You would apply it loosely in our diverse climate. McGregor's X and Y theory states that there are two polar opposite types of workers on opposite ends of a spectrum—X being lazy and unmotivated, while Y is proactive and very diligent. Between those points, there are a myriad of points available to describe workers.
In the ever more diverse workplace in which business is now conducted, motivation and diligence are extremely important, but it is now better understood that there are spectrum of priorities and work techniques that people use, which make it much more difficult to categorize them as simply lazy or hardworking. People may work better doing a certain type of work or communicating in a certain way, which skews the idea of motivation.
Douglas McGregor, who was a professor at the MIT Sloan School of Management, wrote The Human Side of Enterprise in 1960. He described in it what became the widely known Theory X and Theory Y of management. In his formulation, these were not two distinct methods, but the end points of a broad and continuous spectrum of management assumptions and associated behaviors.
Theory X generally assumes that workers are not self-motivated and will only do work well and efficiently if closely supervised. This theory requires that managers create strict rules, rewards, and punishments. Theory Y, on the other hand, assumes that workers are self-motivated and will strive to do well for the intrinsic satisfaction of the job itself if management encourages them to be creative and take responsibility.
With today's diverse workforce, one should not use either one of these different theories exclusively as people from different cultural backgrounds respond well to different management styles. Instead, one should adopt elements of these different management styles to different groups of workers.
As was true in McGregor's time, different types of workers should be managed differently. Workers in fast food or manufacturing may need more standardized procedures and rules, while workers in the new knowledge economy respond better to Theory Y. Also, the entrepreneurial contract workers of the "gig economy," because they are contractors rather than employees, are by nature functioning within a Theory Y context.