The Hollowing-Out of the Workforce

One of the most important trends affecting your job prospects is what is often called the “hollowing-out” of the workforce: High-skill and low-skill occupations continue to grow, but middle-skill occupations are shrinking. This means that if you want to live a middle-class lifestyle (or better), it is increasingly important for you to acquire and maintain a high level of skill. An average level of skill won’t bring decent rewards in the emerging labor market.

Here is a graph I created showing the change in workforce size for occupations at three levels of skill at three points in time, 2000, 2007, and 2011. At each point, you can see the change from the previous year in the percentage of the workforce.

What are the reasons for this trend? Blame automation and offshoring. Many medium-skill occupations consist of routine physical and decision-making tasks that can easily be programmed into a computer and/or robot. I can remember when tall buildings still employed elevator operators. Since then, we’ve seen automation replace human workers who used to route phone calls, take phone messages, drive airport trolleys from one concourse to the next, make travel reservations, format business letters, ring up retail sales, and weld automobile bodies, to name just a few work tasks.

Offshoring has eliminated other jobs consisting of routine physical and decision-making tasks or jobs where the physical proximity of the worker is not needed. The most obvious example is manufacturing. The next time you’re in a big-box store, try to find a manufactured item that was made in the United States. When you’ve had problems using your computer, you may also have encountered a foreign help-desk worker. The highly labor-intensive work of making animations from hand drawings--as opposed to making them from computer images, Pixar-style--is being farmed out to foreign shores. (The next time you watch “The Simpsons,” note the names in the ending credits.) Airplanes can easily be flown to foreign hangars for routine mechanical inspection and repair.

So what jobs resist automation and offshoring? Some involve physical effort that must be done on-site and that involve unpredictable physical settings and nonroutine tasks--unlike an automobile assembly line. Most construction jobs fit this description. So do automobile service jobs. With regard to the latter, note the bifurcation of the workforce into low-skill, low-wage workers, such as those who change your oil at Jiffy Lube, and high-skill, high-wage workers who do the more difficult diagnostic and repair tasks--and who require initial training that takes two to four years, followed by continual training updates as the technology changes. You can observe a similar bifurcation of wages and training requirements in health-care jobs, with home health aides and orderlies at the low end and technicians and professionals at the high end. It’s no accident that job prospects are not increasing as rapidly for licensed practical nurses and for registered nurses with only a two-year degree compared to registered nurses with a four-year degree. Even in our fastest-growing industry, health care, the middle-skill jobs are being hollowed out.

Another category of jobs that resist automation and offshoring are those that require high-level decision-making or people skills. Although the concourse-to-concourse airport trolley is now robotized, the airport van that threads its way through city traffic is still driven by a human (so far). Red-light cameras can detect one form of careless driving without human intervention, but we still need police officers for many other complex decisions about what is legal or illegal behavior. (They also are needed when lawbreakers must be physically arrested.) An automated questionnaire can elicit structured responses from an interviewee, but for employment interviews, businesses still want to use human workers, who can make judgments about which questions do and do not need follow-up and about the interviewee’s body language.

Work that is highly collaborative or creative often resists automation and offshoring. For example, routine computer programming can easily be offshored, but development of a new smartphone app will probably be done by American workers. Locations such as the Silicon Valley allow programmers, computer graphic artists, marketers, electronic engineers, and venture capitalists to come together rapidly for a collaborative project and to shoot ideas back and forth.

Jobs that require a knowledge of American language and culture also resist automation and offshoring. Many companies refuse to offshore their help desks to foreign countries (or at worst locate them in Canada) because customers complain about the difficulty of conversing with foreign workers. A story on the radio program “This American Life” recently revealed that some highly routine newspaper articles--covering real estate transactions or city council meetings, for example--are being written by foreign workers and printed under fake, American-sounding bylines. Nevertheless, most of the news stories you read have been created by American workers. Automation has made it easier to aggregate links to news stories, but when you follow the links, the actual writing has still been done by humans.

So some jobs are relatively secure despite these trends. Robots are not yet capable of taking over everyone’s job, and many American workers cannot be replaced by some low-paid drudge on a foreign shore. What the secure jobs tend to have in common is either a high or a low level of skill. If you are not content to earn the low wages that come from a low-skill job, you’re going to need to acquire and maintain a high level of skill.