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More on Job Loss

The following e-mail arrived in response to my recent post on jobs being performed and not merely “held”:

Your example is of highly trained and talented physicians. As you say, these workers are talented and therefore they will find other good jobs when the need for neurosurgery disappears. But what about low skilled workers? These are the people most ravaged by foreign competition that destroys their jobs.

It’s always difficult to lose a job that you want to keep. And indeed, because low-skilled workers are less likely than high-skilled workers to have substantial savings, low-skilled workers who lose their jobs might confront more difficulty in making ends meet until they find new employment.

But low-skill workers also have something of an advantage on the job-loss front. It is this: to be low-skilled is to be without specialized talents that are in demand in the labor market. It is also to be in competition with a large pool of workers (that is, other low-skilled workers). While these facts might not sound like advantages, they are, at least of the “silver-lining-around-a-dark-cloud” sort. (The dark cloud being the worker’s lack of specialized, valuable skills.)

Compared to jobs performed by skilled workers, jobs performed by low-skilled workers don’t pay wage premiums. Therefore, the loss of any particular low-skilled job doesn’t eliminate any special wage premium earned by that worker; any other low-skilled job will likely pay roughly the same amount as was paid by the now-defunct job. And because basic human labor – which is the product supplied by low-skilled workers – is quite flexible, the opportunities for profitably employing such labor in the economy are large. If a brilliant new invention eliminates the need for lawn mowers to be guided by human beings, the low-skilled workers who previously mowed lawns can work as carpenters’ helpers, janitors, warehouse stockers, and other jobs that require only general human muscle and action.

In short, low-skilled workers whose jobs are eliminated are often more likely than are high-skilled workers to find a new job very quickly that pays roughly the same amount as the old job.

The downside of (the overwhelmingly very advantageous) possession and use of special work skills is that the demand for any such specialized skill is less thick than is the demand for general, low-skilled human grunt labor.


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