Posted by: Josh Lehner | January 13, 2015

2015 Outlook: Middle-Wage Jobs

This week we’ll take a look at both the middle-wage job outlook in Oregon, and examine when the state may hit full employment, or when the labor market is fully healed. Get caught up to speed with the Economic Recovery Scorecard.

Our office defines the much-discussed category of middle-wage jobs as follows, based on our job polarization work (see full report, see short update.) It is important to point out that this analysis focuses on occupations and not industries of employment. Job polarization is occurring at the occupational level and is present across nearly all industries and firms. From our report:

Although [middle-wage jobs] still represent a majority of the workforce, their share of the job market is shrinking rapidly. For the past three decades, employment growth has become polarized, with the majority of job gains occurring at the high and low extremes of the wage distribution. The primary factors contributing to this polarization, including the effects of both technology and globalization, are expected to continue throughout this decade.

OccMedianWage2013

Middle-wage jobs accounted for over 8 out of every 10 job losses during the Great Recession in Oregon and only a small minority of the job gains through 2013. However 2014 was a much better year with middle-wage job growth of 2.7 percent, along the lines of overall job gains in the state. This means Oregon has regained 40 percent of its lost middle-wage jobs so far, even as the overall number of jobs in the state is currently at an all-time high. This is the typical business cycle pattern seen in each of the past 3 recessions where many middle-wage jobs are eliminated during downturns and are not replaced to the same degree as both high- and low-wage jobs during the subsequent expansion. What is the outlook for these jobs more broadly, especially considering the processes of polarization are expected to continue?

Key Middle-Wage Outlook Points

  • Middle-wage jobs are not going to be eliminated completely. Polarization results in a smaller share of middle-wage jobs as growth is strongest at the high- and low-ends.
  • Much of the recessionary losses and recent gains can be tied to two occupational groups: construction workers and teachers. As the housing market continues its rebound and as public sector budgets improve, so too will middle-wage jobs.
  • Key question is how fast (or slow) will polarization occur this decade. It is likely to be muted in the near term as cyclical gains in housing and government support jobs, however there remain structural impacts due to globalization and technology. The error bars in the graph below show jobs under various polarization scenarios.
  • Middle-wage jobs in Oregon are expected to reach pre-Great Recession peak numbers in 2017. However at that time they will represent 61 or 62 percent of all jobs, whereas back in 2007 they accounted for 66 percent of all jobs. Even under a reasonable, best-case scenario, the share will not return.

ORMidWage

Additional thoughts on the drivers of middle-wage job growth from our report.

While the upper middle-wage jobs can be considered as being driven by population growth, these lower middle-wage jobs can broadly be considered as business support occupations. Administrative Support, Sales and Transportation all act as suppliers of labor and services to other businesses or employees. With increases in business operations, including headquarters, the demand for such occupations will increase even if technological advancements continue to eliminate a portion of these jobs. This provides an opportunity for continued investment into activities that foster both an entrepreneurial business climate and also recruitment and retention efforts of existing firms. The loss of significant headquarter operations in Oregon over recent decades has decreased the demand for some of these business support firms and workers.

All told, the outlook for the number of middle-wage jobs in Oregon is relatively bright today. Growth will likely be slowest among the production and admin/office support occupations but for the rest, 2015, 2016 and 2017 should all be pretty good growth years as the cyclical gains continue as the recovery becomes more broad-based in nature. However, over the longer term, the relative share of jobs is expected to continue to decline as high- and low-wage jobs see stronger growth.


Responses

  1. […] week we already took a look at the middle-wage job outlook in Oregon. Today we’ll introduce a new measure called the Total Employment Gap and examine when Oregon […]

  2. […] has been made as the state has finally regained all of its lost jobs due to the Great Recession, middle-wage job growth returned and the like. Our office expects 2015 to more of the same, with some expectations for better wage […]

  3. […] That being said, middle-wage jobs still trail the top and bottom. Specifically, while high- and low-wage jobs have fully regained their recessionary losses and never been more plentiful, middle-wage jobs have regained just 43 percent of their losses and remain 4.6 percent below their peak levels. A majority of Americans are still employed in these occupations (62 percent), and while middle-wage jobs will continue to increase in aggregate, their share of the labor market is shrinking. See here for more on the middle-wage job outlook. […]

  4. […] as the economy has and is transitioning more and more to services. Additionally, see here for our office’s outlook for middle-wage jobs more […]

  5. […] overblown. The fears that middle-wage jobs are being lost forever is slightly overblown, see our middle-wage job outlook for more on […]

  6. […] as the economy has and is transitioning more and more to services. Additionally, see here for our office’s outlook for middle-wage jobs more […]


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