A Blog by Jonathan Low


Jan 14, 2019

Why New Jobs In Big Cities Increasingly Go To the Educated and Skilled

Chicago was 'the city of big shoulders,' where jobs in manufacturing, meatpacking and the like were to be had by the tens of thousands. The Bay Area had shipbuilding, Los Angeles had aircraft production, New York offered garment manufacturing, printing and consumer product creation, Pittsburgh had steel and coal.

The same was true to big cities in Europe and on other continents and produced the wealth that inspired art, literature and music as well as created a middle class life for generations.

But lower skilled workers now face not just a shortage of such work - and at lower wages relative to the economy - but higher prices for rent, food and transportation. It is a true socio-economic revolution. JL

Emily Badger and Quoctrung Bui report in the New York Times:

Workers could long count on earning more in urban areas. Today, that pattern holds for highly educated workers. For workers without any college education, the wage benefits of cities have disappeared. The declining urban wage premium (is due) to the disappearance of “middle-skill jobs” in production but also in clerical, administrative and sales. Many of these jobs have gone overseas (or) been automated. The densest urban counties have become so appealing to prime-age workers that they’re less likely to move away at life stages when previous generations retreated to the suburbs
For decades, workers migrated to big cities in America that promised abundant jobs and decent wages — in clerical offices in New York, at shipbuilding yards in Oakland, on auto assembly lines around Detroit.
Big, dense cities offered not just better pay for lower-skilled workers; cities offered them better kinds of jobs.
This is much less true today, as workers hurt by the decline in manufacturing know. Because of this, cities no longer offer low-skilled workers the economic advantages they once did, according to new analysis by the M.I.T. economist David Autor.
Workers, whether with a college degree or not, could long count on earning more in denser urban areas than in rural ones. Today, that pattern holds for highly educated workers — and has in fact grown much stronger. For workers without any college education, the added wage benefits of dense cities have mostly disappeared in Mr. Autor’s data:
What’s startling about that conclusion is that many economists and policymakers have suggested that workers migrate to prosperous metros to find opportunity. We don’t have many proven strategies for how to revive communities battered by changes in the economy. But we have decades of history that show that Americans have been able to lift themselves up by leaving struggling places for thriving cities.

What happens if that’s no longer true for low-skilled workers?
“People have lamented, ‘Well, all these areas that lost manufacturing, why don’t those workers just get up and go somewhere else?’” said Mr. Autor, who looked at wage data from the census and American Community Survey and recently presented the findings at the annual meeting of the American Economic Association. “It’s just not at all obvious what that place is. It’s less obvious to me now than it was a month ago.”
Mr. Autor attributes the declining urban wage premium to the disappearance of “middle-skill jobs” in production but also in clerical, administrative and sales work. Many of these jobs have gone overseas. Others have been automated out of existence.
This kind of work, he argues, was historically clustered in cities (meaning the entire labor market around cities, within commuting zones). And because of that, workers with limited skills could find better opportunities by moving there.
Now, the urban jobs available to people with no college education — as servers, cleaners, security guards, home health aides — are basically the same kind as those available in smaller towns and rural communities.
The flip side of all of this is that moving to the densest urban areas remains a good bet for college-educated workers. Cities offer them very different kinds of jobs than small towns do. They can enjoy much higher wages for their skills there (in addition to all the amenities big cities provide).
Other research Mr. Autor is conducting with Juliette Fournier, an M.I.T. doctoral student, suggests that the densest urban counties have become so appealing to prime-age workers that they’re now less likely to move away at life stages when previous generations have retreated to the suburbs, like when children arrive.
Policymakers have suggested that low-skilled workers head to the same places where college-educated workers are growing wealthy, like New York and the Bay Area (although many have argued that high housing costs and strict land-use regulation in these places block lower-income workers from opportunity).
The Harvard economist Ed Glaeser, whose work has long championed the benefits of cities, argues that they could still offer advantages to low-skilled workers because of high unemployment in many rural communities. Perhaps the kinds of low-skilled jobs that major metros offer are the same as those in smaller towns — but such jobs are a lot easier to find in big cities.
Low-skilled workers may also find opportunities in cities that don’t come in the form of higher wages. They could come from the availability of nonprofits and social services, or of training programs, or from better access to health care and public transit. And there are other ways to measure opportunity in a community, like whether it enables poor children to get ahead.
The wage pattern Mr. Autor describes looks startling to many economists in part because he has taken a well-recognized divergence in the labor market — between the boom in highly paid jobs for college graduates and the growth of low-paid service-sector work — and mapped it onto the country, by population density.
But other scholars have been studying pieces of this picture for some time. The sociologist William Julius Wilson has documented the disappearance of precisely the kinds of urban jobs Mr. Autor describes.
Mr. Wilson said in an email that he was not surprised by the pattern in Mr. Autor’s analysis, adding that these middle-skilled jobs once offered not just higher wages but also union benefits, retirement, paid vacation and some sense of stability. Low-skilled jobs in the service industry and retail that have replaced that work seldom offer those benefits.
Today, as housing has grown much more expensive in many of the cities that once held out the hope of higher wages for them, low-skilled workers face both low incomes and steep costs. Mr. Autor can’t say how much of the small urban wage premium that remains in his data today is eaten up by these higher housing costs.
But it is clear to him, he said, that the urban advantage that once existed for low-skilled workers is vanishing.


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