McKinsey: Automation could absorb half of U.S. work hours by 2035. The bigger challenge is skills

A new study from the McKinsey Global Institute (MGI) suggests that AI could automate more than half of U.S. work hours by 2035, but the bigger challenge lies in the skills required for the changing job landscape. While technological and economic changes could reduce labor demand by the equivalent of 36 million jobs, economic growth could create demand for about 41 million jobs. Thus, the U.S. might have more jobs in 2035 than today, despite the changes in how people work and the skills they need.

However, new jobs in fields like management and law may require different skills than those currently possessed by workers. AI could help people do their jobs better, not necessarily replace them outright. New responsibilities may emerge, such as checking AI-generated work and ensuring its responsible use, necessitating additional training. Office and administrative support roles face the most significant exposure to automation, with roughly 80% of their current work hours potentially automated by 2035.

The study estimates that about 11 million Americans may need to switch from declining occupations to new ones. Some workers may stay in their fields as their work evolves, while roughly 770,000 workers a year might need to change occupations—a rate three and a half times higher than the historical average. A considerable hurdle is the need for credentials; around 85% of growing employment requires a credential or certification, with 38% legally required and 47% preferred by employers.

Companies could broaden their talent pools by reevaluating essential qualifications and placing greater emphasis on proven skills and experience. MGI recommends monitoring whether employees transition into new roles, if companies fill more positions internally, and how workers perform, not solely focusing on AI-related cost savings.

Finance leaders should examine how employees utilize the time freed up by AI—whether it enhances customer service, fosters new ideas, expands the business, or tackles more complex tasks. The critical question is not just how much work AI can perform but how businesses leverage the time saved.