Thursday, March 12, 2015

In the Current Recovery are Jobs Mostly in the Low Pay Sectors?

St Louis Federal Reserve economists Kevin L. Kliesen and Lowell R. Ricketts examine the question:
A common refrain among many economic pundits and analysts is that the bulk of the job gains during this recovery have been in "low-wage jobs," a term that is rarely defined. This essay will explicitly define "low-wage" jobs in order to assess the validity of this claim...

To preview our conclusion, we found that the percentage change in job losses during the latest recession was higher in "high-paying" private-sector industries—which we define as industries with above-average hourly earnings—than in low-paying sectors. Likewise, the percentage change in job gains during the recovery was also proportionately larger in high-paying industries. It should be pointed out, though, that the total number of jobs in low-paying industries exceeds the number of jobs in high-paying industries by nearly 70 percent. Thus, an equal percentage increase in jobs in both industries would generate much larger job gains in low-paying industries than in high-paying industries. We also found that the percentage change in job gains in low-paying industries was much stronger following the 1981-82 and 1990-91 recessions, which also happened to be periods of much stronger real GDP growth...

In the 1981-82 recession, the high-paying industries lost 9.2 percent of their jobs and the low-paying industries lost 0.1 percent. In the recovery following this deep recession, job growth in the high-paying industries was 13.1 percent. However, it was much stronger, 23.9 percent, in the low-paying industries. A similar pattern occurred in the 1990-91 recession and recovery: Low-paying industries experienced extremely modest job losses during the recession, but much stronger job gains during the recovery (compared with high-paying industries). The pattern changed beginning with the 2001 recession and recovery. Indeed, in the latest recession, the low-paying industries lost 4.6 percent of their jobs, much more than in the previous three recessions. Moreover, just as in the 2001 recession, the percentage growth in jobs in high-paying industries during the current recovery has exceeded the percentage change in job growth in the low-paying industries..
Thus, in contrast with the economic recoveries in the 1980s and 1990s, job growth in the past two recoveries has been characterized by faster job growth in high-paying industries and slower job growth in low-paying industries.
Job Losses/Gains During Previous Recessions and 
Current Employment Statistics (CES) Data
Percent Changes
1981-82 Recession and Recovery
Recession (Peak to Trough)–9.2–0.1
Recovery (Trough to t+66 months)13.123.9
1990-91 Recession and Recovery
Recession (Peak to Trough)–3.3–0.4
Recovery (Trough to t+66 months)6.614.4
2001 Recession and Recovery
Recession (Peak to Trough)–2.3–1.4
Recovery (Trough to t+66 months)7.34.2
2007-09 Recession and Recovery
Recession (Peak to Trough)–9.7–4.6
Recovery (Trough to t+66 months)9.98.9
Averages, Recessions–6.1–1.6
Averages, Recoveries9.212.9
SOURCE: Authors' calculations.

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