Polarization of American labor market

A recent paper has proposed a “polarization” of the American labor market. This trend is directly relevant to how immigrants gain entry into the domestic economy.
Per the authors, work is expanding at the high and low ends with little or no growth in the “routine’ job middle, where the IT revolution (including enabling massive off-shoring) is destroying domestic jobs. The vast majority of immigrants would fit into the lower end of the polarized market. This raises in my mind concerns about what integration into the American economy means for the large majority of immigrants. I conversed by email with David Autor, one of the authors.


The paper is The Polarization of the U.S. Labor Market, by David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, NBER Working Paper January 2006. the link will take you to David Autor‘s webpage…look for the polarization paper under “inequality and technological change.”
The authors break the labor down into four sectors: the expanding non-routine cognitive (highest end); routine cognitive and routine manual (the sectors being squeezed); and the somewhat expanding non-routine manual. Examples (provided by David Autor):
1. Non-routine cognitive: Attorneys, Scientists and academics, Architects, Managers,
(Some) engineers
2. Routine cognitive: Clerks, accountants, Word processors/typists, Telephone switchboard operators, “Anyone who does what Google does”
3. Routine manual: Productive workers doing repetitive assembly tasks, Product inspectors and testers
4. Non-routine manual: Truck drivers. Janitors, Medical aides, Security guards, Waiters/waitresses, Walmart workers. (Autor could have added construction and landscaping workers.)
I asked Autor about the chances a non-routine manual worker might have to improve her or his position. He replied,

The problem with Non-Routine Manual work is that the supply of workers capable of doing these tasks is almost infinite. Thus, even though demand may rise for these jobs, wages will probably not rise quickly except through the opportunity-cost mechanism (i.e., barbers’ wages rise over time not because they have become more productive but because they must be adequately compensated for not doing another job).

You can get the gist of their proposition from the abstract:

This paper analyzes a marked change in the evolution of the U.S. wage structure over the past fifteen years…We document that wage inequality in the top half of the distribution has displayed an unchecked and rather smooth secular rise for the last 25 years (since 1980). Wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987, but it has ceased growing (and for some measures actually narrowed) since the late 1980s. …..We characterize these patterns as the “polarization” of the U.S. labor market, with employment polarizing into high-wage and low-wage jobs at the expense of middle-wage work. We show how a model of computerization in which computers most strongly complement the non-routine (abstract) cognitive tasks of high-wage jobs, directly substitute for the routine tasks found in many traditional middle-wage jobs, and may have little direct impact on non-routine manual tasks in relatively low-wage jobs can help explain the observed polarization of the U.S. labor market.

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