Are jobs in the middle of the education and earnings distributions really disappearing, as some research and popular reports suggest? Or will the middle of the labor market remain robust? And what does all of this mean for education and training policy?
Over the 1990s, gains in jobs and wages rose more rapidly at the top and bottom of the earnings distribution than in the middle, in part because computers more easily replace jobs in the middle of the market than at the top (where abstract reasoning is required) or the bottom (where social interactions are needed). David Autor of MIT and others have warned of a growing “polarization” between workers with high and low earnings, conveying popular images of a “dumbbell” labor market, or an “hourglass economy.”
Given this picture of the labor market, some observers suggest that policy should focus almost exclusively on enhancing cognitive skills and the attainment of college degrees while deemphasizing occupational training for middle-skill jobs. However, if the trends towards labor market polarization are exaggerated and if the demand remains robust for workers to fill jobs requiring less than a B.A. degree, then education and training policies should have a broader focus and should encourage occupational training that targets middle skill jobs as well.
In this paper, we analyze the likely trends in supply and demand for workers with different levels of education and training over the next decade and beyond. We present data on the current distributions of jobs and wages and how these have evolved in the recent past. Next, we draw on data and projections from the Bureau of Labor Statistics to forecast the mix of occupations demanded in the coming decades. We compare these demand-side projections with forecasts of the supply of workers with varying levels of education and training.
Overall, we conclude that the demand for middle-skill workers will remain quite robust relative to its supply, especially in key sectors of the economy. Accordingly, accommodating these demands will require increased U.S. investment in high-quality education and training in the middle as well as the top of the skill distribution. Many current and future low-income workers are likely to take advantage of the added training for middle-skill jobs and thereby raise their earnings and their family’s living standards. If such investments are made on behalf of those who are currently poor, this could also lead to higher earnings and lower poverty rates for those currently at the bottom of that distribution.