Study: Job Market Growing More Polarized

Middle-skill jobs are fading as high- and low-skill jobs dominate economic recoveries

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It's common knowledge by now that America is becoming more polarized both politically and economically, as parties move ever further apart and the wealthy's gains outpace everyone else's. Now, new research shows that the job market itself is growing polarized, with the jobs in the middle making up less of the labor force.

A recent working paper from the National Bureau of Economic Research shows that "job polarization" — when jobs become more concentrated in the high- and low-wage ends of the spectrum — is becoming increasingly prevalent in the United States The authors, Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia, show that the decline of the middle is closely connected with recessions.

"We really did not expect to see that the decline in employment in [middle-skilled] routine occupations that's happened over the past 25, [or] 30 years, that's happening exclusively in recessions," Siu says. "Our impression was this was something that was kind of happening gradually over time."

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The authors show that over the last three decades, middle-skill jobs, which often also tend to be middle wage, declined as a share of total employment. These so-called "routine" jobs involve repetitive work that follows a specific set of instructions; mechanics, postal clerks, secretaries, cement masons, and the like tend to fall into this category. In the last decade, routine occupations' share of employment has slid by 11 percent.

Meanwhile, employment in higher-skill, "non-routine" jobs — think doctors, computer programmers, and financial analysts — has grown over those decades, as has employment in non-routine manual jobs, like janitors and bartenders. These manual jobs, which tend to be lower skill and also often lower wage, grew as a share of all jobs by 16 percent from 2001 to 2011.

This shift away from the middle is associated with recessions that featured "jobless recoveries" — those in the early 1990s, early 2000s, and the late 2000s. In the weak job recoveries that followed these recession, the higher-skilled and lower-skilled areas of the job market have tended to fare better than the middle-skilled, routine areas — though the recovery for all three categories has been remarkably slow after the most recent recession.

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According to the paper, routine jobs made up 58 percent of total employment. As of 2011, that had fallen to 44 percent. If the trend continues, Siu says, it will mean further changes in the fundamental structure of the workforce.

"This is the phenomenon of the hollowing out of the middle," he says.

Siu says that it's not clear exactly why this is happening only during recessions, but he says that technology has fueled job polarization.

"On the factory floor in American manufacturing, there's fewer people and more robots. But that's only part of the picture," he says. "The other part of the picture is that in American office settings, there are fewer people doing, for instance, data entry work and secretarial work." Computers are increasingly doing what people once did, he says, so if technological innovation doesn't slow down, polarization could continue.

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The implications are more far-reaching than dictating our future job descriptions. As people are increasingly concentrated in high- and low-skill jobs, says Siu, it could reinforce the nation's growing economic inequality. The top 20 percent of households received less than 44 percent of income in 1967, according to the Census Bureau. Now, that figure is greater than 51 percent.

"This job polarization has a mirror image in terms of wage polarization," he says. In order to make it in tomorrow's workforce, then, workers may increasingly have to make the choice between learning complex, sought-after skills — or settling for underemployment.

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