Future of work

This report documents the effects of technological change on the future of work, focusing on both backward-looking and forward-looking analyses. Backward-looking analysis evaluates the degree to which occupations were automated from 1970 to 2016. Similarly, forward-looking analysis focuses on the risk of automation for occupations by the year 2030. The authors use several US datasets, such as the Census and American Community Survey (ACS), to examine changes in the labour force by occupation and geography. To estimate future automation rates, the authors use McKinsey’s estimates of the likelihood of an occupation being replaced by an automated process by 2030. These estimates rank each occupation on a scale from 0 to 100, with 100 representing certainty that the occupation will be lost to automation.

In the backward-looking analysis, the report finds that employment has grown overall, but with a net loss of middle-income occupations to automation, resulting in a “hollowed out” labour market. In other words, the increase in employment has been greatest at the high and low ends of wage distribution. Not surprisingly, middle-wage jobs in decline are typically those most closely associated with routine tasks. In terms of the forward-looking analysis, the report finds that while automation will affect tasks in most occupations, it will have a muted effect on total employment. This is due, in part, to new machines and software that will complement tasks in existing occupations, rather than substituting the entire set of tasks that constitute the job. Importantly, the authors mention several limitations associated with their analysis. For example, they make an important distinction between technological possibilities and the adoption of new technology, which is very difficult to model. Second, they cannot predict what new jobs or tasks might be created by new technologies. Finally, the authors note potential policy initiatives to help smooth labour market transitions, including promoting a constant learning mindset towards re-skilling, and improving safety nets for workers struggling with changes in their jobs.