The Comeback of Middle Wage Jobs

Real Clear Markets ^ | August 26, 2016 | Robert Samuelson

[expat_panama]

One of the economy's bright spots is the job market - and it may be even brighter than it seems. Not only are there more jobs (1.3 million so far in 2016), but they may be better-paying, according to a new analysis by economists at the Federal Reserve Bank of New York. The Fed economists report that middle-wage workers - earning roughly $30,000 to $60,000 - represent the fastest growing segment of the labor market. By contrast, earlier in the recovery, low-wage and high-wage jobs dominated employment increases.

The labor market was supposedly becoming economically "polarized," just as society was becoming politically polarized. Now, the new analysis suggests that the labor-market polarization "may have peaked, and middle-wage jobs could be ready for a renaissance," as my Washington Post colleague Ylan Q. Mui wrote in a nice blog post on the New York Fed study.

Assuming that the trend lasts through Election Day, it's probably a plus for Hillary Clinton. It doesn't eliminate jobs as an issue, but it blunts discontent. Here's what the New York Fed study reported.

Although middle-wage occupations represent about half of all jobs - teachers, factory workers, truck drivers, construction workers - they accounted for only 22% of new jobs between 2010 and 2013. Lower-wage occupations - earning $30,000 or less as fast-food workers, sales clerks, janitors - accounted for 40% of new jobs, well above their 30% share of existing employment. And high-paying occupations - with median wages of $60,000 or more, earned by doctors, lawyers, managers and engineers - represented 38% of new jobs, despite being only 20% of existing jobs.

Between 2013 and 2015, this pattern reversed, say the New York Fed economists. In these years, middle-wage jobs accounted for 43% of expanded employment, lower-wage occupations for 30%, and high-wage occupations for 28%.

Just what caused the shift is unclear. Economist Harry Holzer of Georgetown University attributes much of the change to the business cycle. "In the early years, there was a lot of uncertainty. Business leaders didn't know whether the recovery would continue. Many resisted assuming the added costs of more expensive employees," he says. (Presumably, the highest-paid workers had skills more in demand.) Construction also recovered slowly, he said, frustrating middle-wage job growth in that sector.

With the recovery now in its eighth year, confidence and hiring have strengthened, he said. Between 2013 and 2015, blue-collar jobs rose sharply. Employment increased 400,000 in construction, 300,000 in manufacturing, 500,000 in transportation (mainly truck drivers) and 250,000 in installation and repair (of, say, air conditioning systems).

It's unclear whether these gains are temporary or whether they signal a decisive turn in job creation. If permanent, said The New York Times, "it may soon be time to retire a familiar criticism of the long but lackluster economic rebound ... (that it has promoted) the hollowing out of the American middle class."

What's happening, Holzer said, is that middle-wage jobs have become split. There's what he calls "the old middle" of factory workers, construction workers and the rest. These jobs are declining over time. But there's also a "new middle" of jobs - health care technicians, high-tech maintenance workers, paralegals, and store managers - that's growing rapidly. These jobs require more formal education than "old middle" jobs. The question, Holzer said, is whether the country can remake its education system to provide the skills that the economy now demands.

[expat_panama]

What we got is that the middle class has not been annihilated after all, and that's good. While this thread will most probably get posts from those of us that say every single thing about the U.S. economy is bad, we might want to remember that about half the U.S. believes that and the other half is voting for "her".

Meanwhile those of us who work for a living find we can feed our families a lot better if we accept reality as it is, we see the good as well as the bad, and get in w/ the good things happening.

[TalBlack]

Assuming that the trend lasts through Election Day, it’s probably a plus for Hillary Clinton.
yeah, my very first thought upon seeing the headline: “Why! this is just in time for Hillary”!

[pieceofthepuzzle]

“What's happening, Holzer said, is that middle-wage jobs have become split. There's what he calls “the old middle” of factory workers, construction workers and the rest. These jobs are declining over time. But there's also a “new middle” of jobs - health care technicians, high-tech maintenance workers, paralegals, and store managers - that's growing rapidly. “

I don't disagree with your premise of ‘accepting reality’ as it is, but we also need to remember that the powers that be will try to color this reality to make things look rosy before the election. What's stated in the paragraph above aren't great steps forward, IMHO. Health care administrative costs are out of control, and health care costs as a whole thus continue to rise. As such, there will be lots and lots of cost-cutting pressures in the health care sector over the next decade - unless things get dramatically restructured. Paralegals as a growth market for jobs seems a bit far-fetched to me, and even if true suggests that we are becoming more regulated and litigious - not factors that bode well for general economic growth and innovation. Store managers?

[expat_panama]

Happy Friday!! 

Yesterday's stock indexes slipped a tenth of a % in lower volume (continuing the flat trading they've been showing for a couple months now), while gold and silver seem perched on a couple of new support levels (now at $1,327.44 and /418.74).  Looks like everyone's ready for Yellen's speech (Yellen Speaks - Finally! Today we finally hear from Janet Yellen at the Jackson Hole Symposium. Read on to learn more...full story) and our wonderful GDP numbers--

8:30 AM GDP - Second Estimate
8:30 AM GDP Deflator - Second Estimate
8:30 AM International Trade in Goods
10:00 AM Michigan Sentiment - Final

--and:

Sell Stocks In September, or Get Dismembered? - Doug Kass, RealMoney
Why Stock Buybacks Have Become a Big Yawn - Mark Hulbert, USA Today
Stock Market Is a 10% Move Away from Trouble - John Coumarianos, MW
Marxism Always Worse Than All Else, Including Indexes - Allister Heath
Euro Is Not What's Holding Down Europe - John Tamny, RealClearMarkets
There's No Recovery for Central Bankers to Create - Jeffrey Snider, RCM
Labor Trying to Eliminate Right to Work by Lawsuit - George Leef, Forbes
When Unemployment Falls, Thousands of Americans Die - Peter Coy, BV
Investors Move Next Door, Unsettling a Black Enclave - John Leland, NYT

[Gaffer]

It is all well and good to try and put a rosy picture on the economics of all this for whatever reason - some related to the market and economy and trading in it and some related to political aims, I’d expect.

But when I see data such as contained here:

http://object.cato.org/sites/cato.org/files/pubs/pdf/the_work_versus_welfare_trade-off_2013_wp.pdf

It tells me that in many states, while those “great new replacement middle wage jobs” are rosy, the data contained in this report shows that there a number of states where the income equivalent of the collection of “welfare” incomes ranks at the top of this rosy “$30K-$60K” boon.

Just this morning in an earlier thread the topic of a thread was the big increase in work eligible earners in the 25-50 something age range choosing NOT to work - why is that?

[expat_panama]

‘accepting reality’ as it is, but...

imho being willing to see things as they are is not something that goes very well with the word "but". 

...the powers that be will try to color this reality...

The fact that some folks like to taint what they see is part of how things are and we can deal with it.  Mean while let's be happy that the mid-level job market's picking up and let's hope the pace extends to other markets as well.

[Paul R.]

Anemic numbers spun to look good.

[expat_panama]

a plus for Hillary Clinton.

Some see that as the big concern.  My take is we need to ask ourselves whether we really are having to choose between feeding our families and having our political faction win --and would we really opt for a win for politics first.

[Common Sense 101]

Does accepting reality require that we believe there is no inflation, and if in fact there was, food, gasoline, etc. would not be included in the number?

[AU72]

So why is the labor participation rate not decreasing?

[catman67]

Must be all those $15.00/hour burger flipper jobs

($15/hr x 40 hr/wk x 52 wk/year =$31,200/year)!

[1rudeboy]

Gosh, I dunno. Do you follow the number where food and gas is included? It’s not that complicated, really.

[1rudeboy]

I have one of those so-called high-paying manufacturing jobs, and I have yet to reach $15/hr.

[cp124]

I am going to opt out of this new norm. Don’t care to pack hemorrhoids, stock shelves or work for a slimey lawyer. The new norm is the “Dollar Store” economy.

[Common Sense 101]

No it’s not... nor is the reality of a middle class decimated by exponentially higher healthcare premiums and continuously increasing deductibles. But the economy is doing fine... really.

[1rudeboy]

What the heck are you talking about? Those Dollar Stores exist for people like me who don’t need to buy paper towels 24 at a time.

[1rudeboy]

So, you are complaining that food and energy are not included, by citing rising health-care costs?

[kabar]

Labor participation rates are at 38 year lows. This article is just another attempt to put lipstick on a pig. I no longer trust federal data, especially before an election. We saw in 2012 how the unemployment data were manipulated to help Obama.

[onona]

"May have, may, suggests"

When you see those words in the first sentence or two, you know it's B.S.

Shilling for Hillary - 2016

[Common Sense 101]

No, I’m citing the “realities” that this economy is not as rosy as what is being reported...