We found that wide differences existed among blue-collar manufacturing workers in their educational attainment and that these differences were directly related to industry characteristics and thus to the technologies employed and the skills demanded of workers.
[snip]
...[T]o understand the role of education in the pre-1940 period, we generally use the completion of high school as the definition of more-educated, whereas for more recent times we use graduation from college (either four-year or a combination of two- and four-year). The reason for the different standard concerns changes in the average level of education across the century. In 1940, 34 percent of the U.S. male labor force 25 to 34 years old had 12 or more years of schooling whereas in 2000 about the same fraction had a post-secondary degree.
[snip]
The industries clearly divide into two groups. At the low end of the education spectrum are the products of the first industrial revolution (cotton, woolen, and sil textiles; boots and shoes) and many that have been the mainstay of construction for centuries (lumber, stone, clay, and cement). At the high end are various products of the second industrial revolution (e.g., chemicals, petroleum), many in the machine-producing group, and some crafted in settings similar to that found in a traditional artisanal shop (i.e., clocks, watches, jewelry, and even aircraft.) Finally, there is a perennial among high-education industries: printing and publishing.
[snip]
Drivers for jewelry stores and drug stores were more educated than were drivers who worked in other industries. Blue-collar workers in radio stores, and even gas station attendants, were far more educated than the average blue-collar worker. Our point is that in manufacturing, as well as in many other sectors, blue-collar workers using more advanced technologies and being entrusted with more expensive capital and goods were more educated than were others with similar occupational titles.
[snip]
[D]ifferences in educational attainment of blue-collar workers across industries are substantial even after adjusting for differences in urbanization, regional location of production, and age structure.
[snip]
...[T]he fraction employed in the metal trades rose with education, whereas the fraction employed in wood, leather, clothing, and textiles declined with education. The metal trades rose with education, whereas the fraction employed in the metal trades rose with education, whereas the fraction employed in wood, leather, clothing, and textiles declined with education. The metal trades were considered among the more technologically advanced in manufacturing, whereas trades in the other indutriess mentioned were older and less dynamic. Of the young men with 12 years of schooling who were employed in blue-collar jobs, 54.4 percent were in the metal trades. But among those who left school after nine years, 44.4 percent were in the metal trades, and among those who left after six years just 30.3 percent were in the metal trades.
[snip]
The complementarity between technology and skill existed even earlier in the twentieth century and was associated with the introduction of electricity and the more extensive use of capital per worker.
[snip]
Rarely is the education of production workers mentioned in the labor history literature. Yet there is ample qualitative evidence, complementing our empirical findings, that certain cognitive skills were highly valued in various trades.
My main problem with the book was that it discussed income inequality as if only relative inequality mattered, and then claimed a relationship between education and wage compression by looking at data without taking into account marginal income tax rates.
That is, they never just looked and saw if the highest marginal tax rates had led to wage compression. They always argued it was related to education, but the obvious hypothesis they didn't even mention, let alone dispense with.
Moving on, does the book sidestep any debate about education's ability to increase cognitive skills?
I didn't read far enough to know if they show that education isn't just the proxy for cognitive skills. Did they address that possibility?
Certain cognitive skills are highly valued, sure. Is this in any way surprising? What if education just helps the employer to determine who has those skills? Doesn't the fact that about the same fraction had a post secondary degree in 2000 as had 12 years of schooling in 1940 indicate that nothing's changed in education, except the addition of 4 more years?
I didn't read far enough to know if they show that education isn't just the proxy for cognitive skills. Did they address that possibility?
Yes.
I think you can see that in this passage ... understand electricity, read blueprints, etc.
There is also the 'soft' skill of being able to talk intelligently to a college-educated boss.
I think it was Mark Bauerlein who wrote about the 'cultural capital' you gain from education & how that matters when you're trying to convince very educated bosses to hire you.
Doesn't the fact that about the same fraction had a post secondary degree in 2000 as had 12 years of schooling in 1940 indicate that nothing's changed in education, except the addition of 4 more years?
What has changed is the relative supply of skilled workers to skilled jobs. There are, relatively speaking, fewer skilled workers but more skilled jobs, leading to rising inequality.
As new technology is invented, jobs become more 'skill-biased'; you need more training/education to perform them. That's what we see in the NYTIMES article about factories being unable to hire factory workers because the skill demands are too high for the workers available.
It's not just that we're 'losing' blue collar jobs, it's that the blue collar jobs themselves become more complex.
Goldin and Katz demonstrate that the various explanations that have been offered for rising inequality - immigration & 'computers' - don't explain it.
As to taxes, as far as I can tell they're looking at pre-tax income. They draw a lot of their data about income from IRS returns.
They're not talking about the kind of equality that comes from redistribution of income via taxation.
But income and cap gains taxes can affect pre-tax income's wage compression.
It's a John Galt argument. If you're at the higher end of income earning, and marginal taxes on your dollar are extremely high, you will more likely choose not to earn that money. So it will affect pre-tax income. As income distribution isn't flat, then even a smaller portion of the top opting out causes a large effect in wage compression. Similarly, if business taxes are high, that could also lead to less higher wage earners, causing wage compression.
I'm not saying this did happen, but it's something that the book ignored. It needed to be addressed: the years of greatest wage compression that they cite were the years of highest marginal taxes, too. Since they didn't address it, it seems they didn't consider it. To me, it substantially weakens their argument that the obvious non-education related reasons for wage compression weren't even addressed.
There is at least literary evidence that it happened. It was a constant plot device in Nero Wolfe novels, that it was late in the year and Nero had reached the 90% bracket, so it wasn't worth it for them to take cases. This is presented matter-of-factly, as if it would have been common knowledge to Rex Stout's readers, as opposed to a bizarre idea that required explanation. I don't know of any historical studies, but that would be hard to prove either way.
Fascinating! I did not know that. I wonder if other literature from the time is similar...I'm sure if I read such as a child, it would have been over my head.
Interesting! I worked for a short time in the 90's in a shoe manufacturing company that thought (for a short time) that it wanted to be more analytical in its product development. I was shocked at how many people in the company had only a high school education or not even that - most of product design, it seemed to me. I found working there uncomfortable and too much of a return to high school.
It was a constant plot device in Nero Wolfe novels, that it was late in the year and Nero had reached the 90% bracket, so it wasn't worth it for them to take cases.
Yes, level of knowledge, but more than that too. The place just didn't have that many bright people in any department, though there were a few. Lots of mistakes on easy stuff. (Their specs looked like a bad joke to me (vague, errors in math), and I didn't even have real experience in that area at that point.) Also, too much emphasis on appearance for me!
The job after that was at a product development company that mostly worked on medical products. Very different feel, generally higher level of education and intelligence. I have no idea how the level of education in the blue collar jobs at the two companies compared though.
:
My main problem with the book was that it discussed income inequality as if only relative inequality mattered, and then claimed a relationship between education and wage compression by looking at data without taking into account marginal income tax rates.
ReplyDeleteThat is, they never just looked and saw if the highest marginal tax rates had led to wage compression. They always argued it was related to education, but the obvious hypothesis they didn't even mention, let alone dispense with.
Moving on, does the book sidestep any debate about education's ability to increase cognitive skills?
ReplyDeleteI didn't read far enough to know if they show that education isn't just the proxy for cognitive skills. Did they address that possibility?
Certain cognitive skills are highly valued, sure. Is this in any way surprising? What if education just helps the employer to determine who has those skills? Doesn't the fact that about the same fraction had a post secondary degree in 2000 as had 12 years of schooling in 1940 indicate that nothing's changed in education, except the addition of 4 more years?
I didn't read far enough to know if they show that education isn't just the proxy for cognitive skills. Did they address that possibility?
ReplyDeleteYes.
I think you can see that in this passage ... understand electricity, read blueprints, etc.
There is also the 'soft' skill of being able to talk intelligently to a college-educated boss.
I think it was Mark Bauerlein who wrote about the 'cultural capital' you gain from education & how that matters when you're trying to convince very educated bosses to hire you.
Doesn't the fact that about the same fraction had a post secondary degree in 2000 as had 12 years of schooling in 1940 indicate that nothing's changed in education, except the addition of 4 more years?
ReplyDeleteWhat has changed is the relative supply of skilled workers to skilled jobs. There are, relatively speaking, fewer skilled workers but more skilled jobs, leading to rising inequality.
As new technology is invented, jobs become more 'skill-biased'; you need more training/education to perform them. That's what we see in the NYTIMES article about factories being unable to hire factory workers because the skill demands are too high for the workers available.
It's not just that we're 'losing' blue collar jobs, it's that the blue collar jobs themselves become more complex.
Goldin and Katz demonstrate that the various explanations that have been offered for rising inequality - immigration & 'computers' - don't explain it.
As to taxes, as far as I can tell they're looking at pre-tax income. They draw a lot of their data about income from IRS returns.
They're not talking about the kind of equality that comes from redistribution of income via taxation.
But income and cap gains taxes can affect pre-tax income's wage compression.
ReplyDeleteIt's a John Galt argument. If you're at the higher end of income earning, and marginal taxes on your dollar are extremely high, you will more likely choose not to earn that money. So it will affect pre-tax income. As income distribution isn't flat, then even a smaller portion of the top opting out causes a large effect in wage compression. Similarly, if business taxes are high, that could also lead to less higher wage earners, causing wage compression.
I'm not saying this did happen, but it's something that the book ignored. It needed to be addressed: the years of greatest wage compression that they cite were the years of highest marginal taxes, too. Since they didn't address it, it seems they didn't consider it. To me, it substantially weakens their argument that the obvious non-education related reasons for wage compression weren't even addressed.
There is at least literary evidence that it happened. It was a constant plot device in Nero Wolfe novels, that it was late in the year and Nero had reached the 90% bracket, so it wasn't worth it for them to take cases. This is presented matter-of-factly, as if it would have been common knowledge to Rex Stout's readers, as opposed to a bizarre idea that required explanation. I don't know of any historical studies, but that would be hard to prove either way.
ReplyDeleteFascinating! I did not know that. I wonder if other literature from the time is similar...I'm sure if I read such as a child, it would have been over my head.
ReplyDeleteInteresting! I worked for a short time in the 90's in a shoe manufacturing company that thought (for a short time) that it wanted to be more analytical in its product development. I was shocked at how many people in the company had only a high school education or not even that - most of product design, it seemed to me. I found working there uncomfortable and too much of a return to high school.
ReplyDeleteIt was a constant plot device in Nero Wolfe novels, that it was late in the year and Nero had reached the 90% bracket, so it wasn't worth it for them to take cases.
ReplyDeleteWhat a terrific factoid!
kcab - if you're around - how was it too much of a return to high school? (You're talking about the level of knowledge --- ?)
ReplyDeleteYes, level of knowledge, but more than that too. The place just didn't have that many bright people in any department, though there were a few. Lots of mistakes on easy stuff. (Their specs looked like a bad joke to me (vague, errors in math), and I didn't even have real experience in that area at that point.) Also, too much emphasis on appearance for me!
ReplyDeleteThe job after that was at a product development company that mostly worked on medical products. Very different feel, generally higher level of education and intelligence. I have no idea how the level of education in the blue collar jobs at the two companies compared though.