Economists are of many minds on the question of whether government policies can reverse negative trends.
David Autor, an economist at M.I.T., argued in an email to The Times that “we’re not going to rapidly reverse the tide with any conceivable policy that a mainstream political party or even a mainstream economist would adopt.” Autor believes that “middle-skill jobs,” the source of employment crucial to lessening inequality and enhancing economic and social mobility, “are not,” as some argue, “slated to disappear.”
In a paper, “The Task Approach to Labor Markets: An Overview,” Autor writes:
To take one prominent example, medical paraprofessional positions—radiology technicians, phlebotomists, nurse technicians, etc.—are a numerically significant and rapidly growing category of relatively well-remunerated, middle skill occupations. While these para-professions do not require a college degree, they do demand one to two years of post-secondary vocational training.
The middle-skill jobs that are likely to grow, Autor says,
will combine routine technical tasks with the set of non-routine tasks in which workers hold comparative advantage—interpersonal interaction, flexibility, adaptability and problem solving. Medical para-professions are one leading example of this virtuous combination, but this example is not a singularity. This broad description also fits numerous skilled trade and repair occupations—plumbers, builders, electricians, HVAC installers, automotive technicians—marketing occupations, and even modern clerical occupations that provide coordination and decision-making functions rather than simply typing and filing.
Along similar lines, Lawrence Katz , an economist at Harvard, wrote in response to an emailed inquiry from The Times:
This is not the first wave of (wage) polarization (resulting from) technological change. Economic history suggests educational and institutional advances can allow for balanced prosperity in the face of such changes in labor demand. Of course, it is less clear today whether economic history is a better guide to the future than science fiction stories about robots and new technologies that range from Star Trek positive to a world of dystopian futures. I would probably bet on economic history but it will require new educational advances on the scale of inventing the modern high school in the early 20th century, providing universal access without tuition and rethinking labor market institutions to support “high road” strategies by firms.
Adaptation to market pressures is a common theme today among economists. Michael Spence, an economist at N.Y.U. who won a Nobel Prize in 2001, recently wrote in a Project Syndicate column:
In fact, it is possible that we are entering a period in which major adaptations in employment models, work weeks, contract labor, minimum wages, and the delivery of essential public services will be needed in order to maintain social cohesion and uphold the core values of equity and intergenerational mobility.
In response to a follow-up inquiry, Spence wrote that he is
pessimistic and uncertain in the short term because the adaptations are large. Public sector investment is likely to be lower than it should for a considerable period because of fiscal constraints and problems. Longer term, I think values will shift, people will invest in being better prepared for the new work environment.
Kenneth Rogoff, also an economist at Harvard, places his faith in the restorative power of market forces, acknowledging that
until now, the relentless march of technology and globalization has played out hugely in favor of high-skilled labor, helping to fuel record-high levels of income and wealth inequality around the world.
Rogoff goes on to argue, however, that technology may work in the future to reduce income inequality, especially in the field of education:
Surely, higher education will eventually be hit by the same kind of sweeping wave of technology that has flattened the automobile and media industries, among others. If the commoditization of education eventually extends to at least lower-level college courses, the impact on income inequality could be profound.
In addition, Rogoff writes:
Many commentators seem to believe that the growing gap between rich and poor is an inevitable byproduct of increasing globalization and technology. In their view, governments will need to intervene radically in markets to restore social balance. I disagree. Yes, we need genuinely progressive tax systems, respect for workers’ rights, and generous aid policies on the part of rich countries. But the past is not necessarily prologue: given the remarkable flexibility of market forces, it would be foolish, if not dangerous, to infer rising inequality in relative incomes in the coming decades by extrapolating from recent trends.
Changes forced by market pressures, according to Rogoff, will not be easy to take:
Many (if not necessarily all) central banks will eventually figure out how to generate higher inflation expectations. They will be driven to tolerate higher inflation as a means of forcing investors [to put their money] into real assets, to accelerate deleveraging, and as a mechanism for facilitating downward adjustment in real wages and home prices.
The reduction in the number of mid-range jobs — a reduction that restricts mobility and increases inequality – results from factors now deeply ingrained in the marketplace which do not lend themselves to obvious remediation.
Chosen excerpts by Job Market Monitor