Ahead of Wednesday’s forecast release, two quick notes on items that caught my eye recently.
First, as our office has written quite a bit about in recent years, job polarization continues to shape the economy and labor market. That is, jobs are increasingly concentrated at the low- and high-ends of the wage spectrum with shrinking opportunities in middle-wage occupations. The Federal Reserve Bank of New York, who pioneered the local and regional polarization work our office’s uses, has a very useful update they are using in their presentations. One key point when it comes to polarization is that these jobs do not decline forever, they do grow in absolute terms during economic expansions. In fact, as the NY Fed’s graph shows, middle-wage jobs increased in absolute terms faster than both low- and high-wage jobs in recent years. This is good news!
However this does not mean that job polarization does not exist. Middle-wage jobs should increase more in absolute terms given that they represent a larger share of all jobs. The problem with polarization is that middle-wage jobs decline the most in recessions and do not come back all the way during expansions. Thus as a share of the economy, middle-wage jobs are shrinking. This can be seen in the second graph which uses the exact same data and same categories but looks at growth rates instead. Clearly middle-wage jobs, while accelerating some, are still growing slower than both low- and high-wage jobs.
The point here is that it is important to look at both levels and rates. One can potentially be mislead when looking at just one part. The NY Fed did not try to mislead and I am not accusing them of that. Rather, I just wanted to flesh out the story a bit further. I also teach a data analysis and presentation module at Willamette University and this provides a good, new example to bring to class. There is considerably more art and less science than many think when it comes to data analysis and presentation. You need to understand the whole picture to know which parts you want to emphasize in your work. And emphasizing the fact that middle-wage jobs do not decline forever and are even doing much better in recent years is certainly important to do. That point does tend to get lost in the polarization discussion.
Item two is more of a funny data note. Coldwell Banker Real Estate crunched some numbers on the average list price for 4 bedroom, 2 bathroom homes across the country. As the Portland Tribune writes, in Oregon the highest list price is in Lake Oswego and the lowest average list price is in Klamath Falls. From this one can conclude that LO is the least affordable and K Falls is the most affordable place in the state, with the caveat you are trying to buy a 4 bedroom, 2 bathroom home today. Just to check, I wanted to see how these list prices compared with family incomes in the area. It turns out that the list price to family income ratio is nearly identical. While there are a variety of reasons that homes are more expensive in Lake Oswego and less so in Klamath Falls, one of the reasons is income. Just an interesting note on housing and affordability, or lack thereof.