Jul 27, 2023 - Economy

Low-wage earners are 14 times more likely to lose jobs to AI, report finds

Illustration of a uniform name patch with the letters "A.I." stitched

Illustration: Annelise Capossela/Axios

The workers most likely to be replaced by advances in artificial intelligence are those in lower-wage occupations, concludes a new report from the McKinsey Global Institute.

The big picture: This isn't necessarily a story of mass job loss — these workers are likely to find higher-paying jobs in different industries, part of a broader trend already underway.

  • Meanwhile, higher-wage earners will also be affected by AI, but they're less likely to get thrown out of work. "Your job will shift and change, but you won't have to find a new job," says Kweilin Ellingrud, a McKinsey Global Institute director and report co-author.

State of play: Automation, accelerated by the needs of the pandemic era, has already begun displacing low-wage workers across four different fields.

  • Those include jobs in office support, food service (waiters/waitresses/fast-food checkout), customer service (retail clerks), and production workers who move material or work machines.
  • You've already seen some of this: Ordering kiosks at McDonald's replaced front-line staff; self-checkouts replaced CVS cashiers; and front-line office staff never came back after the fully remote days of COVID.
  • AI will turbocharge these kinds of changes. "The in-going model was about 21% of activities can be automated away. When we layer on generative AI that jumps to 30%," says Ellingrud.
  • A prominent example is in customer call centers, where AI can replace more humans taking calls or conducting chats.

By the numbers: 11.8 million workers in these occupations may need to find a new kind of job by 2030, the report says.

  • Some will move into higher-paying roles in the same industry (a grocery cashier becomes a manager, say); 9 million may shift industries entirely.
  • Those earning $38,200 a year or less are up to 14 times more likely to need to change occupations by 2030 than the highest earners.
  • Jobs in these categories, making up the two lowest wage quintiles, are disproportionately held by those with less education, women and people of color.

Key point: The jobs in these four categories make up 39% of jobs in the U.S., per the report. The defining question is what happens to them.

  • "It's the biggest question facing our workforce today," says Ellingrud.

Zoom out: Based on what's happened in an incredibly dynamic labor market over the past three or so years, there's evidence of what could play out as these job categories diminish — and it's a positive story.

  • From 2019 to 2022, 8.6 million workers changed occupations, either switching fields entirely or moving into higher-paying work in the same field, per McKinsey's analysis. More than half of those shifts were among workers in these four categories.
  • The McKinsey report finds that AI and advancement in tech will likely spur job growth in higher-paying fields, and given current demographic trends (there's an overall labor shortage in the U.S.) that means employers are going to need those displaced workers.
  • The report suggests employers loosen some requirements in hiring — around education, for example, and that they expand training.

The bottom line: The transition could be bumpy, but advancements in technology might mean many workers transition to better-paying jobs.

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