Labor Day 2035: Why Workers Will Become More Valuable Than Ever

0:00Okay, good morning. Seeing how it's Labor Day in the United States, I'm going to talk about the labor market because it's really changing a lot and it's not as boring as you think. So there's a couple things that I want to highlight for you guys and one of which I've detailed in a long article on our website this week. The first is the 10-year occupational forecast by the BLS. The BLS is actually a very solid research organization so far, and they went through the 830 job titles in the OEWS database. Those are the main job titles in the United States that the BLS covers, and they track number of workers in each of those categories and wages.

0:42So it's a very useful database. And they project that over the next 10 years, due to retirements and other things I'll talk about in a minute, the U.S. workforce will only grow by 3.5 % over cumulatively at the end of 10 years. Now, the last 10 years, it grew at almost 11%. So this is one-third the growth rate. Yet, if you look at other projections in the U.S. government for GDP, and some of these are probably wishful thinking, but there's a lot of them. If the GDP in the U.S. grows at 1.5 % to 2 % per year, as expected, and of course, you know, the Trump administration wants it to grow faster, the GDP over the same 10 years will grow by 22 % to 24%.

1:26So there will be a need for us to improve the productivity or GDP per worker by about 2 to 2.5 % per worker per year, every single year, or in some huge cumulative fashion, which I don't know how that would happen. Now, historically, this has happened in the past, not often, but the United States productivity sometimes does go up at that rate. But what it means to you as a business person or a leader or an HR person, sort of at a microeconomic level, is that every one of our companies has to improve productivity by 2 % per year or more. So now take that down to the level of a job, team, function, operation, plant, business unit, whatever organization structure you have.

2:15Imagine you're a salesperson, sales leader, marketing leader, finance leader, operations leader, and your boss said to you, I want you to generate 30 % more output with the same number of people, whatever that number may be. By the way, productivity is much tougher to raise than revenue per employee. Revenue per employee can be a combination of inflation and price changes, but that's not productivity. So productivity has a more economic definition. Well, guess what? The next 10 years is going to be all about labor shortages, scarcity, skills, productivity, org design, work redesign, of course, AI, and leadership and management.

2:58So if you seem to have listened to these AI guys talking about the fact that we're going to be wiping out jobs and there'll be no more jobs, that is absolutely false. We're entering the era of what we call the super worker. Even Jensen Wong mentioned this in the G20 speech yesterday or the day before. All of our human capital, and we'll talk about human capital in a minute, is going to have to be more productive in order for us to hit these targets. Now, in a big economy like the United States where there's literally a million companies, the overall growth can be a combination of some companies doing huge improvements in productivity and others doing a lot less.

3:38So if you're a financial sort of market capture company and you have massive amounts of market power, you can generate a lot of economic output with very few people. And, you know, every business goes through cycles of high profit and low profit based on their product cycles and their management and leadership. When I worked for IBM in the 1980s, IBM was unstoppable. There was absolutely no way anybody could stop IBM from growing. Obviously, that's not true today. Today, IBM is a very fragile company. Google is unstoppable. Google's revenue is almost independent of the people. I mean, there are people required, but it's mostly an automated company in many respects.

4:16So you as HR business people have these various options to think about over the next 10 years that include much more strategic hiring and internal hiring, mobility and job and org redesign, what we call it work design, implementation of AI for true business competitive advantage and growth, not just to cut headcount, although cut headcount will obviously be one of the things that will happen. And then most importantly of all, redeployment, reskilling, and realignment of people into new business processes. There's also the opportunity to flatten these hierarchical job functional organizations we have.

4:55There'll be a lot more of that. I've talked a lot about that. That's all developed in our dynamic organization research.

5:01Josh Bersin: And we actually have done, interestingly enough, over the last 30 years, research on every one of these topics, including learning and development and how that works, including how internal mobility works, including how succession management works. And the open questions that are yet to be decided are, how are we going to do performance management in a high productivity company? How are we going to do leadership development? And how are we going to build the super managers or the super leaders we need to operate a business that's much more leveraged in terms of output or revenue per employee? So these feel like subtle issues when you look at them over a 10-year period, But I'm talking to companies about them every single day because in a real company, it's much, much messier than the economists always seem to understand or maybe think about that we can't just redesign a business process without thinking about the customer impact, the data impact, all the systems we have, all the training we have, all the processes we have, all the regulatory compliance we have.

6:02So this new world of low workforce growth in the U.S.

6:08Josh Bersin: is really going to force us to create dynamic organizations. Now, for those of you that use Galileo, we have trained Galileo to discuss all of this. And so we actually have a demo database of a real company in Galileo. and we can show you an example of how to prompt Galileo to step you through the steps and all of the issues that are needed to address in a redesign of the company or a reorganization or a restructuring. And I think if you're into this stuff, you should call us up and we'll give you a demo of that. Now, another part of this, of course, is the role of HR. Well, I wrote a couple weeks ago about how HR jobs are growing in number and in wages above inflation.

6:54Josh Bersin: This data proves that that's needed because there's going to be a lot of HR stuff to do. More strategic hiring, harder to find the right people, keeping people in place and encouraging them not to leave, paying people adequately in an inflationary, high productivity environment, coming up with talent density strategies, building super managers and super leaders. By the way, our new book, Superpowered is coming out in October, and you really are going to want to read it because we've literally written the book on this for those of you that aren't clients on what this is all about. And so what's going to happen to HR is it's not going to get destroyed, unlike maybe what Sherm thinks.

7:32Josh Bersin: It's going to become much more important, much more strategic, and you're going to have much better data. And underneath that is a new set of HR technologies, which we describe and have modeled out in HR 2030. So you guys that are in the HR world or HR solution providers or vendors, you're going to be in a very interesting situation. And, you know, the other thing, of course, that impacts productivity is the business of your company in general. If you're selling low margin products and you're trying to move to more high margin products, like we talked about with Shark Ninja a couple of weeks ago, that improves productivity because you can charge more, you have more channel power, pricing power, market power, and you won't need as many people to drive growth.

8:18Josh Bersin: So I think this low workforce growth environment is going to force a lot of you, just like the oil crisis forces people to think about how to do more with less energy, is going to force you to rethink your business model. I mean, I'll just give you one example of this that's playing out in the market right now. If you know Oracle, I've worked with Oracle since They were a small company a long, long time ago. Very successful software companies started in the database industry, moved into applications, acquired a bunch of other software companies. And the licensed software space is a high margin business.

8:53Josh Bersin: You write a piece of software, you sell it, people pay you for it. And it's something along the lines of 60 to 70 percent margin. In the early 2000s, it moved online. We renamed it SaaS and we renamed it Cloud. And these companies improve their margins or at least maintain them by not waiting for customers to upgrade their software because they could upgrade it automatically. And so the recurring revenue fees were actually even higher margin than the license fees were in the beginning. So you have a company like Oracle. It's a big company, very well known, publicly traded, lots of analysts making good money on this.

9:29Josh Bersin: And for some reason, Oracle decides that they're missing out on the AI wave, and they do a$500 million or billion dollar deal with OpenAI to build a data center in Texas, take out a bunch of loans. The Oracle debt is now junk-grade debt. The company's had a whole bunch of regulatory and environmental and power and water issues building this data center, and they're getting into the data center rental business. Now, you can put a very grandiose perspective on this and say they're generating tokens, they're generating intelligence, they're generating electricity. That's all, you know, that's the way Jensen-Wang does it.

10:08Josh Bersin: But the reality of it is they're now a rental company. They're renting data systems and computers to other people to run. And there's depreciation in the computers. They depreciate pretty fast. Very, very, very expensive chips that go out of date every two or three years. And Oracle's margins are going to go down and their stock has gone down precipitously and they're much less productive than they were. Now, I'm not going to sit here and bash Oracle, but that's an example of how productivity goes down. Now, you know, a lot of economists believe that in the AI world of the future, fast forward 10 years, these massive data centers are going to be so powerful that they'll be like electricity in the factory age where we'll just have tokens for sale and the tokens will do work.

10:52Josh Bersin: And we humans will be sort of managing and monitoring and keeping track of the tokens. And then, of course, you read this week about the, you know, destruction that OpenAI's agents did to Hugging Face. So, you know, maybe that'll happen. There'll be autonomous cars. There'll be autonomous planes. We'll have autonomous delivery drones delivering our Amazon stuff. And, you know, that'll improve labor productivity. But this is going to take time and energy and a lot of restructuring, a lot of rethinking. So that's one thing to think about for Labor Day. Second, by the way, just to throw in a little two bits on that, labor is a terrible word for human capital.

11:32Josh Bersin: The reason we use the word labor, it goes back to the late 1800s and the early 1900s when we had management and labor, and management decided what to do, and labor did as they were told. It's not labor anymore. Everybody's job has agency and self-directed opportunities or what's called job crafting. And it's just ridiculous that we call it labor. Even we have a department of labor. We should call it a department of human capital or department of talent or something like that. And so, you know, what we have to start realizing is that this old economic balance between capital and labor is kind of going away.

12:10Josh Bersin: Because if you think about what AI does, AI captures intellectual capital, business processes, data, customer information, product information, design information, engineering information, and then automates it in some fashion. Maybe not completely automates it, but it greatly industrializes the intellectual capital we have. Just like a machine industrialized the muscles and physical labor in the early 1900s, the AI industrializes our intellectual labor. And so the human definition of what human labor is might be different 10 years from now from the labor labor that we think of today. And I'm very convinced, and I've talked about this a lot on this podcast, that the genetic intuitions and skills and capabilities and emotions that we have are going to define human labor going forward, not manual work, cashier work, data entry work, quality control.

13:15Josh Bersin: There's lots of jobs that are very labor jobs that seem sort of routine. They are definitely going away. So this balance between labor and capital and labor and machines is going to be different. And I think where we're going over this 10-year period with fewer and fewer people is towards a business, whatever business you're in, that is much more human-centric in its management. Yes, we have to build systems. Yes, we have to build AI. Yes, we have to manage the AI, operate the AI, et cetera. But we have even greater leverage of the humans that work for us because there's fewer of them and they're leveraged over more machines or more systems.

13:55Josh Bersin: And that's really the super worker story. And that's where we're going. And the BLS data shows you that. Now, if you read the article that I wrote, I spent a lot of time analyzing the categories of work into four categories. We're developing a good categorization of this. And you can see that even now, only about 13 % of the jobs in the U.S. are fully automatable. So 87 % of us are not going to be touched by this in a negative way. We're going to be touched by this in a positive way. The other thing that comes out of that data that's important to kind of consider going forward is that the biggest trend in this shrinking or not really growing workforce is age.

14:35Josh Bersin: The workforce is going to be significantly older. And one of the reasons the U.S. workforce is not growing, there's really three reasons. One is people are having fewer children. The second is we've stopped immigration. And the third is people are getting older, so they're retiring. So the country is getting older, becoming much more like Japan. And the number of working people, of course, goes down, but people elongate their careers. And so that leads to a workforce of young people, middle-aged people, and old people. And I will never forget when Mark Zuckerberg was a little younger, when he made a speech and said, for some reason, in his naivete, I suppose, young people are smarter than old people.

15:16Josh Bersin: Well, not only is that insulting to me as an older person, but it's not true. Old people, quote unquote, whatever word you want to use, have just as much capability and interest and desires and passions and ambitions as young people. They have more balance. They have more perspective. They might be a little more patient. They've been around the block, so to speak. We're going to have to deal with that too. And the fact that we've been sort of throwing out diversity and inclusion programs leads me to think we have to bring that stuff back because generational diversity is going to be part of this next decade also.

15:48Josh Bersin: You can see, by the way, that this is playing out because the job market is still growing. You know, we're in this very high inflation, high interest rate environment. People are spending money as fast as they can to keep up with inflation. And I think 183, 184 ,000 jobs were created this last month as of today. So Labor Day is a big deal. I'll do some more work on this, and I'll be speaking at this topic in our conferences around the world in the fall. And we'll be announcing a lot of things to further explain this, especially in frontline work. But this is a very, very important time to think about human capital and talk about it as a leadership team.

16:28Josh Bersin: Human beings are not replaceable parts. They are valuable economic and business and human connection assets to your company. And those of us that live in the HR world are going to be really, really thinking about this a lot in the next decade to come. Have a great weekend. And next week, we'll be publishing some interesting podcasts from some clients and lots more to come. See you guys later.