Degrees and Dollars: Paul Krugman

NYTimes
March 6, 2011
Degrees and Dollars
By PAUL KRUGMAN

It is a truth universally acknowledged that education is the key to
economic success. Everyone knows that the jobs of the future will
require ever higher levels of skill. That’s why, in an appearance Friday
with former Florida Gov. Jeb Bush, President Obama declared that “If we
want more good news on the jobs front then we’ve got to make more
investments in education.”

But what everyone knows is wrong.

The day after the Obama-Bush event, The Times published an article about
the growing use of software to perform legal research. Computers, it
turns out, can quickly analyze millions of documents, cheaply performing
a task that used to require armies of lawyers and paralegals. In this
case, then, technological progress is actually reducing the demand for
highly educated workers.

And legal research isn’t an isolated example. As the article points out,
software has also been replacing engineers in such tasks as chip design.
More broadly, the idea that modern technology eliminates only menial
jobs, that well-educated workers are clear winners, may dominate popular
discussion, but it’s actually decades out of date.

The fact is that since 1990 or so the U.S. job market has been
characterized not by a general rise in the demand for skill, but by
“hollowing out”: both high-wage and low-wage employment have grown
rapidly, but medium-wage jobs — the kinds of jobs we count on to support
a strong middle class — have lagged behind. And the hole in the middle
has been getting wider: many of the high-wage occupations that grew
rapidly in the 1990s have seen much slower growth recently, even as
growth in low-wage employment has accelerated.

Why is this happening? The belief that education is becoming ever more
important rests on the plausible-sounding notion that advances in
technology increase job opportunities for those who work with
information — loosely speaking, that computers help those who work with
their minds, while hurting those who work with their hands.

Some years ago, however, the economists David Autor, Frank Levy and
Richard Murnane argued that this was the wrong way to think about it.
Computers, they pointed out, excel at routine tasks, “cognitive and
manual tasks that can be accomplished by following explicit rules.”
Therefore, any routine task — a category that includes many
white-collar, nonmanual jobs — is in the firing line. Conversely, jobs
that can’t be carried out by following explicit rules — a category that
includes many kinds of manual labor, from truck drivers to janitors —
will tend to grow even in the face of technological progress.

And here’s the thing: Most of the manual labor still being done in our
economy seems to be of the kind that’s hard to automate. Notably, with
production workers in manufacturing down to about 6 percent of U.S.
employment, there aren’t many assembly-line jobs left to lose.
Meanwhile, quite a lot of white-collar work currently carried out by
well-educated, relatively well-paid workers may soon be computerized.
Roombas are cute, but robot janitors are a long way off; computerized
legal research and computer-aided medical diagnosis are already here.

And then there’s globalization. Once, only manufacturing workers needed
to worry about competition from overseas, but the combination of
computers and telecommunications has made it possible to provide many
services at long range. And research by my Princeton colleagues Alan
Blinder and Alan Krueger suggests that high-wage jobs performed by
highly educated workers are, if anything, more “offshorable” than jobs
done by low-paid, less-educated workers. If they’re right, growing
international trade in services will further hollow out the U.S. job market.

So what does all this say about policy?

Yes, we need to fix American education. In particular, the inequalities
Americans face at the starting line — bright children from poor families
are less likely to finish college than much less able children of the
affluent — aren’t just an outrage; they represent a huge waste of the
nation’s human potential.

But there are things education can’t do. In particular, the notion that
putting more kids through college can restore the middle-class society
we used to have is wishful thinking. It’s no longer true that having a
college degree guarantees that you’ll get a good job, and it’s becoming
less true with each passing decade.

So if we want a society of broadly shared prosperity, education isn’t
the answer — we’ll have to go about building that society directly. We
need to restore the bargaining power that labor has lost over the last
30 years, so that ordinary workers as well as superstars have the power
to bargain for good wages. We need to guarantee the essentials, above
all health care, to every citizen.

What we can’t do is get where we need to go just by giving workers
college degrees, which may be no more than tickets to jobs that don’t
exist or don’t pay middle-class wages.