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Does Tech-Industry Job Growth Actually Lower Wages For Some Workers?

“A new study finds clear evidence that low-skilled workers fail to benefit from high-tech growth and development,” writes a senior editor at The Atlantic (and co-founder of CityLab).

The UK-based study was co-authored by two researchers, one from the London School of Economics and the other from the Resolution Foundation in London. CityLab summarizes its results:

High-tech growth leads to better jobs and higher wages for more skilled workers. But it leads to lower wages for less-skilled workers. These effects are compounded by housing costs, with less-skilled workers being even worse off when housing costs are taken into account. Indeed, the researchers see “a negative and statistically significant effect from high-tech on wages for workers in the bottom third of educational attainment.”

This effect is even larger when local housing costs are included, which stands in sharp contrast to the situation for higher-skill workers: Their effective wages rise when controlling for housing costs. The reason for this unevenness boils down to the fact that high-skilled tech workers are mobile and paid at rates that factor in higher housing costs, whereas less-skilled workers are more or less trapped; people competing for low-wage jobs mostly lack the resources to move to other places.

The article concludes that spurring growth in tech-industry jobs “offers no panacea for low-wage jobs: If anything, it makes a bad and highly unequal situation even worse.”


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