The employment shift from occupations that require mid-level skills toward those at the high and low ends is one of the most important trends in the U.S. labor market over the past 30 years. Previous research has suggested that a primary driver of this job polarization is something called routine-biased technological change (RBTC), an unfortunate mouthful whereby new technologies substitute for repetitive, middle-skill jobs and complement analytical, high-skill jobs. Think of word processors replacing typists or engineers using AutoCAD software. Until recently, economists thought of this trend as a gradual phenomenon that didn’t depend much on the ups and downs of the economy.
The Great Recession Drastically Changed the Skills Employers Want
The employment shift from occupations in the middle of the skill distribution toward those at the high and low ends is one of the most important trends in the U.S. labor market over the past 30 years. Previous research has suggested that a primary driver of this job polarization is something called routine-biased technological change. Think of word processors replacing typists or engineers using AutoCAD software. Until recently, economists thought of this trend as a gradual phenomenon that didn’t depend much on the ups and downs of the economy. Using nearly all electronically posted job vacancies in 2007 and 2010–2015 collected by the analytics company Burning Glass Technologies, as well as spatial variation in economic conditions, we establish a new fact: the skill requirements of job ads increased in metro areas that suffered larger employment shocks in the Great Recession, relative to the same areas before the shock and to other areas that experienced smaller shocks.