An important long-run change in U.S. labor markets is the decline of middle-skill occupations, like manufacturing and production jobs, and the growth in both high- and low-skill occupations, like managerial jobs on one end and jobs that assist or care for others on the other. Economists have coined the term “job polarization” for this process.1
As has been argued in the economic literature, the most likely drivers of job polarization are automation and offshoring, because both these forces lower the demand for middle-skill occupations relative to the rest. Automation refers to any technology that reduces the need for human assistance. For instance, processes such as grocery store checkout have been automated to a great degree and thus require less labor to perform routine tasks. Similarly, some stages of the production process of a good or service can be performed in foreign countries; therefore, certain tasks can be outsourced. In general, the types of tasks that can be outsourced are mostly routine tasks.