It’s no secret that we’ve observed a rise in wage inequality over the past two decades. Although blue-collar wages and employment in manufacturing experienced a substantial bump over the past three years, the middle class has been hollowed out: Workers in the middle of the skill distribution have seen the weakest growth in wages and jobs.
Understanding the source of these changes in the labor market is a prerequisite for producing effective public-policy prescriptions. Otherwise, any “solutions” may end up being counterproductive.
In a recent working paper released through the Mercatus Center at George Mason University, Georgetown professor Alberto Rossi and I investigate changes in the labor market for financial services, focusing on the rise of science, technology, engineering, and mathematics (STEM) workers. STEM employment grew by 22 percent between 2011 and 2017, exceeding growth in any other sector besides professional services. STEM jobs are associated with large wage