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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Jointly released by the Center for American Progress and

The Hamilton Project

 

 

The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings [30 April 2010]

by David Autor, MIT Department of Economics and National Bureau of Economic Research

http://www.americanprogress.org/issues/2010/04/job_polarization_report.html

or

http://www.americanprogress.org/issues/2010/04/pdf/job_polarization.pdf

[full-text, 48 pages]

 

History suggests that employment will rise again in the United States, but in the recovery we will have to contend with the reality that there has been a sharp rise in wage inequality in recent decades and a declining number of middle-skill jobs.

 

[excerpt]

This paper analyzes the state of the U.S. labor market over the past three decades to inform policymaking on two fronts. The first is to rigorously document and place in historical and international context the trajectory of the U.S. labor market, focusing on the evolving earnings, employment rates, and labor market opportunities for workers with low, moderate, and high levels of education. The second is to illuminate the key forces shaping this trajectory, including:

 

• The slowing rate of four-year college degree attainment among young adults, particularly males

 

• Shifts in the gender and racial composition of the workforce

 

• Changes in technology, international trade, and the international offshoring of jobs, which affect job opportunities and skill demands

 

• Changes in U.S. labor market institutions affecting wage setting, including labor unions and minimum wage legislation The causes and consequences of these trends in U.S. employment patterns are explored in detail below, but the main conclusions can be summarized as follows:

 

• Employment growth is polarizing, with job opportunities concentrated in relatively high-skill, high-wage jobs and low-skill, low-wage jobs.

 

• This employment polarization is widespread across industrialized economies; it is not a uniquely American phenomenon.

 

• The key contributors to job polarization are the automation of routine work and, to a smaller extent, the international integration of labor markets through trade and, more recently, offshoring.

 

• The Great Recession has quantitatively but not qualitatively changed the trend toward employment polarization in the U.S. labor market. Employment losses during the recession have been far more severe in middle-skilled white- and blue-collar jobs than in either high-skill, white-collar jobs or in low-skill service occupations.

 

• As is well known, the earnings of college-educated workers relative to high school-educated workers have risen steadily for almost three decades.

 

• Less widely discussed is that the rise in the relative earnings of college graduates are due both to rising real earnings for college workers and falling real earnings for noncollege workers—particularly noncollege males.

 

• Gains in educational attainment have not generally kept pace with rising educational returns, particularly for males. And the slowing pace of educational attainment has contributed to the rising college versus high school earnings gap.

 

Contents

Introduction and summary 1

Why is employment polarizing? Facts and hypotheses 8

Is polarization a uniquely American phenomenon? 16

Declining labor force participation: The role of labor demand shifts 19

The slowing rate of college attainment and the rising college wage premium 22

The flattening and steepening of the payoff to education 26

Conclusions 29

Data appendix 30

References 35

Endnotes 37

About the author and acknowledgements 40

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