Introduction

One of the most widespread and durable presumptions about the modern American economy is that good middle-class jobs are an endangered species, threatened by the twin toxins of technology and globalization. This dark vision of a dwindling moderate-income job base has become so widely accepted that large segments of both major parties subscribe to it in one form or another; one is just as likely to hear this "populist" critique from conservative talk-show hosts as from union leaders.

But is it true? Does the torrent of news stories about companies shipping American jobs to less-developed countries actually represent an accurate portrait of a middle-class job market gone bust?

It is worth noting at the outset that the concerns about the effect of economic change on middle-class employment are too widespread, too passionately felt, and too enduring to be ignored. There is no doubt that many middle-class workers have been squeezed out of their jobs, and that, in more than a few cases, trade and technological change have played a role in these losses.

Furthermore, the intense concern about the fate of middle-class jobs is inextricably bound up in another set of issues too big to address in any kind of depth here: the fraying of the American social contract and deepening middle-class concerns about such important social goods as health care and retirement security. The increasing cost and fragility of our employer-based health and pension systems adds even greater intensity to any discussion of middle-class jobs; after all, losing one's job in America today can literally mean the difference between sickness and health for oneself, one's spouse, and one's children.

That being said, it is vital to develop a more precise understanding of the impact of trade and technology on job creation. While the Labor Department's unexpected news that the economy lost 4,000 jobs in August caused understandable concern, this single-month decline must be viewed in the context of three decades of employment growth. The American economy is a vast, complex entity, and in formulating policy, it is important to separate assumptions from facts. That is the objective of this paper.