Cities are expensive. But it’s not only skyrocketing rents and increasing cost of living that are making them harder and harder places to live for non-wealthy residents. A lack of middle-class jobs for people without a four-year college education is also to blame. Decades ago, someone without a four-year degree could still make a middle-class living in an urban area, but now those jobs have largely disappeared. And the loss has hit Black and Latino workers the hardest.
Middle-skill jobs have been declining across the U.S. since the 1980s in a shift mostly felt by non-college educated workers (and the majority of American adults do not have a four-year degree). MIT economist David Autor wanted to understand how this related to different regions. “My assumption was rural areas are just hollowing out and cities are where all the action is for everybody, and I was shocked to discover the opposite,” he says.
Historically, cities offered distinct jobs to workers without high levels of formal education, like in offices and factories where workers developed valuable skills and worked alongside highly educated employees. In recent decades, that offering has gone away. “The urban advantage for less-educated workers has just kind of collapsed.”
Now, the jobs that are increasingly available to city residents without a four-year degree are mostly in fast food, as home health aides, and in transportation—jobs that “take care of the physical needs and comforts of others, especially the affluent,” Autor says, but are not actually in collaboration with them. That means the work is more “generic,” and these jobs are often low paid without an opportunity for upward mobility. “They’ve been pushed downward in the occupational hierarchy,” he says of these workers.
Autor published his findings in a new white paper released in partnership with the Aspen Institute’s Economic Strategy Group and MIT’s Work of the Future task force, which he cochairs. He looked at U.S. census Bureau data and referred to his previous work on changing labor markets to show how what he refers to as the “escalator” of urban opportunity has stopped moving.
This has affected everyone without a four-degree—between 1980 and 2015, real wages for non-college workers fell in six of the eight biggest cities—but Black and Latino workers have seen the biggest income losses. In that same period, in the top city labor markets, white non-college workers saw their employment in medium-paying jobs drop about 7%. For Black and Latino workers, it was between 12 and 15%, with almost no change in the number of those workers entering high-paying jobs.
This loss in earnings is so stark that it alone would be enough to price these communities out of cities, even without rising rents. Economists have pointed to skyrocketing rents and increased costs of living for why non-college workers have stopped moving into cities, and though that’s true, it’s only half the story. “What this evidence shows is that . . . the urban advantage for non-college workers has fallen so much that they were just losing ground even without the housing costs [rising],” Autor says.
Enough middle-class jobs aren’t likely to come back to cities, especially as the country still grapples with the COVID-19 pandemic and its economic effects. But Autor says raising minimum wages to city-specific levels would help. This may raise costs for customers and cause inefficient businesses to close, but higher minimum wages “are surprisingly effective at improving the incomes of workers in low wage jobs,” he says, “and they don’t seem to have noticeable adverse effects on employment.”
Another policy Autor suggests involves moving people out of certain big cities and into other midsize areas where they may find better employment, though he acknowledges this is tricky and a bit uncomfortable to consider. Still, the good news is it’s not bad everywhere. Wages and occupations have improved in nonurban areas. That doesn’t mean there are more, better jobs in rural Kansas than New York, but that midsize places like Salt Lake City have fared well for these workers.
During the pandemic and the widespread protests across the country, Autor thinks this research speaks to how frustrated a lot of minorities feel in America about how little progress has been made in recent decades. That’s in terms of racism and police brutality, but also in the expectation of a growing middle class.
“There seems to be still more of a swimming upstream notion that we all had anticipated,” he says. “I think there’s a real legitimate sense of, is opportunity available? Is the American Dream still feasible, or is it just the economic tide is running against you? This feels like a story of, certainly in cities, the economic tide running against the majority of citizens.”