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The day-to-day nature of work could change for nearly everyone as intelligent machines become fixtures in the American workplace.
But the national results contain a wide spectrum of outcomes. A new report from the McKinsey Global Institute, The future of work in America: People and places, today and tomorrow (PDF–4.41MB), analyzes more than 3,000 US counties and 315 cities and finds they are on sharply different paths. Automation is not happening in a vacuum, and the health of local economies today will affect their ability to adapt and thrive in the face of the changes that lie ahead.
The trends outlined in this report could widen existing disparities between high-growth cities and struggling rural areas, and between high-wage workers and everyone else. But this is not a foregone conclusion. The United States can improve outcomes nationwide by connecting displaced workers with new opportunities, equipping people with the skills they need to succeed, revitalizing distressed areas, and supporting workers in transition. Returning to more inclusive growth will require the combined energy and ingenuity of business leaders, policy makers, educators, and nonprofits across the country.
TABLE OF CONTENTS
- Local economies have been on diverging trajectories for years
- Automation will not be felt evenly across places or occupational categories
- In the decade ahead, local economies could continue to diverge
- Less educated workers are most likely to be displaced, while the youngest and oldest workers face unique challenges
- Local business leaders, policy makers, and educators will need to work together to chart a new course
Section 1: Local economies have been on diverging trajectories for years
Cities and counties across the United States are entering this period of technological and labor market change from different starting points. We used a mathematical clustering method to categorize all US cities and counties into 13 archetypes based on their economic health, business dynamism, industry mix, labor force demographics, and other characteristics (download the full list of locations in each segment). This approach reveals that the differences between local economies across the country are more nuanced than a simple rural-urban divide or regional variations. Our 13 archetype can be grouped into five segments with common patterns:
o Urban core. Twenty-five megacities and high-growth hubs account for roughly 30 percent of the US population and are the nation’s most dynamic places. The high-growth industries of high tech, media, healthcare, real estate, and finance make up a large share of these local economies. These cities have higher incomes, faster employment growth since the Great Recession, high net migration, and younger and more educated workforces than the rest of the country—but also high levels of income inequality. Many are experiencing congestion and affordable housing shortage.
o Urban periphery. These 271 counties are the extended suburbs of US cities. Home to 16 percent of the US population, they also have seen strong net migration, attracting people moving out of cities in search of more space. In most of these counties, a large share of the population works in nearby urban areas. Healthcare, retail, logistics, and local services are large parts of these local economies.
o Niche cities. These 56 much smaller towns and cities, home to 6 percent of the US population, have found success by building on unique features. In college-centric towns, a major research university dominates the local economy. Silver cities, many of which are in Florida, are fast-growing retirement destinations. Small powerhouses, such as Bend, OR, and Provo, UT, have built economic clusters around technology and other industries; they have the fastest economic growth rates and second-highest rate of net migration across our archetypes. All niche cities are attracting both workers and companies with a low cost of living and a high quality of life.
o Mixed middle. Almost one-quarter of the nation’s population is found in these 180 stable cities (such as Cincinnati and St. Louis), smaller independent economies (such as Lancaster, PA, and Winston-Salem, NC), and the manufacturing hubs that we call “America’s makers” (such as Rockford, IL, and Oshkosh, WI). Neither thriving nor in distress, these places have slower economic and job growth, higher unemployment, and workforces with slightly lower educational attainment than those in urban core cities. Some of America’s makers are on an upward trajectory, while others are in decline.
o Low-growth and rural areas. This group, which includes 54 trailing cities and more than 2,000 rural counties, is home to one-quarter of the US population. Many trailing cities, such as Flint, MI, and Bridgeport, CT, are former industrial towns with declining economies. Rural counties encompass somewhat better-performing places (Americana) and struggling areas (distressed Americana). In these segments, populations are older, unemployment is higher, and educational attainment is lower than the national average. Things are somewhat brighter in the 192 rural outlier counties that have found some success with tourism or mining and energy.
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Susan Lund is a partner of the McKinsey Global Institute, where James Manyika is chairman and a director. Liz Hilton Segel and André Dua are senior partners in McKinsey’s New York office. Scott Rutherford is a senior partner in the Washington, DC, office, where Bryan Hancock is a partner. Brent Macon is a consultant in the Atlanta office.