Monday, October 10, 2011

Middling ruminations

David Autor has been pushing the fact that there is a class of jobs called “middle jobs” which I take to mean jobs that lead to a middle class life, has been disappearing thereby leading to a polarization of jobs in America. (See here.) I view this through the same lens on the debate of whether world incomes have become bimodal (i.e. twin peaks).

If I understand the report correctly, it takes a class of jobs at the beginning of the period, e.g. 1980 and finds the jobs that are in the “middle”. The report then documents that these jobs have decreased over the next two or three decades. I was expecting a twin peaks type argument but instead I was mostly puzzled over why this was an interesting outcome.

To make my puzzlement (or some might consider thick headed) obvious, consider an artificial economy whose “middle” jobs were mostly in buggy production. This includes production, clerical and other support jobs as well as the various sub-industries that support buggy production such as buggy whips and wheels. Moreover, buggies are in high demand and this supports the profits and middle class salaries in the industry. This economy is hit by an influx of cheap buggies from another country and over the next two decades face fierce competitive pressure which results in a decline in this industry as its inability to compete becomes obvious.

Is it that surprising then that we find middle jobs have disappeared? But does this mean that no other middle jobs have arisen to take its place? This second argument was something I was looking for in the report and perhaps I am misreading it but I don’t see this argument in there. I was also hoping to find a twin peaks distribution of jobs but did not find it. I was also looking for a distribution (either of hourly or total earnings)  that showed the “hollowing” out of the middle between 1980 and 2010 but didn’t.

Linden, et. al (2009) find that even in the case of the iPod which is heavily outsourced, there are still “middle-income jobs” in the iPod production. Though these may be few, I suspect that they are scattered across the industry landscape and the job for economists is to identify these jobs for the rest of us.

Linden, et. al. find:
The offshore jobs are mostly in low wage manufacturing, while the jobs in the U.S. are more evenly divided between high wage engineers and managers and lower wage retail and non-professional workers.

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