AI and automation will cut demand for about 36 million U.S. jobs by 2035 while growth elsewhere creates about 41 million, according to a new report from the McKinsey Global Institute.
The jobs will exist, the authors argue, but it’s getting workers into them that’s the problem.
“The next decade’s challenge is mobility, not scarcity,” they wrote.
In its base case, about 11 million workers, roughly 7% of the workforce, would need to leave their occupations entirely, with a range of 6 million to 16 million. That’s close to the firm’s 2023 forecast of 12 million career switches by 2030.
Most of those workers would have to jump into an entirely different field, such as retail to healthcare. McKinsey estimates about 770,000 people a year would need to make that kind of switch, roughly 3.6 times the historical average. About 788,000 workers a year made similar moves between 2019 and 2022, during the pandemic, without lasting damage, the report notes.
That would represent a big change for workers, who already move between employers less often than they did in the late 1990s and early 2000s, apart from a brief surge during the pandemic, the report notes.
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.”
Geography is the other hurdle. About 76% of growing jobs can’t be done remotely, McKinsey found, including work in hospitals, on construction sites, and in data centers.
Florida’s research has long tracked how different kinds of work settle 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
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.”