Studies of the nature of blue-collar and white-collar work are conducted in a variety of social sciences, most notably economics and sociology. Although methodologies often differ in those disciplines—for example, sociologists are more likely to perform case studies, whereas economists generally use statistical analyses—the underlying phenomena are the same. Both fields study the decision-making behavior of workers, including how they choose an occupation and what constrains their choices. Those occupational choices affect their work lives, their social class, and the society as a whole. For instance, in 1945 the humorist and poet Odgen Nash observed, "People who work sitting down get paid more than people who work standing up." Many people who work standing up are employed in blue-collar jobs, and most people who work sitting down are in white-collar occupations.
DEFINING BLUE-COLLAR AND WHITE-COLLAR WORK
The distinction between blue collar and white collar arose from the blue uniforms traditionally worn by men performing manual labor, in contrast to the white button-down shirts worn by men in professional occupations. These uniforms have become less prevalent with time, but it is possible to observe important differences between those occupational classifications. Blue-collar work can be unskilled, low-skilled, or highly skilled, ranging from relatively simple assembly-line manufacturing to the use of computerized equipment by automobile mechanics. Unskilled work does not require a great deal of training or human capital formation. Human capital is a worker’s productive capacity: his or her knowledge and skill in per forming tasks. Common methods of acquiring human capital include formal schooling, apprenticeship programs, and on-the-job training. In addition, blue-collar jobs generally involve manual labor and physical tasks. Some of the occupations in this category are construction, maintenance, carpentry, assembly, plumbing and heating, typesetting, and truck driving.
Blue-collar workers often are paid an hourly rate and are eligible for overtime pay. Traditionally, many union jobs have been blue collar, and union bargaining power has contributed to higher wages for those workers.
Some aspects of blue-collar jobs are unpleasant, such as the risk associated with construction, fire fighting, and law enforcement. In general blue-collar work is often standardized and less autonomous than other types of work. Particularly in manufacturing, workers have seen periods of low job security for many reasons, including the substi-tutability of physical capital, which is the machinery and equipment used in production. Throughout the twentieth century production processes became much more capital-intensive as machines were introduced to perform tasks that previously had been done by workers. Another important characteristic is that blue-collar work has been done mostly by men. For instance, in 1999, 38 percent of male workers were employed in blue-collar occupations whereas only 9 percent of women were.
White-collar jobs generally require a fair amount of formal schooling, including college degrees ranging from associate’s degrees through professional degrees such as medicine and jurisprudence and academic degrees such as doctorates. Much of this white-collar work is performed sitting at a desk in an office environment, such as engineering, architecture, and bookkeeping. Many of these jobs are well paid, largely because of the amount of education and skill building required to enter these occupations. The acquisition of human capital also spurs greater income growth over time.
Highly educated workers who develop expertise receive promotions within the corporate hierarchy. White-collar jobs often require strong communication skills, either written or oral, for working in teams, communicating with clients or customers, and conveying information within the company. Many white-collar jobs, particularly professional and technical jobs such as accountancy, law, and computer technology, are paid on a salaried basis. Hours worked per week tend to be very high in highly skilled white-collar jobs, with some employees spending more than sixty or seventy hours per week working. Corporate culture and promotion goals account for the long hours, and companies have an incentive to encourage salaried employees to work more hours because those workers are not eligible for overtime pay.
Throughout the twentieth century the majority of job growth was in the service sector. According to definitions from the U.S. Department of Labor, service occupations include health-care support jobs such as nursing and physical therapy; protective service jobs such as police and security work; food preparation; building and grounds maintenance; and personal services provided by hairstylists, child-care workers, flight attendants, and animal care workers. The service sector is not uniformly blue collar or white collar. For instance, washing dishes in a restaurant clearly involves manual labor and little training, but nurses are highly skilled professionals. Many of these workers are paid an hourly wage, but few are unionized. Some jobs, such as chefs, require not only strong communication skills but also the ability to manage a large staff.
TRENDS IN BLUE-COLLAR AND WHITE-COLLAR JOBS
In the mid-1950s well over 30 percent of American jobs were in manufacturing, and in the next fifty years that declined to 17 percent, whereas nongovernment services rose from 48 percent to 67 percent of all jobs. In the late twentieth century American employment in agriculture and manufacturing declined substantially, whereas construction and transportation jobs became more prevalent, revealing a new composition of blue-collar work in the United States. At the same time there have been vast increases in professional and technical work as well as work in the service sector and retail trade. There are also substantial differences in hourly pay rates across types of jobs. As is shown in the illustration, white-collar jobs are very well paid, with professional and technical workers earning approximately $30 per hour on average in 2005. In contrast, blue-collar workers received $15 on average, with those working in skilled craft and repair fields earning more and laborers earning less. The lowest-paid work was in the fastest-growing sector; service workers earned an average hourly wage of $11.
There are many sources of the changing mix of jobs from traditional blue-collar to white-collar work. One of the most important factors has been the steady increase in educational attainment in the U.S. population. In the early 1900s, 38,000 Americans earned bachelor’s degrees. By 2000, well over one million Americans completed that level of education. Both men and women have pursued higher education in greater numbers. In 1940 just over 5 percent of men age twenty-five and over and nearly 4 percent of similarly aged women earned college degrees. By 2000 those proportions grew to 29 percent and 24 percent, respectively. In the early twenty-first century many students entered college because it appeared that a college degree was necessary for a good job: one with a high salary, good benefits, and pleasant working conditions. Therefore, the characteristics of the labor force (the labor supply) have changed substantially. Though some blue-collar jobs are highly skilled, few require a college degree. The majority of highly educated workers seek and usually find white-collar jobs.
In basic labor economic theory it is expected that vast increases in the supply of a certain type of labor will coincide with downward pressure on wages. If companies have a seemingly endless stream of potential hires, there is an incentive to lower costs by offering lower wages. However, the data reveal that the earnings of college graduates have grown substantially so that the premium for degree recipients compared with those with only a high school diploma has remained high. Many researchers have focused on estimating the returns to formal schooling to better understand this dynamic. For example, in 1974 Jacob Mincer found that each year of schooling provides 10 percent higher earnings on average for white men. Furthermore, those returns to college education are greater in the United States than in most other Organization of Economic Cooperation and Development (OECD) countries, helping explain why increasing numbers of young people pursue those degrees and fewer work in manufacturing and trades.
In addition, the technology used in production has changed significantly. During the nineteenth and twentieth centuries electricity and internal combustion engines fueled the transition from a mostly agrarian society to a highly industrialized nation. Into the twenty-first century advances in telecommunications and computers have led workers away from manufacturing and into more service jobs. The use of technology has coincided with more productive workers, but there is also more capital that substitutes for workers, particularly in traditionally blue-collar jobs. Increased use of computers has led to consistently increasing demand for white-collar workers who use that physical capital in production, particularly employees who use personal computers at work.
It is assumed that companies consistently maximize profit and lower production costs. Common methods of cutting costs have had a disproportionately negative impact on blue-collar workers. In the 1970s and 1980s the United States saw many mass layoffs in manufacturing, most prevalently during times of recession, when many companies coped with deficient demand by closing plants. In some cases plants were moved out of the Northeast and Midwest and into the South for cheaper labor. In the 1990s layoffs were used more commonly to restructure firms and increase competitiveness. Some already profitable firms used layoffs to generate even more profit. Overall, in the last decades of the twentieth century over 10 percent of American jobs were lost through business contractions and plant closings.
Workers who have been laid off generally face a permanently lower standard of living. The workers who find a new job earn 15 to 40 percent lower wages than they had previously. One reason for this has been the prevalence of seniority-based raises in the manufacturing sector. Workers who displayed loyalty to the firm were rewarded with higher earnings and more vacation time during their long tenure. A worker who begins at a new plant therefore starts over with a lower wage. In addition, layoffs can cause persistent unemployment if workers have obsolete skills. This happened with many blue-collar jobs as the mix of production in the United States moved from manufacturing to service.
In the twenty-first century, firms continued to move production processes in order to become more profitable. Rather than move within the country, it is increasingly common to move offshore. This practice of offshoring is related to outsourcing. Outsourcing entails moving a business function (often administrative) out of the firm, and many companies do this with human resources or marketing. Offshoring occurs when a company moves some of the business (managerial, administrative, or production) to another country. Many jobs have been moved to Asia. In fact, after China entered the World Trade Organization in 2001, many manufacturing jobs were relocated there from the United States. The majority of American jobs lost to offshoring have been in blue-collar manufacturing, but white-collar workers have not been immune to this trend. For instance, advances in technology and computer support in India have led many American firms to employ white-collar workers there.
PRIMARY AND SECONDARY LABOR MARKETS
In the early twentieth century John Stuart Mill (1909) observed a lack of competition across segments of the labor market. He described one sector that required a fair amount of training and another that did not. Basically, the direct and indirect costs associated with the training kept some workers from competing in the market for well-paid jobs. Direct costs include out-of-pocket costs for training and the related supplies and materials. The indirect cost of forgone earnings arise because the time devoted to skill building is not devoted to work that earns a wage. Many in Mill’s class of "labourers" therefore were unable to take the time necessary to pursue higher-status occupations because they could not afford the associated costs. Thus, the labor market is seen as being segmented into two parts: a primary market and a secondary market.
Primary labor market jobs are characterized by good earnings, job security, a reasonable probability of promotion, good benefits, and agreeable working conditions such as autonomy and a pleasant working environment.
Many white-collar jobs match this description, and those jobs are plentiful and growing. Blue-collar jobs that are within the primary market appear in construction, mining, durable goods manufacturing, and transportation. In contrast, secondary labor market jobs have low earnings, few or no fringe benefits, high turnover, little job security, and few or no promotions. Many blue-collar and service jobs fit this description, and continuing increases in the service sector could create a larger secondary labor market. In this market, there are no clear returns to education and in some cases there are negative returns to experience.
OCCUPATION, INCOME INEQUALITY, AND SOCIAL MOBILITY
A person’s social class is defined by many factors, including income, wealth, education, location of residence, and family background. Occupation is also a main determinant of social class in terms of prestige (for example, surgeon versus construction worker), education required, and earnings received. White-collar jobs traditionally have paid well and carried more prestige than blue-collar jobs, contributing to common attributions of working-class or middle-class Americans. In the mid-twentieth century many working-class Americans had relatively good blue-collar primary market jobs in manufacturing. In contrast, working-class jobs around the year 2000 were more common in the service sector. Those secondary market jobs are not prestigious or well paid, in stark contrast to the growth of quality white-collar jobs for middle-class and upper-class Americans.
Concurrent with changes in class in the United States was the rise of income inequality throughout the twentieth century. To understand the nature of this inequality, it is valuable to make comparisons within the OECD countries, which include nations in North America, Europe, and some parts of Asia. Approaching the year 2000, the United States had the most unequal distribution of post-tax income. Many developing countries have even more inequality, but the best comparison group appears to consist of countries that are similar in industry mix and economic health: those in the OECD.
There are many sources of the unequal distribution of income in the United States. From the 1940s to the 1970s real mean wages rose, but in the next thirty-five years real wages were stagnant. The overall income distribution became more unequal, and more Americans lived in poverty. One of the commonly cited reasons for this is the lack of increases in the minimum wage over that period. Because minimum wages are raised only by government mandate, the legislature must vote on increases. No adjustments are made for purchasing power. If there are no legislated increases for a lengthy period, any wage gains are eroded by inflation (higher prices). At the same time more highly paid white-collar workers saw increased earnings, and in the United States the rich did become richer in the twentieth century.
Another factor explaining low wages for blue-collar workers is the decline in unionization. Compared with most West European countries, the United States has low union rates. In 2004 the percentage of workers covered by collective bargaining agreements was 68 percent in Germany, 33 percent in the United Kingdom, 93 percent in France, and only 14 percent in the United States. However, some strong U.S. unions remain in transportation, utilities, and construction jobs. In contrast, the growing service sector has few unions, and attempts to unionize those workers are generally unsuccessful. Labor economists debate the value of unions. Some cite unions as a potential source of gains for low-paid workers, whereas others believe that unions cause unfair restraints for businesses. When both blue-collar jobs and unions were more prevalent in the United States, the ratio of white-collar to blue-collar wages was lower than it became in the early twenty-first century; the premium to white-collar work grew as unions became weaker. In light of trends in wages and employment for white-collar, blue-collar, and service sector jobs, it appears that the U.S. income distribution is likely to continue expanding, with more inequality over time.