Over the past decade many economists have warned that the middle of the labor market is hollowing out. Traditional middle-skill jobs—like construction, production, and clerical jobs that require little formal education—are disappearing.
But new analysis from Economic Studies Visiting Fellow Harry Holzer uncovers growth in the middle of the labor market that many have overlooked. Analyzing data from the Bureau of Labor Statistics (BLS), Holzer finds that while it’s true there are fewer traditional middle-skill jobs, employers are looking for workers to fill new kinds of middle-skill jobs—in health care, information technology, and advanced manufacturing—but can’t find the workers they need.
In this “new middle” of the labor market, jobs that require slightly more post-secondary education are growing, but American workers are increasingly unprepared to fill the positions.
Major declines in employment growth and wages for jobs in the middle of the labor market have been happening since the late 1980s, a fact that many labor economists, such as David Autor (2010), have demonstrated. The trend picked up speed during the Great Recession with additional job losses in industries like construction and manufacturing (Nir Jaimovich and Henry Siu, 2012).
Holzers’ new analysis of BLS data, thoroughly explained in the first of two new briefs, finds that the share of employment accounted for by “middle-wage” jobs overall fell sharply from 39.1 to 36.6 from 2000-2013. But these declines are completely driven by job loss in construction, production and clerical jobs. All other kinds of middle-wage jobs consistently grew as a share of the labor market, both before and during the Great Recession and recovery.
In many ways the observed declines are the consequence of broader changes in the global labor market. Digital technologies and globalization make it easier for employers to replace workers doing supposedly routine tasks.
But decisions on the part of employers have played a role in this job market polarization, too. By cutting back on training expenditures and refusing to raise employee wages, many employers are now having difficulty filling vacancies for the middle-skill jobs that do exist.
To combat stagnant earnings for the American middle class, policymakers must undertake the critical task of developing policies that improve U.S. worker skills over time and the numbers of middle-skill jobs that employers create. Toward that end, Holzer has authored a second brief that outlines new policies for improving U.S. workforce development.
These proposals not only suggest improvements to employer workforce development programs, but changes in post-secondary education models as well. Holzer writes that “while some employer reluctance to invest in skill-building on their own makes economic sense…our educational system has done too little to generate employees with these skills as well.”
Together, these policies could enhance U.S. workforce development and better prepare U.S. workers for higher-paying jobs, while also encouraging employers to create more such jobs as well.
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