Founders Perspctive

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Since at least the 1970s, most Americans were brought up believing “white collar” jobs were preferable to “blue collar” jobs. This became so ingrained that many parents who held good blue-collar jobs wanted “better” for their children.

This was institutionalized in the late 1970s when liberal educators remolded our entire K-12 education system around the college preparatory track. The stated purpose was to prepare every student for college enrollment. The entire curriculum was rebuilt with this objective.

It is as if those in charge felt we no longer needed to prepare our kids for careers as factory floor workers, hairdressers, welders, waiters, sales clerks, or all the other trades that make up well more than half of our workforce.

Because of the elevated status of college degrees, many jobs that could be accomplished with far less formal training started to require a degree. This in turn led to a dramatic increase in college enrollment, college costs, and student debt.

During this same period, there was a dramatic decline in union workers. See Chart 1. In the first half of the last century, it was the unionization of the blue-collar labor force – particularly in manufacturing – that provided wages and benefits that often exceeded those of many of the white-collar workers of that day.

The decline in private sector unions is closely tied to the decline in manufacturing employment. In the late 1940s, manufacturing accounted for 32% of all jobs compared to 8.5% today. Many of those remaining manufacturing jobs migrated to “right to work” states in the south. Employers in these states had much more flexibility in setting pay and benefits.

In the more recent decades, globalization and technology have also had a profound impact on the decline in U.S. manufacturing jobs. Private sector unions fought rearguard actions to preserve as many jobs as possible with pay packages that would not accelerate the union’s decline.

This multi-decade cycle of the ascendance of white-collar work over blue-collar work may be over. The pandemic shined a bright light on the so-called everyday people without whom life crawls to a standstill.

Private unions appear to be in the ascendancy as qualified blue-collar workers, after years of neglect, have become scarce! The recently passed legislation to boost infrastructure and manufacturing within the U.S. has run into this roadblock. For example, Taiwan Semiconductor had to push back plans for their new facilities outside of Phoenix citing a lack of skilled workers to build the facilities.

In addition, private unions have won major new concessions this year in a wide variety of companies and industries including UPS, longshoremen, and the airlines. The current UAW strike reflects new extremes in union demands.

Many companies such as Target, Amazon, and Kroger have seen the writing on the wall and have voluntarily raised wages dramatically. Virtually all frontline workers have received much more recognition and pay since the onset of the pandemic.

At the same time, white-collar workers may be going the opposite direction. The Challenger Report tracks all layoffs in the U.S. Recently it reported that we may be facing the first ever “white-collar recession”. They noted that most layoffs this past year have been among white-collar employees.

Research from Goldman Sachs suggests that 25% of American jobs could be automated by AI, compared to approximately 18% globally. See Chart 2. A very high percentage of these lost jobs will be from white-collar employment. Whereas there is no AI replacement for your electrician, plumber, mechanic, delivery person, etc, those that work with and distribute data are much easier to replace.

Disclosures