New research by MIT professor David Autor unveiled last week at the Federal Reserve Bank of Kansas City’s economic policy symposium in Jackson Hole seems to suggest that the real problem facing young people entering the workforce is not a burgeoning army of robots and algorithms eating away at their employment prospects, but rather a glut of overqualified workers vying for a number of slots that’s not markedly increasing. Lawrence Mishel, president of the Economic Policy Institute, explains:
[I]nstead of a shrinking middle with an expansion at the top and bottom of the occupation hierarchy for 1999-2007 (see the orange line), he finds an expansion of low-wage occupations (in the bottom thirty percent of occupational employment, ranked by wages), a shrinkage in the middle (from the 30th to the 80th percentile of occupational employment, ranked by wages) and no expansion in the upper twenty percent. Only low wage occupation expanded. The 2007-2012 period (the green line) had similar trends, though there was a slight expansion of high wage occupations. Simply put, there has been no occupational employment polarization since 1999.Autor points out that the consequence of this trend is an oversupply of “highly educated workers,” who have taken jobs that do not require such an education: “These patterns suggest that the set of abstract task-intensive jobs is not growing as rapidly as the potential supply of highly educated workers. As Beaudry, Green, and Sand (2013, 2014) highlight, the coalescence of these forces has likely led highly educated workers to seek less educated jobs, which in turn creates still greater challenges for the lower educated workers competing for routine and manual task-intensive work.”
There are lots of ways to read and interpret these trends, but one way jumps out at us: We are raising a generation of job-hunters instead of a generation of job-builders. Our advice to young people coming out of school soon: Don’t just think about looking for a job somebody else has created for you. Think about how you can build a business or a niche of your own.