Mid-Level Income Jobs Not Increasing

A lot has been made about the hollowing out of America, also called “job polarization” by economists.

It happened during the recession when the employment in mid-wage occupations declined by a larger number than lower-wage or higher-wage occupations dropped.

Since the recovery began, job growth has been lagging in mid-wage occupations. The greatest increase has been in lower-wage occupations, such as jobs in retail and food services.

Growing income inequality is a concern if the reduction in mid-wage jobs is part of a long-term trend as opposed to the temporary effects of recessions.

In fact, the last three recessions were associated with a “jobless recovery” where output grew for several quarters while employment growth remained lethargic.

A 2012 study by Nir Jaimovich and Henry Siu for the National Bureau of Economic Research, using data since 1970, showed that job polarization mainly occurs during economic downturns and is not a gradual phenomenon that takes place over the long run.

Moreover, the jobs that are lost to technological advancements and more liberal trading policies are often middle-waged jobs that focus on routine tasks.

Are mid-wage jobs growing now that we are in the fifth year of the expansion?

Twenty-two percent of the jobs created in the nation from 2012 to 2013 were mid-wage jobs, according to the latest occupation data from 2013 figures by the Bureau of Labor Statistics. (Mid-wage jobs are occupations with median hourly wages from $13.84 to $21.13, or the equivalent of annual income of $28,510 to $43,950.

A much higher percentage of jobs created during the same period came from lower-wage positions (42 percent) and from higher-wage occupations (35 percent).

Overall, mid-wage jobs accounted for 27 percent of the workforce, compared with 38 percent for lower-wage jobs, and 35 percent for higher-wage jobs.

The mix was even worse in Virginia. The state also had 22 percent of jobs created over the same period in mid-wage positions, but 58 percent were lower-wage occupations and 21 percent were higher-wage ones.

The substandard trend in Virginia is probably a result of federal government cuts that are impacting the economy.

In this sense, Virginia’s economy is undergoing a restructuring similar to a business cycle downturn that is dampening growth in middle-wage jobs in industry sectors such as construction and professional services.

A different trend is emerging in the Richmond metro area where employment in mid-wage jobs is growing faster than the nation. Mid-wage jobs made up 41 percent of all jobs created between 2012 and 2013 compared with 49 percent for lower-wage positions and 10 percent for higher-wage ones.

Although the latest occupation data through 2013 is not showing a lot of support in the nation or state that mid-wage jobs are returning, national industry employment from the Bureau of Labor Statistics through June 2014 is showing some promising signs.

Employment in the construction industry that employs many mid-wage occupations is up 3 percent from a year ago and residential builders have expanded their payroll by 8 percent over the same period.

Employment also has grown 1 percent over the same period in manufacturing which also hires many mid-wage occupations.

The more recent industry data show signs of hope for mid-wage jobs.

(This article first ran in the Richmond Times Dispatch.)

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