Good News for Women and for the Well-Educated

Bad news for non-immigrant relatively uneducated men. (America still offers an amazing deal to immigrants.) David Wessel writes about the latest labor market research. The Journal really should put Wessel on page A1:

Why Job Market Is Sagging in the Middle: The salaries of Wall Street's financial engineers are surging while wages in industrial companies stagnate. Manufacturers complain about "skill shortages" while cutting payrolls. The number of health-care jobs soars 45% over 15 years, outstripping the 25% increase in other jobs. Computers seem to have infiltrated every job, yet demand for unskilled, low-wage immigrants doesn't abate....

For decades, employers in the U.S. and other industrialized countries sought more skilled workers as technology and the availability of low-wage workers abroad diminished the employers' appetite for lesser-skilled workers at home. It was painful, but simple: Employers of all sorts wanted more skills and more education, and paid more to get them....

There is still strong demand for high-end workers -- the stars of finance, software, law, sports and entertainment -- as well as for the highest-skilled factory workers. The only news is the intensity of that demand, which is pushing up pay for those at the top.

-- and here's the switch -- demand is increasing for some workers at the low end of the pay scale: the ones who wipe brows in hospitals, care for kids, clear tables at bistros and stand guard in office-building lobbies. In 1980, about 13% of workers without any college education were working in such personal-service jobs, according to David Autor.... In 2005, 20% of them were.

The losers? "The sagging middle," says Princeton University economist Alan Krueger.... Lawrence Katz and Claudia Goldin... "U.S. employment has been polarizing into high-wage and low-wage jobs at the expense of traditional middle-class jobs."... Technology and globalization are boosting demand for the most-educated.... Top hedge-fund managers aren't being replaced by computers; they're harnessing them.... [T]echnology and globalization are eroding demand for workers who do routine tasks in factories and offices, many of whom are high-school or even college grads. The voice-mail system does away with switchboard operators; back-office software eliminates bookkeepers; robots replace assembly-line workers.... But technology and globalization are not eroding demand for personal-service workers... [which] have to be delivered here in the U.S. -- and in person -- either by natives or by immigrants....

Autor and colleague David Dorn examined places that were particularly heavy with easy-to-automate or easy-to-outsource jobs in 1980. By 2005, they discovered, wage inequality in those communities had widened more than elsewhere.... [W]hat, if anything, should the U.S. do about this? That's a harder question.... [S]horing up the middle by... meddling with the market would cost consumers heavily. Some, certainly not all, suggest letting the market be, and using the tax code to transfer money.... Others suggest "professionalizing" personal-service jobs, perhaps encouraging unionization, to boost wages. Unlike factory jobs, advocates reason, these jobs can't be moved offshore or automated if employers have to pay more.

The more popular solution -- at least among economists -- is a familiar one: Educate all workers so they are better at interpersonal or abstract skills... as opposed to dial-turning or keyboard-pounding...

This does call for more redistribution through the tax system: that is why the Star-Maker made progressive income tax systems on the Fourth Day, after all. I don't understand how any professional economist can disagree with the fact that more technology-driven inequality should call forth more social insurance in response.

Comments

[wood turtle]

"This does call for more redistribution through the tax system: that is why the Star-Maker made progressive income tax systems on the Fourth Day, after all."

You left out a lot of stuff after all. Are you sure that Star-Maker is not the same as Ceiling Cat? And exactly what is the most holy number of tax brackets, and what percentage numbers are most fortuitous? You must have a different Bible than I do. But it's right up there-with sun and moon and stars.

[Kaleberg]

"The more popular solution -- at least among economists -- is a familiar one: Educate all workers so they are better at interpersonal or abstract skills... as opposed to dial-turning or keyboard-pounding..."

That's parody, right? If everyone had a PhD, we'd be right back to everyone made it to 4th grade. Writing PhD on a piece of paper doesn't create a job.

---

Was it the fourth day and not the first?

The Old Testament is a fascinating document for an economist:

- There is no such thing as a quit-claim deed. All property reverts at regular seven year intervals. How did they compute the discounted value of a piece of land in old Hebrew numbers?

- All the grain along the edges of your fields and any grain not caught by the first sweep of the harvest belongs, by right, to the poor who are willing to collect it. I suppose this gives poor people the right to enter a harvested field, but who is liable if someone is injured?

[John Emerson]

"U.S. employment has been polarizing into high-wage and low-wage jobs at the expense of traditional middle-class jobs."...

Which Marxists call restratification.

As I keep saying: this kills the Democrats, because the group hurt ("labor") has always been an essential part of the Democratic coalition. After about 20 years of counterintuitive, triangulating Democrats who "refuse to pander to the base", the base is a lot weaker now.

The Republican's fake populism has convinced the Democrats' Ivy League leadership that populism is a bad thing, and a lot of Americans have been without political representation for a couple of decades. A big chunk of the Democratic Party has nothing but contempt for the bottom half of the income Demographic.

[anne]

John Emerson:

"The Republican's fake populism has convinced the Democrats' Ivy League leadership that populism is a bad thing, and a lot of Americans have been without political representation for a couple of decades."

Interesting perspective to think through.