The US labour market looks markedly different today than it did two decades ago. It has been reshaped by dramatic events like the Great Recession but also by a quieter on going evolution in the mix and location of jobs. In the decade ahead, the next wave of automation technologies may accelerate the pace of change. Millions of jobs could be phased out even as new ones are created. More broadly, the day-to-day nature of work could change for nearly everyone as intelligent machines become fixtures in the American workplace.

Until recently, most research on the potential effects of automation, including our own, has focused on the national level effects. Our previous work ran multiple scenarios regarding the pace and extent of adoption. In the midpoint case, our modelling shows some jobs being phased out but sufficient numbers being added at the same time to produce net positive job growth for the United States as a whole through 2030.

But the national results contain a wide spectrum of outcomes. A new report from the McKinsey Global Institute, analyses 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 non-profit’s across the country.


Local economics have been on diverging trajectories for years

Cities and counties across the United States are entering this period of technological and labour 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, labour force demographics, and other characteristics. This approach reveals that the differences between local economies across the country are more nuanced than a simple rural-urban divide or regional variations.

The economic performance of these segments has been diverging for decades, and that trend accelerated after the Great Recession. While all areas of the country lost employment during the downturn, job growth since then has been a tale of two Americas. Just 25 cities (megacities and high-growth hubs, plus their urban peripheries) have accounted for more than two-thirds of job growth in the last decade. By contrast, trailing cities have had virtually no job growth for a decade and the counties of Americana and distressed Americana have 360,000 fewer jobs in 2017 than they did in 2007.

The United States does not have to let opportunity concentrate in a limited number of places, some of which are straining at the seams, while others wither. Policy choices, along with increased public and private investment in people and in the places that need it, can create more inclusive growth. Companies can make a difference, too, in recognizing that talent, space, and untapped potential are available all over the country. It is possible to turn this period of technological change into an occasion to create more rewarding jobs and build better learning systems and career pathways that serve more Americans. The challenge is not fighting against technology but preparing US workers to succeed alongside it.