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Vanishing Middle Class Jobs

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There's a very good article in The New York Post on the polarization of the job market and the disappearing middle class:

From 1979-2009, there was a nearly 12% drop in the four "middle-skill" occupations: sales, office/administrative workers, production workers, operators. Meanwhile, people in the top 20% of the economy earning $100,000 or more a year, says Peter Francese, demographer at Ogilvy and Mather, "have barely been touched by this recession." They average an unemployment rate between 3% and 4%, the lowest in the nation. The US Bureau of Labor Statistics projects a 14% increase in low-education service jobs between 2008-2018. "The only major occupational category with greater projected growth," Autor writes, "is professional occupations, which are predicted to add 5.2 million jobs, or 17%." These sectors include medicine, law and middle- and upper-management.

Economists seem to acknowledge that middle skill jobs are vaporizing. But so far, they seem to view the situation as static. They express little concern that the "missing middle" is going to relentlessly expand and consume more jobs both at the bottom and the top.

As I wrote previously, I think robots and other forms of automation will eventually become cost-effective even in low-wage occupations. At the same time, both software automation/expert systems and offshoring will be increasingly focused on the higher paying jobs. The result is going to be fewer viable consumers -- and that will drive even more cyclical unemployment.

Eventually, I think we will have to find ways other than job-based income to support the bulk of the population and maintain consumption. I suggest a possible scenario for this in my book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future . In the meantime, it looks like we are going to do exactly the opposite. Millions of people will see their unemployment benefits expire in the coming year -- many having used up an entire 99 weeks -- and a Republican House suggests it may be impossible to even renew the existing extensions.

Martin Ford is the author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (available from Amazon or as a FREE PDF download) and has a blog at econfuture.wordpress.com.