McKinsey: Automation could absorb half of U.S. work hours by 2035. The bigger challenge is skills

Good morning. Projections indicate that artificial intelligence (AI) could automate more than half of the work hours in the United States within the next decade. However, this does not imply that a significant portion of the workforce will cease to exist.

This is a pivotal conclusion drawn from recent research conducted by the McKinsey Global Institute (MGI). The report anticipates that advancements in technology and shifts in the economy could result in a reduction of labor demand equivalent to approximately 36 million jobs over the forthcoming decade.

Conversely, economic expansion—including growth within AI-focused industries and services—could generate demand for around 41 million jobs. Consequently, the United States may have more job opportunities available in 2035 compared to current numbers, even amidst a transformation in the nature of work and the requisite skills.

The Skills Gap

A significant challenge emerges from the fact that the newly created jobs may necessitate skills that a portion of the current workforce may not possess. According to the report, in sectors such as management and law—where judgment, coordination, and accountability are vital—AI is more likely to assist individuals in performing their responsibilities rather than replace them entirely. Furthermore, new tasks may be introduced that will require training, ranging from validating AI-generated outputs to ensuring ethical usage and restructuring workflows.

Particularly susceptible to automation are office and administrative support roles, where approximately 80% of current work hours could be automated by 2035. While this does not equate to an 80% loss of jobs, it indicates a considerable transformation within these roles.

Occupational Transitions Required

For many workers, adaptation may necessitate transitioning into entirely different fields. MGI estimates that around 11 million Americans may need to shift from declining occupations to new ones. Others might retain their positions as their tasks evolve. Nonetheless, roughly 770,000 workers annually may require occupation changes over the next decade—approximately 3.6 times the historical norm, as noted by McKinsey senior partners Eric Kutcher, the firm’s former CFO, and Tanguy Catlin, director of MGI.

Credentials and Qualifications

The availability of credentials also poses a significant barrier. About 85% of emerging employment opportunities necessitate a credential or certification. Of these positions, 38% legally require credentialing, while an additional 47% are preferred by employers. The research implies that organizations may broaden their talent acquisition strategies by reevaluating essential qualifications and placing greater emphasis on practical skills and experience.

Recommendations for Measuring Impact

MGI advocates for monitoring the extent to which employees transition into new roles, the frequency with which companies fill positions internally, and the overall outcomes for workers, rather than solely focusing on AI-driven cost efficiencies.

Finance executives might analyze how employees utilize the time released by AI. Is this time leveraged to enhance customer service, foster innovation, expand the business, or engage in more complex tasks? Alternatively, does it result simply in a reduction of time spent on existing responsibilities?

The fundamental question transcends the volume of work AI can shoulder. It centers on the strategic utilization of the time saved by businesses.