Here’s where middle-class jobs are vanishing the fastest

August 27, 2013

There are a few broad trends in the U.S. economy getting lots of attention lately. The job market appears to be increasingly polarized, with high-paid and low-paid occupations growing quickly, while middle-class jobs are disappearing. And on top of that, median wages have stagnated over the past decade.

This is worth exploring a bit more in chart form. Catherine Mulbrandon of Visualizing Economics has created a graph looking at the industries where job growth has been fastest between 2000 and 2011, breaking it down by income:

That's one way to see the labor market getting increasingly polarized over the past decade, as industries with low average pay grow significantly and mid-range industries wither — mainly driven by the steep decline in U.S. manufacturing.

We can also focus specifically on the recession and its aftermath. Mark Thoma points to research from Joshua Lerner of the Oregon Office of Economic Analysis, looking at specific occupations rather than broad industries. Here the trend is even more pronounced (click to enlarge):

Since 2010, lower-wage jobs like food preparation and personal care have grown fast. So have high-end jobs in management, finance and health care. But a number of middle-class occupations, particularly teaching and construction, have continued to decline.

Here's Lerner: "Where we have seen slower growth is in the middle. The light blue bars, which I term lower middle-wage jobs account for about 40 percent of all occupations in 2012 yet account for just 26 percent of the growth. The dark blue bars, which I term upper middle-wage jobs, account for another 19 percent of all occupations and 0 percent of the growth. This, by definition, is job polarization."

So why is this all happening? In the New York Times, David Autor and David Dorn recently argued that labor-saving technological change has, over time, replaced a number of "routine" middle-class jobs like manufacturing, while leaving low-end service jobs and high-end positions largely untouched.

"As employment in routine jobs has ebbed," they note, "employment has risen both in high-wage managerial, professional and technical occupations and in low-wage, in-person service occupations." (Neil Irwin wrote more on the decline of routine jobs here.)

Over at the Economic Policy Institute, however, Josh Bivens argues that this sort of tech-driven polarization isn't enough to explain stagnant median wages over the past decade. "We would argue," he writes, "that institutional factors like the eroding value of the minimum wage as a labor standard and eroding protections for willing workers that want to form a union are more important drivers of inequality and disappointing middle-class living standards over the past generation."

Further reading:

-- Between 2000 and 2012, American wages grew... not at all.

-- How the recession turned middle-class jobs into low-wage jobs.

-- It’s a bad time to be a worker who isn’t flexible. But does that explain the weak job market?

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Sarah Kliff · August 27, 2013