The jobs barbell

With September rapidly approaching, it's decision time for many young Yukoners: job, trade school, university or none of the above? Friends and relatives are usually not shy about offering advice, usually conflicting.

With September rapidly approaching, it’s decision time for many young Yukoners: job, trade school, university or none of the above?

Friends and relatives are usually not shy about offering advice, usually conflicting. “Get a real job!”“A trade is your ticket.”“These days, you’ve got to go to university!” Or even, “I don’t care what you do as long as you move out of my basement and into your own place.”

Someone wise once said that the secret to life was finding what you love to do and doing it. We all know people who are miserable because they stick in some job they hate just because it has good pay or benefits.

Or, as Chevy Chase said in Caddyshack when his caddy said he had to go to college, “You don’t have to go to college. This isn’t Russia … is it?”

But money inevitably comes up as people search for the job they love. Going to the other end of the literary spectrum from Caddyshack, think about Pride and Prejudice’s heroine Elizabeth Bennett. She insists on marrying for love, but it doesn’t hurt that Mr. Darcy is one of the richest men in England.

So what actually are the facts about education, salaries and finding a job?

The big point to remember is that there is no “average” job, and statistics about average unemployment rates and median incomes aren’t very useful.

That’s because what we’ve been seeing in North America in the last decade or two is a “barbelling” of the jobs market. Let’s take a look at both incomes and unemployment rates to see what that means. I’ll reserve any value judgments about whether these trends are good or bad, and will try to stick to the facts.

First on incomes. Statistics Canada has released data on pre-tax earnings for the Top 20 per cent, Bottom 20 per cent and Middle 20 per cent of earners from 1980 to 2005. This is for people with full-time, full-year jobs and is adjusted for inflation to “2005 dollars.”

Overall, median earnings for Canadians basically stayed the same from 1980 to 2005, up just one per cent to $41,348. But if you de-average, quite a different picture emerges. Incomes for the Top 20 per cent are up a solid 16 per cent to a median of $86,253. The Middle 20 per cent was basically flat while incomes for the Bottom 20 per cent went down 21 per cent to $15,375.

This is a staggering difference from previous generations where most people could assume they would automatically be better off than their parents and grandparents.

The statistics don’t cover qualitative improvements in life, such as the iPod being better than an eight-track or your appliances lasting twice as long. But overall, incomes have been stagnant or worse for large swathes of the Canadian workforce.

There is not a complete correlation between education and income of course, but there is a trend.

In 2006, the average employment income of university-educated Canadians was $57,495 while those with trades education earned $34,670 and high school grads $28,038. High school dropouts earned $20,833 on average.

Now for finding a job.

Economists at TD Bank recently published a report showing barbelling in job categories in the United States. A very similar trend probably exists in Canada.

Essentially, the number of high-skill and low-skill jobs is increasing, while the number of middle-skill jobs shrinks.

From 1999 to 2009, professional and highly technical jobs grew by more than 10 per cent. Security guard, food prep, janitorial and various personal services jobs also grew. But office administrative, sales, machine operators and similar jobs shrank.

The TD economists point out that the US Bureau of Labour Statistics forecasts that 45 per cent of jobs created up to 2018 will be “high-skilled,” essentially requiring a university degree, while another 27 per cent will be in low-skill categories. Of the top 20 fastest-growing occupations, nine require a bachelor’s degree. To give a flavour, the top two are biomedical engineers and network systems analysts. On the other hand, five don’t require high school at all. The middle is getting squeezed.

Anecdotal evidence for this is widespread.

Executives now share executive assistants or don’t even have one.

Basic accounting and finance jobs are being automated. You don’t need someone to tally the monthly sales figures when your company’s Oracle system does it for you automatically.

You don’t need as many sales people when customers are shopping online. Manufacturing in America is enjoying a mini-renaissance these days, but if you go to a factory you won’t see many people. Just a few highly paid people to program the robots.

Technology and globalization are two big drivers of these trends. You’re in trouble if your job can be automated. Think of executives typing their own memos on laptops instead of using a typist or printing off the automated Oracle reports that a finance person would have produced a generation ago.

It’s hard to automate a biomedical engineer’s job, or a janitor’s, for that matter. Once again, it’s the mid-skill jobs that are under pressure.

You’re also in trouble if your job is in the “tradeable” sector. That is, if you’re in competition with billions of people around the world. It’s hard to buy a haircut from China, but if you’re making cheap furniture then you’re up against literally hundreds of firms bidding to make bookshelves for Walmart in China. The other thing is that people keep thinking of new ways to trade. Think of the difference between having experienced carpenters build your house, versus ordering pre-fab wall panels from a factory somewhere.

Maybe none of this makes it any easier to decide what to do in September. But one thing you can say to shut up all those people giving you free advice: today’s young people face a more complex and volatile career market than their parents did.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.

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