There is a wide range of opinion on the coming technical automation trend. There are those who take the approach that there is little to worry about at present. Computer automation will assist, not replace humans. But there is another side to the argument, one that doesn’t rely on sweeping generalizations that point to industrial revolutions of the past always creating new jobs to replace those lost, with the most significant impact hitting advanced economies, such as the US and Germany. This more didactic approach seen in a recent McKinsey report takes a more in-depth look at technology’s full impact and predicts a significant shift in the workplace, with as many as one-third unemployed by 2030.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

McKinsey Report predicts - Human thinking is what is for the first time being replaced

When prognostications are created regarding job loss to technology, those in the “don’t worry” camp often point out that each industrial revolution has created a different type of job. Jobs were not lost on a net basis, as new kinds of work replaced the old.

But what these sometimes simple arguments often forget to consider is perhaps the most significant factor in the coming automation.

Never before in the history of humankind has an industrial revolution replaced human thinking.

With an understanding of the nature of this type of job loss comes a December McKinsey report, “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Change.”

Unlike the previous industrial revolution, which witnessed massive migration from farm work to manufacturing, the next wave of automation doesn’t replace human brawn, but rather the brain.

“For society as a whole, machines can take on work that is routine, dangerous, or dirty, and may allow us all to use our intrinsically human talents more fully and enjoy more leisure,” the report hopefully noted. “Yet even as we benefit, our societies will need to prepare for complex transitions ahead, as machines replace workers in many areas.”

Workers will be replaced by automation to different degrees

Workers will be replaced at various levels, with different geographic regions feeling different growing pains as well as benefits.

In advanced economies, those involved in predictable physical jobs are most likely at risk, followed by office support and unpredictable physical labor. Customer interaction jobs are unchanged while McKinsey thinks professionals, care providers and managers and executives will increase.

“Advanced economies (will be) more affected by automation than developing ones, reflecting higher wage rates and thus economic incentives to automate,” the report noted. “The extent to which these technologies displace workers will depend on the pace of their development and adoption, economic growth, and growth in demand for work.”

In the developing world, where worker costs are lower, unpredictable physical labor gets a boost post-automation, while customer interaction, care providers, educators, and builders all see marked increases.

Even as entire job functions might be eliminated, those jobs that remain will likely be dramatically impacted by automation. Sixty percent of occupations have job functions where at least 30% of the work could be automated.

“It will also create new occupations that do not exist today, much as technologies of the past have done,” the report said, touching a common theme. “Even with automation, the demand for work and workers could increase as economies grow, partly fueled by productivity growth enabled by technological progress.”

In the near term in developing countries, an aging population will create demand for healthcare jobs that will be difficult to replace entirely. Further, in developing countries, a robust infrastructure will be required to be built before automation can fully take hold.

Rising incomes create more demand, which creates more jobs, is the hope.

But while hoping for the best, the report notes that “income polarization could continue in the United States and other advanced economies, where demand for high-wage occupations may grow the most while middle-wage occupations decline.”

There is an even more pessimistic view depending on how one looks at the report and interprets the data.

What types of jobs will be created? Loads of high-quality ones (sarcasm) the report mentions the following growing rapidly regarding the US specifically:

  • Retail salespersons
  • Cashiers
  • Construction laborers
  • Combined food preparation and serving workers, including fast food (unclear what the difference is between this and the next one on the list)
  • Waiters and waitresses
  • First-line supervisors of retail sales workers

To be fair, there are some higher quality jobs also on the list (although it will likely lead to healthcare inflation), such as:

  • Registered nurses
  • Nursing assistants

In total, the US and Germany could expect to see one-third of people need to switch professions, which makes one wonder why Germany is so eager to flood the country with migrants.

Readers can judge for themselves and read the full McKinsey report here