Is tech wrecking the middle class?

Two economists make the case.

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.

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"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.

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