2015 JoblessRecoveries
- (Siu & Jaimovich, 2015) ⇒ Henry Siu, and Nir Jaimovich. (2015). “Jobless Recoveries.” In: Third Way Journal, April 8, 2015.
Subject Headings: Jobless Recovery, Routing Jobs.
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Paper Overview
In the last three months, the U.S. economy created more than one million jobs and median wages jumped forward - finally. It took five years from the end of the Great Recession for truly robust job and wage growth to take hold. It took so long, in fact, that a new phrase entered the lexicon "the jobless recovery”.
Henry Siu and Nir Jaimovich may have an answer as to why. In their work presented here, Siu (University of British Columbia) and Jaimovich (Duke University) begin by looking at previous recessions and uncovered a striking pattern. “... Averaged over the three early episodes, employment turns around about four months after the recession; in the recent episodes, the average turnaround time is 21 months. In other words, recent recessions, especially the most recent, are not your father's recessions. Jobs recover very slowly with many people stuck in part time or lower paying jobs.
Siu and Jaimovich explain the emergence of this phenomenon by looking at the loss, over time, of "routine" jobs. They argue that "... many of the routine occupations that were once commonplace have begun to disappear, while others have become obsolete. This is because the tasks involved in these occupations, by their nature, are prime candidates to be performed by new technologies." By showing the trends in routine and non-routine jobs through a series of recessions, they illustrate a central economic problem of our time. The 21st century economy doesn't create the sorts of jobs we used to have. Job creation is no longer simply a function of an economy wide recovery, it poses challenges that were not part of earlier recessions.
This paper should make policy makers think hard about job creation in the information economy. It is the latest in a series of ahead-of-the-curve, groundbreaking pieces published through Third Way's NEXT initiative. NEXT is made up of in-depth, commissioned academic research papers that look at trends that will shape policy over the coming decades. In particular, we are aiming to unpack some of the prevailing assumptions that routinely define, and often constrain, Democratic and progressive economic and social policy debates.
In this series we seek to answer the central domestic policy challenge of the 21st century: how to ensure American middle class middle class prosperity and individual success in an era of ever-intensifying globalization and technological upheaval. It's the defining question of our time, and one that as a country we're far from answering.
Each paper dives into one aspect of middle class prosperity - such as education, retirement, achievement, or the safety net. Our aim is to challenge, and ultimately change, some of the prevailing assumptions that routinely define, and often constrain, Democratic and progressive economic and social policy debates. And by doing that, we'll be able to help push the conversation towards a new, more modern understanding of America's middle class challenges - and spur fresh ideas for a new era.
1. Introduction
The Great Recession officially ended in June 2009 but it has taken many Americans years to believe it and many still don’t. On a number of dimensions, the recovery would receive strong marks. Both the Dow Jones and S&P 500 have more than doubled in value in the past five and half years. Inflation has been kept in check, hovering at around 2% per year. Real GDP growth has been solid, especially in the past two quarters; average real income earned in the United States has grown by about 7%, recouping all of the losses since the recession, and then some.
But in spite of these statistics, when it comes to the labor market, it is hard to muster a passing grade. Since the end of the recession more than a half decade ago, the U.S. labor market has still not recovered. The clearest indication of this: the fraction of the adult population that is employed. We report this statistic in the first column of Table 1. At the economic peak in December 2007, approximately 63% of American adults had a job.1 At recession’s end in June 2009, that number had fallen to 59.4%. In December 2014 (the most recent data available as of writing) it is lower still, at 59.2% — that is, a smaller fraction of the adult population is working today than at the end of the recession. Moreover, this statistic masks the deterioration in the quality of job opportunities. For instance, of those with jobs, the fraction of people working part time because they could only find part-time work more than doubled over the course of the recession. This has remained essentially unchanged since recession’s end.2 Numbers like these have given rise to a new expression, the jobless recovery. In this paper we’ll try and explain why employment opportunities no longer bounce back following recessions by looking at how the occupational structure of the economy has changed.
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A common misperception is that jobless recoveries represent a delayed recovery in hiring experienced “economy-wide.” This, however, is not the case. Instead, they can be traced to a lack of recovery in a subset of occupations in the economy: those that focus on routine tasks.
Job Polarization and the Loss of “Routine” Jobs
What are routine occupations? In the field of economics, these refer to jobs that involve a limited set of tasks. More importantly, those tasks tend to be “rule based,” in that they can be performed by following a well-defined set of instructions, and require minimal discretion.
For example, production occupations are a prime example of routine manual jobs: jobs that are both rule based and emphasize physical (as opposed to cerebral) tasks. As examples, factory workers who operate welding, fitting, and metal press machines fall into this category, as do forklift operators and home appliance repairers. Similarly, office support occupation and administrative support occupations are routine cognitive jobs that focus on rule based “brain” (as opposed to “brawn”) tasks. These include secretaries, bookkeeping and filing clerks, mail sorters, and bank tellers. A growing literature demonstrates a profound implication of technological change on the labor market: many of the routine occupations that were once commonplace have begun to disappear, while others still have become obsolete.11 This is because the tasks involved in these occupations, by their nature, are prime candidates to be performed by new technologies.
The rapid and dramatic technological advances of the past 40 years have left an indelible mark on the modern workplace and the way that work is done. Robotics, automation, computing, information processing: these words and phrases have become part of our everyday lexicon as the processes behind them have transformed the nature of work. Technology has not only made us more productive; it has fundamentally changed the types of jobs we do, and the way that we do them.
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| Author | volume | Date Value | title | type | journal | titleUrl | doi | note | year | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 JoblessRecoveries | Nir Jaimovich Henry E. Siu | Jobless Recoveries | 2015 |