One feature of present day economic stagnation, is interfirm inequality, which has become more pronounced in recent decades. Much of this has been driven by changes in core and peripheral economic activities which were once included in the same institutional settings. As the economic core of economic activity becomes closely aligned with high skill levels, lesser skills are spun off into separate firms, which consequently feature lower income levels. And since populations now prefer to cluster according to income commonalities, employees of peripheral firms aren't always able to generate common spaces with core firms, where those spaces would still prove beneficial to all concerned.
Much of the separation of core and periphery can be correlated with a growing prominence of non tradable sector activity, in relation to tradable sector activity. Nevertheless, automation in word processing, is one factor which contributed to a substantial amount of firm division, regardless of sector. For instance: In the seventies, I was one of many others who took a chance on office work providing income similar to what a four year college degree could offer. Indeed, in the seventies and early eighties, this was still the case. Hence when baby boomers such as myself lost access to office work with traditional benefits, the new option was periphery firms, in which workers were closely packed in small spaces, with work largely bereft of benefits or reliable full time schedules.
Granted, traditional secretarial and administrative assistant positions, still exist alongside core economic activities. Nevertheless, these jobs are now mostly reserved for individuals with college degrees. Prior to the separation of core and peripheral work, secretaries and other office workers once shared office space, local neighborhoods, and other cultural attributes, with firm management.
Why might the separation of core and periphery be more prominent in non tradable sector institutions? While tradable sector activity separates many production processes prior to final product, non tradable sectors may not need to separate core production processes as frequently. In other words, a wider range of tradable sector firms have more "skin in the game" for wealth creation, since product components are built at multiple locations. Spreading production responsibilities more equally, means the possibility of less income divergence, across tradable sector firms.
Unfortunately, wealth redistribution isn't so simple, when product is more closely defined as knowledge or skill. When final product value is closely held, firms are more likely to keep the most important (core) activity in single settings, while contracting for work not essential to final product. Hence wide income differentials become segmented by company definition and job function.
Decades earlier - once opportunities for secure office work diminished - it was an easy decision for me to abandon peripheral office work for more lucrative options. Today, however, potential employees may refuse peripheral work for different reasons entirely. Again, geographic income clustering presents a coordination problem, since low income clusters usually travel further to reach work locations. Hence transportation issues figure prominently, in the personal reservation wage of potential employees.
More peripheral functions are likely to be automated over time, for firms which find it difficult to hire and retain workers close nearby. Consider also, why the revenue dependence of non tradable sectors makes it more difficult to redistribute income, given the level of compensation necessary for employees who committed to extensive human capital investment via their own means. Only remember that this form of organizational capacity has to reimburse human capital input which is not internally generated.
When firms can't find the skills they need, it helps to consider the overall economic circumstances. Demand for specific human capital has shifted over time, to what is not as widely available via formal education, by definition. In other words, the skills these institutions still need, are not broadly represented by existing educational institutions for good reason. To prepare for skills in current demand, is to suggest more educational provision of these skills, which in turn makes the effort less of a strategic advantage, over competitors.
Problems such as these in both core and peripheral organization, also suggest a level of system fragility. Too little skills capacity is actively being sought, for nations to feel confident about their economic futures. The separation of core and periphery, while an understandable response to general equilibrium demands, no longer offers system wide possibilities for full employment.
Tradable sector activity has been able to share income and benefits more broadly, in part because integral parts of production have been divided among different participants in the process. Also important, is the degree to which resource capacity for inputs and outputs alike, is internalized. Fortunately, time arbitrage could also internalize inputs and outputs for time based services, so that more participants would ultimately be able to share in the benefits of the entire process. Given how populations prefer to cluster in similar income groups, it is becoming increasingly important, to generate non tradable sector organizational patterns which are aligned for a full range of local skills capacity.