Some pessimists worry that we are merely creating “McJobs” for the least skilled. Others worry that most of the new jobs require lots of skills, leaving the unskilled without good prospects. Most pessimists worry about both problems, even if it isn’t internally consistent. Just as pessimists worry that machines will take the place of workers in Japan, and that there won’t be enough young people to take care of the elderly.
I’m an optimist; so let me take a stab at this Matt O’Brien comment that Tyler Cowen linked to:
Of course, “us” is a relative term. Unemployment fell from 3.3 to 3.2 percent for people with a bachelor’s degree or more, and from 5.7 to 5.5 percent for those with some college. But it actually rose from 6.3 to 6.5 percent for people with only a high school diploma, and from 8.9 to 9.1 percent for those without one.
In other words, our polarized labor market isn’t getting any less so. The Cleveland Fed points out that routine jobs disappeared during the Great Recession, and haven’t come back during the not-so-great-recovery — which partly explains why our economic upswing, such as it is, has been much less dramatic for the least educated.
I certainly agree with Matt that the labor market is kind of lousy, despite the recent record set in employment. But I also think one month is too short of time to draw any conclusions. Let’s look at how the job market has improved for each of these groups, compared to the worst of the recession. In each case, I look at unemployment rates for people above age 25 (because that’s all I could find, and because it seems more consistent):
Less that high school: 17.9% —> 8.5%
High school grad: 11.9% —> 6.1%
Overall: 9.2% —> 4.9%
Some college: 8.8% —> 5.5%
College grad: 5.3% —> 3.0%
The reduction in the unemployment rate has been much bigger for the less skilled workers. You’d expect that given that they started at a much higher rate. Unemployment cannot go below zero. But it’s also true that even the relative change has been considerably bigger for the less skilled. The least skilled workers saw their unemployment rates fall by more than in half. The high school grads by nearly half. The two college groups saw unemployment fall by even less.
Obviously in an absolute sense the less skilled are doing far worse. But their abysmal job situation actually seems to be improving faster than for the more skilled groups. It’s an easy mistake to make. When I was young I often heard people say, “the rich get richer and the poor get poorer.” Confusing levels with changes. Actually, in 1969 the poor and working class had been gaining on the rich for 40 years.