McKinsey: Jobs lost, jobs gained: Workforce transitions in time of automation

A real Mckinsey presentation on the effect on jobs due to the impact of automation.

McKinsey: Jobs lost, jobs gained: Workforce transitions in time of automation

Key Learnings from the Presentation

The McKinsey Global Institute’s report “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation,” delivered by Susan Lund on September 21, 2017, delves into the transformative impact of automation on the workforce, offering historical context, current trends, and future projections. Below is a structured summary of the report’s key findings and insights.

Historical Lessons on Automation

• Historical Context: Over time, automation and new technologies have often led to the decline of jobs in certain sectors, but this has been counterbalanced by the creation of new jobs in emerging sectors.
• PC Revolution: The introduction of PCs is a prime example, where from 1980 to 2015, the net creation of jobs related to PCs amounted to approximately 15.8 million in the U.S., despite the destruction of some roles.
• Ford Model T Case Study: The automation of the Ford Model T assembly line led to increased productivity and employment due to higher sales at lower prices, demonstrating how automation can stimulate job growth by unlocking latent demand.

Impact of Automation on Occupations

• Activity-Based Analysis: The report emphasizes the importance of analyzing occupations by the activities they comprise, revealing that about 51% of activities in the U.S. economy have a high potential for automation, affecting $2.7 trillion in wages.
• Susceptible Activities: Activities involving predictable physical work, data processing, and data collection are most susceptible to automation.
• Education and Automation: Occupations requiring higher education levels and experience have lower automation potential, highlighting the protective effect of advanced skills and knowledge.

Future Projections and Implications

• Automation Potential by Sector: The potential for automation varies by sector, with accommodation and food services, manufacturing, and agriculture among the highest. Conversely, sectors like education and healthcare have lower automation potential due to the nature of their activities.
• Employment Impact by 2030: In the earliest automation adoption scenario, up to 47% of work hours in the U.S. could be automated by 2030. However, this impact will vary significantly across different countries and sectors.

Key Takeaways and Actionable Insights

• Broad Implications: While few occupations are entirely automatable, over 60% have at least 30% of their activities that are technically automatable, underscoring the broad impact of automation across the workforce.
• Strategic Responses: To mitigate the impact of automation, there’s a need for strategic responses focusing on education, re-skilling, and workforce transition programs to prepare for shifts in employment and the creation of new job categories.
• Opportunities for Growth: Just as historical transitions have shown, the current wave of automation presents opportunities for economic growth and job creation in new and emerging sectors, necessitating a proactive and adaptive approach to workforce development and policy-making.

About McKinsey

McKinsey & Company stands as a premier entity in the global management consulting sphere, initiated by James O. McKinsey in 1926. Anchored in New York City, this firm has carved a distinguished position in the consulting arena, offering strategic guidance across the globe to a diverse clientele that includes businesses, governments, and various institutions.

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