High-wage po­si­tions grow­ing fastest

Trend con­sid­ered good news – but not for all

USA TODAY US Edition - - MONEY - Paul David­son

For years af­ter the Great Re­ces­sion, the jobs re­cov­ery came with a caveat: The fastest em­ploy­ment gains by far were in low-wage in­dus­tries such as re­tail and restau­rants, which crit­ics griped weren’t “good” jobs.

No longer.

Jobs in high-wage in­dus­tries such as tech­nol­ogy, pro­fes­sional ser­vices and en­ergy have grown slightly faster than low-wage sec­tors over the past year or so, ac­cord­ing to an anal­y­sis of La­bor Depart­ment data by Moody’s An­a­lyt­ics. Mean­while, mid­dle-wage in­dus­tries have closed the gap with low-pay­ing sec­tors, though they trail high-wage fields.

The trend helps ex­plain why an­nual U.S. wage growth reached a nine-year high of 2.9 per­cent in Au­gust. The widen­ing share of higher-wage jobs is help­ing push up the na­tional aver­age, says Moody’s economist Adam Kamins.

From June 2017 to Au­gust 2018, the num­ber of jobs in high-wage in­dus­tries grew 2 per­cent, com­pared with 1.8 per­cent for both low and mid­dle wage fields, the Moody’s data show. Lowwage sec­tors had led de­cid­edly since

2010, in part be­cause they re­quired less risk-tak­ing by re­ces­sion-scarred em­ploy­ers.

Moody’s broadly de­fines in­dus­tries as low-wage if their aver­age pay is be­low $35,000. Mid-wage is $35,000 to

$65,000 and high wage is above

$65,000.

The shift can at least partly be at­trib­uted to an econ­omy that’s fi­nally run­ning on all cylin­ders and more evenly dis­tribut­ing pay­roll gains across sec­tors, says Moody’s economist Laura Ratz.

And it’s gen­er­ally good for the econ­omy. High-pay­ing po­si­tions gen­er­ate more in­come that can be spent on goods and ser­vices. And each high­wage job helps create two ad­di­tional jobs, ac­cord­ing to Moody’s. Think of the en­gi­neer who needs an as­sis­tant and buys a new house that em­ploys con­struc­tion work­ers. By con­trast, it

takes three low-wage jobs to help create an ad­di­tional po­si­tion.

“On net, it’s a pos­i­tive,” Kamins says. High-wage earn­ers “have more to spend.”

At the same time, low-in­come Amer­i­cans tend to spend a big­ger por­tion of their pay­checks, notes economist Heidi Schier­holz of the left-lean­ing Eco­nomic Pol­icy In­sti­tute.

The turn­about can be partly traced to the for­tunes of cer­tain in­dus­tries, Kamins says. For ex­am­ple, the run-up in oil prices from be­low $30 a bar­rel in early 2016 to the cur­rent mid-$70 range has spawned a drilling bo­nanza, cre­at­ing lots of high-pay­ing rough­neck and tech­ni­cal jobs. Em­ploy­ment in min­ing and log­ging has jumped 8.1 per­cent over the past year, La­bor Depart­ment fig­ures show.

Mean­while, the ex­plo­sion of smart­phone apps and cloud-based ser­vices has spurred more well-pay­ing tech­nol­ogy jobs. And the healthy oil, auto and hous­ing in­dus­tries have cre­ated highend man­u­fac­tur­ing jobs that rely on com­put­ers to build com­plex ma­chines.

The vi­brant econ­omy and hous­ing mar­ket are also juic­ing de­mand for ar­chi­tects, engi­neers and ad­ver­tis­ing copy­writ­ers. Em­ploy­ment in pro­fes­sional and busi­ness ser­vices is up an aver­age of about 2.5 per­cent an­nu­ally so far this year com­pared with about 2.1 per­cent in 2017.

“Be­cause (eco­nomic) growth is strong… there’s more of a willing­ness (by em­ploy­ers) to take that plunge” and hire more ex­pen­sive work­ers, Kamins says.

Bill Raven­scroft, se­nior vice pres­i­dent of staffing firm Adecco USA, says place­ments for high-wage ac­count­ing, fi­nance and tech­nol­ogy jobs have in­creased about 9 per­cent over the past 18 months. Lower-paid re­tail, call-cen­ter and man­u­fac­tur­ing place­ments have been flat.

“We have a greater chal­lenge find­ing skilled can­di­dates,” he says.

Across the U.S., low-wage jobs are still grow­ing solidly. But re­tail em­ploy­ment gains have been slowed by the shift from brick-and-mor­tar stores to ecom­merce. And job growth for low­er­paid ho­tel, restau­rant and health care work­ers is re­turn­ing to nor­mal af­ter sev- eral years of out­size gains, Kamins says. The pace of job growth in these sec­tors also may have slowed be­cause the 3.7 un­em­ploy­ment rate, a nearly

50-year low, is mak­ing it harder for busi­nesses to find qual­i­fied job can­di­dates.

Mid­dle-wage in­dus­tries have made a come­back af­ter lag­ging for years but they rep­re­sent more of a mixed bag.

Mil­lions of man­u­fac­tur­ing and con­struc­tion work­ers were laid off in the re­ces­sion. The hous­ing re­cov­ery has been a boon for con­struc­tion work­ers. And it has in­creased home val­ues and prop­erty tax rev­enue, boost­ing lo­cal gov­ern­ment em­ploy­ment. The rise of on­line shop­ping, mean­while, has spawned hun­dreds of thou­sands of mid­dle-in­come ware­house po­si­tions.

But many mid-wage man­u­fac­tur­ing jobs in cloth­ing and toys, for ex­am­ple, have been off­shored to China and other coun­tries and likely won’t re­turn. And the de­cline of unions has kept many low-wage jobs from turn­ing into mid-wage ones.

“The hol­low­ing out of mid-wage jobs re­mains a con­cern,” Kamins says.

A re­cent Ca­reerBuilder re­port pre­dicts that low- and high-wage oc­cu­pa­tions will each grow 5.7 per­cent by

2023 while mid-wage oc­cu­pa­tions lag.

“We have a greater chal­lenge find­ing skilled can­di­dates.” Bill Raven­scroft Se­nior vice pres­i­dent, Adecco USA

GETTY IM­AGES

GETTY IM­AGES

Oil in­dus­try work­ers are ben­e­fit­ing from higher prices.

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