Is tech wrecking the middle class?

Is tech wrecking the middle class?

Summary: Two economists make the case.

TOPICS: Tech Industry
Office Space's Milton Waddams may not be collating copies in the new economy, but he'll still have a shot at a paycheck. (Photo courtesy 20th Century Fox)

We can thank technology for reliably boosting business productivity with each passing year; few will argue otherwise. But the inverse relationship between employment and innovation since the Great Recession ended four years ago has some experts wondering if we're losing the battle against our own machines.

The case has been made many times before. Economists usually reject the argument outright because history proves otherwise: the gains of the Industrial Revolution didn't put everyone out of work, it merely shifted what kind of jobs those people were working. Indeed, the idea is "demonstrably false," economists David Autor and David Dorn write in a New York Times editorial this week, because unemployment has not increased in the decades since.

"Labor-saving technological change necessarily displaces workers performing certain tasks — that's where the gains in productivity come from — but over the long run, it generates new products and services that raise national income and increase the overall demand for labor," the authors write.

But what about the rise of the computer? Is its impact any different than that of the steam engine, the cotton gin, the ever-expanding rail network? 

Well, kind of. The two professors write that computers have obliterated demand for "routine" tasks such as clerical work or production jobs but increased value for the "nonroutine" jobs — that is, those that require problem-solving, intuition, creativity, persuation — at each end of the occupational skill distribution spectrum. The same kind of skill is at work whether you're a surgeon in the operating room or a housekeeping employee in a hotel room.

And that's where things get interesting:

Computerization has therefore fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined. Surprisingly, overall employment rates have largely been unaffected in states and cities undergoing this rapid polarization. Rather, as employment in routine jobs has ebbed, employment has risen both in high-wage managerial, professional and technical occupations and in low-wage, in-person service occupations.

So computerization is not reducing the quantity of jobs, but rather degrading the quality of jobs for a significant subset of workers.

"This bifurcation of job opportunities," the authors add, "has contributed to the historic rise in income inequality."

Their suggested solution? Hit the books. Higher education "has perhaps never been a better investment," given this reality, whether it's a professional degree or merely additional training for service jobs that a machine can't readily do.

A customer support representative that can actually help you? Count on it.

Topic: Tech Industry

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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  • Of course technology is destroying the middle class

    it has been excelrating since 2008, while big companies are seeing huge profits, we are seeing more and more jobs being lost, where are they going? Technology, there is no where else to blame or state where they have gone
    • Something else to blame

      I think there is a lot of blame to go to the huge flux of manufacturing jobs moving to places like China.

      When those jobs, typically $30 - $55k annual salaries, move over seas they are not coming back in any way. When we shift stuff from clerical to computers you are employing new people to write and maintain that software.

      So I would honestly blame our inability to compete on manufacturing and losing those jobs to low wage over seas workers more than computers and technology. If you look at the timeline and trends they are pretty similar
    • Did you actually read (or comprehended) the article?

      The jobs are not lost, just redistributed. It is up to the individual's abilities to move up or down from the middle class.
  • Maybe not wrecking the middle class...

    ...but wrecking the middle class paycheck.

    "... but over the long run, it generates new products and services that raise national income and increase the overall demand for labor," the authors write."


    The median household income for most states has FALLEN in the past ten years. The top of the heap has seen big gains, but the rest of us have either stayed where we have been for a long time, or actually lost ground. And these are raw numbers...NOT adjusted for any inflation.

    Take a look at the "Median Household Income by State - 3-Year Averages" PDF on this site.

    Compare the 1998-2000 Median Income data to the 2009-2011 Median Income data, and it's not encouraging.
  • its wrecking all the classes except the top end

    The problem is that there are fewer and fewer jobs for the masses. You either work for sub $20 an hour or work for a high salary. There are very few jobs in between and msot jobs these days are in the service industry and all high paying jobs require tons of years of service for you to make something like $60-$80k. There are few jobs above 100k anymore and as the economy gets worse so does the pay.
    Especially here in America most people live paycheck to paycheck, never being able to deviate from their day to day lives, effectively making their lives useless. Where they will have to live like this for 10-20 years to try to get a shot at a job that pays a little more.
    There is still the opportunity to become wealthy but that opportunity shrinks every day as it becomes harder and harder to ascend to the top.
    • It ain't technology that's wrecking the classes

      It's the top of the top end. The parasitic 0.01% has been stealing our money through various financial scams (the housing bubble being one), then when the scams backfire and lead to losses they ask for bailouts and thereby steal from us *again*.

      The hard-working rest-of-the-1% is doing their darndest to beat it, but it's hard to fight with the big boys with government connections.
      Jacob VanWagoner
  • The moment you said the Great Recession ended

    you lost all credibility. There is no economic recovery, and it has absolutely nothing to do with tech, and everything to do with the fact a majority of Americans voted for socialism, and are getting it.
    • You're an idiot.

      "...and everything to do with the fact a majority of Americans voted for socialism, and are getting it."

      Do, or will you, accept a Social Security check?

      Do you accept or use services offered to you by ANY Federal, State or Local organization to which you pay taxes?

      If you answer yes to either of these...then YOU are a Socialist.

      What is with you right-wing Neo-Cons anyway? Enough already...because your cry of Socialism is COMPLETELY bogus, if you make use of ANY service provided by any governmental organization.

      Whether you choose to open your closed minds or not...YOU ALL ARE SOCIALISTS...and so is everyone else. GET OVER IT.
      • ummm, huh?

        Of course I will accept my Social Security check if/when it is (still) available to me. This is not a handout, this is something that I will have paid into my entire life. If I wasn't paying into it, I would have been paying it into a private retirement fund. The OP, I think, was referencing the entire subclass of the population that receives benefits far beyond what they have paid in, or in some instances, for which they have never paid in.

        This type of "social safety net" is absolutely necessary, and in many ways is a hallmark of a civilized population. The problem is when the number of "takers" begins to outweigh the number of contributors. It is at this point that the social contract begins to fail. We in America seem to have hit a point where people are looking to government first to solve all of their issues and are looking internally second (or not at all).

        I certainly don't have the answer, but I'm not convinced that bringing achievers down will make the non-achievers better off in the long run.
        • No clue how SS works

          If you are anti socialism and accept a SS check you are a hypocrite. The excuse of "I paid into it" doesn't fly. Money you pay TODAY in SS taxes goes out TODAY. It's always been that way. There's no account with your name on it. Today SS recipients like my parents get their money because people like me pay SS taxes. When I get old enough to get a SS check the money will come from people like my son and grandchildren. So when you collect a SS check you are taking money away from those that are actually working. Thus you are doing the very thing you claim to be against. Any money already paid in SS is already gone so if you are so anti socialism you will do the right things and refuse to accept a SS check. Otherwise you are a hypocrite and you need to SYFM.
          • You are right (kind of)

            Yes, the money I pay in today goes out today. The money my kids pay in tomorrow will go out tomorrow. However, I do get an annual statement with an amount that I have paid in as well as what my expected payout will be when I am eligible. This number is different depending on the amount that I have paid in (I know, because my wife is a stay at home mom and her monthly expected payout is MUCH lower than mine due to her considerably fewer years of productive employment).

            What you are saying is that the money that I put into my bank savings account isn't mine because the bank turns around and lends that money out to others.

            In both cases I am making an investment for which I expect there to be a return.
          • Nope

            SS is not an investment. Unlike sticking your money in a bank. Go to the SS website or read your yearly statement. You are not guaranteed anything when you retire. That an ESTIMATE based on what is going on TODAY. When you stick your money in the bank you are guaranteed to have the money available even if the bank goes belly up, up to $250,000
          • Guarantees have nothing to do with whether it is Socialist or not

            You have changed the argument. You originally stated that a SS retirement check is a socialist program. If this were the case, then it would follow the dictate: "From each according to their ability, to each according to their need."
            I have paid more in than my wife, therefore, my estimated payout is more than hers. This is not a socialist model. This has nothing to do with guarantees or anything else you may turn up as a red herring. This is not to say that there aren't efforts actively going on to make it a more socialist program by introducing "means testing" into the argument, but as it stands now, it is not.
          • From the fact that that is NOT the definition of socialism

            the rest of your misinformed argument falls apart completely.
          • So what you're saying is ...

            The fact that there is an account with my name on it and the Social Security Agency has told me what I'm expected to get at retirement, I shouldn't believe that, and to expect that I should receive that money is just a fanciful illusion? And if I were to say, "give me what you owe me" you'd say, "Not until someone else pays for it!"? And if we tried to do the same thing to current SS recipients, you'd balk? Interesting...
        • It's only necessary

          when people are too stupid to understand how to handle their own money.

          Which stupidity can only be permanent when the failure option is taken off the table.
          Jacob VanWagoner
          • Bull, both mathematically and empirically

            Your argument relies on perfect information available to all participants. Reality does NOT work that way.
    • I agree with the other guy

      You are an idiot. Explaining why is a waste of my time. Even if I did, you would dispute objective reality and remain an idiot.
      Sir Name
    • Allow me to be specific.

      A recession -- so defined as the economic event in which there are consecutive quarters of negative economic activity -- ends when it no longer fulfills the definition. In the U.S., that happened in the third quarter of 2009. And the country has posted gains almost every quarter since, 1Q11 the only exception.

      So yeah, the recession is formally over. Your ability to take this commenting thread off topic by raising the question of American voting habits -- as well as your inability to read the proper definition of "socialism," I should add -- appears to be ongoing, though.
      • Which metrics are being used?

        "so defined as the economic event in which there are consecutive quarters of negative economic activity"

        I'm not saying you are incorrect, but would be curious as to which economic indicators are being used to determine "negative economic activity." Many experts tend to believe that this has largely been a "paper recovery" where Wall Street has recovered, but that the recovery is largely not translating to the rest of the population.

        Unemployment numbers have improved not because there are more jobs, but rather because more people are dropping out of the employment search or have given up and taken a job well below their qualified levels.

        Don't get me wrong, I do believe that things are getting better, but I always take a closer look at the numbers than what is presented to me on a silver platter!