Source: Fortune
Summary
A new McKinsey report predicts that AI and automation will reduce U.S. job demand by 36 million by 2035, while creating 41 million new jobs. The report highlights that 11 million workers, or 7% of the workforce, may need to switch careers, with some facing significant skill gaps. Most displaced workers would need to move into different fields, such as healthcare, while job growth is concentrated in sectors like construction and management. The report also notes that 85% of new jobs require credentials, and 76% cannot be done remotely.
Our Reading
The numbers tell one story.
36 million jobs lost, 41 million gained. The math adds up, but the workers don’t.
Most need to move, but few have the path. Credentials block the way.
Geography matters. Cities pull talent. Remote work doesn’t fix everything.
The next decade is about mobility, not just numbers.
Author: Evan Null
Credential labor
The shrinking jobs are concentrated in office and administrative support, retail, and transportation, much of it lower-paid work. Lower-wage workers are 7.6 times as likely as higher-wage workers to need a new occupation. Meanwhile, job growth is in healthcare, construction, and management.
Richard Florida, the urbanist and author of The Rise of the Creative Class, told Fortune that shifts like this have happened 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, from fitness and dermatology to 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.” Some of the old service jobs, he said, “become transformed into much higher-paying wellness jobs.”
McKinsey’s data says some of those moves can be difficult for certain workers. Only one in seven displaced workers has a direct path into a growing job, meaning one that needs 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 what they look for. “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.”
Cities take the lead
He said people are already willing to move 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.”
When he wrote The Rise of the Creative Class in 2002, Florida said he didn’t 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 pull talent in 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. Of that, $2 billion will fund a new Miami campus, which 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 the fundraising.
Florida, who joined Vanderbilt’s faculty this fall, said wealthy people who moved to South Florida first “figured out they didn’t have to bring their companies with them. They could just bring their boats and their family office.” Griffin, he said, “realized that it has to be a talent anchor.”
