What If Middle Class Jobs Disappear?

November 10, 2011

The economy is in a state of transition similar to its transformation in the 1930s. However, while the Great Depression was instrumental in the rise of the middle class, the current downturn has hit that class harder than most, says Arnold Kling, a member of the Financial Markets Working Group at the Mercatus Center of George Mason University.

Between 1930 and 1950, demand fell for human effort such as lifting, squeezing and hammering.  Demand increased for workers who could read and follow directions.  The evolutionary process eventually changed us from a nation of laborers to a nation of clerks.

  • The proportion of employment classified as "clerical and kindred workers" grew from 5.2 percent in 1910 to a peak of 19.3 percent in 1980.
  • Workers classified as laborers, other than farm or mine, peaked at 11.4 percent of the labor force in 1920 but were barely 6 percent by 1950 and less than 4 percent by 2000.
  • Farmers and farm laborers fell from 33 percent of the labor force in 1910 to less than 15 percent by 1950 and only 1.2 percent in 2000.

This sort of transformation is similar to what the American economy is undergoing now, as unprecedented gains in automated machines, information technology and personal computers have again revolutionized the needs of the economy.  These trends serve to limit the availability of well-defined jobs.  If a job can be characterized by a precise set of instructions, then that job is a candidate to be automated or outsourced to modestly educated workers in developing countries.  The result is the polarization of the American job market, under which wage and employment growth have both been lowest at the middle segment of the skill distribution.  Wage improvements have tended to be concentrated at the high end, and employment gains have tended to be largest at the low end of the skill distribution.

In the United States, this polarization was exacerbated by the economic downturn, hitting mid-skilled workers the hardest.  For example:

  • Growth in employment in sales was 54 percent from 1979 to 1989 and 14 percent from 1989 to 1999.
  • But it was just 4 percent from 1999 to 2007, and -7 percent from 2007 to 2009.

Source: Arnold Kling, "What If Middle-Class Jobs Disappear?" The American, November 3, 2011.

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