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Reports Predict That Millions of Low-Wage Workers Will Need to Shift Occupations in Next Decade

  • Forecasts anticipate that COVID-19 will accelerate low-wage job losses over the next decade
  • Pandemic-driven shifts and ongoing trends such as increased automation and e-commerce expected to have major impact in sectors such as food service and customer service
  • One report encourages greater development of digital infrastructure and retraining programs to assist workers in moving to more in-demand sectors with higher wages

Summary by Dirk Langeveld

A pair of labor forecasts is warning that the COVID-19 pandemic is likely to accelerate the loss of low-wage jobs in several sectors over the next decade, and that keeping these workers employed will require training them for positions in higher paying fields poised to experience greater growth.

A recently released McKinsey & Company report looks at the likely shift in the labor market, with other reports to follow on how the pandemic has influenced consumption trends as well as productivity and innovation. The Bureau of Labor Statistics has issued a long-term forecast on the anticipated change in demand for various professions.

The McKinsey report says the pandemic has accelerated several trends that were affecting the labor market prior to the crisis, such as the increasing adoption of automation, digital platforms, and remote work. It forecasts that up to 4.3 million job losses could occur in low-wage positions, particularly areas such as food service, customer service, office support, and warehousing.

Growth is anticipated in health care, STEM fields, management, and transportation. This would result in the growth of skilled, higher wage jobs.

Prior to the pandemic, McKinsey estimated that 7.9 percent of workers would need to move to a higher wage position in order to remain employed. It revised this figure to 10.1 percent to account for the shift caused by COVID-19.

More than half of low-wage workers may need to change careers and acquire more skills in order to remain employed, as the scarcity in low-wage positions makes it less feasible to transition from one sector to another. Women, minorities, and those without a college degree are most likely to be confronted with this challenge.

The BLS report also anticipates a decline in hospitality and travel jobs alongside growth in tech-driven jobs, as well as more jobs created through investments in public health. It says this shift will create fewer opportunities for people who completed a high school diploma or less.

McKinsey finds that the pandemic has spurred greater investments in the already existing move toward automation and artificial intelligence – particularly in areas such as manufacturing, grocery stores, food service, and warehouses – which is further contributing to the erosion of low-wage jobs. The report says the need for workforce development will become more crucial, and that governments and businesses can meet this demand by improving digital infrastructure and offering retraining programs.

McKinsey anticipates that the pandemic will have minimal impact on office environments aside from more permissive remote work arrangements, and little change to outdoor professions such as farming and construction. It also predicts that the digital shift in customer interaction is likely to continue after the pandemic, along with other lasting effects such as diminished demand for travel and leisure.

This report suggests that about one in four workers in advanced economies could work remotely, which could lead to a significant reduction in urban office space as well as ripple effects such as less business for downtown restaurants, public transit, business travel, and accommodations. However, it also says office setups are likely to see a healthy rebound after the pandemic, as certain tasks such as negotiations and providing sensitive feedback are better done in person.

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