Worried about outsourcing? Well, you shouldn't be, at least according to the conventional wisdom; the economy will certainly create better jobs as we climb higher up the skills ladder.
Consider, for instance, Jagdish Bhagwati, a leading free-trade advocate and Columbia University professor, who offers these comforting words: "The fact is, when jobs disappear in America, it is usually because technical change has destroyed them, not because they have gone anywhere. In the end, Americans' increasing dependence on an ever-widening array of technology will create a flood of high-paying jobs."
To follow Bhagwati and others in their bold leap of faith, however, we would have to ignore some exceedingly gloomy facts all around us. The cheerful prognosis flies in the face of 25 years of eroded job quality and poor wage growth among non-college-educated workers (nearly three-fourths of the workforce), not to mention the job problems that have been facing white-collar workers since the early 1990s.
Wages and good jobs have declined dramatically since 1979 -- especially for men, for those without a college degree, and for young workers. From 1979 to 1995, wages fell 8 percent among high-school educated males and 25 percent for young (ages 19-23) high school-educated men. The median male wage fell 11 percent. Yet the nation's productivity rose by 27 percent over the same period. Working-class men clearly took it on the chin in the '80s and early '90s.
The clear exception was a brief period, from 1995 to 2000, when wages improved considerably across the board as a result of low unemployment -- down to 4 percent in 2000 -- and high productivity. The current downturn (starting in March 2001) and the manufacturing debacle (beginning in 1998), however, squelched all of that growing prosperity, as high unemployment and poor job creation hammered wages and benefit coverage. Unfortunately, the good times of the late '90s are unlikely to return anytime soon because there's been very little commitment to driving unemployment back down to 4 percent, despite strong productivity growth.
It is less well known that the wages of white-collar workers and college graduates have faltered as well. From 1979 to 1995, while male wages generally tumbled, the wages of male college graduates did rise, but only by 3 percent, and they actually fell 1 percent over the 1989-95 period. Yet these were the "winners" in the economy.
Young college graduates' wage and employment prospects are a good bellwether of job quality among professional and white-collar workers. White-collar downsizing buffeted job opportunities from 1989 to 1995, and, accordingly, the wages paid to new college graduates (in their first five years of work) fell 7 percent for men and 2 percent for women. The 1995-2000 boom offset these losses with gains of 20 percent for recent male and 12 percent for recent female college graduates.
And now? The wages for young college grads have resumed their decline, falling 3.5 percent for men and 1 percent for women since 2000. This is really no surprise, as the employment problems facing college graduates in this recession have been more severe than ever before. The share of the college-educated population with a job fell from 87.4 percent to 84.3 percent, a drop of 3.1 percent, from 2000 to 2003. This shrunken employment rate reflects a loss of 1.6 million jobs among college graduates. Naturally, this has produced a huge jump in long-term unemployment among college grads, up 300 percent since 2000. Meanwhile, long-term joblessness rose only half as quickly (150 percent) for those with a high-school degree (or less).
As wages go, so go benefits. Among those who rank among the highest 40 percent in terms of earned wages, the share whose employers provided health insurance fell 7 percent, from 1979 to 2000 from roughly 85 percent to 78 percent. The coverage of employer-provided pensions similarly eroded, and the shift from fixed-benefit plans to defined-contribution plans such as IRAs has diminished the overall quality of plans.
So you're probably wondering, is there a point to all this gloom? Just this: Contrary to the almost boundless faith of free traders like Bhagwati, there is no natural law that guarantees good jobs for better-educated workers. Hope is a fine thing. But the experience of the last decade or shows that economic progress for college graduates and white-collar workers is not guaranteed. In a global economy, degreed workers are not as different from blue-collar workers as they might think.
Lawrence Mishel is the president of the Economic Policy Institute (EPI). He and Jared Bernstein, a senior economist at the EPI, write a biweekly column on economic issues for the online edition of the Prospect.
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