As I discussed in my August 2 blog, The Great Recession, especially when combined with the rapid growth in the automation and globalization of jobs, has exacerbated the bifurcation of the U.S. labor force. Those who have traditionally performed mid-skill jobs face the biggest dislocations. Low-skill workers, however, face the most pain.
The Disappearance of Mid-Market Jobs
The vast mid-market, in which millions of moderately skilled high-school and college graduates had made rewarding, life-time careers, is under siege. True, the number of such mid-market jobs will certainly grow when a cyclical recovery really begins to take hold. The problem is that the four big structural trends—automation, globalization, flexible hiring and unpredictable volatility—promise to keep a tight lid on both the pace and the extent of the mid-tier jobs recovery. They will also keep a lid on both the compensation and the security of these jobs.
What will happen to those mid-skill/mid-income blue- and white-collar jobs that form the foundation of great American middle class?
That future is already being played out. Even as the economy begins to recover, globalization (offshoring) and technology (i.e., automation) will continue to eliminate and/or significantly change the type of skills required to perform these increasingly routine, relatively low-discretion jobs. Think, for example of how computer numerical control (CNC) machine tools eliminated the need for millions of assembly line workers and created new demands for computer-literate, numerically-proficient operators.
What happens to the people who have been displaced by these jobs? They must either learn these new skills (for which there are orders of magnitude fewer jobs available), re-train for other functions (often with very mixed success) or compete with millions of other less-skilled workers for much lower-paying low-skill/low-pay non-tradeable service jobs (jobs which must be performed locally and are difficult or impossible to automate).
The same forces are affecting mid-skill/mid-pay office workers. Secretaries and switchboard operators have lost their jobs to automation and accountants, and financial and marketing analysts have had to learn entirely new skills and provide new types of value. Meanwhile, millions of mid-level office jobs, such as accounts payable/receivable, account reconciliation and computer programming have long-since been at least partially automated or moved offshore, to be performed by much lower-cost, and in some cases, better educated workers.
Employees who have traditionally performed these functions can, in theory, be reeducated or retained to perform higher-level functions. In practice, the relatively small number of very higher-skill jobs that are being created are being overwhelmed by the losses in huge, well-paying mid-skill segments, such as construction and manufacturing, and among the ranks of mid-level administrative and supervisory and low-level managerial workers. Meanwhile, efforts to retrain/educate these people for higher-value functions often yield very mixed results.
And, as if these job losses weren’t bad enough, these workers are now joined by millions of government employees and educators who are falling victims to big cuts in government funding.
The Plight of Low-Skill Workers
Meanwhile, growth at the low end of the jobs market has been growing (albeit very slowly), even during the recession. Perpetual high-growth segments, such as healthcare, continue to grow while industries such as retail and hospitality have begun to rehire. The problem is two-fold:
- Many such jobs typically offer very low-pay and little job security and
- Mid-skill workers and recent college graduates, locked out of traditional markets for mid-range jobs, are now competing with high-school graduates and even drop-outs for these low-skill jobs.
So, while the recession, combined with forces including automation and globalization, are taking a bigger toll on mid-skill jobs than they are on low-skill jobs, it is the least educated workers who are, by far, the biggest losers. If you think the market for new college graduates is grim (and it certainly is), the market for less-educated workers is appalling.
Employment prospects and salary levels fall precipitously as education levels decline. These combine to result in huge disparities in lifetime earnings.
Is higher education the Great American Hope? The answer, as I’ll discuss in my September 30 blog is, yes but………