Average is Still Over

by on June 7, 2014 at 6:20 am in Current Affairs, Economics, Education | Permalink

Unemployment fell from 3.3 to 3.2 percent for people with a bachelor’s degree or more, and from 5.7 to 5.5 percent for those with some college. But it actually rose from 6.3 to 6.5 percent for people with only a high school diploma, and from 8.9 to 9.1 percent for those without one.

In other words, our polarized labor market isn’t getting any less so. The Cleveland Fed points out that routine jobs disappeared during the Great Recession, and haven’t come back during the not-so-great-recovery — which partly explains why our economic upswing, such as it is, has been much less dramatic for the least educated.

That is Matt O’Brien, there is more here.

ummm June 7, 2014 at 7:37 am

Raising the minimum will make this even worse. The democrats’ economic solution will put more people out of work, like Obamacare has already done.

In the smartist era, we have a situation where average is over. Many young adults with degrees are doing work that just a generation ago was typically relegated to high-school dropouts. This seems to be a permanent trend in that a surging stock market and steady economic growth isn’t creating enough high paying jobs. To get a good paying job, you have to have superior credentials and or provide exceptional value.

john_smith June 7, 2014 at 12:53 pm

Terrible post, while I agree with the general conclusion, the manner in which it is presented makes you see like a self-indulgent asshole.

The Other Jim June 7, 2014 at 4:00 pm

Not you, though. You sound like a complete sweetie.

And if anyone read those numbers and said “This is why we need to send more people to college!”…. seek immediate help.

Durkheim Weber June 7, 2014 at 4:01 pm

+1!

mulp June 7, 2014 at 8:21 pm

Abosolutely raising the minimum wage will kill jobs because Bill Gates will stop buying coffee ay Dunkin Donuts if the price of coffee goes up to $1.10 to pay workers $15 per hour – he will go instead to Starbucks and pay $6.10 for a mocha frappo macho because no way will he pay a 10% higher price.

And all those minimum wage workers will use the entire $15 per hour to inflate stock prices instead of only spending $7.25 to drive stock prices to record highs, because minimum wage workers never spend their wage income to buy goods and services and drive up GDP, while Bill Gates borrows a billion dollars everytime his stock portfolio increases by $900 million and buys another 7 mansions, 17 personal jets, one million Big Macs.

Or so goes the free lunch economic theory of labor costs.

Every increase in labor cost means a direct reduction in real income and that slashes consumption and thus cuts GDP.

Workers are never consumers but are black holes that such wealth out of the economy.

The way to create wealth is to slash labor costs by killing workers and lowering their pay so that profits soar and the wealth effect flows cash out of the white holes into consumer pockets and they spend spend spend.

Making the 1% twice as rich will drive up GDP by 200% from all the consumer demand.

Paying workers twice as much will drive GDP to zero because all the wealth will disappear and consumer demand will fall to zero.

Abe Froman June 7, 2014 at 8:08 am

This sounds like evidence for the Casey Mulligan theory of the Great Recession.

~FR June 7, 2014 at 5:11 pm

+1. What if it isn’t ‘Average Is Over’ but rather ‘Average Is Outlawed/Forbidden’?

jamesoswald June 7, 2014 at 8:12 am
HR June 7, 2014 at 8:15 am

You said in an April 6, 2014 NYT column that “There is also a special problem for some young men, namely those with especially restless temperaments. They aren’t always well-suited to the new class of service jobs, like greeting customers or taking care of the aged, which require much discipline or sometimes even a subordination of will.” Lack of discipline seemed to me to be part of the problem in the April 5 piece “Dad’s Resume” http://www.washingtonpost.com/lifestyle/style/the-recovery-puzzle-a-new-factory-in-ohio-struggles-to-match-jobs-to-job-seekers/2014/04/05/098d53ec-b44e-11e3-8cb6-284052554d74_story.html. College seems to serve as a marker for discipline. Is there an institution that can serve this role for labor, perhaps the way guild membership did years ago?

ummm June 7, 2014 at 8:23 am

being unemployed will force these young people to adapt to be have better temperaments. It’s not a hard skill .

HR June 7, 2014 at 8:43 am

When in human history has “being unemployed” forced young people to become more disciplined or adopt more productive temperaments?

ummm June 7, 2014 at 1:03 pm

One can argue this is the most cut-throat job market in history. Keep reading articles and seeing videos about how bad the labor market still is. If the growth is in service and healthcare, good people skills will be necessary

HR June 7, 2014 at 1:46 pm

In other words, you think no positive action for training is required or workable. Your position is the common one; I am challenging it.

Jonfraz June 7, 2014 at 8:52 pm

Very recent history maybe (post WWII). But claiming that people were never in fiercer competition than in this era is laughable.

jerseycityjoan June 8, 2014 at 12:15 am

We have an certain heretofore untameable segment of our male population (and NO, I am not using “untameable” as a codeword for minorities). Look at Appalachia. Millions of white males through generations have refused to become what you assume they’d have to.

As conditions worsen for the majority of US citizens who are not exceptionally talented or bright, certainly the possibility for continued passivity and even greater conformity by many or even most men to what the elite wants is possible.

However, more pressure can also lead to more rebellion — and more rebels.

Capitalists can be their own worst enemy. The pervasive and constant social unrest and violence on the streets that happens in other countries (and has happened here too, but not for many years) can happen here.

Socially Extinct June 7, 2014 at 10:58 am

Jail and the military serve as markers for discipline also.

dan in philly June 7, 2014 at 8:25 am

I would argue in such times, where trades quickly become commoditized and few can predict the next need, the an education in the arts once called liberal is more important than ever. Fortunately, it is quite easy and accessable to anyone with access online, or even with a library card.

Michael June 7, 2014 at 8:38 am

Yes, you’re right–but monetization is a problem. We’re not used to paying for content–not to the amount to provide a living wage to more than a very select few.

Bill June 7, 2014 at 8:27 am

This has been happening, not just since the Great Recession, but for 20 years and more earlier:

According to the Fed paper:

“Job polarization has indeed been happening over the past several decades. Occupations that involve predominantly routine tasks have seen their share of overall employment fall since the late 1970s. In 1976 routine occupations constituted almost two-thirds of aggregate employment but by the end of 2013 their share had declined to about 50 percent. On the other hand, occupations that involve predominantly abstract tasks have gained ground, increasing their share from about 28 percent to 40 percent over the same period. Occupations dominated by manual tasks have always stayed below 10 percent, though their share of total employment varied between 7 percent and 8 percent over the same period. These occupations perform tasks that are most likely harder to automate or offshore, such as housemaids, construction workers, hairdressers, and so on.”

A Definite Beta Guy June 7, 2014 at 10:31 am

Sorry, some random thoughts. How does “Average is Over” factor in the theoretical post-2000 drop in cognitive demand? That paper hypothesized that there the cognitive tasks in part served as a substitute for technological and capital stock, and that an expectation of technological diffusion required a surge in cognitive demands to ramp companies up to the next level, that was in turn turned down when firms built their capital. This would imply that firms do NOT expect a further increase in the technological frontier.

This means that we aren’t living in Average is Over, we are living in the pre-industrial Malthusian Economy described in “A Farewell to Alms.” Firms don’t expect Average is Over, IE they don’t expect any new technological innovation, otherwise they would be ramping up to take advantage of it. Rather they are now financial rentiers living on a huge stock of financial capital instead of the feudal-based land capital. Same concept.

This does not seem to factor in the huge off-shoring boom, though, because if this was a global phenomenon, then China et al would be just as screwed as the rest of us. So what gives?

My initial thought would be an inability to actually leverage ourselves in international markets and take full advantage of all our opportunities, but that certainly does not show up in export figures, which grew briskly throughout the 2000 period. So we can clearly sell stuff, at least.

Marie June 7, 2014 at 1:21 pm

” Rather they are now financial rentiers living on a huge stock of financial capital”

That seems very on target.

8 June 7, 2014 at 1:03 pm

Of the 3 billion people who came into the global economy in the past couple of decades, a heckuva lot more of them can compete with high school dropouts in America than can compete with college graduates.

mulp June 7, 2014 at 9:15 pm

But they can’t compete for jobs in the USA unless they lend half their lower wages to Americans so Americans can afford to buy their low cost goods, because even low wage workers in the USA can’t produce anything cheap enough to sell to the 3 billion to balance the cost of all the imports.

Raising the minimum wage in the USA will force low wage workers to loan USA consumers even more money to kill jobs in the USA – ie, the low wage worker cutting Bill Gates’ grass will buy a whole lot more from Asia because he earns more, so because Gates can’t hike the price of software without triggering higher rates of piracy, he needs to sell cheap, so to avoid a change in exchange rate that effectively drives up Asian wages a lot, Asians must flow money into the USA to pay for buying more stuff from Asia, cutting the profits of Bill Gates and Monsanto who demand low labor costs to reap high profit margins on their monopolies.

Marie June 7, 2014 at 1:17 pm

I’m sure I’m contrarian, but I’d like this broken down differently. Correlation, cause, all that.

The straightforward explanation does, indeed, seem to be that smarter or at least more educated folks compete better in today’s more advanced free market economy.

But I’d like to see what those jobs are. I don’t think we’re looking at smart people getting jobs on the space station while dumb or lazy people who used to be able to dig ditches are out of luck because there aren’t any more ditches.

It seems to me we have a huge increase in bureaucratic jobs, and that those jobs almost always require a college degree, so the folks who get college degrees are going to have an easier time finding a place in our modern economy that is very top heavy with government and corporate bureaucracy.

This is a problem, because top heavy things fall down, and an economy built on a lot of people making a lot of money without producing much is shakier than an economy built on a lot of people making a little money not producing much.

But it seems far too self-serving to decide that the problem with the economy is dumb or lazy people are just SOL, and the only solution we need to seek is how to keep those folks appeased while we live our utopian life. I think maybe it’s a little bit more the same old story, an elite doing some good work (management, organization) while the bulk of the population does the lifting (digging the canals), except now we’ve moved so many people into category one that we’re likely to turn on the taps soon and find there’s nothing there.

Marie June 7, 2014 at 1:20 pm

But I read a lot of Douglas Adams as a teen.

Bill June 7, 2014 at 1:31 pm

I think you have a point about changes in job classifications.

It might be interesting, for example, to look at the change in education requirements for policemen,oops, police persons, over time, for example, and whether management positions at the local McDonalds are held by persons with at least a few years of college.

Marie June 7, 2014 at 1:57 pm

My dad had a friend who was a Marine officer without a college degree (later got one, but didn’t start with one). Soon after, that became unthinkable. Also unthinkable a Marine enlisted without high school degree.

Which was sad to me, because just sentimentally if you can’t become a Marine using nothing but grit, what is the world coming to?

ummm June 7, 2014 at 2:16 pm

we have a huge increase in bureaucratic jobs

Hmm, but the stats show govt. employment is well-off the highs :

http://2.bp.blogspot.com/-9CTtSZnWwvw/U5HCeeETmUI/AAAAAAAAfTY/TkVjIYqjzb0/s1600/StateLocalMay2014.jpg

Marie June 7, 2014 at 2:55 pm

Well, this might look like (or be) ignoring the facts in order to stick with my case, but:

1. Is that a decrease in government employees (not by a ton, either, really, 19 million instead of 20?) or a shift to working with feds or with corporate bureaucracies?

2. What do the jobs look like in that clumping? I’m seeing a lot less clearing of snow and filling of potholes but I’m not in a position to notice if there are fewer folks in cubicles. There are some government jobs that are functional and not managerial or informational or administrative or etc. There do seem to be less people in those — emptying the trash cans at the parks, etc.

Still, since we’re talking about a continuing trend rather than a one time snapshot, I suppose seeing the line go down does argue against my POV.

mulp June 7, 2014 at 9:24 pm

Emptying trash bins is not national defense. Removing trash bins is national defense.

Spying on every American as if they are terrorists requires you have a top secret security clearance, requiring a lot of technocrats expert at watching the watchers watching the watchers.

Providing a safe and clean park for kids to play in is 1) not national defense, and 2) anti-capitalism because kids need to be watching TV to see the ads to promote consumption of junk toys and junk food to boost the profits of Toys-r-us who imports junk toys from Asia and Monsanto and ADM who engineer the factory made junk food.

Marie June 7, 2014 at 9:59 pm

You can argue for or against employing people to maintain public parks, but it’s hard to argue that someone who goes around emptying trash bins at parks is a bureaucrat. It may not be a job we want to fund (or it may be) but it’s not a bureaucratic job.

joan June 7, 2014 at 6:42 pm

Most state and local government employees are teachers. police, and other law enforcement not bureaucrats but corporations also have bureaucratic jobs

Marie June 7, 2014 at 7:02 pm

There are a lot of folks in education that are administrative. I don’t know for law enforcement, but I’d be pretty surprised if it weren’t the same. Yes, I do count many corporate jobs as bureaucratic, it’s definitely not a synonym for public worker.

I don’t know of anyone who owns his own business directly serving the public that I’d call bureaucratic, though. Sometimes they have to have a bureaucratic component to their work, often for the purposes of government reporting, and maybe attorney’s in practice are an exception due to the nature of their work. But I’m a one note Nelly.

Jonfraz June 7, 2014 at 8:57 pm

There are businesses that perform as vendors for bureaucratic functions for larger forms, i.e,., outsourced HR functions.

Marie June 7, 2014 at 9:03 pm

@Jonfraz,
You’re right, I way oversimplify.

Jan June 7, 2014 at 3:37 pm

If by “bureaucratic jobs” you generally mean office jobs, be it business analysts, health researchers, administrative work, etc., then yeah, I would agree.

Of course this trend is not really true for government jobs in particular, as umm points out. Jobs are increasingly in the service sector and though what those jobs produce is often less tangible than what people made in the past, it does not mean what they do is of low utility. This may even be true of the financial services sector.

Marie June 7, 2014 at 6:59 pm

Yes, the definition of bureaucrat is up for grabs, and normally comes down to “what that other guy is, not me.” I’d not like to sit and tally how many of my jobs have been bureaucratic in my life!

But I’d say service jobs (or education and law enforcement jobs, a la above) can certainly also be bureaucratic.

Our library is small, and the workers have generally checked out books to people and then re-shelved them. Last week I went in for a program and got two sheets of policy from them — things like “don’t come here drunk” written in HR language. Someone wrote that, someone printed it, probably someone researched what to put on it and probably several people went to committee meetings on it, they may have vetted it past an attorney. Most importantly, some person (or several) made the decision to start printing policy handouts and distributing them to patrons. I don’t know the proportion of hours spent by folks at our library on this bureaucratic stuff vs. the active service, but I’d guess they’d all consider themselves in public service or some similar phrasing.

Even bureaucracy has it’s place, but if it’s not a small place you have trouble. In 1950s libraries, did they have policy on things like ‘If you leave the library with your five year old still there and he starts crying, we’ll try to find you and tell you not to do that’? I don’t know if the local library had fewer workers then or if we have had a switch so that the 3 women that used to help people navigate the card catalog have turned into 1 woman pointing at the computer catalog while 2 others are in a back office writing HR handouts, but I think either situation could probably explain the original stats without the original stats meaning that there’s just no place for folks without a bachelor’s in our economy because we are so advanced. Unless by advanced you mean bureaucratic.

Jan June 8, 2014 at 8:44 am

I don’t know if little old ladies and committees spending time deciding and communicating library policy is a new phenomenon, but the “legalificaiton” of every decision certainly seems to be. I am quite certain that my grandparents never had to sign a statement declaring all non-profit boards their spouse served on or go through a 6-month review before they could finalize an agreement with a contractor, both of which are pretty typical examples of how much influence lawyers wield over daily operations at my workplace.

Marie June 8, 2014 at 4:53 pm

Yes, OLC (Old Lady Committees) are likely timeless! But were they always paid? Were they full of people who had to have a BA to apply for a job on the OLC. . . .it brings up the possibility that jobs that were previously voluntary (either because they were in the realm of public service or because they weren’t tangibly useful enough to demand pay) have now become paid, so that the loss of employment for college educated Americans has been mitigated by the increase in jobs we now pay people to do, when they used to do them as part of citizenship ideals.

How does bureaucracy and law intersect? I’ll shut up on that since I teach my kids that the only bigotry I’ll allow in them is that against lawyers and the French. But your examples certainly don’t change my mind. Seems like the proliferation of law is indirectly proportionate to the strength of the rule of law.

Marie June 10, 2014 at 8:34 am

Too late to add, but this infographic says there are 25 million meetings a day in the U.S., and that the time spent on meetings has increased every year since 2008 (I’m guessing no one measured it before that?).

http://www.mediabistro.com/galleycat/the-ugly-truth-about-meetings-infographic_b86631

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