Technology and the fall of the middle class.

Don't Blame "Technology" for the Fall of the Middle Class

Don't Blame "Technology" for the Fall of the Middle Class

A blog about business and economics.
Aug. 26 2013 10:02 AM

Don't Blame "Technology" for the Fall of the Middle Class

Delicious, well-made tiramisu means better jobs than you get working fast food.

Photo by Marco Secchi/Getty Images

David Autor and David Dorn have a nice piece in the New York Times laying out their theory of how technological change is hollowing out the middle class by "polarizing" employment opportunities between low-wage and high-wage occupations, leaving medium-skilled low-wage work behind. I think this is a great line of research they have, and the polarization in earnings opportunities they note is remarkable and important.

But I'm deeply uncomfortable with the decision to classify what's largely a political trend as a technological one. So, for example, they say: "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." Speaking again of cooking food, they write: "These workers can’t be replaced by robots, but their skills are not scarce, so they usually make low wages." It is true that there's been a lot of employment growth in food-service industries in part because food-service work is not that amenable to automation. It is also true that food-service workers tend to make low wages. Food-service workers would earn higher wages if the minimum wage were a bit higher, but I think there's good reason to believe that if we made the minimum wage much higher, you'd see a loss of job opportunities.

And yet are these low wages really about technology? I doubt it.

According to the Bureau of Labor Statistics, back in 2010 the average hourly wage for a fast-food cook was $8.70. That's a very low-wage job. But the average restaurant cook makes 22 percent more than that. The average private household cook makes a 40 percent wage premium over a fast-food cook. And of course there are also career ladders here. Chefs and head cooks earn more than double what regular cooks make. And here's a really curious fact: The BLS forecast is that the 2010 to 2020 period will see a decline in the number of chefs and head cooks employed in the United States, and "[t]he majority of job openings will stem from the need to replace workers who leave the occupation."

Does technology explain why we're evolving to have more cooks and fewer travel agents? Absolutely. But to understand the wage structure of the United States, you need to understand why so much of the job mix within the cooking field is tilted toward the super-low-wage fast-food sector rather than toward more lucrative full-service restaurants (or even private household chefs). One part of the answer is that American cities tend to be weirdly averse to handing out liquor licenses, and without access to liquor licenses, it can be hard to make the full-service restaurant business model work. But a larger part of the answer, it seems to me, is that if you ask the typical patron of a fast-food joint why he or she doesn't eat more meals in nicer restaurants with higher-paid staff and more training and career ladders, the answer will be: "Those restaurants are more expensive." But if people had more money, people would demand more high-end leisure activities, including meals at nice restaurants. And nice restaurants are better job engines than fast-food restaurants. Not amazing job engines—a 22 percent wage hike over what fast-food cooks earn is still a low-wage job. But it's not nothing. Nobody sneers at a 22 percent raise. And whatever it is that's stopping people from getting the chance at that raise, it isn't that robots have made sit-down restaurant jobs obsolete. It's a full-spectrum cycle of income stagnation, where households don't have the money to buy nice services and therefore people can't get jobs providing nice services.