Frank Levy & Richard J. Murnane
02/01/2005
With his second term under way, President Bush now faces a problem that bubbled beneath the campaign’s surface: the growing mismatch between U.S. workers and U.S. jobs. Employment is growing, but work that can be done more cheaply by a machine or by offshore workers continues to disappear. The jobs that remain increasingly involve face-to-face communication with people in areas ranging from management and brainstorming to sales, and face-to-face work with objects that are rooted here: the mechanic who repairs your car, the electrician who wires your office. Call it the “face-to-face” economy.
Job shifts over the past few years give a preview of what is coming. Since September 2000, job growth as measured by the Bureau of Labor Statistics has been concentrated in three areas: professional and managerial jobs (up 2.1 million), service jobs (up 2 million) and construction jobs (up 900,000). Clearly these are three very different kinds of work, but what unites these job categories is the face-to-face nature of the work.
Over this same period, the heaviest job losses have come in manufacturing production work and clerical work; close to 3 million jobs have been lost. Many of these jobs involve repetitive tasks that can be programmed into a computer or completed by foreign workers; with improvements in telecommunications, they can be done anywhere. Historically in the United States, high school graduates who had not gone on to college took many of these positions.
These gains and losses serve to hollow out the nation’s occupational distribution. Higher-wage and low-wage jobs grow while jobs in the lower middle decline. The lost production and clerical jobs averaged about $25,000 per year, $5,000 more than the service jobs that are replacing them. What this means is that the face-to-face economy is a good place for skilled labor—the white collar worker with advanced education, or the blue collar craftsman—but for people without specific skills, the economy offers less and less. Frank Levy, a professor at MIT, and Richard J. Murnane, a professor at
Harvard, are coauthors of The New Division of Labor: How Computers Are Creating
the Next Job Market.
If these job trends were to continue through the year 2020, 40 to 45 percent of the labor force would need a college education or its equivalent. Achieving that figure would require a large increase in the number of well-educated workers, but that is not on the horizon. The youngest adults in the year 2025 have already been born, so we know with some precision (immigration is the uncertainty) that the labor force will only increase modestly. We also know that while a rising number of young people now begin college, many drop out, and the fraction of new workers who have completed college is growing very slowly. Putting these facts together, Harvard economist David Ellwood estimates that, under optimistic assumptions, no more than 35 percent of the 2022 workforce will be college graduates.
Consequently, Bush and his successors will face three increasingly pressing domestic problems. The first is an increase in the number of low-wage workers, as too many people without college-level skills chase too few jobs. Barbara Erenreich describes these jobs in Nickel and Dimed as positions that people take despite low pay because they lack alternatives. The second problem is a growing number of families without health insurance. As medicine continues to expand its breakthroughs, the cost of health insurance will increase. Rising health insurance costs will cause more employers to drop coverage, particularly for low-wage workers.
The third problem involves the continued slow growth of the college-educated workforce. In a face-to-face economy, a slowdown in college graduates has broad consequences. Until now, the shortfall in skilled workers has hurt individuals but has not noticeably slowed economic growth. At some point, the mismatch will become a drag as new technologies go begging for a lack of people skilled enough to use them.
There are no quick fixes here. Technology and globalization move quickly, while demographics change slowly. Bush did not talk about the face-to-face economy during the campaign, but he will be dealing with its ramifications throughout his second term.