The Recession Blew A Hole In Middle-Class Jobs


The good news is that employment is returning back to pre-recession levels. The bad news is that the kinds of jobs that people can find have changed for the worse.

In its latest update, the Federal Reserve Bank of New York reports that “employment has now returned to levels seen prior to the Great Recession,” but adds that “the types of jobs created during the recovery are not the same as those that were lost during the recession.” The vast majority of jobs lost to the economic crisis were middle-skill ones in construction, elementary education, and administrative support.

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CREDIT: Federal Reserve Bank of New York

Those jobs haven’t returned during the recovery. Instead, the ones being added now are high-skill jobs in engineering, computer programming, medicine, and finance and lower-skilled jobs in food service, retail, health aides, and child care.

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CREDIT: Federal Reserve Bank of New York

The report points to three different trends behind the skewed job creation. One is that it is a continuation of a decade in which jobs have been increasingly growing at the top and the bottom and hollowing out middle-skill and middle-class work. But the recession itself had two different impacts: a weak housing recovery that has been a drag on bringing back construction jobs, and public sector cuts that have slashed employment in state and local governments, particularly for teachers. The economy has shed 707,000 public sector workers since the recovery began in June 2009, including 309,800 K-12 teachers. This is a sharp reversal from past recessions, which saw substantial public sector growth during the recovery periods.

It might not be all bad news if most of the middle-class workers who lost their jobs were ending up in high-paying ones. But that is not likely to be the case. Low-wage industries, where pay is between $9.48 and $13.33 an hour, have accounted for most of the employment growth four years into the recovery, even though they weren’t where the majority of jobs were lost during the recession. They accounted for 22 percent of the losses and have made up 44 percent of the recovery’s gains, while high-wage industries saw 41 percent of the losses but have only made up 30 percent of the gains.

The erosion of jobs in the middle is also coinciding with an erosion of the middle class itself. There are 700,000 fewer middle-income households than during the economic crisis. But this too is part of a longstanding trend, as the number of Americans who fall into the middle class shrunk from 61 percent in 1971 to 51 percent in 2011.

And it isn’t likely to reverse course. More than a quarter of American workers are expected to be in low-wage work over the next decade.