Business and Economics

Skilled versus unskilled labor - wage ratios 6-17-17

Source: "Wages through the ages"  

Skilled versus unskilledHistorically, there have been two times in history where the ratio of skilled labor wages to unskilled labor wages fell dramatically. The first occurred after the Black Death in the 1300's. Here, lower interest rates and (I'm assuming) increased demand for skilled craftsmen resulted in large numbers of unskilled laborers apprentencing themselves and becoming skilled craftsmen. The surplus of skilled workers drove down skilled labor wages. And... shortages of unskilled labor due to the Plague allowed them to demand higher wages. During the Industrial Revolution, techology replaced skilled workers. Unskilled workers made up 20% of the labor force in 1700 but 40% by 1850. As the skilled jobs disappeared, the Gini coefficient rose. This has modern implications. As AI and automation threaten to wipe out skilled jobs considered impervious to automation before, can we expect the Gini coefficient to rise? Somber note: 4 out of 5 of the fastest-growing occupations in the country involve personal care, none require a college degree.