Job polarization and the Great Recession

July 9, 2012

For three decades at least, the U.S. labor market has been stretched toward higher- and lower-skilled jobs, leaving fewer opportunities for those in the middle. This “job polarization” has benefited high-skilled sectors like engineering, computer science and finance on one hand, and low-skilled sectors like farming, health support and building maintenance on the other, according to a study by New York Fed researchers. In the middle – where the majority of Americans work in areas such as education, construction, administration and transportation – job growth since 1980 has badly lagged.

Between 1980 and 2010, high skilled job growth was 101 percent, while low-skilled job growth was 91 percent, the researchers found. Growth among “upper middle” jobs (community service, precision production, etc) was 46 percent over that time, while growth among “lower middle” jobs (machine operation, sales, etc) was only 20 percent. Proportionally, the pattern sharply reduced the largest segment of the workforce – the “lower middle” skilled – mostly because of technology and off-shoring of jobs that require less face-to-face contact than, say, lawyers (high skilled) or personal caregivers (low skilled).

Digging deeper into the numbers, the polarization pattern appears to have held through the Great Recession, with one interesting exception: the low-skilled sector was the only one of the four to actually grow. Jobs in that category, which make up roughly 16 percent of the U.S. workforce, grew by 1.2 percent from 2008 to 2010, while high (-2.3 percent), upper middle (-6.5 percent) and lower middle (-8 percent) all fell. Chalk it up as another quirk in a recession that has transformed the labor market in ways we’ve yet to fully grasp.

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