Job Quality and the Missing Middle
|Quality of New Jobs Improving
The unemployment rate is now near the Fed’s estimates of full employment, but doubts over the health of the labor market still linger. One frequently cited concern over the course of the labor market’s expansion has been the quality of new jobs. Updating our previous work on this issue (See Are American Wages About to Accelerate?, available on request) shows that the composition of new job growth has improved over the past year.
We grouped 75 industries into quintiles based on average hourly earnings in February 2010, when the labor market recovery began. As illustrated in the top chart, job growth over the past year has been strongest in the topwage quintile. Following closely behind is the second-highest paying income quintile and the lowest-wage quintiles. Together, the top two quintiles have accounted for 47 percent of jobs added over the past year despite accounting for only 40 percent of employment. The outsized share of new jobs in higher-wage industries marks a break from the early years of the expansion when hiring in high-wage industries was closely in line with the group’s employment share. Low-wage industries have actually accounted for a slightly higher share of new jobs added over the past year (48 percent), but were already a larger share of employment (44 percent) and therefore would be expected to account for a greater share of job gains.
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