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Understanding How American Workers Progress to Higher-Wage Jobs

  • Publication: 
    McKinsey & Company
    Date: 
    August 12, 2020

    Preliminary research findings identify the career pathways that allow workers to move from low-wage jobs to middle-wage or higher-wage jobs.

    Prior to the COVID-19 pandemic, a common concern expressed by CEOs of American companies was that the United States suffers from a shortage of qualified talent, which makes it difficult for their companies to fill their most in-demand jobs in management, technology, and healthcare. Yet there is a population of people who are rarely considered for these in-demand jobs: the more than 70 million American workers who have a high school diploma but have not completed a bachelor’s degree.

    While these workers make up the vast majority of the US labor force, they often face a frustrating challenge when searching for new jobs: most middle-wage and high-wage jobs list a bachelor’s degree as a requirement. Many companies use recruiting software that automatically screens resumes for the degree. As a result, many skilled workers never even apply for jobs they can perform, and, when they do, their resumes may never be reviewed by a person.

    Making matters worse is the fact that workers without a bachelor’s degree are disproportionately affected by automation and COVID-19-related job losses. According to a 2019 report by the McKinsey Global Institute, during the coming decade, workers without a college degree are four times more likely than those with one to lose their jobs due to automation. Moreover, as measures to contain the spread of COVID-19 have led to economic shutdowns, workers without college degrees have experienced the greatest losses in employment and income.

    These many workers have skills that are under-recognized and underused. With training and support, they could build skills that position them for attractive, higher-wage, more resilient, in-demand jobs that employers find hard to fill. To support them effectively, it is crucial to start by examining the data: What advances have a large number of people achieved, building on their skills to improve their economic circumstances?

    In 2019, McKinsey launched a research effort to help employers move beyond the degree screen and increase the pool of talent they consider for their most in-demand jobs, while helping to create opportunities for people to achieve economic mobility. With input from the McKinsey Global Institute, our analytics team sought to map the actual pathways people have taken in moving from low-wage, declining jobs to middle-wage and higher-wage jobs of the future. To make sure this research reflected the real-world needs of workers and employers from the outset, we were significantly aided by [email protected], a nonprofit organization that seeks to increase career opportunities for millions of US adults who are skilled through alternative routes. They provided input on the challenges faced by these workers, helped validate pathways with workers and employers, and suggested research priorities to inform a more inclusive and equitable labor market.

    In turn, we are putting our research insights to use. As a start, we have been working with the Markle Foundation, as their partner in the Rework America Alliance, to translate the analytics into usable market signals that give workers more targeted guidance on reskilling opportunities—leading to better wages and better quality jobs—and more targeted insights on which training options best fit their reskilling needs.

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