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Job Polarization and the Vanishing Middle Class

Beginning in the 1980s and marked by the introduction of the personal computer, the demand for high-skilled workers grew. Economists proposed that this shift in employment from a lower to a higher skill level was the result of what they called “Skill-Biased Technical Change,” or SBTC, similar to what happened to the steel industry in the U.S during the 1970s.

Subject

However, low-skilled workers also found themselves in demand, something that should not have happened under the SBTC model. What economists were witnessing was not the SBTC model in action but instead a job polarization among workers and employers.

High-skilled workers generally have college degrees, more training, and an ability to excel in jobs that require analytical thinking or creativity. Low-skilled workers, by contrast, have little to no education and are not expected to think analytically or creatively. Medium skilled-workers, lying somewhere in between, have been most impacted by the automation of job functions and tasks completed more efficiently by machines. Why is this?

The answer lies in a distinction between “routine” and “non-routine” work. As it turns out, both high-skilled and low-skilled workers often perform non-routine work or work that cannot be automated. As such, they are in still demand while the need for medium-skilled workers has diminished.

"Job Polarization," or the shift towards high- and low-skill occupations, is a symptom of the decline in “routine” jobs. A 2013 report from the Federal Reserve Bank of Kansas City finds that from 1983 to 2012, high-skilled jobs increased by 11 percent while medium-skilled jobs decreased by 14 percent. This loss and gain cycle was seen across all employment sectors, not just in traditionally middle-class and middle-skill jobs such as manufacturing.

This infographic explores the reasons behind the polarization of employment and the ramifications this process has had for the economy, and if you’re still wondering which career best suits you, take our free career test.

Sources: For a complete list of sources, please view the infographic.

The Federal Reserve Bank of Kansas City, The Vanishing Middle: Job Polarization and Workers’ Response to the Decline in Middle-Skill Jobs, Didem Tuzemen & Jonathan Willis, Economic Review, First Quarter 2013

Job Polarization and the Vanishing Middle Class

Job Polarization and the Vanishing Middle Class
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