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Cities to see more job growth in coming decades, rural areas not so much, study says

"Left unchecked, the disparities within the nation are going to widen,” said Susan Lund of the McKinsey Global Institute, which released the report.
Image: Jobs, USA
A worker welds a lawnmower frame together in Coatesville, Indiana, in 2015. A study examining the future of work in the U.S. indicates big cities will become significantly larger, richer and more powerful while the rest of the nation, especially rural regions, are in danger of losing more jobs, many to automation.Luke Sharrett / Bloomberg via Getty Images file

A new study examining the future of work in the U.S. spells bad news for America’s smaller communities and a growing national divide when it comes to jobs.

The report, published this week by the McKinsey Global Institute, indicates the nation’s biggest cities are on pace to become significantly larger, richer and more powerful in the coming decade, while the rest of the nation, particularly already depressed rural regions, are in danger of losing more jobs, many to automation.

The 113-page study that analyzed 315 cities and more than 3,000 counties shows the nation’s 25 most prosperous cities, which have fared the best since the Great Recession in 2008, are expected to see the most job growth in coming years. These cities include New York, San Francisco, Denver, Dallas, Seattle and Houston.

At risk of falling further behind are the nation’s smaller communities, particularly those whose economies have traditionally relied upon agricultural and manufacturing jobs and whose work forces are older and less educated.

“We’re on the brink of a different age where automation is going to replace a lot of tasks,” said Susan Lund, a partner at McKinsey Global Institute, which conducts research on the economy. “The report is a call to action. Left unchecked, the disparities within the nation are going to widen.”

According to Jed Kolko, chief economist at Indeed, the findings of the report are consistent with national trends his team has been tracking.

“The more urban an occupation is, the more likely that occupation is to grow in the future,” he said. “Future job growth is likely to favor urban areas.”

Automation is expected to hit workers lacking a college degree hardest. But the rise of automation, Lund indicated, will affect workers of all ages.

“We think about automation affecting older workers, but we find 15 million workers under the age of 34 could be displaced," Lund said. “The question is, 'How do you get young people onto the career ladder?' It adds the imperative that schools teach skills like problem-solving so that students can go to more demanding roles.”

Lund said retraining workers will be critical in coming years and noted that this week’s announcement by Amazon that it plans to retrain one third of its workers is a positive sign. The company announced Thursday it plans to spend $700 million to retrain 100,000 workers to do more high-tech tasks in what is being billed as one of the largest employee retraining undertakings in the world.

“I think the Amazon announcement is a positive,” said Lund, noting other companies, including JP Morgan Chase are similarly taking on retraining initiatives. “There’s a recognition that work is changing for everyone, even with those of us with college degrees.”

An additional finding of the McKinsey report finds that Americans are moving far less than they were in past decades.

“People in the U.S. are moving at half the rate that they moved in 1990,” Lund said. “People don’t move as often.”

Lund said people are moving less for a variety of factors: “The population is older, people are taking care of aging parents. For a while, mortgages were under water.”

When people do move, those in low-growth areas tend to relocate to other low-growth areas, meaning there was no upward movement when it came to job opportunities, Lund said.

She said the report is not all bad news for small cities. According to the study, university towns like Ann Arbor, Michigan, where the University of Michigan is based, and communities that attract retirees and tourists are faring well.

Kolko agreed with that idea.

“One of the best strategies for growth is to bring more college campuses to areas that are struggling,” Koko said. “The presence of a college campus or a higher education institution is often related to the strength of a smaller town or rural economy. But that’s a long-term kind of solution. That’s not a quick-fix solution.”

Among the fields Kolko points to as the most likely to grow and remain in demand in coming years, in communities both big and small are health care and technology.

“Health care is needed wherever people live, especially where older people live,” Kolko said. “Jobs in technology also are likely to see strong job growth, not just software developers creating new software applications but also jobs for people who are users of those applications.”