Job polarization, where the majority of the job gains are concentrated in both the low- and high-wage categories, is best seen in the occupational data. The U.S. Bureau of Labor Statistics releases occupational data once a year, as opposed to industry data every month. The 2016 occupational data was released today, March 31st. What follows is a brief update on polarization in the U.S. Next week I will dive into the state level data. See our office’s 2013 report for a more thorough and complete look.
Overall, the same job polarization trends we have seen this century continued in 2016. Job growth was strongest among low- and high-wage occupations. The good news is that middle-wage jobs are also growing, however they took a step back in growth in 2016. This slowdown is concentrated among the traditional blue-collar occupations. Installation, Maintenance and Repair jobs, and Transportation jobs saw slower growth. Construction did too which is interesting given the ongoing (slow) housing recovery. Production jobs — essentially the manufacturing jobs that do the manufacturing — saw very little growth. Some of this is to be expected given the fallout of the oil crash to end 2014 and the strong U.S. dollar.
The second chart shows the actual change in employment by wage group since the start of the Great Recession. The biggest problem with job polarization is that middle-wage jobs decline the most in recession and don’t come back all the way in expansion, particularly as a share of the economy. Job opportunities for middle-wage jobs is a declining share over time, particularly since the turn of the century. That said, middle-wage jobs themselves don’t decline forever. As the Federal Reserve Bank of New York noted last year, the actual number of jobs created were strongest among middle-wage occupations in recent years. This is good news, even as growth rates remain lower for such jobs.
When it comes to middle-wage jobs there are a few important things to keep in mind. First, they impact both men and women, particularly those without college degrees. While many of us know the story of the manufacturing decline hurting men without college degrees, the same thing is true for women and administrative and office support occupations. In fact, here in Oregon the relative decline of office support jobs for women and production jobs for men have been equal in recent decades.
Second, the outlook varies depending upon which middle-wage job you are looking at. Some middle-wage jobs are driven by population gains. The more people you have the larger the demand for artists, clergy, construction workers, police officers, plumbers, teachers, and the like. Locations with stronger population gains have seen better growth in these types of middle-wage jobs. The other types of middle-wage jobs can broadly be considered business support occupations. From our report:
Administrative Support, [some] 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.
Finally, if you want to slice the data differently, you can look at changes between manual and cognitive, and routine and non-routine jobs.
In the short-term, middle-wage jobs are expected to continue to grow along with the economy. Some cyclical rebound is still likely/needed for both construction workers and teachers in particular. 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.
I will have a lot more on job polarization here in Oregon next week and plan on diving into other states in the near future, including an update on other measures like state level Total Employment Gaps.