Labor Market Polarization, more dramatic than previously thought for America

A series of new data is pointing out that the United States is still stuck in its trend of creating only TWO kinds of jobs: A) High Skill - High Wage jobs (think management, highly technical or high-experience business professional services kinds of jobs). B) Low Skill - Low Wages jobs (think food services, personal care, specialized household services and other kinds of basic jobs that have to be done in and around the customer so those tasks cannot be outsourced overseas). What is being lost are the "routine" jobs, according to a new report by the Federal Reserve Bank of Dallas. The Dallas Fed researchers have named their new report "Middle-Skill Jobs Lost in U.S. Labor Market Polarization." By "routine" jobs they mean many manufacturing production jobs, many crafts jobs, many repair jobs, many clerical jobs, most administrative jobs, and most sales jobs. The core driver for the elimination of these "routine" jobs is not labor unions or a shift to a more educated workforce. The Dallas Fed economists say the shift is really driven by more automation. And as the cost of computing power continues to come down, more jobs are becoming automated - from manufacturing production workers to cashiers to bookkeepers to cooks to engravers to title examiners to sales reps. Another key wrinkle is that the economic shift continues to impact American men and women differently. "While women were hit much harder than men by the disappearance of middle-skill jobs, the majority of women managed to upgrade their skills and find better-paying jobs," said Dallas Fed Economist Anton Cheremukhin in the report. "By comparison, more than half of men who lost middle-skill jobs had to settle for lower-paying occupations. Women's higher rates of education attainment are a potential reason for this difference." Now here’s the rub. America has always shed routine jobs in every recession and then gained back those jobs in the subsequent economic expansion periods following the recession – until the last three recessions. “This pattern changed dramatically in the three recessions since 1990,” Cheremukhin wrote. “None of the routine jobs list in these downturns came back in the following expansions. This fact fully accounts for the overall loss in routine jobs since 1990 and also explains the so-called jobless recoveries from the 1991, 2001 and 2008 recessions.” “Middle-skill, routine jobs still account for almost half of all existing jobs,” Cheremukhin wrote. “Unfortunately, as computing power spreads, and with more non-routine tasks becoming routine (driverless cars, drones, online education, robotic surgery), the pace of labor market polarization is unlikely to slow down anytime soon.” Another issue is a new series of data visualizations provided by the U.S. Bureau of Labor Statistics that shows the United States shifting from a predominantly manufacturing economy to a retail economy to now a health care services economy. We'll discuss those data charts in another post but they can be seen at http://www.bls.gov/opub/ted/2014/ted_20140728.htm and http://blogs.wsj.com/numbers/how-americas-top-industries-have-changed-1990-2013-1619/