The Scary Truth About America's Disappearing Middle Class

Posted by Andrew Price

In a new report, MIT's David Autor (PDF) looks at the shifting employment landscape in America and comes to this conclusion: America's workforce is splitting into high- and low-paying jobs. The middle-income demographic is disappearing. He calls it "the polarization of job opportunities."

The chart below tells the story. The height of those columns reflects the growth rate for a given kind of job. On the horizontal axis we go from high-skill, high-income jobs on the left to low-skill, low-income jobs on the right. The valley in the middle is the eroding middle class.

Here's how Autor describes the trend:

The structure of job opportunities in the United States has sharply polarized over the past two decades, with expanding job opportunities in both high-skill, high-wage occupations and low-skill, low wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs. Concretely, employment and earnings are rising in both high education professional, technical, and managerial occupations and, since the late 1980s, in low-education food service, personal care, and protective service occupations. Conversely, job opportunities are declining in both middle skill, white collar clerical, administrative, and sales occupations and in middle-skill, blue-collar production, craft, and operative occupations.

This trend hasn't gone unnoticed. Stuck, as we are, in a Great Recession, there have been lots of articles on the fading middle class. But the trend is older than the media attention. The phenomenon of "median income stagnation"—the weak pay increases for middle-of-the-spectrum earners—has been around for decades. In a July article for the Financial Times, Edward Luce noted that "the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973."

Commentators who talk about this problem usually focus on economic or political factors. Paul Krugman says that right now, more than ever, Congress needs to spend more money to create jobs. That's probably true. Other observers, casting around, it seems, for someone or something to blame, have brought up the issues of tax cuts for the rich and the Citizens United ruling. But the structure of the tax code and the political influence of corporations, while certainly relevant, provide neither an understanding of the problem nor a key to the solution.

Autor has his own explanation for what's going on, and it hints at the real issue.

A leading explanation focuses on the consequences of ongoing automation and offshoring of middle-skilled "routine" tasks that were formerly performed primarily by workers with moderate education (a high school diploma but less than a four-year college degree). Routine tasks ... are job activities that are sufficiently well defined that they can be carried out successfully by either a computer executing a program or, alternatively, by a comparatively less-educated worker in a developing country who carries out the task with minimal discretion.

The culprit is technology, not politics. The hard truth—and you don't see it addressed in news reports—is that the middle class is disappearing because middle-class skills are becoming obsolete. Routine clerical work and assembly-line production can now be done by computers and robots. Algorithms and machines are replacing customer service agents and even grocery checkout clerks.

On the low end of the spectrum, the jobs that are left are the ones robots' bodies can't do yet (grounds-keeping and protective services, for example). On the high end of the spectrum, the jobs that are left are ones that machine brains can't do yet (law and medicine and management). As technology advances, more people near the middle are going to be elbowed out of the workforce.

We may not have robot janitors any time soon. But when the science of computer vision advances sufficiently (and please drop a comment if you think it won't) we'll have algorithms, not humans, evaluating X-rays at airport security checkpoints and monitoring footage from security cameras. Currently the work of screening online comments for child pornography and other offensive junk is often outsourced to people in developing countries. It's horrible work, and it will be nice, in some ways, when an algorithm can do it instead, but that will render another chunk of humanity unemployed.

Addressing this challenge requires a response more profound than tweaking the tax code or extending unemployment benefits. We may have to figure out how to supply meaningful work—and a comfortable, safe, and healthy life—to a growing group of people our businesses do not, in strict economic terms, need. We certainly can't leave large swathes of the population idle (here's one reason why).

This challenge also provides us with an exciting opportunity though. We may have the chance—or perhaps even the moral obligation—to rethink the nature of work. In a world where most of us don't have truly marketable skills, maybe it doesn't make sense to pay people based on the marketability of their skills. Maybe we should start thinking about jobs as a right rather than a privilege. Maybe we should reevaluate the often arbitrary and unfair link between the kind of work someone does and the amount of money they make. And yes, Palin, I think I'm talking about something like socialism.