AI and automation are expected to reduce demand for about 36 million jobs in the US by 2035, while growth in other sectors creates roughly 41 million new roles, according to a McKinsey Global Institute report.
The central challenge will not be a lack of work, but helping people move into it. In its base-case projection, about 11 million workers – roughly 7% of the workforce – would need to leave their occupations entirely, with estimates ranging from six million to 16 million.
“The next decade’s challenge is mobility, not scarcity,” the report’s authors wrote.
Most of those changing careers would have to enter a completely different field, such as moving from retail into healthcare. McKinsey estimates that about 770,000 workers a year would need to make such a switch, around 3.6 times the historical average.
About 788,000 workers a year made comparable moves between 2019 and 2022 during the pandemic, without lasting damage, the report said. However, workers now change employers less frequently than they did in the late 1990s and early 2000s, apart from a short-lived rise during the pandemic.
The skills gap facing workers
The occupations most exposed to falling demand are concentrated in office and administrative support, retail and transport, much of it lower-paid work. Lower-wage workers are 7.6 times more likely than higher-wage workers to need a new occupation.
Employment growth is expected in areas including healthcare, construction and management. Yet only one in seven displaced workers has a direct route into a growing role that requires little retraining and pays at least as much as their current job.
Nearly half face what McKinsey describes as an “unpaved” path, involving substantial skills gaps or credential requirements. About 85% of growing jobs require a credential.
Richard Florida, the urbanist and author of The Rise of the Creative Class, said previous economic shifts had also transformed the workforce. “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.”
Mr Florida, who was not involved in the report, expects some displaced service workers to move into a broad range of wellness jobs, including fitness, dermatology and Pilates. “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 existing service roles, he added, “become transformed into much higher-paying wellness jobs”. He said employers were also changing the qualities they sought, placing greater emphasis on people able to develop a business and work with customers, clients and colleagues.
Location becomes another barrier
Where new jobs are created may make the transition harder. About 76% of growing roles cannot be carried out remotely, including jobs in hospitals, on construction sites and in data centres.
Mr Florida said manual work tended to be spread widely across different areas, while cognitive work was more likely to be concentrated in major cities. He also said people were willing to move for economic opportunity, even when they disliked the politics of their destination.
He pointed to Canadians moving from Toronto to Miami, saying they might not support political conservatism or Donald Trump but could be attracted by lower taxes, lifestyle and economic opportunities. People moving to Nashville, where he now teaches, had told him they valued living in a blue city in a red state while paying less tax.
Universities and new campuses are also being used to attract talent. Citadel founder Ken Griffin, who moved the hedge fund from Chicago to Miami in 2022, committed $3 billion to Carnegie Mellon University on September 30. Of that sum, $2 billion will support a new Miami campus, which plans to enrol 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 its fundraising.
Mr Florida, who joined Vanderbilt’s faculty this autumn, said wealthy people who moved to South Florida initially realised they did not need to relocate their companies. Mr Griffin, he said, later recognised that the region needed “a talent anchor”.
