There are two major issues in the job market today, says Economist Michael L. Walden, William Neal Reynolds Distinguished Professor at N.C. State University. One is job creation, which has been painfully slow. The other is the quality of jobs being created – measured mainly by their pay.
In a News & Observer editorial, Walden says many are worried that a large number of new jobs are at the lower end of the pay scale. This would imply a job market that is “bottom heavy,” shaped sort of like a water buoy.
Actually, this description is not quite correct. A better image would be a weight room dumbbell. Like a dumbbell that has heavy weights on both sides with a thin handle in-between, the jobs being generated today are largely at the low-end and the top-end of the pay scale with few middle-paying jobs.
Construction Jobs Not Coming Back
Traditionally, construction and construction-related jobs have been mainstays of middle-paying positions, but the crash of the residential housing market devastated these occupations. And, although the housing market is staging a comeback, the number of construction jobs is not. Indeed, in the past two years, North Carolina has lost jobs related to building.
Most economists think there will eventually be a rebound in construction jobs. If they’re right, that will be good news for shoring up the middle of the pay ladder. In the late 1990s and early 2000s, losses in manufacturing jobs were absorbed by gains in construction jobs.
A recent study confirmed the dumbbell description for the national economy. During the last two years of job growth, the occupations increasing in numbers most quickly were food preparers and personal care workers at the low end of the pay scale, and management, computer, finance and advanced health care practitioners at the high end. Middle-paying jobs in construction and teaching actually experienced losses.
Similar results occurred in North Carolina. From 2010 to 2012, the largest job gains were in food prep and personal care with relatively low wages and in finance and advanced health care with relatively high wages. In our state, the number of protective service jobs – paying mid-level wages – also increased significantly.
Why is this pattern occurring? A big part of the answer is technology. Computers and other information technology devices have taken the place of people for many routine-oriented jobs – that is, jobs that a machine can be programmed to do. Factory jobs are a good example. Many say the factory of the future will have robots doing all the work, with only a few people behind the controls.
In contrast, it’s more difficult to use technology to replace workers where direct personal contact is needed – as with food-prep and personal-care jobs – or where decisions are very complex, like in finance, management and medical diagnoses.
Perhaps the most interesting explanation for the lack of growth in middle-paying jobs has to do with supply and not demand. It’s not that companies don’t want to hire people for jobs in the mid-range of the pay distribution; it’s that there aren’t individuals with the necessary training and skills for these jobs.
Shortage of Skilled Workers
This issue was highlighted in a recent study from a national business consulting firm, which forecast that, by 2020, the nation could face a shortage of close to 900,000 skilled manufacturing and technical workers, such as machinists and welders. The firm recommended that more be done in schools – especially high schools – to offer training in these fields. The consultants also called on businesses to become more involved in promoting – and maybe in helping to finance – these skills and the jobs tied to them.
The “dumbbell” shape of today’s job market has effects beyond just where people work. Our country has long been known as a middle-class nation; indeed, most people identify themselves as “middle-class.” But the growth in jobs at both ends of the pay scale reduces the size of the middle class, leaving profound implications for social cohesion, income inequality and income mobility.
A rethinking of training options for students – particularly in high school – and greater advocacy by businesses for this training may be what is needed to fatten up the middle of the job market shape. Read More.