Talent Attraction and Recruitment
A Macro Perspective
André Kurmann Professor of Economics
June 18, 2024
It’s been a busy few years for recruitment…and it’s unlikely to slow down
4 Points
It would have been much worse without immigrant labor.
Occupational transitions sparked by the pandemic were a big part of the problem.
AI will further accelerate occupational transitions and disrupt labor markets.
Accommodating these changes is key for productivity growth and income inequality.
The Employment Boom since the Pandemic
Foreign-born workers have been driving the employment boom since the pandemic.
Source: Catherine Rampell (The Washington Post). Based on data from U.S. Bureau of Labor Statistics via FRED.
Foreign-born workers did not take jobs from native-born workers. Lower employment growth among nativeborn workers is entirely due to aging.
Source: Catherine Rampell (The Washington Post). Based on data from Current Population Survey.
Occupational Transitions sparked by the Pandemic
The pandemic caused big labor market dislocations
• Employment of in-person service sectors (Retail, Leisure & Hospitality, Education & Health) collapsed.
• Employment of other sectors (Transportation & Warehousing, Professional Services, Management) surged.
Þ 8.6 million occupational shifts (50% more than pre-pandemic)
Þ Surge in recruiting
Source: McKinsey Global Institute. Based on data from O*NET, U.S. Bureau of Labor Statistics.
Source: McKinsey Global Institute. Based on data from O*NET, U.S. Bureau of Labor Statistics.
Much of occupational shifts due to labor supply ⇒ strong wage growth (especially in Leisure and Hospitality)
Average Hourly Earnings, Total Private, Deflated by CPI, Feb 2020 = 100
Average Hourly Earnings, Leisure and Hospitality, Deflated by CPI, Feb 2020 = 100
2017-2020
Overall, labor productivity continued to grow at its pre-pandemic pace.
2017 -2020 trend line
Lower real wage growth implies decline in labor share of income.
AI and the Future of Productivity and Labor Markets
How will AI affect future productivity and labor markets?
• AI is estimated to affect majority of U.S. workforce (Eloundou et al., 2023)
• Likely productivity boost, but perhaps only modest (Acemoglu, 2024)
• Extent to which AI replaces workers rather than enhances workers remains uncertain
– Likely declining labor demand (AI substitutes): office support, customer service
– Likely increasing labor demand (AI complements): STEM, creative, business professionals
Þ Occupational transitions could reach 12 million by 2030 (McKinsey&Co., 2023)
Þ Further surge in recruiting and competition for talent
Source: McKinsey Global Institute. Based on data from O*NET, U.S. Bureau of Labor Statistics.
Source: McKinsey Global Institute. Based on data from O*NET, U.S. Bureau of Labor Statistics.
Source: McKinsey Global Institute. Based on data from O*NET, U.S. Bureau of Labor Statistics.
Accommodating the Changes
Effects
of AI on wage inequality
• 3 key questions:
1. Will AI displace mostly low-wage or high-wage jobs?
2. How will overall labor demand for different jobs change?
3. How quickly / easily will workers be able to move from low-demand to high-demand jobs.
• How to accommodate the changes?
– Relax regulations / degree requirements
– Invest in retraining and education
– Enhance in-house training and apprentiship programs
References
• Acemoglu, D. (2024). “The Simple Macroeconomics of AI.” Economic Policy (forthcoming).
• Eloundou, T. et al. (2023). ”GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models.” Mimeo.
• Ellingrud, K. et al. (2023). “Generative AI and the future of work in America.” McKinsey Global Institute, July 2023.
• Rampell, C. (2024). “You don’t want immigrants? Then tell grandma she can never retire.” The Washington Post, April 23, 2024.