Technology Didn't Kill Middle Class Jobs, Public Policy Did

[xchrom]

http://www.commondreams.org/view/2013/11/26-4


Unionisation has shrunk in the US from over 20% in the 1970s to less than 7% today. (Photograph: Christopher Furlong/Getty Images)

A widely held view in elite circles is that the rapid rise in inequality in the United States over the last three decades is an unfortunate side-effect of technological progress. In this story, technology has had the effect of eliminating tens of millions of middle wage jobs for factory workers, bookkeepers, and similar occupations.

These were jobs where people with limited education used to be able to raise a family with a middle class standard of living. However computers, robots and other technological innovations are rapidly reducing the need for such work. As a result, the remaining jobs in these sectors are likely to pay less and many people who would have otherwise worked at middle wage jobs must instead crowd into the lower paying sectors of the labor market.

This story is comforting to elites, because it means that inequality is something that happened, not something they did. They won out because they had the skills and intelligence to succeed in a dynamic economy, whereas the huge mass of workers that are falling behind did not. In this story, the best we can do for those left behind is empathy and education. We can increase opportunities to upgrade their skills in the hope that more of them may be able to join the winners.

That's a nice story, but the evidence doesn't support it. My colleagues Larry Mishel, John Schmitt, and Heidi Sheirholz, just published a paper showing that the pattern of job growth in the data doesn't fit this picture at all. This paper touches on a wide variety of issues related to technology and wage inequality, but first and foremost, it shows that the story of the hollowing out of the middle does not fit the data for the 2000s at all.

[pipoman]

1. yeah...

"These were jobs where people with limited education used to be able to raise a family with a middle class standard of living. However computers, robots and other technological innovations are rapidly reducing the need for such work."

How about let's not forget trade, tax, and economic policy favoring companies moving those jobs to 3rd worlds, eh?

edit..as I read on the author agrees..

[Egalitarian Thug]

2. K&R All propaganda has to be popular and what can be more popular than a story

that allows everybody to be as evil as they like and be absolved of all responsibility for it?

Hmmm, seems I've something similar to this before...

[Scuba]

3. When companies are given tax breaks for offshoring jobs ....

.... that's not just bad public policy. That approaches treason.

[KurtNYC]

4. Data from Germany supports the idea that middle class jobs are tied to manufacturing base

http://www.huffingtonpost.com/gerhard-schroeder/lesson-from-germany_b_2198379.html

Also the fact that they are the number 2 exporting country in the world (behind China) goes against CW that says cheap labor is key to manufacturing and to producing goods for export that can compete on price with the rest of the world.

[pscot]

5. But Germany has a 2 track educational system

that ties into corporate/union sponsored job training.

[KurtNYC]

8. and we should do likewise instead of blindly pushing every teen into college

where only 59% finish and much of the education is not tied to any specific job path.

[Igel]

6. Far too many venues for publication.

The middle class was hollowed out from bout 1970 to 2010. The '00s were considered strange.

So the hollowing out from 1970 to 2010 doesn't fit the data from the '00s? And we assume it would why?

Esp. during a period that saw stagnant growth?


Greater demand creates higher wages if there's limited supply. When unemployment is at 4.5%--something we thought atrociously high in 2006--there was still a skew in the unemployment figures. Low education young people, esp. of color, still had unemployment rates of 7, 8, 9%. Hardly limited supply.


That's a nice story, but some evidence doesn't support it. A reasonable story for much of the '00s is also that it's hard to lower wages if the job doesn't change. Rising wages in the '90s were met by stagnant wages in the '00s. Lowering wages for employees was and is hard--even in union shops, they wanted to lower wages for new hires, or move locations so they'd be offering lower wages to different hires. At the same time, in the '00s compensation really increased by more than is usually reported, since compensation includes employer contributions to insurance.

It's usually easy to prove what you want to prove. What you need to do is make sure that it's not at least as easy to disprove what was just proven.

[xchrom]

7. dean baker isn't just a casual observer. i'm a gonna go with him. nt