Families making the least and most money are seeing their job prospects improve. Middle-income earners are getting hit the hardest in the job market.
Employees making above-average wages, like doctors and energy-industry workers, and those at the other extreme, including home-health aides and restaurant staff, have seen the greatest improvement in hiring since the jobs recovery began in February 2010, say economists at Wells Fargo & Co. and JPMorgan Chase & Co.
Professions in the middle, such as financial services and specialty construction, aren’t doing as well.
This helps to explain why income gains have yet to return to levels seen before the recession began and why consumer spending over the past two years has grown at the slowest pace of any expansion in the post-World War II era. It also points to a pool of unemployed Americans that will prevent wage increases from getting out of control and fueling inflation as the economy grows.
“If we’re only creating jobs for the highly skilled and for folks with basic skills, then you’re leaving an awful lot of people behind,” said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina. “Until we have broad-based growth, it’s hard to imagine how we can have a self-sustaining economic recovery.”
The highest-paying jobs, which employ about 15 percent of all workers, have accounted for 20 percent of the gains in employment since February 2010, when the jobs recovery began, Wells Fargo calculations show.
Those whose average earnings are lower than 60 percent of all employees have accounted for about 46 percent of job growth in the same period.
Middle-income occupations, which employ about 40 percent of all workers, have created about 34 percent of jobs since February 2010, Wells Fargo found.
The divergence in job gains, which extends a pattern that began decades ago, was concentrated during the recession that lasted from December 2007 to June 2009, according to the National Bureau of Economic Research, the group that determines when economic slumps begin and end.
Research at Duke University shows that 95 percent of the jobs lost during the economic slump were among workers who carried out routine assignments. These jobs, which usually pay average incomes and include office and administrative roles, bank tellers, machine operators and mechanics, disappeared during the recession and show “no recovery to date,” the researchers found.
On the other hand, employment was little changed during or since the recession for a range of positions from computer programmers to bartenders and home health aides, jobs that encompass the high and low ends of the income spectrum and require non-routine skills like flexibility, problem-solving or human interaction.
Technology allowing businesses to replace routine labor with equipment may explain the lack of middle-income jobs.
Employment appears to be shifting toward industries or occupations with relatively high incomes. Growth in a number of managerial and professional jobs like doctors and college administrators, which pay on average 70 percent more than sales and office occupations, may explain the shift alongside advancements in technology that reduce demand for middle-skilled jobs.
Consumer spending, which accounts for about 70 percent of the U.S. economy, grew 2.2 percent last year after a 2 percent gain in 2010, the weakest back-to-back advance of any expansion since the end of World War II, according to figures from the Commerce Department.
Hourly earnings for all workers climbed 2.1 percent in the 12 months through March, according to figures from the Labor Department issued last week. The gain remains short of the 3.9 percent advance in the year ended June 2007, six months before the recession began.
One reason for the restraint in spending is that middle- income households are no longer willing to take on more debt to supplement a shortfall in wages, says Wells Fargo economic analyst Joe Seydl.
The desire for economic growth may drive economic initiatives to improve education with the hope that this will translate into improved employment rates and income levels. This may include increased focus on reducing high school dropout rates.
[Bloomberg News contributed to this article.]
