Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I recently listened to a podcast by NPR (transcript here) that introduced an economist named David Autor, who gave a lecture at one of the most important gathering of economists at the personal behest of none other than former Fed chairman Bernanke.
Autor's research went against what was considered a decades-old truism: moving to cities (especially "superstar cities" like NYC, SF, LA) gave you a tremendous boost to your career that you couldn't get anywhere else ("from the mailroom to the executive suite" stereotype).
His research found that this "career elevator" was indeed upward-sloping throughout the 70s and 80s, but had begun to flatten out through the 90s and aughts until it had leveled out by 2015. And this trend was due to the country's labor marketing polarizing into 2 tiers:
Tier 1: high-paying knowledge-based jobs
Tier 2: low-paying service-based jobs (this class of workers is literally only there to service the Tier 1s)
And the middle tier (or, middle class) disappeared over time since this work was among the first and easiest to automate or offshore.
From Autor's speech:
Quote:
Noncollege workers are primarily there to see to the care and comfort and feeding and security of the more affluent. They have been reshuffled into these jobs that use arguably more generic skill sets, and that's why it's hard for them to command high wages because the set of people who can do many of those tasks is abundant.
Autor's research shows that for every Tier 1 job created, 5 Tier 2s show up to cover those "care/comfort" needs. He uses jobs like restaurant servers, yoga teachers, dry-cleaners, etc. as examples -> Jobs that either can't or won't be automated, but are so low-skilled that replacements are abundant.
So Autor's main point here is that it probably only makes sense to try your hand at "making it" in the superstar cities like NYC if you fall into a Tier 1 category.
Quote:
They're overrated for adults without college degrees. They're probably not overrated for highly educated adults.
This is very important to me because I currently live and work in NYC and feel that this is very very true. My HR recruiter says that we get hundreds of applications for even entry-level job openings (40k salaries), and around half of the applicants have MBAs or advanced degrees. So if I had to guess, I would even take it a step further and say that even advanced degrees may not be enough anymore.
What you probably *actually* need is a very rare or particular skill or advanced degree. Because we are also hiring data scientists, anyone with experience in AI and machine learning, and throwing 150k starting salaries at them.
I sometimes wish our HR could send out a letter to our applicants and tell them things like this, instead of the same bland, "Thanks for applying, you look awesome blah blah blah, but we decided to go with someone else." The struggle, in my opinion, is only worth it if the playing field is relatively fair and equal for everybody, but that doesn't seem to be the case, at least not anymore.
Superstar cities cost triple for housing but salaries aren't triple.
It's not that hard to achieve upper tier: Starting from high school attend a JC live at home. After two years transfer to a state college and live at home. Most important: Earn a practical degree. Graduate with little to no student loans. Start working and building wealth.
There are plenty of good jobs in the US otherwise millions of people wouldn't to try to immigrate here to be our doctors, engineers, business owners, dentists, etc.
You don't have to attend UCLA or MIT or Stanford either. An engineer from Cal State Nowhere isn't going to earn that much less than someone who spent $140K at Football U.
Having lived and worked in NYC, my personal observation is that Autor is probably right.
I made a good living, and knew many others who did as well. However, I also knew many people working for less than $40k/year, and their quality of life was not good.
Tier 1: high-paying knowledge-based jobs Tier 2: low-paying service-based jobs (this class of workers is literally only there to service the Tier 1s)
And the middle tier (or, middle class) disappeared over time since this work was among the first and easiest to automate or offshore.
-- What's high-paying vs low paying? I don't know that my plumber is lowly-paid.
-- What did his study say about the self-employed, or sole proprietorships? Put them in a sub category, or not factor them in at all, like they didn't exist.
I agree, which is why everyone would be foolish to not spend 5-10 hours/week studying and learning new skills in their free time. People who do things like that get the tier 1 jobs. People who expect to stay in the same job for 30 years without learning new skills solidify a place in tier 2.
-- What's high-paying vs low paying? I don't know that my plumber is lowly-paid.
-- What did his study say about the self-employed, or sole proprietorships? Put them in a sub category, or not factor them in at all, like they didn't exist.
You are missing the point of his article.
The concept is that a generation ago, it was good advice to move to the city for your career. Even if your career was a service economy job, such as gas station attendant, elevator operator, telephone operator, waiter, or retail clerk, you likely earned more money in the city than you would in the country, and the differential for cost of living was not that different. Essentially, the city cost a little bit more than small towns, but everybody made a lot more than in small towns.
That has changed for many people. Those service jobs often don't exist, or no longer pay commissions, or simply pay only minimum wage. Meanwhile the cost differential for living in the big city is substantial, so that on balance, the lesser skilled jobs are better positioned in small towns. The skilled jobs meanwhile make considerably more than they have in the past, so have kept up with the increased COL in large cities, or even exceeded it.
The exceptions to the rule, or the surviving members of the shrinking middle class that you point out, are in fact irrelevant to the study. The fact remains that the lowest tier of employment no longer enjoys an advantage in earning power by moving to a big city.
-- What's high-paying vs low paying? I don't know that my plumber is lowly-paid.
-- What did his study say about the self-employed, or sole proprietorships? Put them in a sub category, or not factor them in at all, like they didn't exist.
yea those are good questions. i assume his publications, rather than interviews, would do a better job providing those answers.
his research does seem to leave out the skilled trades, though.
and maybe he doesn't include business owners since he is really only looking at labor? (just my own guess)
The concept is that a generation ago, it was good advice to move to the city for your career. Even if your career was a service economy job, such as gas station attendant, elevator operator, telephone operator, waiter, or retail clerk, you likely earned more money in the city than you would in the country, and the differential for cost of living was not that different. Essentially, the city cost a little bit more than small towns, but everybody made a lot more than in small towns.
That has changed for many people. Those service jobs often don't exist, or no longer pay commissions, or simply pay only minimum wage. Meanwhile the cost differential for living in the big city is substantial, so that on balance, the lesser skilled jobs are better positioned in small towns. The skilled jobs meanwhile make considerably more than they have in the past, so have kept up with the increased COL in large cities, or even exceeded it.
The exceptions to the rule, or the surviving members of the shrinking middle class that you point out, are in fact irrelevant to the study. The fact remains that the lowest tier of employment no longer enjoys an advantage in earning power by moving to a big city.
yep, bingo! great summary.
although, i think selhars is probably just trying to determine what kind of framework/foundation Autor is working with here.
i too would like to know how he classifies "high" and "low" paying jobs exactly. and also whether or not his research extends to business owners and skilled tradesmen.
i too would like to know how he classifies "high" and "low" paying jobs exactly. and also whether or not his research extends to business owners and skilled tradesmen.
I am not exactly sure, but I would take the bottom 25% of earners in a city, and the top 25% of earners. Compare their average income to comparable jobs in a small town, and look at the differential between income and cost of living. Take a snapshot of that date for the past 50 years comparing in 5 or 10 year spans.
It doesn't really matter exactly what a person does, if they are self employed, contract workers, or anything else. All he was saying is that it used to pay off for everybody to move to a big city, and now it does not.
It's going to get worse as more jobs (both white and blue collar) become automated.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
