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The U.S. labor market is shifting toward skilled labor as white-collar hiring slows

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America's job market increasingly appears to be splitting into two tracks, economists say, alongside a steady demand for skilled workers and a flagging interest in hiring more "knowledge-based" professionals.

The evidence can be found in the data, which shows a higher unemployment rate for professional and business services workers, and a lower one for people who work in manufacturing.

"It's a buyer's market for brain and a seller's market for brawn," said Aaron Terrazas, chief economist at the jobs and workplace search site Glassdoor.

On Friday, the Bureau of Labor Statistics will report the latest monthly payroll data for the U.S. economy. Estimates were for a gain of 240,000 for April, a lower pace than the 303,000 seen in March.

It's not that America is only - or even mostly - producing low-wage jobs. The health care industry continues to lead the employment boom, with an approximately 4.5% gain in payrolls over the past year, equating to some 750,000 new jobs. Other industries seeing strong growth include government jobs, certain sectors of social work, travel, tourism and the arts - alongside some manufacturing sectors.

But the overall labor market remains at something of a standstill, as seen in a report earlier this week showing the hiring rate continuing to drift sideways. At the same time, the rate of workers quitting or being laid off is also not showing much change. Economists led by Guy Berger at The Burning Glass Institute research group call it the "g reat s tay."

"It's a good time to have a job, but a not-so-good time to be actively looking for one," h e wrote in his Substack newsletter Wednesday.

Many American consumers have also begun reporting signs of a deteriorating job situation. In its latest report on consumer confidence, the Conference Board business group said respondents to its monthly survey reported feeling less positive about the current labor market and more concerned about future business conditions, job availability and income.

That echoed findings of the New York Federal Reserve's monthly survey of consumer expectations, which reported more survey respondents feeling pessimistic about losing their job or finding a new job. Respondents rated the average probability of losing their job in the next 12 months at almost 1 in 6 - above pre-pandemic levels and the highest reading since September 2020.

"On the margin, businesses are not as eager to add staff," said Sarah House, managing director and senior economist at Wells Fargo.

But why has payroll data remained strong? One reason is increased supply, thanks to rising participation rates in the workforce, as well as booming immigration.

"There is increased labor 'supply' for businesses that do want to hire or add staff," House said.

Yet, those trends are likely to diminish too, if they haven't already, she said.

One sign that the job market remains strong is that the number of individuals collecting unemployment is still very low.

"We're seeing a gradual and orderly slowing" in workers quitting and firms with job openings, said Joe Brusuelas, principal and chief economist for RSM US LLP. That is consistent with private sector firms "carefully managing their labor force."

On Wednesday, Federal Reserve Chair Jerome Powell said the central bank does not intend to change its key interest rate anytime soon even as its fight against accelerating price increases has stalled - and despite the apparent softening of the labor market.

He said the central bank had "the luxury of strong growth and a strong labor market" that will allow it to maintain interest rates until inflation comes down further - and ruled out any implication that there might be "stagflation" in the economy.

But he invoked the prospect of a rate cut should the labor market "unexpectedly" weaken.

As inflation continues to moderate, Powell said, "We're now focusing on the other goal," referring to the Fed's dual mandate of balancing price growth with jobs.

"The employment goal now comes back into focus. So we are focusing on it," he said.

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The U.S. labor market is shifting toward skilled labor as white-collar hiring slows

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The evidence can be found in the data, which shows higher unemployment for workers in business services and a lower one for people who work in manufacturing.

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I'm LinkedIn's chief economist and this is how AI will change the global labor market (but not how you think)

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We're moving toward a world where degrees will no longer required or be enough to carry professionals through their careers. Instead, we will all need to be continually learning and growing skills as new technologies evolve.

There's a lot of change-meets-optimism in the future world. At LinkedIn, our analysis suggests the rise of AI across the workforce is set to significantly transform more than half of all jobs, and the skills required to do all jobs will change by up to 65% by 2030.

This transformation will show up in the technology we use in our day-to-day tasks, in the knowledge we need to do our jobs effectively, and in the people skills and hard skills necessary to continue to be successful at work-all of which will look quite different by 2030. It presents a momentous opportunity for professionals and businesses who are willing to invest in developing AI literacy as well as people skills.

Changes in the labor market over the last five years give us another strong indicator about the impact this new era of work will bring. We've observed a growing shift toward skills-first hiring on the part of employers.

We know this expands the talent pool, democratizes access to jobs, and makes the labor market and workforce more resilient. In fact, roughly one in five job postings in the U.S. no longer requires a degree (up from 15% in 2021).

Employers are increasingly looking for skills, and in the past year, AI skills and complementary people skills have been rising to the top, with demand coming from virtually every industry and spanning both technical and non-technical roles. In parallel, demand for people skills that complement AI is also rising. A majority (92%) of U.S. executives agree that people skills are more important than ever.

While AI is sure to bring change to workers and industries, I believe that the widespread availability and adoption of AI tools will also create new avenues of opportunity for all professionals. AI will also make job mobility more accessible for many.

As AI adoption rises, the knowledge and skills needed to do a job successfully will change. In many cases, it will become less important to have a deep understanding or background of an industry, and knowing how to apply AI tools within a role will become more important.

This means skills may become more industry-agnostic, and that professionals who are AI literate and know how to effectively use AI to generate results will be able to move more freely between roles, industries, or companies.

AI literacy, which is to say having working knowledge of AI-powered tools and technologies, will also reduce the time spent on tasks like researching, summarizing documents, managing a schedule, and drive much greater efficiency in our day-to-day roles. In fact, 74% of U.S. executives see at least one way generative artificial intelligence will benefit their businesses and employees-including increasing productivity and unlocking more growth and revenue opportunities.

For this reason, employers and business leaders will need to prioritize workforce learning and embrace a "training to promote" mindset that encourages upskilling and expansion into new roles and functions. Employers have a big role to play in ensuring that employees at all levels have access to the resources needed to become AI literate and ride this coming wave of AI-driven opportunities.

In an AI-enabled workforce, those individuals who have developed the skills needed to successfully utilize AI at work will stand out and be ready to access the opportunities coming in this time of transformation. That's why it's so important for professionals to invest in themselves and in learning the right set of AI and complementary skills.

But many professionals aren't currently doing that. According to a LinkedIn survey, less than half people say they've begun experimenting with AI tools, and less than a third have taken an online course to understand AI.

Tapping into certification programs or online courses via platforms like LinkedIn Learning, experimenting with popular AI tools like ChatGPT or Copilot for Microsoft 365, reading articles on AI, following thought leaders in the space, and gaining a strong understanding of how to use AI in business will enable professionals to capitalize on this wave of opportunities that are only just getting started.
Karin Kimbrough is chief economist at LinkedIn.

Recognize your brand's excellence by applying to this year's Brands That Matter Awards before the early-rate deadline, May 3.

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I'm LinkedIn's chief economist and this is how AI will change the global labor market (but not how you think)

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'AI across the workforce is set to significantly transform more than half of all jobs, and the skills required to do all jobs will change by up to 65% by 2030.'

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Blue is the new white? Labor market's sudden shift towards skilled trade workers is a win for blue-collar jobs

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Many employers in the US are in need or skilled/trade-labor workers. I chose this article because this talks about how many jobs in America are now desperate for skilled labor workers. “Since the beginning of 2023, there have been more than 770,000 skilled job postings from nearly 95,000 different employers across the country…” this quote from the article shows how many employers need workers and how hard they are trying to gain those new workers for their businesses. A reason for the shortages of workers has been the inconsistency of younger workers and their inability to be encouraged to try newer jobs that are more hands on.

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One New York business owner offered a seemingly simple solution to helping Americans get their home repair and construction projects done on time with minimal hassle.

"We're in demand," Gateway Plumbing & Heating owner John Cataneo said on "America's Newsroom" Tuesday. "If I had more workers, I could get a lot more done."

Many U.S. employers are in desperate need of skilled labor or trade workers, as the industry sees double-digit growth in demand for services.

Since the beginning of 2023, there have been more than 770,000 skilled job postings from nearly 95,000 different employers across the country, according to data from PeopleReady Skilled Trades.
LOWE'S FOUNDATION INVESTS $50M TO ADDRESS 'CRITICAL' TRADESPEOPLE WORKER SHORTAGE
Demand for carpenters has gone up 23% from March to May, while stonemasons are up 45% and construction laborers are experiencing an 18% demand surge in the same time period.

"Masons, electricians, plumbers, it's a very varied industry, the building trades," Cataneo reflected. "It's good, honest work, and the pay can be very good. Plus there's overtime and benefits, and the unions do a good job of training their members."

The small business owner pointed out that younger generations aren't encouraged to explore hands-on jobs like he was as a young man. The 54-year-old remembered learning his trade craft from his father.

"Kids wanted to do that. Parents wanted their kids to become a tradesperson," Cataneo said. "It used to be that people had a job and they stayed there for 20 years or something."

In the current labor market, the employer noted that many younger workers tend to have quick turnarounds.

"Now there's a lot of jumping around. It's sort of the way that people advance their careers now, is jump from company to company," Cataneo explained. "So you got to be careful now who you train, who you want to put some money into, want to put some time into."

"I do get applicants," he added, "but are you going to stick around? Are you serious about this? Are you able to carry a heavy bucket and climb a ladder?"

"If I had more workers, I could get a lot more done."
- John Cataneo, Gateway Plumbing & Heating

While the New York business owner recognized the value of investing in higher education for some professions, he urged those listening that the trade worker force is always hiring.

Over the past decade, college enrollment has declined roughly 15%, while the number of apprentices has increased by more than 50%, the Wall Street Journal reported based on federal and Urban Institute data. Estimates today show that colleges and universities enroll about 15 million students in total, while companies employ around 800,000 apprentices.
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"We keep hearing about people getting great education at colleges and universities across the country come out, and they're just mired in debt and they're not getting great jobs anyway," Cataneo said.

"Whereas in the trades," he continued, "we pay you to learn and it's basically an apprenticeship-type program, and you come up through the trades and once you've put it in a little bit of time, about the time it takes you to get a college degree, you're making six digits."

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Blue is the new white? Labor market's sudden shift towards skilled trade workers is a win for blue-collar jobs

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Skilled trade labor is "good, honest work" that can pay six-figure salaries amid a double-digit demand surge for workers, says Gateway Plumbing & Heating owner John Cataneo.

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Unemployment rates are at the lowest they’ve ever been. This article talks about how in the labor markets it seems to be harder to find talent and this can cause pressure on wages. I chose this article because it explains how the shift of skills-based hiring is coming to be, and explains more about how AI ties into this, saying how society needs to re-skill and learn with the pace of technology instead of going to college and learning to get a bachelors degree.

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AI is going to eliminate way more jobs than anyone realizes

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With the rise of AI, many people all over the world will be struck with unemployment. This strikes my interest because there are lots of influence by media and the internes in general. And because of the growth of AI, many people will lose their jobs due to AI being able to them more efficiently. This can cause great debates because employed people will have to find new jobs and/or learn new things to get better jobs.

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A tidal wave is about to crash into the global economy.

The rise of artificial intelligence has captured our imagination for decades, in whimsical movies and sober academic texts. Despite this speculation, the emergence of public, easy-to-use AI tools over the past year has been a jolt, like the future arrived years ahead of schedule. Now this long-expected, all-too-sudden technological revolution is ready to upend the economy.

A March Goldman Sachs report found over 300 million jobs around the world could be disrupted by AI, and the global consulting firm McKinsey estimated at least 12 million Americans would change to another field of work by 2030. A "gale of creative destruction," as economist Joseph Schumpeter once described it, will blow away countless firms and breathe life into new industries. It won't be all bleak: Over the coming decades, nongenerative and generative AI are estimated to add between $17 trillion and $26 trillion to the global economy. And crucially, many of the jobs that will be lost will be replaced by new ones.

The crescendo for this technological wave is surging, and we are at just the beginning of this upheaval that will ripple through the labor market and global economy. It's likely to be a transformation as influential as the industrial revolution and the rise of the internet. The changes could boost living standards, improve productivity, and accelerate economic opportunities, but this rosy future is not guaranteed. Unless governments, CEOs, and workers properly prepare for the upsurge with urgency, the AI revolution could be painful.

We didn't see the internet coming, but AI is within view

The adoption of groundbreaking technology is often hard to predict. Take the internet: In 1995, Newsweek published an article titled, " Why the Web Won't Be Nirvana," making the case that books and airline tickets would never be purchased over the internet. Later that year, Bill Gates was asked by an unconvinced David Letterman, "What about this internet thing?" Even three years later, as adoption grew, the economist Paul Krugman famously declared that the internet's influence would be no greater than that of the fax machine. In hindsight, it's clear that the internet's effects couldn't have been any more miscalculated.

Part of the reason for the initial skepticism was that the influence of the internet was uneven and slow at first but quickly grew as more people learned how it worked. "The rule for exponential curves is that they changed the world slowly at first, and then suddenly," Erik Brynjolfsson, a Stanford University innovation economist, told me.

The arrival of AI presents similar unknowns - but the growth curve is becoming clear much quicker. In 2017, McKinsey estimated that robust large language models such as GPT-4 would be developed by 2027. But they are already here. And seemingly overnight, OpenAI's generative AI was integrated into Microsoft products, and in the span of a few months, corporate giants including Amazon, AT&T, Salesforce, and Cisco have rushed to incorporate enterprise-grade AI tools. McKinsey's latest report predicted that somewhere between 2030 and 2060, half of today's work tasks would be automated. Their best guess as to when this will happen - 2045 - is almost a decade earlier than previously estimated. Things are changing fast.And as adoption picks up, so will the downstream effects of the technology. The World Economic Forum estimated 83 million jobs worldwide would be lost over the next five years because of AI, with 69 million jobs created - that leaves 14 million jobs that will cease to exist during that timeframe. Even the people who do retain their jobs will experience a massive shift in how they do their work: The World Economic Forum says that 44% of workers' core skills are expected to change in the next five years.

I do not think we'll see mass unemployment. But I do think we'll see mass disruption. Stanford economist Erik Brynjolfsson

Past automation technologies had the most effect on low-skilled workers. But with generative AI, the more educated and highly skilled workers who previously were immune to automation are vulnerable. According to the International Labor Organization, there are between 644 and 997 million knowledge workers globally, between 20% and 30% of total global employment. In the US, the knowledge-worker class is estimated to be nearly 100 million workers, one out of three Americans. A broad spectrum of occupations - marketing and sales, software engineering, research and development, accounting, financial advising, and writing, to name a few - is at risk of being automated away or evolving.

This doesn't mean, however, that there will be a flood of unemployed workers begging for any job. AI will lead to net job creation over the long run, and some roles that seem like they will be affected may actually grow in demand. For instance, ATMs increased the number of bank tellers.

"I do not think we'll see mass unemployment," Brynjolfsson, who anticipates AI spreading faster than other general-purpose technologies, told me. "But I do think we'll see mass disruption, where a lot of wages for some jobs will fall, wages for other jobs will rise, and we'll be shifting around into demand for different kinds of skills. They'll have to be a lot of reallocation of labor and rescaling of labor with winners and losers."

This shift will be so massive that we won't miss many of the jobs that disappear. Before the industrial revolution, the job of a human alarm clock was to wake up workers in the early-morning hours by tapping a broomstick on their window. Thanks to alarm clocks, no one misses this job today. Similarly with AI, there will be jobs that will be conveniently forgotten about.

Permanent mass unemployment can safely be ruled out, but in the short term, the transition will be messy. If one-quarter of tasks across all US occupations were automated by AI, and one-third of workers' workload replaced, it would take only a small segment of the broad white-collar class to simultaneously experience job losses or transitions for it to have a dire impact on the broader economy. This sort of monumental reshuffling requires preparation on the part of governments and businesses. In its most recent employment outlook, the Organization for Economic Co-operation and Development declared that this AI revolution was creating "an urgent need to act now" to help the economy adapt.

Productivity boom

In 1987, the economist Robert Solow famously declared: "You can see the computer age everywhere but in the productivity statistics." Solow's "productivity paradox" spotlighted a key puzzle of the emerging computer age. Even with heavy investments in information technology and computing - which were supposedly making workers more productive - official statistics showed that workers were not producing more per hour.

Robert Gordon, a macroeconomist and self-styled " prophet of pessimism," provocatively suggested that the ho-hum productivity figures proved that new technology today was less radical than in the past and that as a result, the world's advanced economies had entered a point of stagnation. The most impactful technologies - the car, the toilet - have already been invented, he argued, and everything else only incrementally improves productivity. Along the same lines, other economists have suggested that the growth rate of new ideas is slowing.

These arguments may seem like a compelling reason to doubt the productivity gains of AI at first, but there's good reason to think that the latest revolution could produce more rapid gains. The internet's mass adoption required software, network protocols, infrastructure, and devices - it took awhile for every home and office to have computers and internet access.

Today, AI's adoption could happen much faster since the technological infrastructure is already in place. Plus, in contrast to hype cycles around crypto or the metaverse, AI is entering maturity. Its user experience makes it uncomplicated, and it already has practical uses, which is why hundreds of millions of people are already integrating the tech into their day-to-day workflows. This is starting to push the technology into companies.

It's also not AI on its own that's game-changing; layering AI on top of preexisting tech can unlock exponential gains - just as the combination of the internet, GPS technology, and smartphones changed our world. Laser weeders that use AI, GPS, and tractor technology can now comb through crop fields in seconds to zap weeds, eliminating the need for herbicides or large hand-weeding crews. And AI embedded within advanced imaging tools have the potential to diagnose and treat cancer.

If the internet made the world flat, then AI makes the world faster. One recent study conducted by Brynjolfsson and his colleagues quantified the productivity of over 5,000 customer-service agents who used generative-AI technology. The results were encouraging: Call-center operators became 14% more productive, and less experienced workers improved their productivity as much as 30%. A study out of MIT found software developers completed tasks 56% faster with generative-code-completion software, and yet another study found that professional-document writing was 40% faster using generative AI.

The small and large compounding effects of productivity growth across many industries are central to the growth trajectory and the long-run effects of AI. Goldman Sachs estimated that over 10 years, generative AI alone could raise annual US labor-productivity growth by just under 1.5 percentage points, "roughly the same-sized boost that followed the emergence of prior transformative technologies like the electric motor and personal computer." If that proved true, it would lead to an annual increase of 7% in global GDP, while contributing $2.6 trillion to 4.4 trillion to the global economy - about the equivalent of the UK economy.

Brynjolfsson, a "mindful optimist," is confident that these productivity gains will accumulate - and show up in the official stats. He told me that he had a bet with Gordon, the pessimist, that productivity growth over the coming years would outpace the 1.4% annual growth projected by the Congressional Budget Office. "In fact, I think it's going to be closer to double that," he said.

While estimates for productivity reflect how workers within firms will become more efficient at their jobs, it also assumes that laid-off workers will find new jobs. As productivity rises, total economic output will increase and GDP will rise. This will create a virtuous cycle, as companies will need to expand operations to keep up with this increased demand, which means they will need more workers. Plus, labor-productivity growth has been shown to raise real incomes, benefiting workers and households. Simply put: Technological innovation, even as it may lead to worker displacement, will help workers in the long run. A widely cited study by the economist David Autor and colleagues found 60% of workers today had jobs that did not exist 80 years ago, suggesting that 85% growth in employment was a result of technology innovation.

Future proofing - faster and smarter

That's all great news, but the turbulence of the AI revolution can't be ignored. The rapid pace of AI advancement and adoption makes this shift markedly different from past industrial revolutions. It's not as simple as textile workers being replaced by mechanized looms - workforce transformations are happening to varying degrees across occupations. And this pace of change is bound to outrun any changes in education and workforce preparation designed to keep up with the tech.

America's already antiquated workforce education system already fails to address modern workers' needs, let alone what they may need as AI takes hold. Maria Flynn, the CEO of the Washington think tank Jobs for the Future, said the US was encumbered by a "patchwork of programs that don't blend into a nice-looking quilt." In fact, there are 43 federal employment-training programs whose total budget is $20 billion, or less than 0.1% of US GDP. This is an alarmingly trivial amount for an economy of $25 trillion GDP and over 150 million workers.

To ease the pain of the labor-market upheaval, the US needs to invest more in its workforce - and fast. One approach is to adopt Denmark's model of job security and retraining, known as "flexicurity." The system helps avoid structural unemployment by making it easy for employers to let go of workers and by providing a substantial cushion for those laid off. The program provides unemployment benefits for two years at as much as $2,860 a month for people who are laid off, as well as one-on-one job counseling with retraining opportunities. As a result, the Danes are unemployed for much less time compared with workers in similar countries.

The US once had a similar program, the Trade Adjustment Assistance program, which was established in 1974 and administered by the Department of Labor for workers affected by trade and production in other countries. "It was an entitlement program so that any worker who met certain conditions - that their job was displaced due to trade - had an entitlement to receive a package of income support and retraining support," Flynn told me. An expansive and well-funded program geared toward the AI labor-market shift would help ease turbulence for workers by providing relocation grants and wage insurance to temporarily bridge the wage gap when workers find employment in lower-paying jobs.

To retrain people for an AI-based economy, the US could look to Singapore. There, workers above the age of 25 are given $500 in credits to access 24,000 courses in anything from data science to business, and a public-private retraining program makes sure skills training is matched to employers' job classifications. Every year, over 660,000 people make use of the country's national retraining program. For those concerned about productivity lags, these kinds of large-scale upgrades to education and training have the potential to fill in the gaps of a major workforce transition. Singapore's efforts have helped step up the annual labor-productivity growth rate to a respectable 3%.

All these public-sector policies would still need to be complemented by private-sector investment in retraining. In an MIT survey of workers, 50% of respondents reported receiving formal skills training by their employers. Incentivizing retraining through tax credits -- such as those in New York and Georgia -- could spur employers into action and ensure everyone is ready for the AI revolution.

Technology can't be uninvented - disruptive catalysts such as AI require the proactive pursuit of adapting to that change. And making workers resilient to large shocks requires recognizing that this technological wave can temporarily wipe out a large portion of the workforce, or it can be smoothly surfed to calm waters.
Emil Skandul is a writer on technology and urban economics, and a Tony Blair Institute fellow.

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AI is going to eliminate way more jobs than anyone realizes

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AI is a tsunami about to upend the global economy, throwing 300 million jobs into mayhem and forcing half the workforce to learn new skills.