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Mid-Level Income Jobs Not Increasing

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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 Siufor 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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