Raising Compensation at Low-Skill Jobs

Ezra Klein reproduces a chart from David Autor’s “Polarization of Job Opportunities in the U.S. Labor Market” (PDF):

The structure of job opportunities in the United States has sharply polarized over the past two decades, with expanding job opportunities in both high-skill, high-wage occupations and low-skill, low wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs. Concretely, employment and earnings are rising in both high education professional, technical, and managerial occupations and, since the late 1980s, in low-education food service, personal care, and protective service occupations. Conversely, job opportunities are declining in both middle skill, white collar clerical, administrative, and sales occupations and in middle-skill, blue-collar production, craft, and operative occupations.

This relates back to the point about education and wages that I was trying to make last week. The wages earned by food service workers isn’t a fixed element of the natural order. A cook in India makes less than a cook in Mexico who makes less than a cook in Germany. That’s not because cooks in Germany make better food than cooks in Mexico or India (indeed, in general the reverse is probably true). It’s because the overall level of skills and wages is higher in Germany than in Mexico or India. So if we get more people into the high-skill category, that not only raises those people’s wages it increases incomes across the board. Alternatively, increased immigration by foreign professionals would raise the incomes of non-professionals in the United States.

Alternatively, there’s evidence that if we sharply curtailed immigration from Mexico we’d raise wages for Americans who haven’t finished high school, especially Hispanics, albeit at the price of reduced living standards for the vast majority of the North American population.


The point either way is that “good” and “bad” jobs aren’t ontological categories. On the one hand, goodness and badness are relative — working at McDonald’s is a pretty good job compared to the job the average Chinese person has. On the other hand, precisely because of this relativity, broader social factors play a big role. Since labor market opportunities in China are generally unappealing relative to those in the United States, McDonald’s pays Americans much more than it pays Chinese people who, living in a country where the per capita GDP is $6,500 would be confused by the idea that making