Technology vs. the Middle Class

I previously wrote that we live in the age of the great decoupling.   The decoupling of productivity from employment.  The decoupling of wealth from work.  The key to it all is technology.  Technology is racing ahead and leaving more and more people behind.  As symbolized in so many movies, the race against the machines is already here.  Those that learn to race with the machines are winning.  Those that try to race against the machines are being left behind.  Venture capitalist Marc Andreessen is supposed to have said: “The spread of computers and the Internet will put jobs in two categories: People who tell computers what to do, and people who are told by computers what to do.” Only one of these two job categories will be well paid.

Last week, the Opinionator section of the NYT had a piece on “how technology wrecks the middle class”.  It was written by David H. Autor, a professor of economics at MIT and David Dorn, an assistant professor of economics at the Center for Monetary and Financial Studies in Madrid.  They argue that computerization has fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined.  Surprisingly, overall employment rates have largely been unaffected in states and cities undergoing this rapid polarization.  Rather, as employment in routine jobs has ebbed, employment has risen both in high-wage managerial, professional and technical occupations and in low-wage, in-person service occupations.

These academics conclude that computerization is not reducing the quantity of jobs, but rather degrading the quality of jobs for a significant subset of workers.  Demand for highly educated workers who excel in abstract tasks is robust, but the middle of the labor market, where the routine task-intensive jobs lie, is sagging.  Workers without college education therefore concentrate in manual task-intensive jobs — like food services, cleaning and security — which are numerous but offer low wages, precarious job security and few prospects for upward mobility.  This bifurcation of job opportunities has contributed to the historic rise in income inequality.

This marries with some research that I read from March this year which calculated that 5 high tech companies alone – IBM, Intel, Microsoft, Oracle and Qualcomm – have combined 10 000 current openings in the US!  Of course these vacancies are heavily skewed towards STEM type (i.e. science, technology, engineering and math) roles.  As we move forward in this age, it is difficult to overstate the importance of education.

Today’s Atlantic had an article entitled – “When Class Became More Important to a Child’s Education Than Race”. As the US and indeed the wider world celebrates 50 years since MLK famous speech, this piece from Sarah Garland reminds us that the country is far from fulfilling King’s dream that race no longer limit children’s opportunities.  Rather, how much income their parents earn is more and more influential.  According to a 2011 research study by Stanford sociologist Sean Reardon, the test-score gap between the children of the poor (in the 10th percentile of income) and the children of the wealthy (in the 90th percentile) has expanded by as much as 40 percent and is now more than 50 percent larger than the black-white achievement gap—a reversal of the trend 50 years ago. Underprivileged children now languish at achievement levels that are close to four years behind their wealthy peers.
US Taxation Singapore

These days, middle-class children are also falling further behind their affluent peers. The test-score gap between middle-income (the 50th percentile of income) and poor children has remained stagnant; it’s the gap between the top earners and the rest that is growing rapidly. And though more poor and middle-income children are completing college these days, they can’t keep up with the growth in college graduates among the wealthiest families.  “Income has become a much stronger predictor of how well kids do in school,” Reardon says. “Race is about as good a predictor as it was 30 years ago. It’s more that income has gotten more important, not that race has gotten less important.”

I have to confess that I am a bit obsessed with this issue given the critical decisions we’re making with regards to our sons’ education.  For so many parents like myself, it feels like an investment arms race as so much time and money is spent in private education, extra lessons, trips and anything we hope will open their young minds in a good way.  After all, research suggests that new experiences are essential to building children’s vocabularies, and that a large vocabulary is in turn essential for a successful academic career? 

This is quite nerve wrecking as the game seems to evolve into a winner takes all one.


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