James Manyika on how the pandemic has accelerated the future of work | Homeroom with Sal

Hi everyone! Welcome to our daily homeroom. I'm very excited about the guest we have today. Before we jump into that conversation, I will give my standard announcement.

I want to remind everyone that Khan Academy is a not-for-profit organization that can only exist with philanthropic donations from folks like yourself. So if you're in a position to do so, please think about donating to Khan Academy. I want to give a special shout out to several corporations who've helped support us, especially when they found out that we're running at a deficit pre-COVID, and then because of COVID, our server costs have gone up. We've been trying to accelerate a whole series of programs. So special thanks to Bank of America, Google.org, AT&T, Fastly, and Novartis.

With that, I’m really excited to introduce our next guest, James Manika. I have many connections and there are many reasons why James is interesting. I consider him a friend and a mentor. He is also a board member of Khan Academy, and his day job is he is the head of the McKinsey Global Institute. So James, thanks for joining us!

Maybe a good place to start is for those who don't know McKinsey or the McKinsey Global Institute. What is that?

James: Well, thank you! I'm so delighted to be here. It’s one of those situations where I feel like you’re one of my teachers. You know, it’s kind of like when your teacher invites you to class; you’re kind of terrified because they’ve been your teacher. So, I’m kind of a little terrified right now, but I’m delighted to be here.

So, the McKinsey Global Institute is kind of McKinsey’s economics and research think tank, if you like. We research trends in the economy and the impact that technology is having on society. We look at issues around economic growth, inequality, globalization. These are trends we spend a lot of time thinking about, and we try and make our views kind of benefit leaders—whether it's leaders in the private sector, in business, in non-profits, in government. Many of those folks around the world take advantage of the research that we do.

So, what I’m hoping to talk to James about... I think there are many things we could talk to him about, but directly related to his work—and he obviously sits on the board of Khan Academy and several other foundations—I would love to dive into, you know, even pre-COVID, James has done a lot of interesting work around the future of work and what will technology and automation do to it. There’s then a layer that COVID has added to it, and then there’s a layer of, you know, the environment we’re in around the anti-racism movement. How do we increase diversity, equity, and inclusion in corporations?

What things might transcend beyond the COVID crisis or beyond the news cycle that we happen to be in? So if anyone has any questions on YouTube or Facebook, please put your questions in the message boards. We have team members who are looking at them, and they’ll surface those questions to myself and James.

But James, just to get everyone grounded, you know, given the work that you just described that the McKinsey Global Institute does, you know, what even pre-COVID, what trends have you seen or are you all prognosticating about the future of work? You know, what is automation going to do? What is globalization or de-globalization going to do?

James: Well, I think, you know, work has been changing and will continue to change in some profound ways. I think there are a few different things that are driving those changes. The first one is the role of technology and automation. We know that this is, by the way, this is a trend that's been going on for centuries actually. Every time we’ve invented new ways or technological ways to complement what people do—the work that people do—there's always been this ongoing tension and co-evolution between what people do and what the machines around them do.

So the role of technology and automation is one of those trends that affects work. The other trend that's been affecting work is the fact that there are now many more varieties of work. We know that there are people who do full-time jobs; there are people who now do independent work—the gig economy. So, the set of arrangements that we put around work have kind of expanded. Some of that has been driven by the fact that some of these alternative models are flexible for people, useful for people, and allow people to complement their incomes when they’re not earning enough from their full-time jobs.

So this variety of work phenomena has also been changing our work quite a bit. So, you know, these were trends that were already underway even before COVID that already impacted sectors like manufacturing. So if you’d gone to a factory in 1980 versus a factory in 2018, it looked very different. You probably wouldn’t see as many people there; you’d probably see a lot of robots and machines assembling things on the assembly line. So this is already changing.

But I think one of the things that as we look forward that’s become important is that with the emergence and progress in artificial intelligence, for example, we’re starting to see machines that are capable of doing some of those things that we often associated with human intelligence—the ability to understand patterns, the ability to think through some kinds of classes of problems. And so the expansion and the emergence of artificial intelligence has made many people start to worry about—so therefore, what will people do in the future? So that’s been one of the trends we’ve been looking at along with the varieties of work.

I should point out though...

So you’re about to ask something?

No, no, keep going.

I was going to ask, you know, all the things you alluded to: automation, artificial intelligence. You know, there’s people who can paint a very dystopian future, that most jobs could get taken away. I mean, people talk about self-driving cars and trucks. And even a lot of office work or even, you know, AIs that can, you know, deep learning algorithms that are better at diagnosing radiological images better than radiologists do. Do you all see a future where we have this mass displacement of, you know, tens of millions of people, even in just the U.S.? Or do you think it’s more gradual? We shouldn’t be so scared.

James: Well, we shouldn’t be so scared because one of the things that actually happens is that—I’ll illustrate this with a story. So you know, you’re a student of history, Sal, and you know many people may not know this, but in the 60s, President Lyndon Johnson put together a commission—which is a blue ribbon commission—to look at the future of work and the role of automation. One of the conclusions in their report in 1967 was something that always stuck with me.

What that conclusion was, that technology destroys jobs but not work. That is actually quite important because what happens, as we’ve seen both historically and also looking forward, is that yes, there will be some occupations that will decline. You know, we don’t have people driving horse-drawn buggies anymore; we don’t have people who operate elevators anymore, except maybe in a few remaining places. So some jobs will decline, but many more actually grow and emerge because there’s still work that needs to be done.

So when you look at the puts and takes, if you like, much of the research we’ve done—and in fact, many other economists have done, and technologists have done at least over looking at the next few decades—at least suggest that while some jobs will be lost, there will also be jobs gained, meaning jobs that will grow and emerge as a result of new things that we'll do in the economy.

So I like to think of this as what we see with technology and automation is a phenomenon of three kinds, actually. Yes, some jobs lost, some jobs gained, but also many more jobs changed. The jobs changed part is quite important. Think about, you know, whatever, you know, the things you spend your day doing. Most occupations consist of 20 to 30 different constituent activities. Some of those are being replaced by all those constituent activities that have been replaced by technology—your job is still there. You mentioned the radiologist; if you look at what the radiologist actually does, the amount of time that they spend looking at images is— I think the number in the U.S. is something like 38 percent, is the time they actually spend looking at images.

There are other things that they do—they coordinate things, they’re doing research, they’re doing a whole bunch of other things. So that’s an example where a portion of their work changes. Think about the bank teller, which is a fascinating example. If you had looked at a bank teller in 1970, what did they spend the majority of their time doing? Counting your money, either to take it from you when you give it to them or to give it back to you when you ask for it. That was like 80 percent of their time. Then the ATM showed up. Well, you don’t need them to do that. Do we still have bank tellers? We do! What do they do now? Quite different activity.

So if you look at the amount of time bank tellers are spending counting money, it’s a tiny portion. The rest of the time they’re doing customer service, they’re helping you think about, you know, accounts you want to open—a whole bunch of things. That’s an example of a job that’s changed because of the advent of technology.

So we’ll see this phenomenon of jobs lost, jobs gained, and jobs changed is an important thing to keep in mind as you think about the impact of technology on our society.

And what do you think?

Well, you know there’s a bunch of questions, and even a few that I’m seeing from YouTube. To do a synopsis of some of these, I think everyone— I hear you, but you know there’s a general feeling that artificial intelligence might be different than just the traditional forms of automation that have happened before. And that even if it doesn’t net kill work, does it change the equality or inequality?

And this kind of starts going into what we’re seeing with COVID, what we’re seeing with a lot of the issues, you know, that COVID might have only highlighted around inequality, whether it’s around income, around race. Should we be afraid? And this is kind of a lot of the tension we’re feeling—almost a byproduct of some of these trends starting to really hit home.

James: I think that the question is an important one to think about because, you know, while as I said before, I worry less about is there going to be work in the future, because I think there will be, net, of the things I just described. But there is something I worry about. These are a couple of things I do worry about. I do worry about impact on incomes and wages because, I’ll illustrate this as an example, Sal: many of the hardest automated occupations tend to be, you know, so think about care work, for example. It’s very, very hard to fully automate that.

Think about some of the hardest—you know, many of those occupations have tended to be occupations that the wages have not been great for, actually. So there’s a worry that even if we have enough work, it’s possible that many of the jobs won’t pay very well. And that’s something I do worry about, and that would actually exacerbate the challenges we already have with inequality.

It’s something that people have worried about for a long time. You often hear politicians say, you know, we need good jobs back—manufacturing jobs are good jobs. It is true; manufacturing jobs have historically paid quite well, but that’s also where we’ve seen a lot of automation. Whereas many of the jobs that have grown in the service sector have tended to be—not all of them, but many of them have tended to be jobs that don’t pay as well.

So yes, the income and the quality quest is clearly one that we should worry about. The other one we should worry about are the skills and adaptation that people are going to have to go through. So even if there is enough work, and people work alongside machines, that’s going to require slightly different skills—a slightly different mix of skills.

So how do we retrain everybody? How do we keep people’s skills adaptable as they end up working alongside technology? So these issues of skills and adaptation, and the income questions are things that do worry me. I worry less about will there be jobs. I worry more about will they be the right kind of jobs and how we tackle inequality.

Now, many of these issues, you know, we’ve often talked about themselves as the future of work. Well, in some ways COVID has kind of accelerated all of that, and it’s now kind of here. And maybe that’s something we should talk about. What are we seeing around work in this moment?

Right, I mean, there’s, you know, from Facebook we have this question from Matthew Kavanagh: Is AI making it impossible to predict the future of work and work patterns? Several people have kind of alluded to what should they do with their life. I’m assuming they’re high school or college students.

And you’re absolutely right: COVID has, you know—there’s kind of these two worlds: people like me and you who can, for the most part, continue to do our work from our home offices, and then a lot of people in service industries and wherever else where they can’t. And it’s made inequality maybe worse. So what advice would you give, and what trends do you think from COVID are real and that we really do have to struggle with?

James: Well, I think it’s important before we get to what we do about it to actually fully understand what’s been exposed regarding work and inequality by this COVID moment. So right now, for example, if you look at the U.S. workforce, something like about a third of workers that I would call vulnerable—and let me describe what I mean by vulnerability. These are workers who are vulnerable to layoffs or to being furloughed or experiencing reduced hours and income as a result of both either public safety concerns about health or the fact that the sector that they work in has essentially shut down.

So, for example, if you happen to work in a restaurant, for example, or in the travel industry, well, there isn’t a whole lot going on right now. So a third of the U.S. workforce—that’s vulnerable in that sense. That’s a very large number. Now, if you look at the profile of who those workers are, something like 80 percent of them are low-wage workers, meaning that they earn less than $40,000 a year. So it’s disproportionately impacting low-income workers the most; a large portion of them don’t have college degrees or college education—80 percent of them, actually.

And many of them are disproportionately people of color—Black and brown people. So you know, if there was already inequality in an educational sense or in a low-wage sense or in a kind of a demographic sense, we’re seeing it in full-blown force. And those are people, as you said, Sal; many of those occupations, you can’t do them remotely the way you and I can do what we do because we know that something like almost 45 percent of those vulnerable workers, their work has to be done in some physical place somewhere. You can’t do it over Zoom or over whatever technology you happen to be using.

So that’s a real concern. So the question is, what do we do about that? I think lots of things. First of all, we need to solve for the public health concerns because a lot of the people who are most exposed in the public health sense have tended to be many of those same workers. We also have to—so we have to solve for their health safety—give them the right equipment, PPE and so forth, making sure that they’ve got—they’re protected if they have to go out to do work there.

But the other thing is to think about how do we supplement their incomes and help them and support them. So some of the stimulus checks or the unemployment insurance checks have helped a lot. But one of the things we’re realizing is that because we have a system where a lot of the access to health services or benefits are tied to employers, well if employers shut things down, we’ve essentially potentially cut off people from some of the health and other benefits that they might have got. So that’s exposing the difficulty when we’ve got a benefit system that’s inherently tied to employment.

These are some of the things we have to tackle if we’re going to support those exposed and vulnerable workers.

Do you think there’s some limit to—I mean this goes into more of a macroeconomics question that I’ve asked other guests, but you know a trillion here, a trillion there, starts to add up at some point. What do you think is the limit at which, you know, the government won’t be able to, you know, write checks to hold people over essentially?

James: Well, this is the classic difficulty of balancing the short term and the long term. So, you know, in the short term sense, I would say let’s help people as much as we can because that’s the challenge that’s here and now. Those are workers we need to support—an economy support—who are exposed in the public health sense right now and also in an economic sense right now. So we have to protect their lives and livelihoods.

This is something we’ve been writing a lot about: how do we protect lives and livelihoods in this moment? But it also then has this other long-term consequence, which is because the way the economic system gets to write those checks or a trillion here, a trillion there, is that in some ways we’re borrowing from the future, if you like, in a way. So this is the tough combination, but personally, I would say, you know, let’s tackle the issues that are right in front of us right now, which is people are exposed whose lives are exposed and whose livelihoods are exposed. So anything we can do to help them I think is fundamentally important.

Right, right. And what I’ve, you know, the general sense I’ve been hearing—and even when I think about myself—is the Fed is aggressive, that helps lower interest rates; they’re essentially printing money, and then the government can borrow at, you know, record-low interest rates. And really, the risk in the short to medium term is inflation, which doesn’t seem, if anything, deflation because of all the other trends you talked about, like automation. It might be a bigger risk.

Oh, it would be. So, so in fact, one of the other challenges we’re facing, by the way, as I mentioned, there are a lot of workers are exposed right now, either vulnerable because they can’t work and so forth. Well, we know already that you know something like 40 percent of those occupations also are occupations that are at risk of automation. So, you know, the interplay of these dynamics is really, really important. But I think one of the things many of us are concluding is that we kind of have to simultaneously solve these two things, which is how do we deal with the public health crisis that we’ve got at the same time we’re finding safe ways to keep the economy and reopen the economy? And those two things kind of go hand-in-hand.

I think the challenge we’ve got practically is that, you know, we’re running a—you know, 50 experiments, if you like. In fact, more than that in the sense that every state is kind of doing their own thing—in fact, it’s more than that because even within states you find some cities and some counties are doing things a little bit differently.

That actually makes it very complicated and in fact raises the potential that we’re going to be kind of in this bumpy road for a while, and recovery will probably take even longer because we’re kind of waiting on the one end for the public health crisis to abate or be under control. And you know, waiting for vaccines—and you had Bill Gates talking about that—we’re waiting for therapies. But also we need to find safe ways to reopen, and we’re trying to reopen and get the economy. So I worry that we’re going to be in this mode of kind of, you know, small steps, bumpy steps, back and forth and forward hopefully for quite a while—for longer than we would like, and that’s a worry.

And then related to this, and I do think it is somewhat related—I don’t think it’s a coincidence that we’re seeing the kind of mass protests in, you know, when you already had this, you know, COVID happening in the background. But you have—you’ve had, obviously the murder of George Floyd, which has kind of reinvigorated or really opened up conversations around systemic racism and police brutality. I’m curious your point of view, obviously personally how it affects you and your family, and but also as someone who thinks systematically about business and jobs.

You know, there’s a fear that a lot of companies, you know, they do lip service to the notions of diversity and inclusivity, but at the end of the day behind closed doors, they’ll say, “Well, but it’s a harder problem.” They’ll talk about the pipeline problem, but you know, it starts maybe it’s Khan Academy’s problem because we have to start with students when they’re in pre-K and elementary school and all that.

How do you think about—I mean how is it, how are you thinking about it personally? What do you think has to change so that we don’t keep repeating this? And how do you think the role of the business community—what action should they be taking to not just do lip service?

James: Well, these are really big questions, Sal, you know, but you asked about personally my own experience, and I’ve lived in the United States now for about 20 years, and I can tell you these issues affect me and affect everyone. One of the things that’s been surprising to me is the, you know, even when people understand things is the presumption that, “Oh, it happens to those people over there,” you know, “poor, disadvantaged people of color.” Well, I think it happens to all people of color.

So let me give you some personal experience. It doesn’t matter, you know, I’m fairly privileged; I’m lucky to do the things that I do and so forth, but that doesn’t stop the police stopping me occasionally, which happens. It doesn’t stop showing up—I work in Silicon Valley—showing up at a company to say, “I’m here to meet to the CEO,” and I’m told, “Oh, you can leave it here,” right? The presumption being I’m there to deliver something, right?

So it happens to all of us. There isn’t a Black male in this country who, apart from people perhaps who are recognizably celebrities—there’s the Black male I know, CEO down to the janitor—who hasn’t got a story to tell you about some experience that they’ve had in the store somewhere. So this happens to all of us, and we’re constantly thinking about that. I worry about—I’m the father of a young Black, you know, Black man. I worry about it when he goes out.

So these are very personal issues, but I think zooming out from the personal, I think perhaps what we’re seeing is, you know, these have been issues that have been, you know, there for a very long time. And you know, it’s a culmination; I think perhaps this moment was a bit of a boiling over point of the death of George Floyd that kind of brought things to a fall. But these issues of inequity, systemic inequities both in the—not just in the policing criminal justice system but in society economically have persisted for a very long time.

And I think, you know, what I’m hopeful is that maybe this time things will be different, and people start to take, you know, address them directly. I’ve been quite encouraged— we’ll see—but I’ve been encouraged by the fact that there’s been a bit of a collective chorus of recognition of these issues. Not universal, of course, but at least, you know, a larger chorus than before.

And I see it both in the inside large companies in the private sector, in foundations, and on the social—in the social sector. So that chorus, I think, is encouraging. I’m also seeing it go beyond just a chorus, but people starting to propose actions that they’re going to take. The hardest, there are some easy actions, important but easy actions.

The easy actions, I think, for companies is to write a check—so donate to this course and that course and fund this fund that’s great. It’s happening, and I think many will benefit that way. The harder thing is to actually change organizations, change, for example, leadership, change attitudes towards these issues, change hiring practices, address some of the biased questions that affect candidates when they’re applying for jobs, and work—those are much harder things to do.

But I think people are committing to doing this. I’m hopeful; I’m optimistic in that sense.

And just even from your vantage point as, you know, one of the senior leaders at McKinsey, which is, you know, for those who don’t know McKinsey, it is kind of, you know, considered kind of the elite of the elite in terms of strategy consulting firms, and you know, you all are the advisors to CEOs and governments around the world. So in a lot of ways, you’ll have influence with a lot of other entities, and then also what you all obviously do with your own organization. Do you see that there will be change? Are you—and what are those levers? Like, you know, if you have to pick your top three levers on any of these issues—obviously there’s the police brutality issue, which, you know, we might have limited control over—that’s kind of a sheriff, government, police union type issue—but in the corporate sector, what levers would you...?

James: Well, I think in the corporate sector it’s committing to the kind of inclusivity that we’re talking about. I mean, you know, for those who are interested, even we at McKinsey have actually put out 10 actions that we’re going to take. Some of the harder ones in the private sector for many of us is to make sure we recruit differently, we hire differently, we address issues of bias in how people progress.

We make sure people are being mentored and have allies. I mean this is one of those things where, you know, the people of color can’t just, you know, work on this by themselves. I think there’s a sense of a need for collective ownership of the fact that we do want to hire differently, we do want to look at candidates across the board, we do want to look at people’s skills, we do want to look at, you know, how do we support people progress—those are some of the more kind of cultural things to think about.

I think there’s some wonderful work and research that was done by Claude Steele. So Claude was the provost at Berkeley and Columbia before that; he’s a professor at Stanford about these issues of stereotyping and bias in how we coach each other, support each other. I mean, you know, you’re a teacher and you’re educating people, but even the way a learner and their teacher—or you know, if it’s a worker, a worker and their supervisor who’s coaching and mentoring them, paying attention to these things makes an enormous difference. It makes an enormous difference.

So many corporations that we’re doing it ourselves, going through training about systemic bias—how do you watch for that? How do you make sure in the coaching and mentoring you’re not inadvertently biasing the feedback and the learning? That’s the hard work that we’re all going to have to do. And we at McKinsey, I know, have as much work to do as anybody. We don’t have enough Black leaders at McKinsey; we don’t have enough people of color coming through in the organization. We’re all working hard at it.

So we’ve made a commitment to double, for example, leadership in our firm at all levels in the next, you know, in four years or less. That’s—that’s going to be hard for us, but you know, that’s a big commitment we’re making.

Yeah, and you know the going back to—I mean there’s a ton of questions that are coming in, and these conversations always go faster than I expect because there’s so much to talk about. I mean, you know, there’s a couple of questions people are asking. I mean going back to the work question about, you know, what should people do with their lives given the uncertainty?

There’s questions about what do you think are going to be the permanent effects of COVID? But I would give an extended COVID and a lot of what we just talked about. There’s a very particular question about, from Facebook, about what do you think about Trump’s H-1B policy—the visa policy? I’d like to, you know, take it where you’d like to take it, James, in the few minutes we have left.

James: So, it’s worth talking perhaps about what’s gonna be permanent post-COVID—maybe as trends that people can anticipate as people think about what to do, how we adapt and adjust. I think we’ve seen ourselves go through some rapid global experiments. We’ve experimented with the work-from-home. We’ve experimented from remote learning, and people have—more people that are already using Khan Academy have discovered Khan Academy thankfully in this moment, and that’s a wonderful thing.

But I think many of those things aren’t going to change. I think we’ve seen the benefits of some of those things. We’ve seen the value some people have from working from home, the flexibility, but some people want to go back to work. So the workplace itself, I think, is going to look quite different. The learning environment, I think, is going to look quite different. I think we’ve learned that, you know, we may be in a no-contact or at least a low-contact economy.

I think some of the experiences of social distancing and avoiding density, I’m not sure all of those will go away. I think we’ve seen a growth in telehealth, for example—people being more comfortable doing health consultations remotely. I think much of that is gonna stay. So those are things that I think are gonna be with us for a while.

To the question of, you know, how can one adapt and learn, I think, you know, it’s one thing I love about Khan Academy. I think that being in a mode where we are perpetually learning and augmenting our skills and what we know, I think that’s just gonna become—it’s just going to become a lifelong skill. Learning to learn and learning to adapt permanently and perpetually is one thing.

The other thing I would also add is, we’re going to see the importance of both skills—not just the STEM skills—but also even some of the artistic skills. I think it’s going to be the combination of these other social skills with what some people have called STEAM, right? By adding A to STEM—A for the arts. I think that combination is going to be quite important. And those who have both kinds of combinations of skills, I think, are going to do well.

Yeah, and I always find STEAM entertaining because it really just means being a well-rounded human being because it’s covering everything!

Exactly! Exactly!

Well, James, unfortunately, we’re all out of time. Considering you’re a board member, I consider it your duty to do this again. So I hope we can have more of these conversations because I think we just started scratching the surface on a lot of this—especially even the future of work, etc., etc.

So thank you, James, so much for joining, and I hope we do get to do this in another couple of weeks.

James: Well, thank you for having me, and welcome support from those watching Khan Academy. It’s a wonderful, wonderful resource. So thank you!

Thanks, James!

So thanks everyone for joining. As you can see, just another fascinating conversation. James is a big hero of mine and someone I definitely look up to and is a great board member for Khan Academy. And I look forward to not only bringing him on in the future, but we have many other really interesting guests coming up, and I will see you at future live streams. See y'all later!