| DELIVERING ON DIVERSITY, GENDER EQUALITY, AND INCLUSION
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| McKinsey stands with Ukraine. We share with readers this statement from Bob Sternfels, McKinsey’s global managing partner, on the Russian government’s brutal and senseless invasion of Ukraine, as well as the actions that McKinsey is taking to support the Ukrainian people. |
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| In this issue, we look at how the US can improve the experiences of workers, why automation isn’t an immutable force, and how companies can open the door to new talent. |
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| David Autor is a leading American labor economist and a professor of economics at MIT. In the latest episode of the McKinsey Global Institute’s Forward Thinking podcast, he discusses how the US can provide more economic security to workers; how policies, institutions, and norms shape the distributional consequences of automation; and how employers can expand opportunity by rethinking hiring requirements. Here are four highlights from that engaged discussion. |
| Businesses can open the door. As the MIT professor points out, far less than half the US population has a four-year college degree—and the figure is markedly lower for Black, Hispanic, and Latinx Americans. Only 38 percent of Americans aged 25 and older have a bachelor’s degree; one in five Hispanic and Latinx Americans and less than 30 percent of Black Americans have graduated from a four-year college. Dr. Autor says that businesses should open the door to more talent. |
| The economist is not alone in calling for change. In this podcast episode, two other leading voices on the subject lay out the case for a more skills-based labor market.
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| The US government is also setting an example. This week, the Biden administration announced that it is moving to expand skills-based hiring—and it challenged employers to do the same. |
| There’s a bright spot at the bottom. Professor Autor observes that while many Americans are seeing nominal wage gains without seeing real wage gains, that’s not the case at the bottom of the labor market, where wage gains are outpacing inflation: “In hospitality and leisure, wages are increasing about 12 percent a year. Inflation’s running about 6 percent. So that’s a good thing.” |
| That’s a statement that Dr. Autor declines to qualify. After all, he says, most people are workers. |
| The economist knows very well that “businesses aren’t thrilled about this”—but he says it’s high time that real wages went up. Over the past four decades, Dr. Autor says, labor markets have gotten worse for Americans without college degrees—due in large part to automation. Most Americans without a college degree now work in service jobs—often “low-paid work, with almost no collective bargaining, and minimum wage levels that are in real terms the same as they were in 1950.” |
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| Automation might be inevitable—but the results of it aren’t. Dr. Autor notes that the same underlying forces have played out quite differently for workers in other industrialized countries. Advanced economies in Europe and Asia have had to contend with technological changes along with globalization and demographic challenges.
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| “And yet, there’s a whole spectrum of outcomes that they have produced. And the US is kind of at the left-hand tail of badness of those outcomes,” in terms of median wages, job quality, job security, and workers’ living standards. |
| One reason, according to Dr. Autor: differences in the role of unions. He explains that “in the US context, with the lack of collective bargaining and very limited efforts to hold up the floor, automation unfolded with very few checks and balances.” The bottom line, he says, is that while automation creates certain pressures, “how those play out is a function of the market forces, the institutional structures, the political economy, and even the norms.” |
| On that note, here’s a look at what happened when Germany instituted a national minimum wage. Plus: Dr. Michael Spence on the ongoing rise in inequality, Dr. Daron Acemoglu on AI and the political economy of growth, and more from McKinsey on making growth both sustainable and inclusive. |
| Where there’s political will, there’s a way. Professor Autor puts it plainly: “We have all the tools we need to be prosperous and to actually use the improving productivity and the growing capability of all the technologies we’re creating to raise standards of living for many, many people.” What’s needed, he says, is political will. |
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