The rise of lousy and lovely jobs

By Chrystia Freeland
April 12, 2012

More bad news for the middle class: When the economy recovers, jobs in the middle won’t. That is the conclusion of an important new study that connects a long-term trend in the labor market with the business cycle of recession and rebound.

Nir Jaimovich, an economist at Duke University, and Henry E. Siu, an economist at the University of British Columbia, take as their starting point one of the most important continuing changes in Western developed societies. That shift is what economists, most notably David Autor of the Massachusetts Institute of Technology, have called the ‘‘polarization’’ of the job market. Maarten Goos and Alan Manning, extending the research to Britain, have more colorfully dubbed it the dual rise of ‘‘lousy and lovely’’ jobs.

Their point is that, thanks to technology, more and more ‘‘routine’’ tasks can be done by machines. The most familiar example is the increasing automation of manufacturing. But machines can now do ‘‘routine’’ white-collar jobs, too — things like the work that used to be performed by travel agents and much of the legal ‘‘discovery’’ that was done by relatively well-paid associates with expensive law degrees.

The jobs that are left are the ‘‘lovely’’ ones, at the top of the income distribution – white-collar jobs that cannot be done by machines, like designing computer software or structuring complex financial transactions. A lot of ‘‘lousy’’ jobs are not affected by the technology revolution, either – nonroutine, manual tasks like collecting the garbage or peeling and chopping onions in a restaurant kitchen.

An extensive body of economic research has shown that job polarization is happening throughout the Western developed world. It accounts for many of the social and political strains we have experienced over the past three decades, particularly the increasing divide between the people at the top and at the bottom of the economic heap, and the disappearance of those in the middle who were once both the compass and the backbone of our societies.

What’s new about Jaimovich and Siu’s work is that they have found that job polarization isn’t a slow, evolutionary process. Instead, it happens in short, sharp bursts. The middle-class frog isn’t being gradually boiled; it is being periodically grilled at a very high heat. Those spurts of change are economic downturns: Jaimovich and Siu have found that in the United States since the mid-1980s, 92 percent of job loss in middle-skill occupations has happened within 12 months of a recession.

‘‘We think of recessions as temporary, but they lead to these permanent changes,’’ Siu told me. ‘‘The big puzzle about business cycles is: Why have we had these jobless recoveries over the past three recessions? These jobless recoveries are because you have these middle-skilled jobs that are being wiped off the table.’’

Economists are often in the business of collecting empirical evidence of the trends many of us civilians have long experienced in our daily lives. That turned out to be the case when Siu shared his research findings with his family.

‘‘I told my father-in-law, who used to be an executive in the oil industry,’’ Siu said. ‘‘He said: ‘That is exactly what happened. Every vice-president had a secretary, then they fired them during the recession. But after the recession we had to pair up, and two vice-presidents had to share one secretary.’’’

Another example may have been hinted at in the March U.S. jobs report. Those figures showed a decline of 34,000 jobs in the retail sector despite recent improvements in store sales. Some economists attributed that apparent mismatch to the power of technology, in this case e-commerce.

‘‘That is certainly in line with our findings,’’ Siu said. ‘‘Salespeople are one of the prime examples of routine jobs.’’

The Jaimovich-Siu paper concludes that ‘‘jobless recoveries are evident in only the three most recent recessions, and they are due entirely to jobless recoveries in routine occupations. In this group, employment never recovers beyond its trough level, nor does it come anywhere close to its pre-recession peak.’’

This is, Siu told me, ‘‘a stark finding.’’ David E. Altig, the research director at the Federal Reserve Bank of Atlanta, who has written a blog post about the paper, echoed that view. ‘‘One of the things you certainly note is that this is the mother of all jobless recoveries,’’ he told me.

Siu urged me not to be too gloomy. ‘‘In the broad sweep of history, technology is good,’’ he reminded me. ‘‘We’ve been wrestling with this for 200 years. Remember the Luddites.’’

That is an important point. All of us, even the hollowed-out middle class, would be much worse off if the Luddites had won the day and the Industrial Revolution, whose latest wave is the past three and a half decades of technological change, had never taken hold.

But it is also true that every seismic shift, including the current one, has winners and losers. And for the losers, adapting to today’s world of lousy and lovely jobs may be even harder than it was for the artisans of the Luddite era to thrive in the Machine Age.

‘‘What might be different today is two factors,’’ Siu told me. ‘‘The pace of technological change is so much faster, and we live in such a complex society, that it is harder than ever to switch to a new occupation.’’

All of us are awaiting an economic recovery. We should be braced for one that offers scant comfort to the middle class.

31 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Excellent article.

Posted by Adam_S | Report as abusive

Hi Chrystia: Are you sure the lousy jobs are really lousy and the lovely, really lovely?

The lovely jobs seem always to be rather abstract jobs and tend to require that the person holding them has already internalized many subtleties of the larger world. Such skills as high reading comprehension, the ability to understand and speak other languages, the ability to understand mathematical, scientific and artistic concepts, and the ability to work without gross physical supervision and even without visible means of support, are jobs that the holders tend to occupy because they have learned to understand them (in many cases on their own) and can actually be as absorbing as any hobby. They are almost jobs that could be seen as levitation or walking on water. They also seem to be subject to very subtle modes of censure and almost incomprehensible disqualifies. I always thought so. Life in some jobs is like living constantly where the air is too thin.

On the other hand the unlovely jobs – and they start to look so good when you haven’t got one at all, seem to be more forgiving of those who still occupy their flesh and blood, so to speak. However, the censures and controls tend to be a lot less subtle. I am not sure which type of job feels worse when one finds oneself being censured or degraded? All types of jobs require rewards or the difficulties in mastering them will be too great to try to overcome at all.

God may like “the hot or cold but the merely warm he spits from his mouth”. Yet somewhere, when a society starts to do that and has only the grandees and the rest become the “lumpenprolitariat” or the commoners engaged in the productive physical labor, we tend to think of that society as primitive or undeveloped.

But as a society develops it seems to differentiate the grandees and the commoners and the extremes start to meet and even overlap. I think both Mao and Jefferson knew that even thought they had very different solutions to the difficulty.

After all – even a “dumbbell” can’t exist without a very strong bar that holds the two heavy weights at each end together. If the strong bar weakens, the two ends become useless. One end can’t effective communicate with the other and the society tends to fall apart. The top seems to take the sophistication of the culture “home with them” and the bottom becomes coarser because it is being forced, or left to fall, into a more animal world that works more on instinct than thought. The situation could be characterized as the gated community versus the slum.

Here is a puzzle – we talk about “vocational’ training and higher education. The car mechanic may have taken “Voc Ed” and the college bound takes degrees. Was the high school being patronizing and polite or did it really see those skills as a vocation rather like clergy? Both the car mechanic and the clergyman seem to have to have tools of the trade and both have to know how to deal with physical reality and the public. Which one deals with greater subtlety?

BTW – the worlds of the software designer and the car mechanic both seem to be occupied by people who find the technologies of their trades fascinating and all absorbing and I suspect neither really cares which is more subtle. They both have toys and games that train their young devotees. The pay for a car mechanic isn’t small and they know they occupy a position that is never going to run out of customers. And the mechanic isn’t walled off from sophistication. And he may actually have a grasp of what goes on at the very top of the industry where the vehicles are deigned and built. He just might not have all the related skills necessary for the top jobs and he may not even want them. A lot of people like the assurance of working for themselves and hate the compartmentalization and routine of the higher positions. They may really dislike the fact that the higher one goes, the more anonymous the products of one’s labor can become. The sense of personal satisfaction can take a beating in the higher positions.

Now that I am waiting most of the time for the phone to ring with a order from one of the clients I used to work for, it seems that everybody earns more money than I do.

I was impressed with the article until the word “Luddite”. Thats was really a cliche. Technology is not good or bad in itself. If a task can be performed without highly sophisticated technology – why employ it. Technology is a tool in service of a standard of living isn’t it? But if that tools becomes destructive of standards of living, what good did it do actually?

Posted by paintcan | Report as abusive

Gentlemen, We’ve gotta protect our phoney baloney jobs!

–Mel Brooks
–Blazing Saddles

Posted by GLK | Report as abusive

One way to preserve jobs in light of this is to reduce payroll taxes and replace them with carbon taxes. This is not a new idea. It basically follows the principal that we should tax what we don’t want: pollution, and stop taxing things we do want: jobs.

This doesn’t stop the trend of automation, but it does slow the inequity that arises from it. Our current tax laws promote capital investment and discourage labor. This accelerates the job losses in a recession and encourages automation over hiring.

It also seems to me that a carbon tax is preferable to elimination of accelerated depreciation. One or the other is needed to pay for a reduction of revenue from reduced payroll taxes. And, while I prefer hiring over investment, I do prefer investment over no investment, and clean investments are better than dirty ones.

The future is inevitable. How we manage it is up to us.

Posted by LEEDAP | Report as abusive

The problem is there is no manpower intensive technology on the forseeable horizon. There are lots of technologies on the near and far horizon that will allow even more jobs to be automated. And we are just in the early stages of experimenting with artificial Intelligence. If something doesn’t change, the bottom half of society will become unemployable and then what do we do with millions of bored disenfranchised people?

Technology is great. The way we manage it’s integration into society isn’t.

Posted by samuel_c | Report as abusive

And who maintains the website and refines the code that run the travel websites? You are forgetting that each new invention that replaces something must be maintained and expanded upon.

Posted by Matt-Chicago | Report as abusive

To see why the middle class is evaporating in this country, you need look no further than WalMart ..

Posted by Woltmann | Report as abusive

I’m afraid you are correct. Most middle class Americans realized that middle class jobs were not coming back once the bottom fell out a few years ago. We are just seeing the empirical proof catch up. I’m also afraid we are beyond a normal ‘pendulum swing’ or ‘cycling’. We will need to move forward into a new world that is unfathomable to the masses. Unfortunately, there will be many many left behind with the main opportunities in reserve of the young or unborn, yet to reach the job market.

What we have to question is ‘What IS a job?”. With automation, computerization, mass media and mass communication at unprecedented levels we have to start finding a new way to distribute resources because relying on ‘paychecks’ will no longer fit in the model.

This is a quantum leap. Not a baby step, not a change, not a revision. It’s a rewrite of how humanity will live.

Posted by SeaWa | Report as abusive

What’s funny is that feeding people is vastly more important than most other jobs. The market finds both cooks and customers expendable, and wages for cooks reflect that. But if a cook poisons you, he may lose his job, but you could lose your life.

Q: Why don’t pay through the nose for people responsible for our well being? Waitstaff make more than cooks, more than airline pilots, and all they do is flirt with your significant other.

Posted by blogoleum | Report as abusive

Thanks paintcan, I always enjoy your commentary.

Posted by tmc | Report as abusive

Soon, within the next few decades I think, one third of the population will be able to provide the basic needs and even entertainment for the other two thirds. It may take a few more decades after we reach that ability for it to be in practice. That gives us just a couple of generation to work out new social, financial, and national frameworks. Many more old governments of the past century will fail as we learn to adapt to technologies and the realities of natural resources and population control. This is a new era beginning. The long count starts again.

Posted by tmc | Report as abusive

If there where better mechanisms in place for life long education and if it was made profitable for employers to hire inexperienced with the technical education (or if by law they where required to hire education over experience), employees could adjust much better.

A worker has limited access to experience particularly if he is older and paid more to do a job efficiently and the automated way is now not efficient but being developed. He can at a cost (of time and money) get more education.

The young and low paid are more often put on automated methods of white collar work.

Posted by SamuelReich | Report as abusive

I think the piece of research presented here misses out one important factor: manufacturing offers the bulk of middle-class jobs, and it is the manufacturing that is being outsourced overseas. No wonder the middle classes are being progressively wiped out.

In the developing countries all over the world the middle classes are growing and not shrinking, despite the technological advances. I think this is evident from the fact that there have been a number of middle-class-led democratic revolutions throughout the world.

Posted by Radek.kow1 | Report as abusive

We all like the idea of a world where people have good paying jobs, even if that means higher prices, but given the choice between Walmart and mainstreet in the real world, the people have chosen. Now we must live with it.

Posted by mtarpey | Report as abusive

Not a single mention of the countless manufacturing jobs shipped overseas to China, programming jobs to India and Russia, etc? The jobless recovery in America has created plenty of jobs in other parts of the world.

Posted by BigRocket | Report as abusive

@paintcan

First, rarely do I find a comment as interesting and well written as the article, good for you.

Second, “The situation could be characterized as the gated community versus the slum.”

I think that’s the core of the problem and why all of “this” and when I say “this” I mean the essence of what the plutocrats … the grandee supporters … desire to see happen is going to fail.

I know you and Ms. Freeland approach it from the perspective of the Good Jobs and the Crap Jobs with the grandees working the “good” ones but my point here is that it’s those “elites” that see no problem with this and by doing so, endorse it, are ultimately going to suffer as much as everyone else.

As a supporter of Occupy Wall Street, I think I know why “revolution” hasn’t broken out yet. There’s all the components of a revolution out there and if one is to look at past revolutions it becomes obvious that the answer is that…

“When the people no longer care about their own personal well being or the well being of society at large, they revolt.”

In the French Revolution there were all of the elements present today. There was a technological evolution (industrialization), there where plutocrats exploiting the masses and destroying the bourgeoisie (middle class) and so forth and so on but there was one (1) critical element they had that is missing today … mass starvation and perhaps a second (2) one as well, an absence of hope.

In almost every revolution the masses were physically hungry…France, China, England, Russia in every revolution the people were actually starving. When you’re starving you go into an almost zombie like state. The hormones coarse through the body, you’re running on adrenaline. Couple that with ideological, economic and social strife and you have the people in the streets with pitchforks and torches.

You can’t fight biology.

The point being that “this” … this “change” both economic and social could fail. Why? Well it doesn’t matter how many walls they build, how many guns they hire, eventually when the “system” fails to meet the “physical” needs a “critical mass” (pun intended) of the population society will collapse and there will be war.

When this happens, how long can this rich people’s “happy time” can last (where the plutocrats continue to destroy the middle class) continues, when it all comes crashing down is anyone’s guess.

Maybe all that’s needed is for the summer crops to fail in a massive drought and the price of food to multiple by a factor of three. Couple that with a “conservative” president like Mitt Romney who uses Tea-Bag principles and tells the starving to “get a job;” that open warfare breaks out.

This society is way out of balance.

To wit, right now there is a union between the grandees and the commoners. The grandees hold all these pointless jobs … such as Chief Editor of International News at Reuters. No offense to the Chief Editor of International News at Reuters, I’m just using you as an example … but frankly, society doesn’t NEED you.

This is perhaps TRUE for perhaps 99% of the grandees. Lawyers? Don’t really NEED them. They are a drain on resources. You can figure it out without them and society can come up with solutions for conflict resolution that eliminates them if needs be.

With perhaps the exception of doctors and engineers, most “grandees” are un-necessary or otherwise can be lived without / done away with.

Bankers? Do we really NEED them? No.
Investors? No.

Systems and solutions can be implemented that eliminates them. Perhaps the economy works better with bankers and the legal system better with lawyers – that’s debate-able. But the truth is you can have a justice system sans lawyers – that works perfectly fine.

From administrators, to bureaucrats to chief regional strategic analysts (whatever the heck that is) all of it is like icing on a cake – so much fluff.

And when push comes to shove, when the people are starving when the military has imposed martial law, when society no long participates in the democracy (which is already the case), when the propaganda fails to indoctrinate, when there is no more hope … well then whether you have or had a “lovely job” or not won’t mean … dick.

It’s ironic but democracy and economic prosperity for all (or most) are the very things that support and uphold the institutions that ensure that having a “lovely job” will matter or be there tomorrow.

As for lousy jobs, they’ll always a need for someone to dig a ditch or is that a grave.

Posted by Lord_Foxdrake | Report as abusive

Everyone expecting this mythical recovery to take hold. Ask yourself, how did we get out before? Low interest rates and FED policies you say? Been applying them for years now, along with billions if not a trillion or more of stimulus and the effect is muted at best.

Pray tell, do recoveries just create themselves?

Posted by mick68 | Report as abusive

These definitions are confusing. I have a lovely job that I think is lousy

Posted by whyknot | Report as abusive

Paintcan: it was difficult finding any merit in your long-winded ramble. Please refrain from posting this type of content in the future.

Cynthia: you have failed to identify globalization as the root cause of the loss of the majority of these middle class jobs. While it is true to a minor degree that technology can replace jobs, what has been a driving force for the last few decades has been the shifting of manufacturing jobs to the developing world. I am astonished that you did not even mention this in your article.

Posted by pbsuccess | Report as abusive

Wait until Operation Fool Me Twice launches later this year and the whole Persian Gulf region is blanketed with toxic debris from bombed nuclear facilities, not to mention the fallout from tens of thousands of civilian deaths. The wheels will come off the world’s fragile economies and what’s left of the middle class will be living out of shopping carts.

Posted by politbureau | Report as abusive

I wonder why they never come out with a monthly Careers Report. We always see the jobs report but never a careers report. Most of us are slaving for pennies at a job we have to take so we have socially constructed dignity.

Funny, since when is working for slave wages dignified?

Posted by RichardNibbler | Report as abusive

Technology is bad during a recession. All those folks who lost their job to robots and software will never recover. We need to slow down innovation so folks can catch up. We are innovating faster than people can learn.

Even real journalists are losing their jobs to bloggers. And the media has suffered tremendously for this. Not a day goes by I don’t see an on air retraction or in print retraction.

Back in the day, that was a death sentence for a news outlet. Now its just “my bad.” My bad for abusing the freedom of the press.

Posted by RichardNibbler | Report as abusive

Mandated Collective Deep Breaths?

An increased depersonalization in the daily business of all our lives has been accompanied by a notable decrease in our quality of life and a lack of credibility and accountability – all at the same time.

Technology has ramped up the pace of this process considerably, a situation which allows for both an opportunity to view the implications of these changes upon our lives, and the opportunity to evaluate whether these dehumanizing changes are actually desirable, in real time.

If we are not able to make a commensurate shifts in our states of consciousness in keeping with the pace of shifts in our experiences of daily living, humans will devolve as a species.

According to natural law, these changes are likely to happen at a naturally coordinated pace. With that in mind, hopefully soon, we can all agree on the collective value of building in moments for collective deep breaths.

xo

Posted by LoneStarLaurel | Report as abusive

Player Piano by Kurt Vonnegut should be mandatory reading for every American.

Posted by bkh | Report as abusive

Thank you for presenting one of my favorite topics so well.
Sadly, the part that I would like to take exception with is probably quite true: That this is a “stark finding”.
While this should be a patently mundane observation as those interested in the evolution of technology and it’s impact on human civilization (often called futurists) have been shouting this from the rooftops, they are typically received as irrelevant or “kooky”. I suppose the fact that the serious ones are mixed in with those of more fantastic preoccupations (sci-fi and the like) does not help. Anyway, it is nice to see these sensitive social issues receive an analytic presentation based on empirical observation. It is against our more primitive nature to judge the situation dispassionately, but we don’t do ourselves any favors with emotionally branded critiques of the symptoms such as “outsourcing” or “redundancy” or there countermeasures (e.g. socialism). As the article says, technology is eventually our friend; we need only the social fortitude to gracefully reassign our roles. There might just be a little left over time in our lives to direct some energy from our selfish personal persuits and actually bring about the change in undeveloped nations that has been within our power for many decades now (*sarcasm).
Okay, to my point: The more mainstream this discussion becomes, the more likely that our policy makers (read: politicians) will be able to (read: forced to) address these issues. Our idea of meritocracy was never realized, and the dream that it ever will is fading fast. The next big wave of innovation and recession will result in the devaluation and commoditization of our brain power. It’s anyone’s guess but the futurist give us another 15 to 20 years to prepare ourselves for the transition. I hope it will be a graceful one…but I’m not holding my breath.

Posted by gnostic8 | Report as abusive

The traditional Middle Class does not exist.

The Middle Class, as it was originally defined, was gone long ago. It is only a business and political ploy that the corporate and political powers keep using that term for most Americans. Traditionally, having households where both parents had to work to subsist was considered Lower Class and Working Poor. Today that is what we mostly have, two parents working double time, saving nothing, and living check to check to pay their basic necessities. That is Middle Class? Of course it is not. That is Lower Class and working poor.

The Gap between between the real Upper Class and this Lower Class is enormous. If the “Middle Class” realized that they had truly devolved to Lower Class and Working Poor, that would cause riots. Middle Class was traditionally one wage earner and one parent home with children. The quality of life of a traditional Middle Class family was what the Upper Class enjoys today only. Things like leisure time, and the ability to have one parent be the main physical daily caregiver to your children, were traditional Middle Class norms.

Again, the traditional Middle Class has shrunken astronomically. Most of the Upper Class are really what was defined as traditional Middle Class, and the Middle Class has become what traditionally Lower Class and working poor was defined as.

That is the reality. How can two parents who each work 60 hours per week, and put have their children raised by strangers most of the day, still believe that they are Middle Class? This is a mass rationalization propagated by employers, the government and big business.

Parents in Lower Class families have to work a combined 120 hours per week just to survive. If this is your situation, you are NOT Middle Class. Traditional Middle Class families do not have two parents working full time outside the home.

Most people who believe they are Middle Class have really become Lower Class and working poor slaves to their consumption, all at the loss of the quality of their lives and their family’s lives. Strangers raise many children in “baby corrals” while their parents work all day. Many people have willingly been pushed into a mild slavery, and all the while they believe that they are “getting somewhere.” Living check to check is not Middle Class..

Posted by chriswhalencpa | Report as abusive

Recession? Hell, we’re heading like a roaring, out of control train into a full scale depression. This won’t end well, folks.

We are turning into a Rich\Poor economy, with the poor unable to change their outlook and the rich unwilling to re-invest their capitol.

If the Federal Reserve ups the short term interest rate, investing may come back into it’s own again. But until that time, money holders will be money hoarders, to the further detriment of all involved.

Posted by tnourie | Report as abusive

this does not account for the skilled labor jobs returning like in Indiana at Caterpillar at a fraction of the wage once earned, all in the name of globalization. or at all the non-union auto jobs at BMW in S.C. that are held up by the GOP as success stories. $12/hr or $15/hr or even the top $19/hr (that was once $28.00/hr or more) does not a fair wage or middle class make. do the math. in the end they will implode as we as consumers lose all purchasing power. and perhaps the CEO’s can give up a few million to pay a fair wage to the workers that make these companies hum, literally. Hasn’t undercover boss taught us anything?

Posted by aj14 | Report as abusive

Information is the most important commodity for an informed workforce. When hiring trends change, workers need
to keep themselves informed because the government isn’t capable of making effective career choices for them. Sooner
or later, economics trumps compassion.

Posted by Psychologist | Report as abusive

The key question is why are economists still being paid?

Posted by MarkRB | Report as abusive

Here is another problem I have. It was only 2 years ago the IPad came out. Now we are up to the IPad 3. What technological advances in the tablet took place over 2 years? All they did was add a 3 to the name. That simple addition will run you another 700 bucks.

Yet, folks are lining up already to buy a brand new IPad 3.

Its silly to me. This country consumes unnecessary stuff at an alarming rate. Remember when things use to last a long time? Washers and dryers lasted 20 years. TV’s lasted 20 years. Everyday household products use to actually work. Laundry detergent, 20 years ago, actually did what it claimed.

How many times have you purchased something and it didn’t work as advertised?

Let me tie this all in. When we started outsourcing jobs things stopped lasting a long time. When we started outsourcing jobs things stopped working as advertised. We have rules and laws in America. Some countries don’t have rules. Our jobs and the products we are using has suffered over the last 30 years.

We need to get back to American made products. Made by Americans.

Posted by SamHarris | Report as abusive