What If Middle-Class Jobs Disappear? — The American Magazine
Structural change is an important factor in the current rate of high unemployment. The economy is in a state of transition, in which the middle-class jobs that emerged after World War II have begun to decline.
The most recent recession in the United States began in December of 2007 and ended in June of 2009, according to the official arbiter of recession dating, the National Bureau of Economic Research. However, two years after the official end of the recession, few Americans would say that economic troubles are behind us. The unemployment rate, in particular, remains above 9 percent. Some labor market indicators, such as the proportion of long-term unemployed, are worse now than for any postwar recession.
There are two widely circulated narratives to explain what is going on. The Keynesian narrative is that there has been a major drop in aggregate demand. According to this narrative, the slump can be largely cured by using monetary and fiscal stimulus.
The main anti-Keynesian narrative is that businesses are suffering from uncertainty and over-regulation. According to this narrative, the slump can be cured by having the government commit to and follow a more hands-off approach.
I want to suggest a third interpretation. Without ruling out a role for aggregate demand or for the regulatory environment, I wish to suggest that structural change is an important factor in the current rate of high unemployment. The economy is in a state of transition, in which the middle-class jobs that emerged after World War II have begun to decline.
As Erik Brynjolfsson and Andrew McAfee put it in a recent e-book Race Against the Machine:
The root of our problems is not that we’re in a Great Recession, or a Great Stagnation, but rather that we are in the early throes of a Great Restructuring.
In fact, I believe that the Great Depression of the 1930s can also be interpreted in part as an economic transition. The impact of the internal combustion engine and the small electric motor on farming and manufacturing reduced the value of uneducated laborers. Instead, by the 1950s, a middle class of largely clerical workers was the most significant part of the labor force.