Tuesday, March 26, 2013

De-Skilling of College Educated Workers


Majia here: Interesting article in the Wall Street Journal about a new thesis on workforce changes. Some economists have concluded (as previously recognized in economic sociology), that de-skilling is occurring at rapid rate, even among professional workers:

  “high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers

  This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together” (from Beaudry et al here)

Majia here: The Wall Street Journal describes the report, which is the source of this de-skilling thesis, in an article by B. Casselman (2013, March 26) ‘College Grads May be Stuck in Low-Skill Jobs’ The Wall Street Journal, A5:

[excerpt] The recession left millions of college-educated Americans working in coffee shops and retail stores. Now, new research suggests their job prospects may not improve much when the economy rebounds. Underemployment … has been one of the hallmarks of the slow recovery…

…“Once the robots are in place you still need some people, but you need a lost less than when you were putting in the robots” said Paul Beaudry, an economist at the University of British Columbia… the paper’s lead author…. [end] 

Majia here: As you can see from the WSJ account, the future of work doesn't look so grand for today's youthful generation of college grads. The facts are that college-educated young people are graduating with high debt (which isn’t covered in this article) and are unable to find professional work (which is the focus of this article).

The 'new' thesis is that the workplace is being de-skilled. The source for this thesis (as cited in the Wall Street Journal article) is below with the abstract:
 
The Report: The Great Reversal in the Demand for Skill and Cognitive Tasks by Paul Beaudry, David A. Green, Benjamin M. Sand NBER Working Paper No. 18901  Issued in March 2013, http://www.nber.org/papers/w18901

[excerpt from abstract] What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. 

In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. 

Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. 

We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together

In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US. 

Majia here: Well, these conclusions seem self-evident at this point, with the exception of the model of viewing cognitive tasks as a stock rather than a flow. I am not familiar with either formulation so I cannot comment on the esoteric use of these terms. 

What is clear is that employers need FEWER COGNITIVE SKILLS from their employees. Employers want (1) a few very technically oriented workers to automate processes and (2) drones for servicing the automated system.

I know about this system and its effects because my spouse has worked with SAP, one of the largest technology companies (see a list here of the Most Valuable Enterprise Resource Management Companies).

The new supply chains require fewer skilled workers, especially as logistics have been automated even more with the RFID chips.

That is why the service economy is the primary source of job creation. However, service economy jobs tend to have poor wages and, increasingly, part-time positions. 

We are witnessing the graduate elimination of the American middle-class as automation replaces skilled workers.


PREVIOUS POSTS


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