Wednesday, March 9, 2011

The Hollowing of the Middle

David Leonhardt at the NYT has as article about a recent paper by economist David Autor. I cannot read Autor's original paper, but Leonhardt's article is worth a read.
Over the course of the past 20 years the middle class has seen declines in opportunities while low and high paid jobs have increased.
In the last two years especially I think this is pretty clear. We continue to lose good factory jobs with good wages for line workers and salaries for shop management. The costs for factory jobs are just too low outside the US/Canada. HOWEVER, Autor's data indicates that while middle wage workers did fare worse than high wage workers, the middle wage workers fared better than low wage workers.
On wages — the most important factor for most workers, since the vast majority of workers remain employed even when unemployment is high — middle-wage workers have fared worse than high-wage workers but better than low-wage workers. Rising inequality, rather than a hollowing out of the middle, seems to be the best summary of recent wage trends.

Consider the change in inflation-adjusted wages by education attainment from 2007 to 2010:

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