Jim Fallows on Andrew Sullivan as Magazine Editor
Al Gore [and IPCC] lands a Nobel Peace Prize

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.

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