Day: 2012/11/09

Election Day Research on ‘Job Polarization’

So there was an election the other day, and some Demmers won while some Pubsies lost. Florida is still undecided, which is pretty funny. I’m pleased the Pubsies lost, but the biggest problem I have with the winning Demmers is that I still can’t tell if they have a thought-out, long-term understanding of the planet’s and our trans-continental superstate’s problems. It’s like they’re winging it. A bellwether of what I mean is an article that popped up on Election Day on economist Mark Thoma’s Web site, Economist’s View.

Henry Siu, Nir Jaimovich, “Jobless Recoveries and the Disappearance of Routine Occupations,” Vox EU.

It’s some good social science: The authors project the job recoveries from the 1991, 2001, and 2009 recessions as if they included routine jobs’ bounce back in prior recessions. It’s pretty stark stuff.

It may be that there are fundamental differences between 70’s-ish recessions and the ones I remember, but I think the authors’ findings are otherwise sound.

Structural change in the labour market is clearly manifesting itself in the business cycle. The long-term decline in routine occupations is occurring in spurts – employment in these jobs is lost during recessions …

The loss of routine jobs in recent recessions has given rise to jobless recoveries. Aggregate employment struggles to rebound following recessions since middle-wage, routine occupations no longer recover. Moreover, employment growth following recent recessions has been unevenly distributed across pay, concentrated in high- and low-wage occupations. A recent report by the National Employment Law Project (2012 [PDF]) indicates that the recovery from the Great Recession has been particularly lopsided, with the majority of jobs added being low-paying jobs.

Here’s what the National Employment Law Project is talking about:

Job polarization is going to be a growing issue in the coming years. Already, we’ve seen economists essentially saying that the solution to the problem of Morlok Material Movers is training them to be Eloi Lawyers. It won’t work (Siu and Jaimovich are wise enough not to comment either way), and the result will be more credential inflation, i.e. Morlock Material Movers who are also lawyers but are on IBR, unlike their colleagues who have more discretionary income but diminished understanding of Privileges and Immunities Clause precedent.

(Incidentally, I’m not using lawyers as an example here because I research legal education; rather, theirs is the best non-routine occupation to alliterate with ‘Eloi’. Lawyers are actually an exception to job polarization in that one would expect them to have higher wages after a recession because you (probably) can’t build a robot that can attend status conferences, but law practice is a non-Eloi-ish occupation for reasons you can find on just about every other post on this blog.)

Thus, the problem for the Demmers (I doubt the Pubsies will ever care about job polarization) is addressing their pessimism towards the low-wage workers’ lots. Instead of overeducating them, it’s a lot wiser to think of ways to ensure their jobs pay better. We can’t all be “entrepreneurs” who “innovate” by founding the next Twitter, which only employs 200 people.

I fear Demmers will try to solve the problem by taxing capital, which would disrupt the productivity that drives the polarization and gives us new Twitts. This is why I prefer taxing land values instead. Speaking of which, here’s the trailer to the upcoming Henry George documentary.