Artificial intelligence and automation could fundamentally reshape the labour market over the next decade, forcing millions of workers to change occupations even as new jobs emerge elsewhere in the economy.
According to a new report from the McKinsey Global Institute (MGI), demand for approximately 36 million US jobs could decline by 2035, while growth in other sectors could create around 41 million new jobs. The report suggests the bigger challenge will not be a shortage of work, but helping workers transition into new roles.
“The next decade’s challenge is mobility, not scarcity,” the report states.
While the findings focus on the United States, they offer a glimpse into the workforce shifts many economies may face as AI adoption accelerates across industries.
Millions could be forced to change occupations
McKinsey estimates that around 11 million workers, representing roughly 7% of the US workforce, may need to leave their current occupations entirely by 2035 under its base-case scenario.
The consultancy’s projections range from 6 million to 16 million workers, depending on how rapidly automation and AI technologies are adopted.
The estimate is broadly consistent with McKinsey’s earlier 2023 forecast, which projected around 12 million occupational transitions by 2030.
Many of these workers may not simply move to a new employer. Instead, they could need to shift into entirely different sectors.
According to the report:
- Around 770,000 workers annually may need to switch into completely different occupations
- This is approximately 3.6 times higher than the historical average
- Similar levels of occupational mobility were observed between 2019 and 2022 during the pandemic period
- Roughly one in 14 workers could ultimately require a career change
The report notes that workers today generally switch employers less frequently than they did during the late 1990s and early 2000s, making large-scale occupational transitions more challenging.
Lower-wage workers face greater disruption
The impact of AI and automation is unlikely to be evenly distributed across the workforce.
According to McKinsey, declining demand is expected to be concentrated in:
- Office and administrative support roles
- Retail occupations
- Transportation jobs
Many of these positions sit within lower-paying segments of the labour market.
The report found that lower-wage workers are 7.6 times more likely than higher-wage workers to require a transition into a different occupation.
Meanwhile, job growth is expected to occur primarily in:
- Healthcare
- Construction
- Management occupations
These sectors are projected to absorb a significant share of workers displaced from shrinking job categories.
Skills and credentials emerge as key barriers
One of the report’s most striking findings concerns the difficulty many workers may face when attempting to move into growing occupations.
McKinsey found that only one in seven displaced workers has a direct pathway into a growing role requiring limited retraining while offering comparable pay.
Nearly half face what the consultancy describes as an “unpaved” pathway because of substantial skills gaps or credential requirements.
The report also found that approximately 85% of growing jobs require a credential, highlighting the increasing importance of formal qualifications and workforce development programmes.
For employers and policymakers, the findings reinforce the need for reskilling initiatives as workforce demands evolve.
Workforce expectations are changing
Speaking to Fortune, urbanist and author Richard Florida, who was not involved in the McKinsey research, said labour market transformations of this scale have historical precedents.
Florida noted that agriculture and manufacturing once employed significantly larger shares of the workforce before technological progress altered employment patterns.
He also suggested new forms of work may emerge in areas such as wellness and personal services, creating opportunities for workers displaced from traditional service occupations.
At the same time, he observed that employers are increasingly seeking workers who can collaborate, engage with customers and contribute to broader business outcomes rather than relying solely on technical expertise.
Geography could complicate workforce transitions
The report identifies geography as another major challenge.
According to McKinsey, around 76% of growing jobs cannot be performed remotely, including positions in hospitals, construction sites and data centres.
This could require workers to relocate in pursuit of opportunities, creating additional barriers for those already navigating career transitions.
Florida told Fortune that talent continues to gravitate towards locations offering strong economic prospects, even when workers may not share local political or cultural preferences.
The trend is prompting cities and regions to invest more heavily in education and talent infrastructure to attract skilled workers and support future economic growth.
A mobility challenge rather than a jobs crisis
The McKinsey findings suggest the future of work may be shaped less by widespread job shortages and more by workforce mobility.
While AI and automation are expected to reduce demand in several traditional occupations, the report indicates new opportunities will emerge across healthcare, construction, management and other sectors.
The central question for employers, educators and policymakers may be whether workers can acquire the skills, credentials and support needed to move into those roles quickly enough. As AI adoption accelerates, the ability to navigate career transitions could become one of the defining workforce challenges of the next decade.
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