The Disappearing Middle is a Cover-up for Bad Economic Policy Coming from the Top

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Thursday, 18 April 2013 13:41

Thomas Edsall relies on some research which unfortunately in many cases is a bit dated to discuss the idea that middle wage jobs in the United States are disappearing due to technology. While there was some evidence that middle wage occupations were dwindling in the 1990s, this was reversed in the last decade. In that decade there were declines in employment shares for all but the lowest paying occupations. Since we saw the same pattern of wage polarization, with more income going to the top, in the 2000s and 1990s, this would seem to indicate that the loss of middle wage jobs was not the story in the 1990s either.

In considering the recent pattern of job growth the proliferation of low-paying jobs is most obviously explained by the weak economy. The economy also generates lots of bad jobs, however in a healthy labor market most people don't take them. It is only when people have no other job options that take these low-paying jobs. Therefore the fact that a disproportionate share of the jobs created in the last 5 years are low-paying jobs is best explained by the fact that the economy is not creating very many jobs.

The piece also notes the shift of manufacturing jobs to China. This is not a result of inevitable globalization, but rather a policy decision to put manufacturing workers in direct competition with low-paid workers in the developing world, while maintaining or increasing protectionist barriers that allow doctors, lawyers, and other highly paid professsionals from avoid similar competition. The United States has also further disadvantaged manufacturing workers by pursuing a high dollar policy that makes it more difficult for them to compete internationally.

There is little reason to believe that there is anything inevitable about the loss of wages by middle class workers. Rather this is primarily a policy driven outcome.