Byron Auguste is a director of McKinsey & Company based in Washington, D.C. Susan Lund is research director of the McKinsey Global Institute, based in Washington, D.C. James Manyika is a director of the McKinsey Global Institute based in San Francisco.
Today, 40 million workers across advanced economies are unemployed. Yet businesses can't fill job openings because they can't find qualified workers. This labor market dysfunction is a manifestation of the rapid evolution of the nature of work and the inability of worker skills — and labor market institutions — to keep up with the pace of creative destruction in business. As a result of these changes, many jobs that were lost during the recession may be gone for good — bad news for the workers who held them and perhaps for the economies in which they live, too. To meet the long-range challenge, wealthy nations will need to find new approaches that go beyond simply stimulating growth.
Here are five trends from the McKinsey Global Institute's latest discussion paper, "Help wanted: The Future of Work in Advanced Economies," that explore the forces shaping which jobs are created, who fills them, where they are located, and what they pay.
1. Technology is changing the nature of work. Over the past three decades, technology has altered how production and routine transaction work is done — substituting machines for assembly-line workers and ATMs for bank tellers, for example. The next frontier is "interaction work," the fastest-growing employment category, which s includes low-skill jobs that must be done face face-to to-face (such as day-care work), as well as the managers and professionals who are the costliest corporate resources. One shift underway is for companies to disaggregate these jobs into multiple tasks-and reassigning the routine tasks to lower-skill employees, the way a paralegal takes on the routine work of attorneys. This model applies to other professions and to corporate roles, such as human-resources managers, which in many companies has been broken down into subspecialties (benefits administration, compensation, etc.). Jobs today are also becoming more "virtual" — with broadband connections, cloud computing, and other technology, many interaction jobs can be conducted "anytime, anywhere," making it possible for employers to engage talent (full-time employees or contract workers) on an as-needed basis.
2. The growing skills mismatch. The divergence between the prospects of highly educated workers with advanced skills and those with less education is growing. In the United States, the unemployment rate for college graduates has never topped 5 percent since 2008, while the unemployment rate for high school drop-outs rose to more than 15 percent at its peak in 2009 and 2010. Across OECD countries, the trend is clear: jobs that are being created are increasingly for workers with more education and skills. As a result, many workers are being left behind. By 2020, MGI projects that the United States may be short 1.5 million workers with college or graduate degrees — and face a surfeit of nearly 6 million workers who have not completed high school. Similarly, France's employers could be looking for 2.2 million more baccalaureate holders than will be available, while that nation will have an oversupply of 2.3 million workers who do not have their "bacs." If this skill mismatch persists, advanced economies will face a growing pool of permanently unemployed.