Job Market Polarization and the Vanishing Middle Class

There’s a very good article in the New York Post on the polarization of the job market and the disappearing middle class:

In his recent paper for the Center for American Progress, MIT economist David Autor studied the increasing polarization in the US job market, finding that the highly educated upper class and the less-educated lower class are faring far better in the recession than the middle class, which has been crushed by off-shoring and technology. (Other factors, such as the housing crisis, financial deregulations and the decline of unions, are cited by nearly all economists as contributors, but Autor focused on job availability and creation.)

From 1979-2009, there was a nearly 12% drop in the four “middle-skill” occupations: sales, office/administrative workers, production workers, operators. Meanwhile, people in the top 20% of the economy earning $100,000 or more a year, says Peter Francese, demographer at Ogilvy & Mather, “have barely been touched by this recession.” They average an unemployment rate between 3% and 4%, the lowest in the nation. The US Bureau of Labor Statistics projects a 14% increase in low-education service jobs between 2008-2018. “The only major occupational category with greater projected growth,” Autor writes, “is professional occupations, which are predicted to add 5.2 million jobs, or 17%.” These sectors include medicine, law and middle- and upper-management.

Economists seem to acknowledge that middle skill jobs are vaporizing, but so far, they seem to view the situation as static. They express little concern that the “missing middle” is going to relentlessly expand and consume more jobs both at the bottom and the top.

As I wrote previously, I think robots and other forms of automation will eventually become cost-effective even in low wage occupations. At the same time both AI/expert systems and offshoring will be increasingly focused on the higher paying jobs.  The result is going to be an increasing death of consumers—and that will drive even more cyclical unemployment.

Eventually, I think we will have to find ways other than job-based income to support the bulk of the population and maintain consumption. In the meantime, it looks like we are going to do exactly the opposite. Millions of people will see their unemployment benefits expire in the coming year—many having used up an entire 99 weeks—and a Republican House suggests it may be impossible to even renew the existing extensions.

2 thoughts on “Job Market Polarization and the Vanishing Middle Class

  1. I think what you are describing is an M Shaped society. Many Asian countries have become M shaped. Hong Kong, Taiwan and Japan are pretty much M shaped. Where there lots of very poor people and also a fairly substantial uber rich section of society with very very few in between.

    Here in the UK the UK government is toying around with the idea of a universal credit, though welfare here tends not to last more than 4 years anyway unless you go on sick/disability or have children.

    I’ve been on the bleeding edge of it. Lost 3 jobs due to outsourcing and automation and all of the jobs at the bottom are essentially no more. The bread factory I worked in as a teenager uses robots now!

  2. Yea would seem that the only job you need to learn how to do is fix robots. What do you need middle management for to supervise robots lol
    Really should make it so when you graduate with a high school diploma you allready know how to create automated factories.

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