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The disappearing middle-class jobs

Published: Sunday, May 26 2013 10:25 p.m. MDT

Home health aide Tyrone Winston attends to Richard Uriarte. Low-skilled workers are finding jobs in the health care industry.

Jeffrey D. Allred, Deseret News

Last year, online retail giant amazon.com paid $775 million to acquire a relatively small company called Kiva Systems. Soon, Kiva’s little orange robots will swarm the floors of Amazon’s distribution centers, retrieving entire pallets of packages and delivering them to their shipping points. Human workers will no longer be necessary to fulfill this major part of Amazon's operation.

The John Henry story of technology supplanting the industrious American worker is not a new one. But over the past few decades, machines have not just replaced individual workers, they have replaced the entire middle class. Economist David Autor of MIT described the changing labor market as a “hollowing out” or polarization of middle-class job opportunities.

This split of the economy into high- and low-skill jobs was popularly attributed to the decline in American manufacturing and construction. But a new study from the Federal Reserve Bank of Kansas City conducted by Didem Tuzemen and Jonathan Willis called “The Vanishing Middle: Job Polarization and Workers’ Response to the Decline in Middle-Skill Jobs” revealed that the divide occurred in every sector of the economy, from health care and education to agriculture and mining.

As middle-class jobs have disappeared, women and men have responded to the hollowed out labor market differently. Women have almost entirely shifted into high-skill jobs, while men have shifted equally into high-skill and low-skill jobs.

The great divide

Over the past three to four decades, the number of jobs that require a basic high school education and pay a middle-class wage have been declining, according to the Federal Reserve Bank of Kansas City study.

Experts define these “middle-skill” jobs as those that mostly involve routine, easily executed tasks like typing, sorting mail or packaging food. Willis, an author of the study, says classic examples of such jobs are administrative assistants or assembly line workers.

But technological advances have left computers and robots standing where secretaries and factory workers once made a living. A 2012 study by labor economists Nir Jaimovich and Henry Siu explained how technologies replace middle-skill workers during economic downturns. In a recession, employers conduct layoffs of middle-skill jobs to cut costs and then bring in technologies to do routine tasks.

When the recession ends, the employer realizes it does not need to rehire workers where a machine can do the task faster and cheaper than the worker it replaced. So Amazon’s little orange robots are not unique, according to Siu. They are the norm.

This has resulted in a phenomenon dubbed “job polarization” by economists. In 1983, middle-skill jobs comprised 59 percent of all employment, but by 2012, that number had dropped to 45 percent, according to Tuzemen and Willis. In contrast, jobs that require higher levels of training and education are growing in demand, as are non-routine low-skill jobs such as service workers, waiters and security guards.

More than half the jobs created in America during the recession were low-skill, according to a recent report from the Royal Bank of Scotland. In particular, service industry jobs are comprising a larger portion of the labor market. A 2012 study by David Autor found that the share of the labor force in service occupations grew by 30 percent between 1980 and 2005 after having been flat or declining in the three prior decades.

Siu explains that understanding the job polarization trend requires a shift in the way we think about the labor force. “Typically ‘blue collar’ jobs and low-paying ‘white collar’ jobs have been declining over time,” Siu said. “What’s really been growing in past 10 years are the ‘non-collar’ jobs.”

Not just the factory jobs

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