Most rich countries hire back workers after a recession. The U.S. replaces them with machines

Economists have recently discovered that it’s middle-skill routine jobs -- think of cashiers, telemarketers, or cooks -- that tend to get eliminated in jobless recoveries. In a landmark paper titled “The Trend is the Cycle: Job Polarization and Jobless Recoveries,” Nir Jaimovich and Henry Siu found that it’s these workers who aren’t being hired back in the U.S. after recessions hit. In fact, the much-feared phenomenon of job polarization -- the separation of the labor market into low-paid grunt work and high-paid knowledge work -- happens entirely during these U-shaped recoveries. But does this happen in other countries? If not, there might be policy steps the U.S. could take to prevent this from happening. In a new paper called “Is Modern Technology Responsible for Jobless Recoveries?,” economists George Graetz and Guy Michaels looked at 17 different developed countries, from 1970 through 2011. The title refers to the hypothesis that companies replace routine workers with machines. Graetz and Michaels basically find that the modern jobless recovery is a phenomenon unique to the U.S., and that other nations manage to quickly re-employ their middle-skilled workers once bad times end.

Read more... Bloomberg News