An important shift is underway in America’s job market, and it hasn’t gotten enough attention.
In the early days of the recovery from the Great Recession, the labor market was divided. The first workers to find new jobs were either employed in high-paying, high-skilled fields such as engineering, management and technology or they were in low-paying, low-skilled industries such as food service, maintenance or sales. In other words, the top and the bottom bounced back, but the middle-income jobs that had long formed the backbone of the American workforce were still in short supply.
That split in job growth became a popular narrative that helped explain why the nation's economic recovery always felt so disappointing. But new analysis from the Federal Reserve Bank of New York released Thursday shows that the divide has actually reversed.
Between 2013 and 2015, the economy added 2.3 million middle-wage jobs, blowing past the growth in high-paying and low-income sectors. The hiring came in construction, education and transportation, among other industries. And in fact, the growth in middle-wage jobs over those two years was larger than the gains in the other income levels during the early phase of the recovery, from 2010 to 2013.
That’s not to say America’s blue-collar workers aren’t still struggling. The advent of technology and the rise of globalization have changed the broader dynamics of the nation’s job market. Previous research by the New York Fed has found that in the three decades between 1980 and 2010, the number of high-skilled jobs doubled, and the jump in low-skilled jobs was nearly as large. The growth in middle-skilled jobs was significantly more subdued, with some regions in Fed’s district showing a net loss.
The consequences of the hollowing out of the middle class are vast, with economists linking it to rising inequality. Frustration with an uneven recovery has also helped fuel the populist anger that has roiled this presidential election cycle.
But the new data suggest that polarization in the labor market may have peaked, and middle-wage jobs could be ready for a renaissance.
“The tide has begun to turn,” New York Fed President William Dudley said in a speech Thursday. “If it were to continue, it would create more opportunities for workers and their families who have been struggling up to now.”