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Low-Skilled Workers Everywhere are Getting Squeezed

Production fragmentation is the process by which different businesses, sometimes across nations, produce different parts of what will be a final good. Walter Frick examines this phenomenon for the Harvard Business Review, and he finds that low-skilled workers have the most to lose from its spread.

Pressure Point

Frick uses a paper from the Journal of Economic Perspectives in his analysis. It finds that from 1995 to 2008, low-skilled labor has met with large decline in financial value, whereas the value of high-skilled labor has gone up in similar proportion. Medium-skilled work and capital have also gone up slightly. Frick finds that low-cost labor is often a source of competitive advantage in an economy, and so we are not making the best of the resources available to us if we continue to discount its value. He concludes that regardless of where you live right now, high-skilled labor and capital are going to “reap the highest returns.”

You can read Frick’s full HBR post here: http://blogs.hbr.org/2014/05/low-skilled-workers-everywhere-are-getting-squeezed/

About John Friscia

John Friscia is the Editor of Computer Aid's Accelerating IT Success. He began working for Computer Aid, Inc. in 2013 and continues to provide graphic design support for AITS. He graduated summa cum laude from Shippensburg University with a B.A. in English.

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