Tyler links to this post noting that it seems to be Trading one kind of inequality for the other.

Sides of the Same Coin: U.S. “Residual” Inequality and the Gender Gap (PDF):

In this paper, we show that the two major developments experienced by the US labor market - rising inequality and narrowing of the male-female wage gap - can be explained by a common source: the increase in price of cognitive skills and the decrease in price of motor skills. We obtain the implicit price of a multidimensional vector of skills by combining a hedonic price framework with data on the skill requirements of jobs from the Dictionary of Occupational Titles and workers’ wages from the CPS.

We find that in the 1968-1990 period the returns to cognitive skills increase four-fold and the returns to motor skills decline by 30%. Given that the top of the wage distribution of college and high school graduates is relatively well endowed with cognitive skills, these changes in skill prices explain up to 40% of the rise in inequality among college graduates and about 20% among high school graduates. In a similar way, because women were in occupations intensive in cognitive skills while men were in motor-intensive occupations, these skill-price changes explain over 80% of the observed narrowing of the male-female wage gap.

It's an interesting thesis. I'd like to see if this skills-based analysis holds up in other OECD countries too.

I think this is a false dichotomy. It isn't cognitive vs. motor skills, it's different types of cognitive skills. The false assumption here is that labor is merely brute force - that there is no knowledge, skill, judgement or thought required. This makes no sense at all if you have ever tried to do any of the older trades that have lost value in the market. They aren't easy to do no matter how fine your motor skills, and being productive is harder yet. Do it well, do it fast, and make a living. It ain't easy.

Seeing that it is the evolution of cognitive skills that accounts for changes in wages clarifies the issue, and underscores Tyler's post title: Trading one kind of inequality for the other. But it isn't quite as he conceives it since it is various cognitive skills that are unequally compensated.

Why? That ain't fair. Well, it wasn't fair before either and it won't be fair in future. Egalitarianism is a foolish idea though we seem wired to whinge about it. There are always skills-of-the-moment that are in higher demand than others. You can teach old dogs new tricks, but they are still old dogs and that can be a problem. I'm a retread, a drifter that has worked several trades and professions over time, and it's odd to be a decade or two older than others working at the same hierarchical and seniority level. You are treated as a less valuable resource, one with less potential, and must achieve above the pack to be equally rewarded.

I don't think this can be fixed. Trying to level things would degrade the whole system and make everyone worse off, while also failing to eliminate inequity. Tyler is right in this: it just trades one sort for another. We can care that some people get a raw deal from life, even if they share responsibility for choices that led to these results, and we can throw them a bone or two, but we can't fix it.

At best we can gain insight and a more realistic attitude. Good fortune is in part just that: luck. And luck is in part good timing: the right stuff at the right time and place. In the day, when automobiles were new fangled things, their service technicians were fairly high status people with esoteric knowledge. Now they are casually dismissed as people with motor skills. (No pun. OK, no intentional pun). The same has happened, and continues to happen, to people with computer related skills. They were overvalued at one point and are on their way to being undervalued now: the auto mechanic of the 80's so to speak. Will unthinking academics treat them similarly, dismissing their skills as mere motor skills (typing, mousing, the ability to go without sleep, etc.)? Probably. But they are still wrong. Are all academics paid the same? Are some cognitive skills of higher value there too? Is the Phd. burger flipper a myth?