The Globe 100: The best of Massachusetts Business, 2009
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Acemoglu: Workers need to adapt

Skills and flexibility will mark workers of the future in the US labor market

By Daron Acemoglu
May 19, 2009
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It's no comfort to millions of families suffering hardship today, but the economy will get better, eventually. But we should not expect all to benefit equally from a labor market recovery. The trends of the past 75 years have moved inexorably towards greater rewards for workers with greater skills and education. Gone are the days when high school graduates could expect high-paying jobs with generous benefits, and college graduates without postgraduate degrees could count on secure managerial jobs with steady raises.

Technological and social changes transformed the US labor market long before Wall Street started playing with credit-default swaps. Scores of unskilled and semiskilled workers have been replaced with new machines operated by just a couple of highly educated employees. This transformation has been heightened by manufacturing and even managerial jobs migrating to foreign lands, where labor is cheaper.

As a result, the US workforce has concentrated where our comparative advantage is: innovative sectors such as biotech and computers, high-tech services such as healthcare, and, alas, finance. There is no point blaming trade or outsourcing. They are just part of the unrelenting trend away from unskilled labor.

So if we cannot expect marked improvements in the fortunes of even workers with bachelor's degrees, is the future just bleak? Not necessarily. The demand favors not only those with MBAs and MDs, but all workers with skills and flexibility. This is a good a time for workers to invest in themselves, to take advantage of the downtime in labor markets to learn new skills via vocational courses, training programs, and community college and university courses. In the future, there might not be plenty of high-paying jobs for everyone. But there will always be opportunities for those with the right qualifications and the ability to adapt to changing environments.

Daron Acemoglu is Charles P. Kindleberger professor of applied economics at MIT and the 2005 winner of American Economics Association's John Bates Clark Medal.