Oregon Office of Economic Analysis

This coming Thursday, October 24th, our research report — Job Polarization in Oregon — will be released. [UPDATE: the report has been released, click here] I will also be presenting the report Thursday morning at the 10th Annual Oregon Economic Forum, held at the Portland Art Museum. What follows is a brief primer on the subject with the full report and slides available on Thursday.

From the paper’s introduction:

Job polarization refers to an increasing concentration of jobs in occupations at both the high and low ends of the wage scale, with a relative shrinking share of middle-wage jobs. For now, the majority of Americans, and Oregonians, continue to be employed within middle-wage occupations. However, employment growth over the past three decades has become very polarized, with this trend projected to continue in the coming decade.

A growing body of research has illustrated these changes at the national level and at least a partial consensus is forming as to why this polarization is occurring. The two most common explanations involve technological change and globalization—factors which certainly are not mutually exclusive. The role of technology, including the computerization of the workplace, is generally considered the most significant contributor to job polarization. Technological investments often involve the automation of what may be termed routine work, allowing each individual worker to be more productive and allowing firms to get by with fewer workers.

Much of the research has been focused nationally, led by MIT Professor David Autor and co-authors, with little done on a regional or local level. Our office’s report is designed to highlight job polarization trends in Oregon over the past thirty years and how the Great Recession has impacted the labor market. As noted by Jaimovich and Siu (2012), recessions exacerbate the job polarization process, with most job losses among the middle-wage occupations. Making matters worse, the lack of growth among middle-wage occupations in the early stages of the expansions has resulted in the jobless recoveries experienced in recent decades. In other words, many jobs in middle-wage occupations are eliminated during economic downturns and are not replaced to the same degree as both high- and low-wage jobs during the subsequent expansion.

The graphs below illustrate this process during and after the Great Recession. While Oregon lost 8 percent of its jobs overall, high-wage occupations only lost 2 percent of employment, while low-wage occupations lost 3.5 percent. The vast majority of the job loss during the recession occurred in both the upper middle- and lower middle-wage occupations.

Two years into the labor market recovery the same general job polarization pattern has emerged. From 2010 to 2012, job growth has been dominated by both high- and low-wage occupations. The counterweight to the gains at the high and low ends, are the small gains seen in the upper middle-wage group and continued losses in the lower middle-wage group.

Stay tuned for the research report’s release on Thursday. The report covers much more material including taking a closer look at occupations, how the different decades changed Oregon’s labor market, and some policy considerations for middle-wage jobs. Education plays a vital role, however it is not the be-all and end-all for finding a middle- or high-wage job.