Tuesday, August 13, 2013

Job Polarization: Middle-Class Jobs Disappearing

Source One - What explains the stubborn malaise in its labor market? Any future recovery from recessions will likely be jobless [like the last one] because technological advances and mechanization now enable troubled firms to shed middle-income jobs in favor of machines and automation. If these jobs are not recouped during subsequent economic recovery, future recoveries may well remain jobless.

Source Two - Labor that is freed up through technological change is supposed to find its way into other industries and increase the overall production of goods and services. We can produce more goods and services with the same amount of labor as before, and that should allow growth that makes us all better off. But does it make us all better off? Digital and other technology has advanced to the point where good, middle class jobs are being replaced rather than those on the lowest rung of the job ladder, and this is polarizing labor markets as the middle class is reduced in size. Some workers are still moving up to better jobs – that’s part of the polarization – but far too many people are moving in the other direction, toward lower paying jobs than they had before.

Source Three - Most recently both the Wall Street Journal and the Federal Reserve Bank of Atlanta compare industry sectors by average pay and lament the fact that most of the jobs are in lower-paid industries...In short, yes, the U.S. economy is adding a large number of low-paying jobs, however we are also seeing relatively strong growth at the top end of the employment scale as well. We are missing the growth in jobs at the middle of the income distribution. If this all sounds familiar, it is. This is the continuation of the job polarization process analyzed, described and researched extensively by MIT’s David Autor...The process is exacerbated during recessions. These middle-wage occupations fell much further during the Great Recession and are growing much slower coming out, if at all.

As an aside:

Source Four - Larry Summers was a big proponent of deregulation of the financial sector in 1990s and in the last decade --- right up to when the collapse of the housing bubble led to the financial crisis.

Summers also was an opponent of actions to break up the big banks even when they when they were bankrupt and would have collapsed if the market was allowed to work its magic. Largely as a result of Summers' actions, the big banks are bigger and more profitable than ever.

Summers also played a role in getting President Obama to accept a less than adequate stimulus and then shifting his focus to deficit reduction, even when the economy clearly needed more stimulus. The weak recovery and continued high unemployment is the price that we are paying for these policies.

From TooMuchOnline.org:

This summer’s hottest inside-the-Beltway battle is pitting Larry Summers, the “poster boy” of the Democratic Party’s Wall Street wing, against party progressives out to end Wall Street’s outsized influence on party policy. Summers, a former Clinton Treasury secretary and top Obama adviser, is angling to become the next chair of the Federal Reserve Board, the powerful panel that oversees the nation’s financial industry. That industry has been kind to Summers. Recent news reports have traced how cushy gigs with the likes of Citigroup and Goldman Sachs jacked up the Summers personal net worth from $400,000 in the mid 1990s to as much as $31 million in 2009. At that point, the New York Times details, Summers joined and then left the Obama White House to begin still another “moneymaking spree.”

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