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Job Market in the US and Future

The job market in the United States has changed significantly over the years. The kind of jobs available in the market today are markedly different from two decades ago. Various dramatic events such as the Great Recession and the COVID-19 pandemic have reshaped the labor market. In the coming decade, the next wave of automation technologies will accelerate the pace of change. While millions of jobs are likely to be phased out, new ones will also be created.

Employment Outlook in the United States

Job growth in the United States has been phenomenal, but employment is yet to be recovered. As services industries reopened post-pandemic in 2021, job growth surged suddenly. However, the unusually strong growth is only constrained to certain industries such as personal care, mining, leisure and hospitality, and education (The Conference Board, 2021). On the contrary, most other sectors in the market have the same rate as before the pandemic. Nonetheless, the economic recovery from the pandemic has been stronger in the United States compared to other advanced economies (Pew Research Center, 2020).

The United States workplace has been transformed by changing power dynamics, globalization, and the growing economic role of financial markets. New and emerging technologies, such as big data, robotics, and artificial intelligence are playing increasingly shaping the jobs of the future. The technologies are shifting jobs between sectors, changing how people connect to work, and transforming how tasks are done in existing jobs (Berkeley Economic Review, 2020). With the integration of technology, traditional employment now looks more like gig work characterized by more precarious working conditions, unpredictable work schedules, and flexible rewards.

Growing Technology Use

The pace of technology adoption across industries is expected to remain unabated while accelerating in some areas. Specifically, the adoption of big data, e-commerce, and cloud computing will remain high priorities for business leaders. The trend, which emerged a few years before the pandemic will shape every aspect of future businesses. The majority of employers are set to digitize their working processes, including expansion of remote work. At the same time, employers are expected to take steps toward creating a sense of community connection to address concerns about productivity and well-being.

Going by the trend, a new generation of smart machines that are fueled by advancements in robotics and artificial intelligence (AI) is likely to replace a large proportion of existing human jobs. The adoption of robotics and AI is expected to cause substantial disruptions in the job market. As companies responded to the impacts of the coronavirus pandemic, they fast-tracked the use of new technologies in a bid to enhance productivity, slash costs, and be less reliant on real-life people. Although many people lost their jobs due to the pandemic, AI and robotics will take away even more jobs from workers. Automation is likely to displace over 85 million jobs by 2025. Nonetheless, AI and robotics have the potential of bringing greater economic benefits and adding about $15 trillion to the global GDP by 2030 (American University, 2021). With the additional wealth, the demand for many jobs will increase. However, it may also displace many existing jobs.

The continued adoption of technology by companies will transform jobs, tasks, and skills by 2025. This means that a significant portion of companies will reduce their workforce after integrating technology. Other companies will expand their use of contractors for task-specialized work while others will expand their workforce because of technology integration. With more integrations, the number of time humans spend on the current task at work will be equal to that of machines by 2025 (Brown, 2020). A significant share of companies is also expected to make changes to their value chains, locations, and the size of their workforce because of factors beyond technology.

If the changes in technology are harnessed properly, they will create new industries, jobs, and occupations. Instead of simply replacing people and use of manual labor, use of technology will augment it. Useful technology can be a boon to people with disabilities and help in increasing human productivity and job quality. However, maximizing the usefulness of new technologies will require strong regulations, policies, standards, and innovative business practices that will increase economic security and quality work (The Conference Board, 2021). It will mean building a coalition of workers and their advocates, policymakers, and the private sector.

The Shift to Remote Work

Remote work has become popular and is expected to stay even after the pandemic. Most employers are of the opinion that remote work does not affect employee productivity negatively. In fact. Remote work is associated with improved productivity and employee satisfaction. This has seen a growing share of firms shifting to the remote work model permanently (The Conference Board, 2021). The COVID-19 pandemic has also seen an increase in the share of job offers mentioning remote work, especially in finance, insurance, and computer-related occupations.

As remote work becomes more popular, employers are geographically expanding their employee pools. Employers can now hire workers in a cheaper labor market on a remote basis, and save on labor costs. The trend has been growing from about 40% of jobs in Silicon Valley tech companies in 2018 to about two-thirds in 2021 (McKinsey & Company, 2019). Although most of the increase has occurred during the pandemic, remote work is expected to be a norm in the future.

Labor Shortages

Despite the high unemployment rates in the country, severe labor shortages are expected to persist. The labor market is tight due to the unusual dynamics of the pandemic and post-pandemic situation. The combination of the surge in demand and stagnant labor supply has created recruiting difficulties in many industries. The share of employers dealing with unfilled positions is still high, with an elevated share of workers who are voluntarily quitting their job and the time companies are taking to fill open positions (World Economic Forum, 2020). The issue is predominant in low-paying jobs, such as manual services and blue-collar occupations in which employers are facing recruiting and retention difficulties.

Over the next few years, skills gaps are expected to continue being high as in-demand skills in different jobs. The top skills and skills groups that continue to rise in prominence include problem-solving, critical thinking and analysis, and skills in self-management like stress tolerance, active learning, flexibility, and resilience. On average, companies project that around 40% of employees will require reskilling of about 6 months (Irreview, 2022). In addition, employment has been on the rise in occupations that require more preparation.

In addition to skills gain, there are also concerns about technologies disrupting the job market and causing job losses. While automation will create new and better job opportunities, it displace people without the needed skills. New technology may erase the need for physical labor but will leave unskilled workers without a home in the new environment (World Economic Forum, 2020). Workers in industries like baking and financial services will either lose their jobs to find a way to reinvent themselves. In most cases, millions of individuals in the current job markets will need to be reskilled to perform in the new technological environment.

The Bottom Line

Technology will change the future of the job market in the United States. Although the consequences will differ across industries, technologies such as AI will lead to increased productivity, the increased importance of human skills, and specialization in job roles. The gains of the evolving job market will include economic growth, even though they will not be evenly distributed. Automation will complement jobs in fields such as healthcare but replace jobs in industries that rely on standard routine.

References

American University. (2021, February 18). AI and the future of work in the United States. https://www.american.edu/sis/centers/security-technology/ai-and-the-future-of-work-in-the-united-states.cfm

Berkeley Economic Review. (2020). The future of employment in the age of robots and AI. Berkeley Economic Review — UC Berkeley’s Premier Undergraduate Economics Journal. https://econreview.berkeley.edu/the-future-of-employment-in-the-age-of-robots-and-ai/

Brown, A. (2020, August 6). Key findings about America’s workforce and changing job market. Pew Research Center. https://www.pewresearch.org/fact-tank/2016/10/06/key-findings-about-the-american-workforce-and-the-changing-job-market/

The Conference Board. (2021, May 1). The Reimagined workplace a year later: Human capital responses to the COVID-19 pandemic. https://www.conference-board.org/topics/natural-disasters-pandemics/reimagined-workplace-a-year-later

Holzer, H. J. (n.d.). THE US LABOR MARKET IN 2050. Brookings — Quality. Independence. Impact. https://www.brookings.edu/wp-content/uploads/2019/05/201905_Holzer-The-US-Labor-Market-in-2050-Supply-Demand-and-Public-Policy.pdf

Irreview. (2022, April 1). Future prospects of the American job market — IR review. IR Review. https://www.irreview.org/articles/future-prospects-of-the-american-job-market

McKinsey & Company. (2019, July 11). The future of work in America: People and places, today and tomorrow. https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-in-america-people-and-places-today-and-tomorrow

Pew Research Center. (2020, August 6). AI, robotics, and the future of jobs. Pew Research Center: Internet, Science & Tech. https://www.pewresearch.org/internet/2014/08/06/future-of-jobs/

World Economic Forum. (2020). The Future of Jobs Report. https://www3.weforum.org/docs/WEF_Future_of_Jobs_2020.pdf

World Economic Forum. (2020). Don’t fear AI. The tech will lead to long-term job growth. https://www.weforum.org/agenda/2020/10/dont-fear-ai-it-will-lead-to-long-term-job-growth/