The Hollowing Out of the American Labor Market

The effects of globalization and technological change on the labor market have been highly uneven. While the number of blue-collar workers in manufacturing has plummeted since 1978, the number of engineers in manufacturing has doubled. In general, job opportunities in the U.S. labor market as a whole have been concentrated in high-skill, high-wage jobs (professional, technical, and managerial occupations) and low-skill, low-wage jobs (food service, personal care, and security service occupations). Job opportunities for middle-wage, middle-skill white-collar and blue-collar workers have declined sharply. As pointed out by the MIT labor economist David Autor, the labor market is losing its middle. It’s hollowing out.

 New technologies tend to favor highly skilled workers, reduce the need for many occupations calling for medium-level skills, and barely affect occupations at the low end of the skill spectrum. In an influential 2003 paper, Autor and two colleagues showed that computers and robots are particularly efficient at performing routine tasks—tasks that can be accomplished by following explicit rules, such as repetitive customer service, record-keeping, and many other middle-income white-collar jobs—but they are inefficient at nonroutine tasks. Many tasks that used to be performed by bank tellers, for example, are now performed by ATMs or Web-based programs. But jobs that involve nonroutine tasks—either abstract or manual—have fared quite differently. Occupations such as carpenter, truck driver, housecleaner, security guard, and many others that are defined by nonroutine manual tasks have not been particularly hurt by computers. Jobs that involve “nonroutine problem-solving and complex communications tasks”—those in science, engineering, marketing, and many other areas—have actually been made more productive by computers. For example, a journalist, architect, or scientist is now much more productive because she can use computers and the Internet on her job.

American Pastoral, Philip Roth’s great novel about the shifting Zeitgeist of American society in the 1960s and 1970s, chronicles the rise and fall of a Jewish family in New Jersey. But almost as poignant as the unraveling of Seymour “Swede” Levov’s personal dreams is Roth’s description of the unraveling of Newark’s social fabric. In the story, Levov has inherited a small glove factory, a disappearing microcosm of experienced blue-collar workers deeply attached to their jobs, proud of their skills, happy to teach their trade to the next generation. Describing the satisfaction and self-respect that comes from a job well done, Roth contrasts the values of these workers with the values of the uprooted and transient new labor force. The stable middle-class jobs in the glove factory have been replaced with more precarious service jobs that have high turnover and that elicit little pride.

The hollowing out of the labor force and the evaporation of the middle class is not a passing trend, nor is it unique to Newark or the United States—it is common across industrialized economies. Autor has looked at changes in employment since 1993 in sixteen major European Union economies within three broad sets of occupations—low-, middle-, and high-wage. Just as in the United States, the number of middle-wage jobs has declined in all countries while the number of low- and high-wage jobs has increased