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.
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.
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