To what extent has the emergence in technology catalyzed job polarization?
Job polarization is the increasing trend towards greater low and high skilled work, whilst the middle skilled jobs are tending to evermore decrease. One popular view is that technology is to blame for this occurrence at both ends of the spectrum. Technological capital now replaces human labor and automation has increased low skilled work opportunities whilst innovative technology has done so to high skilled opportunities, all whilst threatening middle-skilled employment. Job polarization is not a consequence of technological outbreaks and is the outcome of simultaneous human and institutional changes that have lead to this phenomenon.
Technological replacement of workers is a cost-effective strategy that close to all business have adopted. The cheap availability of it over years makes it an obvious replacement or addition to the workplace. Middle class/skilled work was formerly performed by workers with modest education in the Fordist era of the 1930s. Many of these industries are now routinized and simplified in a Taylorist manner more so than in the post-Fordist era with the help of technology. The implications for mid age blue collar workers from this are fairly severe. Those who have been displaced and replaced by automation tend to be unable to retrain or upskill quick enough to reenter the industry with the updated skills, therefore settling for lower skilled and reluctantly lower paid jobs.
It may be argued that there is no actual replacement of technology for human labour as the “routinization” hypothesis states. Work is now routinized with the use of workers, in fact technology merely influences processing tasks, standardizing tasks and the offshoring of information based tasks. Although human labor is involved, it is far less skilled than before.
The first graph shows how the middle paying third of occupations saw the greatest decline in share of employment across all countries, whilst the other variables see a positive rise. (Acemoglu and Autor, 2011). The graph on its own does not associate this trend with technology however.
The second graph links a possibility to a connection between increasing job polarization and technology. It shows that middle-skilled labour that can be easily routinized such as production, administration or sales, have been, as technology advanced. The high and low skilled occupations have actually not seen as much of a change over the years, or in the more recent years where technological advances were spewing.
(Source: Data on EU employment are from Goos et al.(2009), From 1993 to 2006, data collected in a week interval between all workers within the age range of 16-64) (Acemoglu and Autor, 2011)
However, not all tasks in the middle skilled sector are subject to automation or technological manipubility. Non routine tasks are a minority in middle skilled labor and can not be “routinized” (Oesch and Rodriguez Menes, 2010). Abstract work and manual work both require different human function such as problem solving and intuition in the former, and situational adaptability and simple sight, functions that capita simply can not carry out. (Autor, 2011)
Job polarization may be caused by shifts in labour market institutions (Autor, 2011). The emergence of strong capitalist run economies operated by the free-market have caused divides in many ways. The ability to delayer companies in an effort to reduce costs has simplified and clarified the hierarchy to low and high paid wages which has extended across economies. The emergence of the globalized economy welcomed International markets and pressures, resulting in higher costs and a race towards efficiency. This does not give companies much of a choice on whether to hold costly middle-skilled and paid workers or to replace them with capital investment. Radical labour movements such as migration in recent years have lead professionals migrating to settle for lower skilled, lower paid work in other countries. This is eliminating the middle class as many settle for the low end of the spectrum or squeeze into the top, supporting job polarization and slowly peeling away the middle skilled worker.
The 2008 recession lead to a higher demand for high skilled workers which lead to higher wages (Autor, 2011). This was not helped by the slowing supply of highly educated workers as there was a slowing rate of four-year college degree attainment among young adults in the US (Autor, 2011). Job polarization may be parallel to wage determination as greater employment and earnings in the lowest and highest skill sector may be attracting the middle-skilled workers towards either side. Workers who lacked postgraduate education struggled to find job opportunities in the middle skilled sector after 2008, this was not the case in the industrial era this was not the case.
Is de-unionization a leading cause of job polarization instead? Real wages in the UK have stagnated before 1979, meanwhile inflation rates rise at a targeted 2%. This mathematically drags down medium paid sectors towards lower paid sectors over time as the real spending worth is lower. The middle wage sector is therefore slowly dragged away due to failures from unions to raise minimum wages or renegotiate current wages. Then again labour unions only have direct impact on public sector jobs and manufacturing, which compromise a surprisingly small amount of the economy we see today. The service sector accounts for 70% of the UKs GDP and is also heavily privatized, providing many low skilled jobs and a few high skilled, therefore unions may not be the answer to job polarization. In the US however, job polarization is seen across all sectors those that are de-unionized also.
As strong as the argument for technology may be, there is no one single explanation that can be held solely responsible for this phenomenon. Job Polarization has been apparent since before technology was influential, not to say technological advancements haven’t boosted its rate significantly to which it is now more visible in our societies. The rise to privatization, and unfortunate economic recessions have contributed significantly towards workers being forced to one end of the job market, not just technological changes.
Acemoglu, D. and Autor, D. (2011). Skills, Tasks and Technologies: Implications for Employment and Earnings. Handbook of Labor Economics, [online] 4b, pp.1070-1077. Available at: http://economics.mit.edu/files/7006 [Accessed 17 Mar. 2016].
Autor, D., Katz, L. and Kearney, M. (2006). The polarization of the U.S. labor market. National bureau of economic research, pp.5-7.
Goos, M. and Manning, A. (2007). Lousy and Lovely Jobs: The Rising Polarization of Work in Britain. Review of Economics and Statistics, 89(1), pp.118-133.
Goos, M., Manning, A. and Salomons, A. (n.d.). Explaining Job Polarization: The Roles of Technology, Offshoring and Institutions. SSRN Electronic Journal, pp.4-5, 21-24.
Hadlock, P., Hecker, D. and Gannon, J. (1991). High technology employment: another view. Monthly Labor review, pp.1-3.
Oesch, D. and Rodriguez Menes, J. (2010). Upgrading or polarization? Occupational change in Britain, Germany, Spain and Switzerland, 1990-2008. Socio-Economic Review, 9(3), pp.503-508, 517-529.
Autor, D. (2011). The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings. Community Investements, 23(2).