The "hollowing out" of America's middle-class jobs in recent years is a trend that started before the Great Recession and has gotten only more attention since then. But where do those who have lost their jobs go? Do they end up with low-paying service jobs, McJobs as they're sometimes called, or do they move up the ladder to higher-paying positions?
Many people believe most of those who lose middle-class jobs end up worse off than before, but recent research by economic policy analyst Ellie Terry and economist John Robertson of the Federal Reserve Bank of Atlanta finds some surprising results.
But first, it is true that middle-skill jobs were hit hardest by this recession. As the researchers noted: "Only employment in middle-skill occupations remains below prerecession levels."
Overall employment declined by more than 8 million from the end of 2007 to the end of 2009, and middle-skill jobs declined the most, approximately 10 percent. These jobs are still 9 percent below the level they were when the recession began in late 2007.
And for full-time workers in middle-skill jobs, the picture is even worse. The researchers said "the number of full-time workers whose main job was a middle-skill occupation fell more than 15 percent from 2007 to 2009 and is still about 11 percent below the level at the end of 2007."
For high- and low-skill occupations, the story is very different. Low-skill occupations are now 7 percent above the level they were at in late 2007, and high-skill occupations are 8 percent higher.
Second, it's also true that "Those in middle-skilled occupations were most likely to become unemployed." At the deepest part of the recession, the unemployment rate for people who held middle-skill jobs a year earlier was 6 percent, but for low- and high-skill jobs, the rates were only 3.5 percent and 3 percent, respectively.
Third, the employment recovery across all skill levels has been very slow.
But the fourth finding is where we get some good news. As the large number of people who have lost middle-skill jobs have been reemployed, "Those who held middle-skill jobs are more likely to obtain high-skill jobs than before the recession." According to this research:
... of those in middle-skill occupations who remain in a full-time job, about 83 percent are still working in a middle-skill job one year later. ... What types of jobs are the other 17 percent getting? Mostly high-skill jobs; and that transition rate has been rising. The percent going from a middle-skill job to a high-skill job is close to 13 percent: up about 1 percent relative to before the recession. The percent transitioning into low-skill positions is lower: about 3.4 percent, up about 0.3 percentage point compared to before the recession. This transition to a high-skill occupation tends to translate to an average wage increase of about 27 percent (compared to those who stayed in middle-skill jobs). In contrast, those who transition into lower-skill occupations earned an average of around 24 percent less.
Labor markets still have a long way to go before we reach full employment, wages and incomes have been relatively flat, the number of involuntary part-time workers is much too elevated and the recovery has been far too slow. We still have plenty to fret about over employment across all skill levels, especially middle-skill jobs.
But it could be even worse. A surprising and increasing number of middle-skill workers are moving up rather than down the economic ladder. Let's hope that trend continues.