Monday, 14 June 2010
The Sagging of the Middle Class
It’s not that all middle-class jobs have gone missing. It’s just that their growth is sagging compared with that of other jobs. No giant sucking sound, just the gentle hissing of an inner tube losing air, threatening a flat tire that could send the American dream machine off the road.
United States Census 1980, 1990 and 2000; American Community Survey, 2008.The chart above captures the takeaway point of David Autor’s new report, “The Polarization of Job Opportunities in the U.S. Labor Market,” published by the Center for American Progress and the Hamilton Project.
Professor Autor ranks occupations by mean wages (using these as a proxy for skill). Between 1999 and 2007, growth took place primarily at the low end. Between 1979 and 1989, the share of high-wage jobs grew fastest. Between 1989 and 1999, the share of low-wage jobs began to grow, but high-wage jobs continued to expand. Between 1999 and 2007, growth took place primarily at the low end.
The cumulative effect is polarization and increased inequality, intensified by job losses during the recent recession that also hit the middle-wage group particularly hard.
Professor Autor, an economist at the Massachusetts Institute of Technology, argues that a similar trend is unfolding in other industrialized countries, driven by a combination of technological change and international trade.
Economists don’t all agree on the past or future trajectory of middle-wage jobs. Stephen Rose has observed that trends look more positive for women than for men. Harry Holzer and Robert Lerman emphasize that middle-skill jobs (defined as those that require more training than a high-school degree but less than a college degree) still play an important role in the labor force. They worry that a doomsday scenario could discourage efforts to improve training opportunities for such jobs.
The policy debate that Professor Autor hopes to encourage would focus on efforts to both increase skills and improve job-market opportunities. What interests me is the divide between those who believe increased education and training can solve the problem, and those, like Professor Autor, who worry that those measures alone might not be enough.
The fact that middle-wage jobs, rather than low-wage jobs, are declining suggests it is not the overall level of skill but the specific type of skill that matters. In fact, skill itself may be less important than other characteristics of a task, such as how easily it can be automated or outsourced at some point in the future.
Alan Blinder of Princeton observes that some jobs are simply more outsourceable than others because they don’t require physical proximity or person-specific skills. The combination of rapid technological change and increased global trade in services has effectively devalued skills that many individuals spent considerable time and effort to acquire.
Consider, for instance, the possible extinction of travel agents and the gloomy job prospects facing journalists. The expansion of online education sites replete with videotaped lectures by superstar professors will almost certainly reduce demand for a skill I labored to develop for many years — lecturing to large classes of economics majors.
Economists at the Bureau of Labor Statistics have developed an index of occupational susceptibility to offshoring. Almost every computer and mathematical science occupation is high on the list.
We constantly exhort young people to invest in their human capital. But investments in human capital, like those in real estate, don’t always yield a reliably high market rate of return.
Middle-class culture in the United States rests on the precepts of human capitalism — invest in your own skills and those of your children, and the market will reward you. These precepts now seem shakier than they have in the past. No wonder middle-class spirits, as well as incomes, are sagging.
By NANCY FOLBRE
Nancy Folbre is an economics professor at the University of Massachusetts Amherst.
in:in economix blog on NYT June 14 2006