions. The tightness of the job market, which is particularly robust for blue-collar workers, is tied to several factors, including retirement rates, pandemic-induced exits, health concerns and immigration declines.

“Millions of workers not only changed jobs but made bigger leaps into new occupations.”

Researchers expect labor shortages to remain more persistent in some sectors than others, a continuation of trends established during the pandemic. Accommodation and food service workers suffered high unemployment during the early part of the pandemic. Today, businesses in those sectors have roughly 40% more unfilled job openings than before Covid. Customer service and sales roles, which are affected by the rise of e-commerce, have recovered more slowly, with employment still 8% less than 2019 levels.

Job market transformation has increased employment in higher-wage occupations, which are up 9%, while lower-wage roles declined by 3.7%. Despite demand, fewer applicants feel inclined to fill lower-wage service jobs. This highlights a national need for better pay, job quality, benefits and advancement opportunities. Companies face the alternative of increasing automation to address these labor shortages.

AI will shape the US employment landscape through 2030.

Numerous trends, including rising AI technology, indicate how the US job landscape could shift by the end of the 2020s. Beyond automation, factors like remote work, e-commerce, federal investments, education levels and evolving healthcare needs will contribute to changes in the job market. An estimated 11.8 million occupational transitions could occur by 2030.

Researchers faced prominent concern in 2023 that generative AI could lead to significant job losses. Although this research doesn’t definitively predict job losses, it acknowledges that, historically, technological disruption leads to job market disruption. While estimating future overall employment levels is very difficult, researchers’ analysis of the factors that drive the demand for labor suggests that while certain job categories exposed to generative AI could keep growing, AI’s adoption might moderate their growth rates. For example, legal roles were resilient during the pandemic, but new technology could influence a decline in this field in the demand for specific workers, such as paralegals. The change greatly depends on how each profession adopts and uses new technology.

“While STEM, healthcare, builders and professional fields continue to add jobs, generative AI could change work activities significantly for many occupations.”

Hopefully, what generative AI takes from the job market it may also give back in other ways. Job gains in healthcare, STEM, construction and some roles in business and the legal sector might offset losses elsewhere. For instance, researchers expect healthcare roles to grow by 30%, with AI assisting in providing specialized healthcare for an aging population. Also, despite high-profile tech-sector layoffs in 2023, tech roles will remain in strong demand as more businesses embrace AI and digitization and their related cybersecurity needs grow. Conversely, job losses due to automation are most likely to occur in office support, customer service and food services.

Data now indicates that more workers than previously estimated are likely to need to change occupations by 2030. This could involve transitions within or across occupational categories, with around nine million workers potentially shifting to entirely new categories. Most pandemic job shifts occurred in office support, customer service, sales, production and food services. Those fields will also account for over 80% of potential future transitions. This portends both bad news and good news for affected workers, who will face disrupted jobs but also higher-wage opportunities.

AI will alter the ways people work.

The pandemic expedited the adoption of automation. For instance, retail giants like Amazon and Walmart deployed robots for warehousing tasks, while restaurants and retailers turned to “touchless tech.”

Automation doesn’t always equal job loss, but it can alter the nature of many jobs. While still in their early stages, these tools are expediting the automation timeline. Experts predict a shift in the US economy, with the number of automated tasks growing from 21.5% in 2023 to 29.5% by 2030. Though automation has, historically, affected low-skilled workers, generative AI defies this trend by automating the tasks of highly skilled knowledge workers. Generative AI will primarily affect areas involving professional expertise, interactions and creativity, while physical tasks will remain relatively unaffected.

“White-collar jobs are among the most potentially impacted by generative AI.”

The rise of tools like ChatGPT and Dall-E is revolutionizing the writing and design industries. Occupations like computer programmers, translators, financial advisers, and science and market researchers are also susceptible. Additionally, generative AI is set to influence the legal and engineering fields significantly by optimizing such tasks as legal research and architectural design.

Climate change will alter what kinds of work will be in high demand.

Climate change will be another primary influence on the labor market. Perhaps it will dictate the ability or speed people will need from generative AI. Recent US legislation aimed at shifting priorities toward sustainability is set to transform employment demand.

“The net-zero transition could reallocate a substantial number of American jobs.”

The impact of the Inflation Reduction Act, Bipartisan Infrastructure Law, and CHIPS and Science Act could potentially realign job markets. To meet net-zero emission commitments by 2050, the United States is poised for a green transition catalyzed by the funding provided under the Inflation Reduction Act.

While this effort could create 4.2 million jobs in renewable energy by 2030, sectors such as oil refinement and traditional automotive manufacturing may lose approximately 3.5 million positions. This shift will necessitate upskilling traditional workers – such as transitioning coal miners to solar energy roles – especially in regions that depend on carbon-intensive industries.

Low-wage workers will feel the largest impact from job-shifting trends.

An analysis of occupational data reveals that women, people without college degrees who hold lower-wage jobs, and people of color are at a higher risk of needing to change occupations by 2030 due to automation. Almost 80% of these potential transitions will occur among people who earn less than $38,200 a year, with a particular impact on retail, cashier and stocker roles.

Workers without college degrees might account for about 8.9 million of the estimated 11.8 million occupational shifts, with production and office support roles – held mostly by women – predominantly affected. These changes could cause mass unemployment, increased homelessness and further disparity unless marginalized groups receive tailored support.

“People could land better-paying jobs if they can access skills training and if employers are willing to take more chances in hiring.”

Job quality improvements are needed to meet growing social and economic demands. For example, low-wage roles like home healthcare aides, nursing assistants and child care workers – again, primarily carried out by women – remain vital yet underpaid. Research confirms that these social and emotional skills will continue to be significant as the workforce shifts leading up to 2030. However, automation will mean reduced demand for jobs fulfilling basic tasks – a trend that underscores the need for reskilling. Workers who improve their skills will find more opportunities for higher-value work; for instance, retail employees with enhanced skills could focus more on customer interactions.

Upskilling and reskilling are necessary for ensuring fair and equal workforce opportunities.

Automation’s effects on workers, particularly those who live paycheck to paycheck, can trigger significant stress. Automation may impel millions of workers to change occupations, necessitating tailored interventions and retraining. However, inclusive growth is possible if companies can provide skill training and flexible hiring opportunities to enable low-wage workers to access better-paying jobs.

The unexpected pandemic underlined the need for businesses to be proactive in the face of uncertainty. As automation reshapes occupation demand, employers must anticipate further turbulence. Leaders should encourage skill development, reinvigorate mid-career transitions, and prepare sidelined individuals to work in critical sectors such as healthcare and skilled trades.

“Helping people in low-wage, shrinking roles add the skills they need to move into growing jobs will require significant effort.”

The US labor market must focus on retraining, inclusivity and effective policies to foster growth. Leaders should revamp recruitment by hiring from a broader talent pool, including underrepresented groups. Employers also should offer more flexible work arrangements. For example, they could remove unnecessary educational requirements and biases, rethink retirement and mentorship, and use remote work to support disabled individuals, rural residents and those with criminal records to create a more diverse, resilient workforce. Employers and policymakers have the opportunity to build a stronger and more inclusive economy by embracing these strategies.

Ensuring a smooth transition for workers in declining roles will demand substantial effort and proactive upskilling initiatives. Yet, even as employers restructure jobs to adapt to automation, provide upskilling and enhance job satisfaction, workers also must remain adaptable to evolving technological developments. Amid concerns about automation’s effects on jobs, researchers also project that the number of higher-paying positions will grow.

The future may provide workers with more time for creativity and innovation.

Boosting sluggish US productivity growth, which has remained at 1.4% since 2005, requires leveraging technology, including generative AI. Successful integration of generative AI will require implementing it strategically, nurturing talent and updating organizational models. This could lead to a productivity “J-curve” featuring small starting benefits that lead to the creation of long-term, higher-value results. In many fields, automation could speed up production and amplify creative input.

“When machines take over dull or unpleasant tasks, people can be left with more interesting work that requires creativity, problem-solving and collaborating with others.”

As AI takes over many menial tasks, managers can shift their focus to coaching, researchers can turn to more innovative work, and teachers can enjoy more personalized student interactions.

Clear guidelines for the responsible use of AI and a shift in mind-set from job displacement to job enhancement are essential for both workers and employers who want to harness AI’s potential for creativity, strategic thinking, collaboration and productive growth.

About the Authors

The report’s authors are research leaders Kweilin Ellingrud, an McKinsey Global Institute (MGI) director, McKinsey partner Saurabh Sanghvi; MGI senior expert and associate partner Gurneet Singh Dandona; MGI partners Anu Madgavkar and Michael Chui; MGI director Olivia White; and project team leader Paige Hasebe. MGI executive editor Lisa Renaud edited the report.