Visiting the Labor Market

by Elaine Schwartz    •    Mar 9, 2011    •    570 Views

We might need to adjust how we think about the labor market. Yes, we know that the unemployment rate for February was 8.9% and that 13.7 million people are jobless.  However, to encourage thoughts about the future, an M.I.T. economist tells us more.

First, let’s slice the labor force into thirds:

1) High-skill, high wage workers which include “high education professional, technical, and managerial occupations.”

2) Middle-skill, middle wage workers that are “white-collar clerical, administrative and sales jobs occupations and blue-collar production, craft, and operative occupations.”

3) Low-skill, low wage workers which take us to “low-education food service, personal care, and protective service occupations.”

According to M.I.T.’s David Autor, #2, the middle, has experienced diminishing opportunities during the past 2 decades while the top and the bottom of the labor market have had expanding job potential. Most important, though, are the two challenges cited in Dr. Autor’s paper. 1) Skilled workers are in greatest demand but educational levels have not kept up with our increased need for them. 2) Because we have expanding job opportunities at the top and the bottom of the labor market, we have greater polarization–a greater divide about which he is concerned.

The basic question for us is trajectory. Do we approve of the direction in which the labor market is heading? What are the policy implications for wages, educational attainment, and employment opportunities?

The Economic Lesson

To be defined as a member of the labor force, an individual is:
-16 years old or older
-unemployed and looking for a paying job


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