In our recent report, my colleagues and I found that the US labor market experienced a remarkable 8.6 million occupational shifts during the three years of the COVID-19 pandemic, 50 percent more than in the previous three-year period. While it’s impossible to trace individual moves, many people left their previous roles and landed better-paying jobs in other occupations. Most of these shifts involved people leaving industries such as food services, customer service, and office support.
Automation, fueled by generative AI, is a major driver of change in the job market—and it’s only getting started. By 2030, tasks that currently account for 30 percent of hours worked across the U.S. economy could be automated. However, we expect that generative AI can enhance the work of STEM, creative, and business professionals rather than eliminating their roles outright. The biggest automation-related job losses are likely to occur in categories such as office support, customer service, and food service, where we estimate that an additional 12 million occupational shifts could occur by 2030.
Beyond automation, federal investment in climate and infrastructure will also alter labor demand. The transition to a net-zero economy will likely erode employment in industries such as oil and gas while adding jobs in green industries, resulting in a modest net gain in employment but significant churn. Infrastructure projects will also increase demand in the construction sector, which is already facing a shortage of almost 400,000 workers in the U.S. Healthcare and transportation services are expected to see increased demand as the population ages and e-commerce grows.
These changes will produce both challenges and opportunities. The good news is we expect the U.S. to keep adding jobs in the future—and better-paying jobs on average. However, those jobs will require higher levels of education and skills, while some of the roles that typically do not require college degrees will be in decline. Workers in lower-wage jobs today (those making less than $38,000 a year) are up to 14 times more likely to need to change occupations in the years ahead than the highest earners. Women are also 1.5 times more likely to need to move into new occupations than men.
Many jobs of the future will involve more social-emotional and digital skills: things like building trust, influencing, showing empathy, interacting with technology, and defining technology needs. Although the demand for basic cognitive and manual skills is likely to decline, physical work is not going away. It may still account for just under one-third of work hours across the economy in the future, driven by growth in sectors such as transportation services, construction, and healthcare.
To navigate this rapidly evolving job landscape, individuals can focus on adding and honing the social-emotional and digital skills that will be in demand. While millennials and members of Gen Z have stronger digital skills on average, social-emotional skills are not easy to build, particularly with limited interaction coming out of three years of COVID, with more work being done remotely.
As previous MGI research has shown, a great deal of skills development happens on the job. We found that work experience contributes 40 percent of the average individual’s lifetime earnings in the United States, and 50 percent of an individual’s lifetime earnings around the world. Skills learned through work experience are an even bigger determinant for people without fewer educational credentials who start out in lower-wage work. This underscores the importance of mentorship and strong middle managers.
Change is not only happening on the demand side of the labor market; labor supply is changing, too. America is aging: while 12.3 percent of the US population was over age 65 in 2000, that share was up to 17.2 percent in 2022. Labor force participation is also dropping, from 67 percent in 2000 to 62.5 percent in December 2023.
Productivity improvements, from generative AI or elsewhere, could help relieve some of this pressure, but employers are likely to have to cope with continued labor shortages. Navigating this will call for hiring based on skills, competencies, and potential rather than just credentials. Employers can also recruit from traditionally overlooked populations, such as rural workers and people with disabilities. Additionally, training will need to keep pace with evolving needs—and the nation as a whole will need to invest in reskilling and upskilling programs at scale.
The future of work is moving fast. The pandemic has shown us that workers are willing and able to change career paths, and a tighter labor market has encouraged companies to hire from broader applicant pools. This adaptability is cause for optimism—but not complacency.
This article originally appeared in Forbes.