No room in the middle
Why is the middle-class going extinct?In a new report from the Brookings Institution, MIT ‘s David Autor thoroughly examines economic trends over the past generation and finds a troubling trend:
“…the structure of job opportunities in the United States has sharply polarized over the past two decades, with expanding job opportunities in both high-skill, high-wage occupations and low-skill, low- wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs.”
Here’s the gist of the report:
- Middle income, “routine” jobs are disappearing, largely because they’re being replaced with robots or people from developing nations where the wages are lower.
- The jobs that are left are “abstract” jobs that cannot be done remotely or by a machine. These include certain forms of manual labor, customer service, and advanced knowledge work. Basically these are jobs where you either must interact with people, react to a random (real-world) environment (which robots can’t do very well), or do something requiring original thought (which computers can’t do).
- The wage gap between low-education jobs and high-education jobs is growing rapidly — partially because middle-class jobs are increasingly merging downward into lower-skill and lower-wage jobs, and partially because despite the demand for very high education jobs the percentage of people who have a very high education has not been increasing significantly since the 1970′s.
Autor reports a few critically important findings.
The first is this: in general, the principle reason that the wage gap is accelerating so rapidly is that the domestic supply of college graduates and post-graduates is not growing very quickly. As supply lags behind demand, the price of a college graduate continues to climb. However, normal economic theory would suggest that this increase in wages would attract more people to attend college. This is not happening, and Autor states that the reasons why are “deeply mysterious.”
The second is this: every cohort of the population EXCEPT white males is increasingly attending college. Autor shows this graph:
What’s really remarkable here is that the increase in minority college attendance and especially female minority attendance is DRAMATIC. But white males are not going to college much more today than they did in 1990! This is NOT because they’re all going to college already – only 26% are going to college!
The reason is NOT deeply mysterious.
White males are the chief villain of academia. If you are a white male and not extremely poor there is virtually NO hope of scholarship or even recruitment effort directed at you. You are NOT wanted in college, and trust me, if you’re a white male and you did go to college you’ve experienced the unbelievable disfavor first hand.
In thinking on the economy and the growing wage gap, we need to be real about something here: EVERYONE needs to be going to college to compete in the current economy, and that means higher percentages of EVERY race, not just minorities.
As John Roberts said, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” It’s time for colleges to focus on getting *all* young people to work hard at their education and get through college at much higher rates than they do today.
However, this leads us to another problem that we equally need to be realistic about.
High-Pressure, High Knowledge work isn’t for everyone
There are a lot of people in the world who are not that interested in super-competitive knowledge work, and who just want to have a “middle-class” job where they can put forth a steady and honest effort and be rewarded with a modest, comfortable life for their families.
I think if we worked hard to create significant cultural change we could possibly reach 35-50% college attainment for the entire US population, but it’s hard to imagine that more than half the people in this country – or any country – want that kind of work, and if they don’t want it they aren’t going to be happy chasing it and may not be able to achieve it.
The problems of polarization – having two distinct and intractably separate classes – aren’t going to go away if only 50% of the population is wired for the kind of high-knowledge work that will remain as an option for mid/high wage employment.
We need viable middle-income life. That’s a bigger problem than I can take on in one post, but I welcome thoughts from readers on this topic. Socialism has failed everywhere it has been tried. What people need is meaningful work that they can enjoy doing and take pride in. How do we restore that kind of work for people who aren’t interested in doing heavy-duty intellectual exercise every day?
I have a few thoughts, but I’ll save them for another day. For now I hope you’ll take time to ponder that question and let me know what you think.
4 Comments
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You lost me at:
“The reason is NOT deeply mysterious.
White males are the chief villain of academia. If you are a white male and not extremely poor there is virtually NO hope of scholarship or even recruitment effort directed at you. You are NOT wanted in college, and trust me, if you’re a white male and you did go to college you’ve experienced the unbelievable disfavor first hand.”
I’m a white male. I attended college. And I completely disagree that white males are not encouraged to attend college, are not recruited, or able to receive scholarships. I was “recruited” by several colleges and offered merit-based aid at several as well – including some of the best institutions in the United States. Maybe it was tougher for me than if I had been a minority, a female, or a 6’6 wide receiver. Then again, my ancestors were not enslaved here for hundreds of years, so I’m not going to complain.
>>As John Roberts said, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”
I’d be fine with offering incentives to certain economic classes instead of looking at race or gender, but I’m all for helping out the disadvantaged in some way. I don’t believe that John Roberts cares about things like the vast income inequality and disappearance of the middle class that the rest of your article describes… as long as the rich are happy.
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On your larger point of the disappearance of what we used to think of as “middle class” jobs; I have often thought about this very issue and I think it is very complicated and is based on many factors.
First, it helps to remember that the US is still the third leading exporter, behind only China and Germany. One could argue that, given the aggregate size of the US economy, this is still a pretty poor showing. But I think it’s good to keep things in perspective. The US still manufactures things and it still exports things. Not at the scale we used to, but it still does happen.
Second, many of the manufacturing jobs lost to places like China were of a pretty low skill level (let’s call them “Laverne and Shirley Jobs”). These are the type of jobs that are easily replaced by automated machines or workers in third-world countries that will work for extremely low wages. In the past, working Laverne and Shirley Jobs may have provided a decent income but calling it a stable middle class job was a stretch.
Third, and this may come off as harsh, but frankly many of the things manufactured in the US weren’t that well made. Many things built in the US (especially when our main competitor was Europe), competed on price rather than quality. US cars weren’t as well made as German cars but they were cheaper and easier to maintain. That strategy worked fine when competing against Europe. But once the competition shifted to Asia, the whole strategy was turned on its head. We simply can’t compete based on price anymore. We have to compete on quality and that requires a totally different mindset and industry structure. Many industries in the US still haven’t learned that lesson.
Finally, to compete on quality as mentioned we have to really begin to rethink how industry, education and, in some cases, the community as a whole is structured. Apprenticeship programs, for example, are extremely common in many countries, for example Germany, and is part of the structured education system. On the other hand, apprenticeship programs in the US have largely been abandoned. Such programs are normally linked to a strict licensing system that provide barriers to entry to new inductees but also ensures higher quality and standards (and thus higher pay). Such systems will, as a consequence, raise prices for consumers which is part of the argument against such systems. But this focus on price is part of the problem. It is also part of the larger consumer-based attitude here in the US which differs dramatically from other countries (like Germany).
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Well said Martin. I think the biggest thing you hit on was that a lot of our problem is related to the “consumer-based” economic idea in the US, which other leading economies don’t share. My concern is that as long as we remain a “consumerist” economy we’re going to fall further and further behind, because it’s no longer most profitable for the businesses that mass produce consumer crap to churn it out in US factories, hence a larger and larger portion of the economic value created by US consumption is leaving the US economy. In other words, our mindset makes us poorer and other nations richer at our expense every day. Until we change that we’re going to continue to decline in economic prowess and world power and influence.
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As an update to my comment earlier, report out today showing that Germany had the highest growth since reunification in the second quarter of this year, more than doubling growth in the US over the same period.
What’s the main reason behind this surge in growth? Exports.