December 04, 2017

The Looming Threat of Automation

A new report by The McKinsey Global Institute warns that up to 375 million workers throughout the world will need to switch occupations by 2030 due to automation. The jobs most at risk include physical jobs in predictable environments, such as operating machinery or preparing fast food. Another role possibly impacted is data collection and processing, which has implications for paralegals, accounts and back-office processing, and mortgage origination. In a study from earlier this year, McKinsey found that almost half of all global work activities have the potential to be automated; this new report concludes that up to a third of work activities could be displaced by 2030. The report reinforces that economic growth, rising productivity and other forces will help to offset the losses

In the U.S., 39 to 73 million jobs could be eliminated, but about 20 million of those displaced workers could be shifted into similar occupations taking on slightly different tasks. This means that 16 million to 54 million workers (up to a third of the U.S. workforce) will need to be retrained for new occupations.

“The model where people go to school for the first 20 years of life and work for the next 40 or 50 years is broken. We’re going to have to think about learning and training throughout the course of your career.” ~Susan Lund, a Partner at the McKinsey Global Institute

Despite the looming threat of job reductions, the report does reveal how workers can get ahead, noting that workers who are willing to develop new skills should be able to find new jobs. According to Susan Lund, a partner at the McKinsey Global Institute and a co-author of the report, the biggest challenge will be retraining millions of workers midcareer.

Additionally, the authors do not expect automation to displace jobs that involve managing people, social interaction, unpredictable environments, or applying expertise. For example, child and elder-care workers, scientists, educators, and electricians face less risk from automation. As a result, high-wage workers are expected to be less impacted by the sweeping changes because they have skills that cannot be replaced by machines. Low-wage jobs could also grow quickly since they cost employers less and are often not worth the cost of automating. According to the report, this means middle-wage jobs will continue to decline, widening the gap between wealthy and low-income households.

Employment Growth and Decline by Occupation: % Change in Labor Demand, Midpoint Automation

Source: The McKinsey Global Institute