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Jacob Bailey conducts assembly on an SUV chassis at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. General Motors Co is raising the stakes on its bet that sales of fuel-thirsty sport utility vehicles will keep driving its global profits as Chinese and other markets sag. GM said on July 14, 2015 that it plans to spend $1.4 billion to modernize the factory in Arlington, Texas, that builds the Cadillac Escalade, Chevrolet Suburban and GMC Yukon sport utility vehicles. It's the largest single investment in a $5.4 billion, three-year plant upgrade program announced earlier this year. Picture taken June 9, 2015. To match Insight GM-SUVS/ REUTERS/Mike Stone	 - GF10000166170

How automation and other forms of IT affect the middle class: Assessing the estimates

Editor's Note:

This paper was prepared for the inaugural conference on “Automation and the Middle Class” for the Brookings Institution, Future of the Middle Class Initiative.

Henry E. Siu

Professor - Vancouver School of Economics, University of British Columbia

Faculty Research Fellow - National Bureau of Economic Research

In the last four decades, the US and other industrialized economies have experienced a pronounced drop in the fraction of the population working in middle-waged jobs. Since employment growth has been weighted toward the upper- and lower-tails of the wage distribution, this phenomenon has become known as job polarization. An important literature demonstrates that this change has meant the loss of job opportunities in certain types of occupations—those that are routine in nature, for which the tasks performed on the job follow a well-defined linear structure or procedural routine. The fact that such occupational tasks are easily automated has led researchers to study the role of recent advances in “automation technologies” in this disappearance of middle-skilled jobs. In this paper, we review the literature regarding polarization and the changing nature of work in the US economy, and discuss its implications for the middle-class.

The goal of the Future of the Middle Class Initiative is to improve the quality of life of America’s middle class and to increase the number of people rising to join its ranks. Through independent, non-partisan analysis and policy development, we seek to advance public understanding of challenges facing the middle class and barriers to upward mobility.

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