Upbringing and education shape each person’s capabilities and set them on a future path. Extensive research confirms that people who don’t have college degrees in hand have more limited prospects and lower lifetime earnings on average.
But fate isn’t sealed at age 18 or 21. An individual’s human capital doesn’t stop developing when that person is handed a diploma. In fact, people keep learning over the course of their entire working life—and the ones who make strategic job moves that stretch their skills further can break out.
This story of possibilities emerged consistently across several countries in our new research. We looked at the career progression of some four million workers over a decade, combining it with millions of detailed job postings to see the skills people add or begin to deploy over time—and how that process affects their eventual lifetime earnings.
One group jumped out of the data. Roughly a third of U.S., German, and U.K. workers, and almost a quarter of Indian workers, are on a path to move up one or more quintiles in estimated lifetime earnings from their career starting points. Some of their trajectories are dramatic. Just over 6% of American workers, for example, are on track to move from the bottom all the way to the top quintile.
The big skills factor
How exactly is this group propelling themselves upward, defying the odds at a time of growing income inequality? We zeroed in on the points at which people made role moves, measuring the share of distinct skill requirements in someone’s new role relative to the skills attached to their previous position. The higher the share of new skills, the “bolder” we consider a role move to be.
In addition to changing jobs more frequently than other groups, upwardly mobile workers consistently made bolder moves, taking positions that represented more substantive leaps in skills and responsibilities. In our sample, skills acquired through work experience account for 60 to 80% of lifetime earnings for the people who move into higher earning brackets but only 35 to 55% for those who stay flat or drop down. The income growth of a dishwasher who becomes a food prep cook, then a line cook, then a sous chef, and then a catering entrepreneur is almost entirely fueled by techniques and tricks of the trade learned on the job.
For everyone in our sample, not just the upwardly mobile, job moves involving salary increases required a greater stretch in skills on average than other moves. Incremental moves with largely overlapping skill requirements don’t pack the same punch. Going to another company to perform largely the same tasks may yield a pay bump in the short term but not real growth over the longer term. When someone has learned all they can from one employer, they should not only go; they should boldly go in search of learning opportunities elsewhere.
Consider someone who starts as an administrative assistant at one nonprofit before landing a job cultivating donors in the development department of another. From there, she joins a research hospital as a grant writer before moving into a broader communications role. Eventually she becomes head of media relations for a major university. Her growth in skills compounds with each move, resulting in a far bigger shift over the entirety of a working life.
Skills vs. education
Our research estimates that skills linked to work experience account for half of the average worker’s lifetime earnings. That’s not to say that education doesn’t matter. In fact, education is foundational. It primes people to continue learning over a lifetime. But gaining skills on the job also has a powerful impact. For people who don’t have educational credentials, work experience is an even more important driver of lifetime earnings—and making targeted job moves to build skills is one of the only available ladders leading up.
But workers can’t make bold moves upward unless an employer sees their potential and is willing to take a chance on them in hiring. Employers need to break free of the status quo in hiring and develop ways of evaluating the potential in people rather than holding out for candidates who fit a template perfectly. If someone’s track record shows the acquisition of new skills over time, it probably means that person is capable of learning more.
Since technical skills can always be taught, it makes sense for hiring managers to look more broadly at innate characteristics and relevant soft skills. Have applicants demonstrated an analytical mind, a meticulous attention to detail, or good project management in previous jobs? Are they good communicators? Digital tools, including “gamified” options for pre-employment testing, can help with these types of assessments—perhaps measuring whether someone thinks logically or has a flair for solving puzzles.
Companies also tend to overlook the fact that their existing employees often have aspirations and untapped potential. Since organizations typically pay a premium for external talent and cannot always know if a candidate will be a cultural fit, it makes sense to take a real inventory of the capabilities that are already available internally, in proven employees. Employers can benefit from making job movement within the boundaries of their organizations more fluid. Internal mobility options that enable people to keep learning and reinventing themselves can keep employees energized and improve retention. In a June 2021 Gallup survey of 15,000 U.S. workers, 61% said that the opportunity to learn new skills is an extremely or very important factor in deciding whether to stay at their current job.
Companies have been understandably taken aback as the Great Attrition becomes the Great Renegotiation. But mobility is a healthy dynamic, especially if it’s fueled by growth and leads people to better matches where they can realize their potential. The role of employers as incubators of skills and engines of upward mobility is underappreciated—and there is huge scope to expand and improve it, widening pathways for a bigger share of the workforce.
Sven Smit is chair of the McKinsey Global Institute, Anu Madgavkar is partner at the McKinsey Global Institute, and Bill Schaninger is a senior partner of the People and Organizational Performance practice.