Technology and Inequality
A few days ago, Sebastian Mallaby chimed in
on the inequality debate with the claim that better education would solve our most pressing problems. The real trouble with the American job market, according to Mallaby, is that rapid technological change has left too many workers behind, unable to compete in the modern world. What we really need are better schools that can get those lower-class workers up to speed; then
everything would be peachy, or at least drastically better.
It's a nice thought, but as I wrote over at Mojo, it's probably bunk. Now it is
true that workers with less education have fared much, much more poorly over the past few decades. According to the Economic Policy Institute's ever-useful The State of Working America
, from 1979-2000 real hourly wages declined by 1 percent for those with less than a high school education and 0.1 percent for those with only a high school diploma. (Wages climbed, albeit grudgingly, for those with some college, a college degree, or an advanced degree.) So the picture Mallaby's painting here seems plausible enough on the surface; it really does seem like there's a vast uneducated underclass that is being left behind by the modern, high-tech world, and that's why inequality is increasing.
But there are other, better reasons to believe that the education/technology explanation doesn't tell the whole story. For one, according to the EPI book, the timing and rate of technological innovation don't quite line up with the rise and pace of income inequality. The late 1990s are a special aberration here: remember that we had a writhing, thrashing technology boom overtaking the nation. But that was precisely the period of time when hourly wages were finally rising for the uneducated, and wage inequality was decreasing
between groups of different education and experience. Doesn't quite jibe with Mallaby's story, eh? Meanwhile, according to EPI, over half of the growth in income inequality has occurred within
groups of roughly similar education and experience. Many educated workers have been losing out in the new economy. How would more schooling alone solve that problem?
Meanwhile, high-tech, high-skilled jobs are not
the only ones being created en masse by the "new" economy: the demand for low-wage, de-skilled jobs is still astoundingly high. Indeed, a study by economists Frank Levy and Richard Murnane has noted that two types of companies are becoming prominent in the new economy: "Some firms may choose to compete for larger shares of standardized products produced by low wage workers carrying out relatively simple tasks. Other firms may choose to tailor production to a high value-added, high quality product at the upper end of the market." Mallaby's technology story would make more sense if only the second type of firm existed in America. But it doesn't.
Indeed, of the occupations expected to add the most jobs over the next decade, the overwhelming majority
don't require a college degree: a list that includes cashiers, salespersons, truck drivers, receptionists, food preparers, and office clerks. And there's no reason to think these jobs will disappear anytime soon—who's going to serve coffee at Starbucks? cook our food? mop our floors?—at least until we invent suitable robots to do the tasks. But until then, though, there's no reason to think that improving education will automatically help this particular set of workers, whose wages have been stagnating or declining. Something else needs to be done, whether that's strengthening unions, boosting the minimum wage, pursuing full employment policies, or some other measures. Education's a laudable goal, and I'm all for it, but education alone won't fix the inequality problem in the United States today.