Job Polarisation and The Decline of Middle-Class Workers’ Wages

Lambert here: “Twenty years of schoolin’ and they put you on the day shift.” –Bob Dylan. Of course, that’s oldthink. , they had shifts. Real wages have been flat for thirty years. Seriously, are we to believe that economists and the elites they service just got around to noticing? Pas si bête.

By Michael Boehm, Assistant Professor, University of Bonn; Affiliate, London School of Economics. .

Employment in traditional middle-class jobs has fallen sharply over the last few decades. At the same time, middle-class wages have been stagnant. This column reviews recent research on job polarisation and presents a new study that explicitly links job polarisation with the changes in workers’ wages. Job polarisation has a substantial negative effect on middle-skill workers.

The decline of the middle class has come to the forefront of debate in the US and Europe in recent years. This decline has two important components in the labour market. First, the number of well-paid middle-skill jobs in manufacturing and clerical occupations has decreased substantially since the mid-1980s. Second, the relative earnings for workers around the median of the wage distribution dropped over the same period, leaving them with hardly any real wage gains in nearly 30 years.

Job polarisation and its cause

Pioneering research by Autor, Katz, and Kearney (2006), Goos and Manning (2007), and Goos, Manning, and Salomons (2009) found that the share of employment in occupations in the middle of the skill distribution has declined rapidly in the US and Europe. At the same time the share of employment at the upper and lower ends of the occupational skill distribution has increased substantially. Goos and Manning termed this phenomenon “job polarisation” and it is depicted for US workers in Figure 1.

Figure 1. Changes in US employment shares by occupations since the end of the 1980s

boehm fig1 7 feb

Notes: The chart depicts the percentage point change in employment in the low-, middle- and high-skilled occupations in the National Longitudinal Survey of Youth (NLSY) and the comparable years and age group in the more standard Current Population Survey (CPS). The high-skill occupations comprise managerial, professional services and technical occupations. The middle-skill occupations comprise sales, office/administrative, production, and operator and labourer occupations. The low-skill occupations include protective, food, cleaning and personal service occupations.

In an influential paper, Autor, Levy, and Murnane (2003) provide a compelling explanation: they found that middle-skilled manufacturing and clerical occupations are characterised by a high intensity of procedural, rule-based activities which they call “routine tasks”. As it happens, these routine tasks can relatively easily be coded into computer programs.

Therefore, the rapid improvements in computer technology over the last few decades have provided employers with ever cheaper machines that can replace humans in many middle-skilled activities such as bookkeeping, clerical work and repetitive production tasks. These improvements in technology also enable employers to offshore some of the routine tasks that cannot be directly replaced by machines (Autor 2010).

Moreover, cheaper routine tasks provided by machines complement the non-routine abstract tasks that are intensively carried out in high-skill occupations. For example, data processing computer programs strongly increased the productivity of highly-skilled professionals. Machines also do not seem to substitute for the non-routine manual tasks that are intensively carried out in low-skill occupations. For example, computers and robots are still much less capable of driving taxis and cleaning offices than humans. Thus, the relative economy-wide demand for middle-skill routine occupations has declined substantially.

This routinisation hypothesis, due to Autor, Levy, and Murnance, has been tested in many different settings and it is widely accepted as the main driving force of job polarisation.

The effect of job polarisation on wages

Around the same time as job polarisation gathered steam in the US, the distribution of wages started polarising as well. That is, real wages for middle-class workers stagnated while earnings of the lowest and the highest percentiles of the wage distribution increased. This is depicted in Figure 2.

Figure 2. Percentage growth of the quantiles of the US wage distribution since the end of the 1980s

boehm fig2 7 feb(1)

Notes: The chart depicts the change in log real wages along the quantiles of the wage distribution between the two cohorts for the NLSY and the comparable years and age group in the CPS.

It thus seems natural to think that the polarisation of wages is just another consequence of the declining demand for routine tasks. However, there exists some evidence that is not entirely consistent with this thought: virtually all European countries experienced job polarisation as well, yet most of them haven’t seen wage polarisation but rather a continued increase in inequality across the board. Moreover, other factors that may have generated wage polarisation in the US have been proposed (e.g. an increase in the minimum wage, de-unionisation, and ‘classical’ skill-biased technical change).

In my recent paper I try to establish a closer link between job polarisation and workers’ wages (Boehm 2013). In particular, I ask three interrelated questions:

  • First, have the relative wages of workers in middle-skill occupations declined as should be expected by the routinisation hypothesis?
  • Second, have the relative wage rates paid per ‘constant unit of skill’ in the middle-skill occupations dropped with polarisation?
  • Third, can job polarisation explain the changes in the overall wage distribution?

I answer these questions by analysing two waves of a representative survey of teenagers in the US carried out in 1979 and 1997. The survey responses provide detailed and multidimensional characteristics of these young people that influence their occupational choices and wages when they are 27 years old in the end of the 1980s and the end of the 2000s.

Using these characteristics, I compute the probabilities of workers in the 1980s and today choosing middle-skill occupations and then compare the wages associated with these probabilities over time. My empirical strategy relies on predicting the occupations that today’s workers would have chosen had they lived in the 1980s and then comparing their wages to those of workers who actually chose these occupations at that time.

The results from this approach show a substantial negative effect of job polarisation on middle-skill workers. The positive wage effect associated with a 1% higher probability of working in high-skill jobs (compared to middle-skill jobs) almost doubled between the 1980s and today. The negative wage effect associated with a 1% higher probability of working in low-skill services jobs compared with middle-skill jobs attenuated by over a third over the same period.

I find similar results when controlling for college education, which is arguably a measure of absolute skill. This suggests that it is indeed the relative advantage in the middle-skill occupations for which the returns in the labour market have declined.

In the next step of my analysis, I estimate the changes in relative market wage rates that are offered for a constant unit of skill in each of the three occupational groups. Again, the position of the middle-skill occupations deteriorates substantially: the wage rates paid in the high-skill occupations increased by 20% compared to the middle while the wage rate in the low-skill occupations rose by 30%. This decline in the relative attractiveness of working in middle-skill occupations is consistent with the massive outflow of workers from these jobs.

Finally, I check what effect the changing prices of labour may have had on the overall wage distribution and whether they can explain the wage polarisation that we observe in the US. Figure 3 shows that the change in the wage distribution due to these price effects reproduces the overall distribution reasonably well in the upper half while it fails to match the increase of wages for the lowest earners compared to middle earners.

Figure 3. Actual and counterfactual changes in the US wage distribution

boehm fig3 7 feb

Notes: The chart plots the actual and counterfactual changes in the wage distribution in the NLSY when workers in 1980s are assigned the estimated price changes in their occupations.

At first glance, this is surprising given the strong increase in relative wage rates for low-skill work and the increase in the wages of workers in low-skill occupations. The reason is that these workers now move up in the wage distribution, which lifts not only the (low) quantiles where they started out but also the (middle) quantiles where they end up. The inverse happens for workers in middle-skill occupations but with the same effect on the wage distribution.

Conclusions

Despite the above findings, my paper does not provide the last word about the effect of job polarisation on the bottom of the wage distribution. This is because, for example, my estimates do not take into account potential additional wage effects from workers moving out of the middle-skill occupations into low-skill occupations. Therefore, we cannot yet finally assess the role that job polarisation versus policy factors (such as the raise of the minimum wage) played on the lower part of the wage distribution in the US.

However, what emerges unambiguously from my work is that routinisation has not only replaced middle-skill workers’ jobs but also strongly decreased their relative wages. Policymakers who intend to counteract these developments may want to consider the supply side: if there are investments in education and training that help low and middle earners to catch up with high earners in terms of skills, this will also slow down or even reverse the increasing divergence of wages between those groups. In my view, the rising number of programs that try to tackle early inequalities in skill formation are therefore well-motivated from a routinisation-perspective.

References

Acemoglu, D and D H Autor (2011), “Skills, Tasks and Technologies: Implications for Employment and Earnings”, in Handbook of Labor Economics edited by Orley Ashenfelter and David Card, Vol. 4B, Ch. 12, 1043-1171.

Autor, D H (2010), “The polarization of job opportunities in the US labour market: Implications for employment and earnings”, Center for American Progress and The Hamilton Project.

Autor, D H and D. Dorn (2013), “The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market”, The American Economic Review, 103(5), 1553–97.

Autor D H, L F Katz, and M S Kearney (2006), “The Polarization of the US Labor Market”, The American Economic Review 96.2, 189-194.

Autor D H, F Levy and R Murnane (2003), ‘The Skill Content of Recent Technological Change: An Empirical Exploration’, Quarterly Journal of Economics 118(4): 1279-1333.

Boehm, M J (2013), “The Wage Effects of Job Polarization: Evidence from the Allocation of Talents”, Working Paper.

Goos, M and A Manning (2007), “Lousy and lovely jobs: The rising polarization of work in Britain”, The Review of Economics and Statistics 89.1, 118-133.

Goos M, A Manning and A Salomons (2009), “Explaining Job Polarization in Europe: The Roles of Technology, Globalization and Institutions”, American Economic Review Papers and Proceedings 99(2): 58-63

Michaels G, A Natraj, and J Van Reenen (2013), “Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 Years”, forthcoming in Review of Economics and Statistics; earlier version available as CEP Discussion Paper No. 987 ().

Spitz-Oener, A (2006), “Technical change, job tasks, and rising educational demands: Looking outside the wage structure”, Journal of Labor Economics 24.2, 235-270.


1 This figure and the ones below are based on two representative samples for 27 year old males in the United States (the National Longitudinal Survey of Youth (NLSY) and the Current Population Survey (CPS)). For qualitatively similar statistics on all prime age workers, refer to Acemoglu & Autor (2011).

2 Examples of tests of the routinization hypothesis include Michaels et al (2013) who find that industries with faster growth of information and communication technology had greater decreases in the relative demand for middle educated workers; Spitz-Oener (2006) who shows that job tasks have become more complex in occupations that rapidly computerized; and Autor and Dorn (2013) who show that local labour markets that specialised in routine tasks adopted information technology faster and experienced stronger job polarisation.

3 For the details of this estimation, please refer to the paper.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

48 comments

  1. JGordon

    “Policymakers who intend to counteract these developments may want to consider the supply side: if there are investments in education and training that help low and middle earners to catch up with high earners in terms of skills, this will also slow down or even reverse the increasing divergence of wages between those groups.”

    Err no. There is already only a finite number of higher tier jobs. Increasing education and training will only lead to… more highly trained/educated people who are under/unemployed. Usually with a new mountain of debt on their shoulders.

    The solution is to realize that “the economy” is a human-made, semiotic (and failing) construct that doesn’t even exist in reality as it’s imagined to exist–and to start looking for alternatives to it for support. Family, friends and local community resources are a good start. And if you don’t have them, start developing them now, while the situation is still relatively stress-free. Being alone and reliant on the government or a corporation for your needs, including the need for self protection, as many people still foolishly are, is a sure-fire way to end up in a existentially bad situation.

    1. Banger

      Correct. The whole “training” meme is a typical idea of some progressives that is painless and appears to be doing something but its effects are marginal at best. The current system cannot, at present, be reformed as many people are beginning to understand there was a class war and the rich won. We now await their pleasure on the macro level.

      As you say, the way forward is through developing our social ties and reforming from the bottom up. Spread kindness, generosity, liberality (in the old sense of the word) and call selfishness and narcissism out in ourselves and our friends. Do we really all want to lead the lives of Ebeneezer Scrooge and live in Pottersville?

    2. A Real Black Person

      Families and friends are not made equal.
      The people who obtain and keep the top tier and high skill jobs are usually people who come from affluent backgrounds (or are able to seize what they want through violence) so they have better (better meaning more effective) friends and families and have better local community resources at their disposal. In environments where scarcity dominates, where that environment is a agrarian region experiencing famine or the inner city of an industrialized civilization, social relationships break down after a certain threshold of scarcity is achieved. When the survival of a person depended on the strength and quality of their social connections, the world was a more violent place since there were fewer prisons. I’m not sure why you’re pining for that, but we’re going in that direction anyway, simply because the sur that allows civilization to function is eroding. And even if it wasn’t, we’d be heading there anyway, because most people are only looking out for their friends and families while screwing over the system as much they can. The system being people they “don’t know” or “don’t like” while delivering empty platitudes about equal opportunity, justice, and morality.

    3. jrs

      depending on other people for one’s needs is a sure fire way to end up in an existentially bad situation. Now if you are talking building worker co-ops or something I’m down with that (but it does beg the question: why aren’t there more). But most means of relying on other people for income are crazy crazy dysfunctional, and no wage slavery doesn’t compare in dysfunction even if it’s not ideal either. See the dysfunctional relationships woman have historically put up with because men were the bread winners.

    4. jrs

      Oh agree on the whole education nonsense. While it might produce some slight net increase in good jobs, it won’t be enough to make up for the supply of workers who now have credentials, so it’s mostly credential inflation.

    5. jrs

      As for local attempts at alternative economics. Yes they are great. Yes I support them. But frankly most of them are in no way, shape, or form a replacement for the existing economic system for the individual. That’s not some praise for the existing economic system, that’s just explaining why most everyone still needs a job.

  2. Ben Johannson

    Sorry, but I’m becoming very intolerant of the notion one job is more “skilled” (or economically valuable) than another. Who are these folks to argue Jaimie Dimon uses more “skill” than a taxi driver in New York traffic? Always there is a value judgement contained in such discussions, which I think illustrates just how deeply we’ve all been indoctrinated in conservative-approved thinking.

    Some people are not better than others, and those who believe so need their teeth kicked in.

    1. A Real Black Person

      “Some people are not better than others, and those who believe so need their teeth kicked in.”

      I think–well, I know for a fact that this statement is rubbish. People are not born with equal capabilities and aptitudes. We spend so much time judging each other and measuring our value to each other, as humans, that the statement,
      “Some people are not better than others, and those who believe so need their teeth kicked in.”,

      is a willful rejection of reality, at best.

    2. Lexington

      Exactly right.

      Although the terms “high”, “medium” and “low skill” is crucial to their analysis they don’t even bother to attempt a rigorous definition of these terms, much less propose any kind of objective criteria for evaluating the skill requirement of a given occupation. Their entire argument is in fact based on a tautology – a job is “high skill” if it pays well, and “low skill” if it doesn’t.

      This kind of slipshod reasoning should be an embarrassment to any discipline with pretensions to academic respectability, but then again we are talking about economics. Within the discipline these nostrums are repeated so often as revealed truth that they are uncritically accepted as axiomatic.

      1. jrs

        By skill I think they mean credentials for the most part. Yes of course there’s probably manual labor that’s more skilled than the work done by PhDs, but they aren’t aiming for a real measure of “skill” as such.

        1. LifelongLib

          I’m a computer programmer, but a while ago I did some volunteer work at a construction site. I was amazed at the number of skills an “ordinary” construction worker needs to do his/her job. It’s as mentally demanding as the computer work I do. And much more physically demanding, dangerous, and harder to correct if you make a mistake than anything I ever have to deal with in computers. “Just a construction worker” is not an expression I’ll ever use (or tolerate) again.

          1. casino implosion

            Protip: “Construction workers” do not refer to themselves as such. They use the name of their specific trade: carpenter, steamfitter, plumber, ironworker, glazier, concrete laborer, bricklayer, operating engineer, electrician, dockbuilder etc. The skills, culture and traditions of every trade are different.

    3. Well said!! The highest salary I ever earned was for doing the easiest job I ever had. Unfortunately the job entailed spending way too much time with super-rich assholes, and so I quit after a year :)

  3. craazyman

    is this from the same shop that did the democracy and equality paper? what are you guys trying to kill us here or what? holy smokes. first thing in the morning and it feels like there’s a crowbar buried in my head already.

    I did a cross-longitudinall study of sunshine light density and time of day in 21 separate regions of the nation. In all cases I found a strong correlation between light density and time, with the strongest correlation between 8 am and 3 pm. I concluded that sunglasses are most effective during these hours.

    You can pay the person or pay the machine. if you pay the machine, the person doesn’t get the paycheck, unless they make the machine or sell the machine or install the machine or repair the machine or raise money to buy the machine. does x>y or does y>x.

    Once you have all the machines installed, you need something else for the people to do, since the machines are doing what the people did before. This may or may not be economic. They can lay around and drink and smoke. Or they can do things together, pay each other, and call it “work”. Somehow these activities need to be created and organized. How that happens is a mystery.

    1. ambrit

      Dear craazyman;
      Bloody H— mate! “They” already do exactly that which you propound. It’s called “Upper Management.” Since the hows and wherefors are a “mystery,” we need some sort of priesthood to read the entrails for us. Er, where’s the Vestals cobber?
      Happy investing!

      1. craazyman

        yep. the higher the pay, the less real work is done. when the pay gets high enough, no work is done at all. unless you’re playing spawts or singin on youtube

        there is a leisure class at both ends of the income distribution

        don’t know how you keep your sanity in the Big Box but I tip my hat to you. I don’t have a hat, acctuallly, but the thought is there

      2. craazyman

        Leisure class is in air quotes. The leisure is increasngly involuntary, obviously, the lower the income. involuntary leisure isn’t very leisurely but that’s why it was in air quotes.

    2. Lexington

      did a cross-longitudinall study of sunshine light density and time of day in 21 separate regions of the nation. In all cases I found a strong correlation between light density and time, with the strongest correlation between 8 am and 3 pm. I concluded that sunglasses are most effective during these hours.

      LMAO!

      I’ve always said that if common sense ever makes a comeback there are going to a lot of unemployed social scientists.

      That democracy and equality paper was a perfect example. I was tempted to write a response, but that would mean reliving my entire university political science undergraduate experience.

      I just couldn’t bring myself to go through that one more time.

  4. A Real Black Person

    While we’re on the subject of declining membership of the “Middle Class” and the implications for the larger economy, I feel that I have to chim in and say something about deflation. A
    The worries expressed by ‘progressives’, most notably in the comments section on this blog, about deflation sound like people worried about their devaluing assets. The assets that they’re worried about, I’m almost certain, are speculative. Most assets in most modern societies are speculative. Things like stocks and bonds, and real estate depend on upward inflationary spirals. Prices must go up in order for things to remain solvent–and of course, this encourages reckless consumption, particularly the kind that progressives like to pretend that they disapprove of. I see the anti-deflationary people on the same side of the crony capitalists–both these groups favor the government stepping in to save the value of their speculative assets–assets that were the products of market bubbles.

  5. mad as hell.

    How do they know that x amount of people have dropped out of the job sector and quite looking for work? What is the source that they rely on each month? Could someone elaborate?

  6. Eureka Springs

    I wonder if posts like this are designed to perpetuate self loathing among those who consider themselves middle class? It certainly perpetuates my loathing of those who try to communicate in the manner this post does. I mean if i were middle class I still wouldn’t understand, nor want to understand those charts. wtf?

    No matter what I have a strong sense when folk are talking about a middle they are helping ignore an ever increasing lower tier… you know a hundred million ‘merican human beings or more.

    That’s no class at all.

    And thanks to craazyman for your comments on both posts mentioned above this week. Breath of fresh air, sir.

  7. Despite the above findings, my paper does not provide the last word about the effect of job polarisation on the bottom of the wage distribution. This is because, for example, my estimates do not take into account potential additional wage effects from workers moving out of the middle-skill occupations into low-skill occupations. Therefore, we cannot yet finally assess the role that job polarisation versus policy factors (such as the raise of the minimum wage) played on the lower part of the wage distribution in the US.

    Just about says it all, doesn’t it?
    Nevertheless…..!

  8. Hugh

    This paper is impossibly bad. It reads like parody and manages to work in the two usual wheezes: jobs-skills mismatches and automation.

    If you notice, the author doesn’t really define what he means by “wages”. I’m guessing it refers to hourly rates. The problem is that the number of hours per week has been on the decline so stagnant hourly real wages or even moderately increased real wages times declining hours equals overall reduced yearly income.

    Another dodge the author uses is to describe everything in percent terms. While this can be useful, it needs to be balanced with absolute numbers. As JGordon notes, the author never points out just how few people are in the upper ends of his distributions.

    The author also uses inaccurate language. He talks about workers not choosing higher skilled jobs like they have some real choice in the matter, as if those higher skilled jobs would be there if they wanted them. He also blithely asserts that higher skilled jobs (whatever that means) are necessarily more productive and that middle skilled jobs can be offshored or “routinized”. This is wrong in a couple of ways. First, white collar jobs (programming, legal research, reading medical scans, etc.) have been offshored. Second, productive doesn’t mean beneficial to society. Third, people in mid level skills jobs can be quite productive and have a good grasp of technologically sophisticated systems with regard to the actual tasks they use them for.

    Finally, none of this addresses wealth inequality. Most of the work I have done and seen indicates that real income has been stagnant for the bottom 80% since the late 70s. But for the sake of argument lets say someone in the bottom 20% and someone in the top 20% get a 10% raise. These are not equal. In absolute terms, the one might be $1500, the other $8000. But more than this, the $1500 might quickly disappear on basic necessities while the $8000 is almost entirely discretionary. Looking at this over a period of several years, the increase in wealth of the person in the bottom 20% will remain pretty much zero, while that of the person in the top 20% keeps increasing. The one has no net increase in wealth, the other can see an increase of tens of thousands of dollars. But as I said before, the situation is probably that the person at the lower end saw no increase in their income while the person at the top saw an even larger one (so the wealth inequality will be even more marked).

    1. Banger

      Thanks Hugh. This brings us back to a prior discussion about academese that has infected intellectual life in this country in particular. We need, somehow, to create an alternative venue for research and discussion that is rigorous in elevating the human spirit rather than crushing it.

    2. flora

      Well said, Hugh. This paper reads like a scientist analyzing a ship’s wake without comprehending ‘ship’. What made it? Hmmm, is it water, is it wind? Is it jobs skills, is it automation?

      A very good overview of markets/middle class job destruction in the last 30 years is Adam Curtis’s 4 part BBC documentary ‘The Mayfair Set’ ( filmed 1998 ?). Four 1-hour episodes (E1-E4). Available on Youtube. Search Youtube for “Adam Curtis Mayfair Set”. The last episode (E4) alone is a good summation of how we got here. And no, it isn’t automation or a lack of jobs skills.
      It’s hostile takeovers, quick-buck artists stripping acquired companies of assets to pay the junk bond interest, eliminating jobs, loading companies with debt and profiting off that debt destoying the companies, eliminating jobs, forcing publicly traded companies to offshore labor, looting companies from the inside via self-dealing ‘management’. It’s using the stock market to destroy companies and jobs while enriching the looters. And the looters call themselves “the jobs creators.” We’ve been watching this show for 30 years.

  9. allcoppedout

    The ‘can democracy help with inequality’ paper was from MIT last year. It was obvious dross. This one makes sense and is just “obvious”. Yves’ analysis of how offshoring took what we used to think of as real jobs, with the offshoring itself creating new jobs to administer it is far more relevant and compelling. Many middle class jobs went through delayering, downsizing, rightsizing and other synergies of the experience curve. What we now call automation has a long history, usually called the embodiment of work’ – an odd term until you realise it means embodiment in machines. The Spinning Jenny, Crompton’s Mule and resettlement of land by more economic sheep are examples.

    Where societies have been able to avoid hard work, they usually have. Slavery is much more common in history than the revolting treatment of Africans. I have no problem with automation and efficiency, the problem is exploitation, who benefits and transitional effects, from unemployment to starvation.

    I doubt any work done and paid as middle class is really highly skilled, like welding a left-hand corner whilst swinging from a rope. Teaching in schools and universities is now largely child-minding and the educational content could be automated and delivered more effectively. Resistances of modernisation are often complex – who would want kids learning at home or adolescents around the place if they could avoid it? Much of what we laud as soft skills actually should be replaced by machine functions.

    This paper makes no points you can’t find in similar work in the 80’s. I would have no resistance at all to robots taking my work if I could still get a secure living. Lambert’s use of Dylan is particularly apt. I suspect Dimon and his ilk would not succeed in the reasonably open fields of science and technology with peer review, or on any shop-floor. But let’s ask what we would find if we could examine what those richer than most of us really do to be so.

    In 1950’s films on work study, workers always try and slow down while being measured. The middle class and rich obfuscate a great deal more. Nearly everything we buy has a production cost of perhaps 20% of what we must pay. Criminal and anti-social families probably cost £200K a year by the time 17 agencies are involved in failing to relieve the problem or help the victims. Homes with a build cost of £25K are at vast premiums to this because of finance. A bridge over the river costing $6 million will require $6.4 million in finance costs.

    Most undergraduates and MBAs are taught in a manner that is very heavily routinised. Hardly surprising they do routine work. There is, of course, no analysis of the work that needs doing in the world, or how higher education is producing Ant People even in roaring economies like China. I suspect education is a near total failure, producing ‘Simulants’ like these academics who can feign argument, rationality and an objective voice because we have mannered routines for that. We have long lacked organisations genuinely researching policy and practice. CH Waddington pointed out 40 years ago we can only detect such by their absence.

    Happy with the US recovery? After all unemployment is down just as in the Reagan recovery. Yet weirdly by creating many less jobs than required then with a 30% smaller workforce. Same here, incidentally. Papers like this are non-starters because they don’t probe the reality of modern work and reward.

    1. TimR

      great comment, thank you! We live in a hologram, and it’s deeper and more profound than most peole could even imagine. Even people who believe *some* things are illusion, would not go so far as to see practically the whole workforce as illusionary. We need articles & essays about that..

  10. Andrea

    I get what this chap is trying to show if not some odd analysis..

    Some general points are not addressed and the explanations are weak. (I’m always skeptical about the ‘computers are destroying jobs’ meme.)

    With a decreasing US labor participation rate (since about 2000 say), increasing unemployment, decreasing hours worked, independents who don’t earn (and whatever measure one cares to throw in there), that is *less work / income from work* overall, it is absolutely to be expected that the share (not absolute nos.) of ‘low skill’ work increases.

    Within the US landscape right now, these workers at the lower / bottom level have a kind of ‘incompressible’ quality.

    At some point one cannot lower pay (even with food stamps to make up..) and without them, all (Amazon, Starbucks, freight, infrastructure, water delivery, fruit picking, hospital cleaning, document delivery..) falls apart.

    That they are paid more (a tiny bit more than previous!) follows as well as there is more competition for jobs, the ‘better’ guys and gals are retained (e.g. with more education, harder workers, etc.), or turn-over is rapid (etc. there are many other factors) and the tasks are performed more efficiently.

    This ‘higher increase‘ in salaries for the lesser qualified / in low-level jobs has been quite steep in Switzerland. Here, though, it is attributed to communal efforts to deliberately hike these wages in the interest of equality, to prevent social unrest, to be ‘fair’ etc. (That is the rationale!)

    So, if the top 10 or 20 %, Pols and Corporations decide, or unconsciously participate in a scheme to lower wages across the board , it is by definition the ‘middles’ – average salary or a bit, or quite a bit above – that must be attacked, lowered, as that is where the ‘money’ gains are.

    Moreover, it would appear it can be done without social damage, as ppl can live with x income and ‘don’t need’ z income! The lady in another link who has turned into a ‘has-not’ is still alive, eating and showering and typing on the internet; not starving in the street or getting ready for the Revolution.

    My argument: all this is explained by “Less work, Less pay for work” – which is another, general, ball of wax.

    I do not think the ‘middles’ have had their jobs decimated, their pay lowered for the existing jobs, because computers or robots stole their jobs.

    (And see Ben above about the ‘skilled’ aspect. I just used the definitions that were implicit – not well spelled out – in the paper.)

  11. Generalfeldmarschall von Hindenburg

    Buckminster Fuller and Bob Black both point out that the automation can make this a largely work free utopia with the work that remains (repairing the machines and other non automatable tasks) equitably shared to alleviate the tedium. This leaves us all free to design interstellar hyperdrives, difference engines and whatever.
    But our Western culture is infected with a religiously inculcated and constantly reinforced glorification of work. I’m sick of being made to think there’s something wrong with me if I’m less than totally gung-ho about participating in my own repression.
    Posts like this are vaguely interesting because often the numbers do prove useful food for thought, but as others have more concisely pointed out, they really do a little soft shoe around the Elephant in the parlor.

    1. F. Beard

      But our Western culture is infected with a religiously inculcated and constantly reinforced glorification of work

      Such as the death penalty for working on Saturday? Such as every 7th year (The Sabbatical) off for agricultural workers?

      If the usury-loving Calvinists have conned you, it’s due to Biblical ignorance.

      1. allcoppedout

        Religion was once quite revolutionary Beard and in rebellion against debt. Time for jubilee!

      2. craazyman

        How can there be a death penalty for working on Saturday, since somebody would have to be an informer and rat you out, and that’s a job!

        So if you’re the informer, you’re on the job on Saturday and you know what that means.

  12. allcoppedout

    The ‘working smarter’ debate is ancient. The Greeks had some understanding of system production, various agricultural and industrial revolutions have been based on it and the classic was Taylor’s ‘scientific management’. We were talking about Mcdonaldisation not long ago, really about de-skilling all jobs so any mug can do them.

    As Banger says we actually need much more spiritual consideration of what kind of society we want, which would obviously include what productivity increases are for. This would also entail consideration of what productivity actually is, as currently my guess is our societies are not productive but backward and libidinal in economics. I am laughably supposed to teach maths nowhere near as smart as software programs to increase the skill pool. The kids I get from our schools have no ability in the subject, though do have GCSE qualifications in arithmetic suggesting abilities we once expected in 12 year olds.

    Underlying this rot is the notion education makes people smarter, competition spreads to all countries and a lot more that makes no sense. Many middling jobs have not been routinised or robotised, merely casualised, paid less, pension rights diminished and so on. One day you are a civil servant, the next working for far less via an agency.

  13. cnchal

    The author washes away the fact that wealth creating jobs in NA and Europe were transferred wholesale to Asia, with the following statement.

    These improvements in technology also enable employers to offshore some of the routine tasks that cannot be directly replaced by machines (Autor 2010).

    This turns Mount Everest into a hole in the ground.

    Some time ago, one of the links here on NC led me to an article about Boeing, and how the wing making for the Dreamliner ended up in Japan. This is advanced manufacturing technology that Boeing gave, yes gave, to Japan Inc. Tooling and all. The line that stood out for me was, and I am paraphrasing a bit. Boeing has spent the last 50 years creating a book called “How to build an advanced passenger jet”, and then handed it over to Japan.

    Who at Boeing benefits? Isn’t building advanced passenger jets a comparative advantage for the US? Didn’t US taxpayers subsidize Boeing over the last 50 years?

    Just one example of thousands of “high skill” decision making.

    1. LifelongLib

      You’re assuming that the decision making was supposed to be for the benefit of Boeing as a whole. That’s not the way to look at it. Companies like Boeing have long been owned and run by people who only care about maximizing return on investment (however temporarily), not about comparative advantage to the U.S. (their fortunes aren’t tied to that), employees (cheaper the better), or U.S. taxpayers (i.e. suckers).

      1. cnchal

        I left out my last line, which would have been:

        My mind reels at the stupidity, and the executives should be thrown in boiling oil.

        1. allcoppedout

          There was a great book on Boeing and similar engineering companies by the feminist Susan Faludi. The title says it all – “Stiffed”.

  14. Polly Cleveland

    There’s an assumption built into research like this: technology is the prime mover. Thus the computerization of routine jobs causes loss of middle income employment. In reality, technology responds to prices, and distribution affects prices. The One Percent suffer a serious management bottleneck, a principal-agent problem in spades. That makes it imperative for big corporations to computerize every job they can, at the cost, as Yves has pointed out, of imposing one-size-fits-all procedures throughout. They can get away with this because they are monopolists–thanks to the end of antitrust enforcement.
    Skills mismatch arguments just blame the victims.

  15. OMF

    In an influential paper, Autor, Levy, and Murnane (2003) provide a compelling explanation: they found that middle-skilled manufacturing and clerical occupations are characterised by a high intensity of procedural, rule-based activities which they call “routine tasks”. As it happens, these routine tasks can relatively easily be coded into computer programs.

    Not this “Look Over There!”, “Blame the computers” thing again.

    The truth is, the level of remuneration in most jobs is entirely socially constructed. Why are bankers paid so much? Because their job is “harder”? Because it requires more skill? Because it adds value?! All ridiculous. Bankers salaries, lawyers salaries, executive salaries; all are completely socially constructed nominal values.

    And the low wages of most middle class jobs? Again, entirely socially constructed. Why does your employer pay less than your parents employer? Because of “Market Forces”? Or because of the conversion of society to a market-based belief system in which money is the only consideration in all decisions?

    Was your job really replaced by a computer shell script? Or were all the benefits, securities, social benefits, and value extracted from your job over the last three decades — not by computers — but by societies slow adoption of a belief system directly opposed to your interests, to the point where your insecure, individualistic job has consequently been stripped of value and hence is worth less pay.

    Meanwhile, even in industries where people _are_ and probably should be being replaced by computers — e.g. banking — which market-ideologies regard as the elect, where social/class/networking connections are vital, where jobs are secure and pensions both padded and inviolate, salaries have sky-rocketed to obscene levels.

    The processes behind the decline of Middle class jobs have nothing to do with technology. Nothing. They have everything to so with society, ideology, and above all else the Law. Everything.

  16. Brick

    The good part about this post is that it highlights that middle income earners (as opposed to middle class) have not done particularly well in the US. Yet Gillian Tett had an article up at the weekend reporting that globally the middle class is increasing in size.
    Whats anoying about the post is the concept of class or that education and skill have bearing on income. Scanning around at various reports from Israel, Germany, Japan and the UK this seems to be a developed nation phenomenon.

    Denmark stands out as a country where until very recently this has not happened. Coincidentally or perhaps not politics in Demark is less polarised in terms of the asset rich and asset poor, Tax rates are significantly higher, health care is free and social welfare is much more supportive.

    Personally I think there are another two drivers for this. The first being currency distortions due to emerging market economies tending to be partly developed and the second being the corporate drive towards global centers of excellence.

    Society for the study of economic inequality report link.

  17. washunate

    “The high-skill occupations comprise managerial, professional services and technical occupations. The middle-skill occupations comprise sales, office/administrative, production, and operator and labourer occupations. The low-skill occupations include protective, food, cleaning and personal service occupations.”

    This model of skill, of course, is nonsense. It’s good to see lots of comments pointing this out in various ways.

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