In recent decades, the American labor market has undergone major restructuring. Employers have demanded higher skill levels. Workers have stayed in school longer, and it's paid off.
Here are four charts explaining how the economy and job market have transformed — and who has benefited from the upheaval. They're drawn from a new study by Georgetown's Anthony Carnevale and George Washington University research professor Stephen J. Rose.
Americans shifted their budgets away from food and clothing between 1947 and 2007 as such items became easier to produce and cheaper. Consumers began allocating more of their cash to high-skill, service-heavy industries, including healthcare and business services.
What's more, how we produce things changed. Even for something like food, services are now a huge input. Actual farming and fishing account for just 5 percent of the value of food products, as shown in the graphic below. Restaurants and grocery stores make up a combined 28 percent.
As high-skill services became dominant, the supply of educated workers increased to meet labor demand. The share of working Americans with a bachelor's degree climbed by 14 percentage points to 21 percent between 1967 and 2012, while the share with an advanced degree climbed by 6 points to 11 percent. High-school dropouts made up just 10 percent of the workforce in 2012 — down 28 points.
Demand for high-skilled service workers fed through to wages, while less-educated Americans fell behind, as the graphic below shows.
The takeaway from all of this?
"There is an intimate fit between the rise of our new service economy and the huge increases in educational attainment of our workforce," Carnevale and Rose write. They credit about 20 percent of "upskilling" to changing consumer demands and the other 80 percent to changes in how we're producing. "Today’s educated workers are needed to run our increasingly skill-driven economy."