News

What AI Will Mean for U.S. Hiring Practices: Report

• By David Ramel
• 08/14/2023

While many studies raise concerns about AI potentially displacing jobs, several indicators point to a net positive impact on the workforce when AI is integrated into business operations. A management consultancy has outlined strategies for organizations to adapt their hiring practices in response to the changing employment landscape.

A recent report from McKinsey & Company acknowledges the significant influence of AI on the U.S. labor market but emphasizes that the disruptions caused are not solely focused on job elimination. This research aligns with previous findings that suggest while AI may replace some jobs, it also leads to the creation and enhancement of others.

One key driver of these job disruptions is automation powered by generative AI. McKinsey's report, titled "Generative AI and the Future of Work in America," suggests that this technology may contribute to the ongoing shift in occupational patterns observed during the pandemic. This shift has seen individuals moving away from roles in food services, in-person sales, and office support to pursue different career paths."

"By 2030, activities that account for up to 30 percent of hours currently worked across the US economy could be automated -- a trend accelerated by generative AI," the firm noted in a report highlight. "However, we see generative AI enhancing the way STEM [science, technology, engineering and mathematics], creative, and business and legal professionals work rather than eliminating a significant number of jobs outright."

The report also notes how an additional 12 million occupational transitions may be needed by 2030 as people leave shrinking occupations, which could result in more higher-wage jobs. Meanwhile, those in lower-wage jobs are up to 14 times more likely to need to change occupations than those in highest-wage positions, which will require additional skills for successful transitions.

And that, McKinsey said, will require a big ramp-up in workforce development, which already was a big problem as organizations worldwide have scrambled to secure hard-to-find tech talent through education, upskilling, outsourcing and other techniques.

With AI making talent-hunting even harder, one strategy organizations can follow is to hire for skills and competencies rather than credentials and deliver training that keeps pace with their evolving needs.

"Most employers can benefit from using a broader lens in hiring," the report said. "Instead of insisting on prior experience that matches the responsibilities of an open role as closely as possible, organizations can evaluate candidates on their capacity to learn, their intrinsic capabilities, and their transferable skills."

Hiring people with potential and training them on the job can not only address labor shortages, but also provide new opportunities to people who need them, McKinsey said.

However, organizations might need to target previously overlooked workforce populations to fill in the gaps, the report said, such as:

• Retirees who want to return to work
• People with employment gaps
• Formerly incarcerated people
• People with disabilities who cannot commute and those in rural communities, who can benefit from the remote work trend

"Filling the jobs of the future is an opportunity to make the labor market more inclusive," the report said. "Employers may need to reconsider whether some credential requirements are really necessary. Some 60 percent of US workers have skills gained through experience but lack four-year college degrees. Initiatives like Tear the Paper Ceiling are supporting workers who have experience but not degrees by raising awareness among employers and providing resources."

That Tear the Paper Ceiling initiative says: "Millions of workers with in-demand skills and experience, overlooked for higher-wage jobs because they don't have a bachelor's degree. Companies stuck on a talent treadmill, desperate to build a reliable pipeline of skilled workers. Two allies separated by an insidious and invisible barrier. Now the enemy has a name. The paper ceiling."

Following recommendations such as those in the McKinsey report and several others might determine just how successful organizations are in the new era of generative AI, which is being embraced by enterprises in many different ways.