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Home Publications Blogs Beat the Press M.I.T. Economist David Autor Shows Soaring Demand for Uneducated Workers

M.I.T. Economist David Autor Shows Soaring Demand for Uneducated Workers

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Tuesday, 08 March 2011 22:14

David Autor has inaccurately reported that he has found evidence of a hollowing out of the distribution of jobs for men, with increased employment at the top and the bottom ends of the wage distribution and a loss of jobs in the middle. NYT columnist David Leonhardt seems to have largely bought this story as well.

Actually, as John Schmitt, my colleague at CEPR, and former colleague Heather Boushey pointed out, Autor's work shows the opposite. In the most recent business cycle, 2000-2007, there was a relative decline in the demand for all male occupations, except those at the bottom of the wage distribution. There was less of a decline for jobs near the top than for those in the middle, but it would be more than a bit of an exaggeration to call this a hollowing out of the job distribution. Autor's data is essentially showing an increased demand for less-skilled occupations pure and simple.

The story for the prior business cycle is also not quite what Autor describes. Between 1989 and 1999, there actually was a decline in relative employment for all occupations below the median except those near the very bottom (the bottom decile).

A large percentage of the workers in this bottom decile were immigrants. There has been considerable research (e.g. here and here) that suggests that immigrants don't compete directly with native born workers and instead fill a sub-class of occupations in which jobs would have gone largely unfilled in the absence of immigrant workers. Insofar as this is the case, it suggests that the growth in the lowest wage occupations was not a demand-side phenomenon, but rather a supply side story. In this view, if there had been a large influx of immigrants occupying the middle wage occupations, then we would have seen strong growth in employment in these occupations as well (albeit at much lower wages).

In the period from 1979-1989, the first business cycle analyzed by Autor, there is a decline in the relative shares of employment for all occupations below the 60th percentile. This also does not support the hollowing out story.

To summarize, in the first cycle, Autor finds increased relative demand for highly skilled occupations and decreased demand for less skilled occupations. In the second cycle he finds increased demand for highly skilled occupations and decreased demand for all but the lowest skilled occupations, which may be the result of an influx of low-paid immigrant workers. In the third period, there is a decline in the relative demand for everyone but less-skilled workers. In other words, he really doesn't show any evidence of a hollowing out of the job distribution.

Comments (6)Add Comment
Monopoly power of hospitals, etc, shouldn't be left out
written by Rachel, March 09, 2011 12:41

How much of the demand for the high-earners (often NOT such genuinely highly-skilled people as engineers) is artificial, produced by a reduction of competition by the less expensive? This is an important question that Autor's analysis doesn't seem capable of addressing.

And yet here in Northern California, health care prices have gone up 155% in ten years, which surely contributes to some firms being unwilling to hire middle class workers (and older workers). And while some of the medical inflation is due to the precipitous adopting of new technologies, much is due to increased monopoly power in hospitals, which pushes more and more high income people into higher income categories.

Now Boston also has big problems with medical market power. I assume that many other urban areas do too. So perhaps we should be skeptical of analyses that ignore this issue.

Immigrants Hollow Out American Jobs
written by izzatzo, March 09, 2011 5:18
There has been considerable research (e.g. here and here) that suggests that immigrants don't compete directly with native born workers and instead fill a sub-class of occupations in which jobs would have gone largely unfilled in the absence of immigrant workers.


Nonsense. Any economist, Ayn Rand for example, demonstrated the hollowing out of American Native Indian jobs by immigrants from Europe, pointing out that it was perfectly possible for Columbus to 'discover' America even though two million people were already living here.
...
written by ralston mctodd, March 09, 2011 8:57
"...immigrants don't compete directly with native born workers and instead fill a sub-class of occupations in which jobs would have gone largely unfilled in the absence of immigrant workers."

Wait, what? Doesn't this imply either the "skills mismatch" theory or the "employers can't possibly offer higher wages" theory of unemployment, both of which have been thoroughly debunked here?
...
written by skeptonomist, March 09, 2011 9:21
Actual wage/salary data do not indicate any increased demand for lower-skilled workers since 1973:

http://www.skeptometrics.org/Education-Income.png

Going into the current recession, those without a college degree were basically where they were around 1982, which is considerably worse than where they were in 1972.

Of course wages are not just a matter of supply and demand in free markets. By far the most important development in wages and salaries in the 20th century was the period from the late 60's through the 80's when the long-time trend of increasing real wages was sharply reversed, and almost everybody's compensation went down. This was the period when the Fed deliberately set out to beat down wages by raising interest rates, crushing the economy and raising unemployment to 10.8%. Now some people apparently want a repeat performance.

Data source:

http://www.census.gov/hhes/www/income/data/historical/people/index.html

Tables P-16 and P-17
...
written by Robert, March 09, 2011 6:22
Dean,

Isn't Krugman attempting the same argument, in a different manner, in his March 6th editorial in the New York Times?

http://www.nytimes.com/2011/03/07/opinion/07krugman.html?_r=1
...
written by Robert, March 09, 2011 9:43
"There has been considerable research that suggests that immigrants don't compete directly with native born workers and instead fill a sub-class of occupations in which jobs would have gone largely unfilled in the absence of immigrant workers."

It's amazing how liberals can ignore supply and demand when it comes to immigration. Maybe it's that liberals don't eat fast food. Have you listed to what language is being spoken behind the counter? So I guess there are no American teenagers willing to work in the food service industry? Teen unemployment is much higher now than a few years ago, so the problem is a lack of demand rather than a massive change in preferences. With less immigrants there would be more openings and higher wages. It's the same story for Americans who want to work in construction, and many other occupations.

It's the job of economists to tell the public who gains and who loses from immigration. The amoral fact is that our immigration policy is a deliberate redistribution of income from working Americans to both their employers and to the immigrants themselves. Ultimately it is counterproductive for liberal intellectuals to deny uncomfortable realities.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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