The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market

Income Distribution, August 2013

The authors offer a uni­fied analy­sis of the growth of low-skill ser­vice occu­pa­tions between 1980 and 2005 and the simul­ta­ne­ous polar­iza­tion of US employ­ment and wages. They hypoth­e­size that polar­iza­tion stems from the inter­ac­tion between con­sumer pref­er­ences, which favor vari­ety over spe­cial­iza­tion, and the falling cost of automat­ing rou­tine, cod­i­fi­able job tasks. They find that local labor mar­kets that spe­cial­ized in rou­tine tasks dif­fer­en­tially adopted infor­ma­tion tech­nol­ogy, real­lo­cated low-skill labor into ser­vice occu­pa­tions (employ­ment polar­iza­tion), expe­ri­enced earn­ings growth at the tails of the dis­tri­b­u­tion (wage polar­iza­tion), and received inflows of skilled labor.