NCPA - National Center for Policy Analysis

Why Hairdressers Are Secure: Their Jobs Can't Be Exported

July 17, 2012

Before, during and after the recession, demand for one sort of worker has been persistently stronger: jobs that involve assisting or caring for other people. This job trend persists despite net job losses for heavily skilled employment and professional employment alike, says the Wall Street Journal.

One of the primary reasons for this trend, notes Massachusetts Institute of Technology (MIT) economist David Autor, is that these jobs cannot be outsources overseas. Autor and MIT's Daron Acemoglu conducted a study of 318 occupations, ranked by skill and education to demonstrate this point.

  • Between 1989 and 2007 -- just before the recession -- they found a 5 percent increase in routinized production, machine-operator and clerical jobs.
  • At the same time, they found a 36 percent increase in personal-service jobs and a 40 percent increase in top-of-the-pyramid jobs, such as managers, professionals and finance wizards.
  • This trend continued despite rapid job losses with the onset of the recession in 2007: while the nation as a whole saw the number of jobs decrease by 6 percent, there was a 2 percent increase in personal-service jobs.

The proliferation of low-skill, low-education service positions has allowed for fallback employment for many made out-of-work by the recession. This is especially true for those who previously constituted the medium-skilled fraction of the workforce who saw the harshest of recessionary impacts.

  • The number of middle-skill jobs, those most susceptible to automation or offshoring, fell by 12 percent between 2007 and 2010.
  • These job losses have stemmed from mammoth employers laying off workers in droves: Ford Motor Co. and General Electric Co., for example, shed 19,000 and 24,000 jobs since the recession began, respectively.

The contrasting outlooks for these separate factions of the labor force are not isolated to employment figures: further analysis also finds a substantial differential in wages.

  • Autor and colleague David Dorn found a 16 percent increase in inflation-adjusted average hourly wages between 1980 and 2005 for service workers.
  • They also found a 30 percent increase for the professionals, managers and upper-end finance workers.
  • That contrasts with a 6 percent increase for machine operators and assemblers and a 4 percent decline for production and craft workers.

Source: Neil Shah and David Wessel, "Why Hairdressers Are Secure: Their Jobs Can't Be Exported," Wall Street Journal, July 4, 2012.

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