Better-paying jobs stage a comeback

Construction is one of the higher-wage industries showing recent growth in hiring. (Mark Lennihan/AP)

By Ylan Q. Mui
August 17 at 7:52 PM - The Washington Post

The recovery in America’s job market is finally spreading to industries with good pay after years of being concentrated in fields with low wages.

Hiring has picked up steam in areas such as construction, manufacturing and professional services in recent months — sectors with a median hourly wage of at least $20. Nearly 40 percent of the jobs created over the past six months have been in high-wage industries, compared with just a quarter during the last half of 2013, according to an analysis by the National Employment Law Project for The Washington Post. Meanwhile, growth in many low-paying jobs has leveled off or even declined.

“I often hear that the recovery is only in low-wage jobs. That is categorically inaccurate,” Labor Secretary Thomas E. Perez said in an interview. “This recovery is creating a lot of good jobs.”

If those trends hold, economists say it could mean that the bumpy road back from recession is beginning to even out — particularly if it means that more jobs with better pay can help boost household income.

When averaged across all occupations, the median hourly wage has fallen 3.4 percent since the recession, after adjusting for inflation, according to NELP research to be released Monday. Many economists, including Federal Reserve Chair Janet L. Yellen, have pointed to an increase in earnings as one of the key missing pieces of the recovery.

Yellen and dozens of other top economists from around the world will convene in Wyoming this week to discuss the health of the U.S. labor market.

“What I think matters most is wages,” NELP Executive Director Christine L. Owens said. “In terms of just looking at the balance, the crisis is as much a crisis of wages as it is which jobs are being created.”

Matthew Gallagher, 26, has been waiting four years for his break. After graduating college magna cum laude, the Dallas resident struggled to find full-time work. He settled for part-time jobs at a local museum and as an animal massage therapist — even though his degree is in public relations.

But his prospects may be brightening. After a year-long search, Gallagher landed a position developing online educational courses two weeks ago. It’s another part-time job, but this one holds full-time potential.

“I feel it’s a little ridiculous,” Gallagher said. “I was told constantly that you need to go to college to get a good job, and I have just this year broken into double-digit hourly wages.”

Even before the recession began, the economy was experiencing what academics call job ­polarization: growth at the high and low ends of the pay scale, but not much movement in the middle.

Two major factors drove this shift: new technologies that replaced some skilled workers and increased competition from the international labor market.

The country’s deep downturn skewed that dynamic even further.

Businesses of all stripes slashed jobs during the recession, but low-wage industries such as retail and food service bounced back most quickly. They now employ 2.3 million more workers than they did in 2007, according to NELP.

Middle- and high-wage sectors have yet to recoup the ground they lost. NELP estimates that about 1.2 million jobs are still missing. But the pickup in hiring in recent months suggests the economy may be entering an inflection point.

“What was so unusual about this recovery was that the low-wage industry growth was faster than high-wage growth for so long after the recovery began,” said Sam Coffin, an economist at UBS.

Coffin said low-wage sectors tend to grow faster during the first two years after a recession before other industries catch up. But it’s been five years since the recession ended, and his research shows that higher-paying jobs began to outpace others only in the past three months.

In his analysis, Coffin divided employment into two categories: jobs that pay above and below the national median wage.

A more detailed breakdown by JPMorgan senior economist Robert Mellman separated growth by high-wage professional and managerial occupations from those in the low-paying service sector. It showed the turning point in job creation started at the end of last year.

But perhaps most surprising, Mellman said, was the simultaneous rise in all other occupations, which he classified as ­middle-wage jobs. That was largely driven by a surge in manufacturing, transportation and construction — the same sectors long buffeted by technology and globalization.

“For the jobs in the middle, maybe the ones that are going have all gone, and now you’re growing from a lower base,” Mellman said.

At Simmons Machine Tools, President David Davis said the company plans to hire 10 people over the next six months. About 100 people work at the plant in Albany, N.Y., which manufactures equipment to help maintain trains and subway cars. Davis said the company was able to avoid layoffs during the recession but has also been cautious about expanding during the recovery.

“Once we hire, that’s generally because there’s some systemic foundational growth that’s going on in the business,” he said.

Though the majority of the company’s sales are international — Simmons also employs 1,000 workers at a plant in Germany and an additional 150 in China — Davis said he is starting to see pressures on wages in the United States. The open jobs require specialized technical skills that can be hard to find.

“Those people don’t grow on trees,” Davis said. “You kind of have this premium. The employees that you do have you’re trying to keep.”