Center for Business and Economic Research - Ball State University


CBER Data Center
Projects and PublicationsEconomic IndicatorsWeekly CommentaryCommunity Asset InventoryManufacturing Scorecard

About

Commentaries are published weekly and distributed through the Indianapolis Business Journal and many other print and online publications. Disclaimer

RSS Feed

Disclaimer

The views expressed in these commentaries do not reflect those of Ball State University or the Center for Business and Economic Research.

Recent

Two Key Economic Lessons in One BillHoosiers face trade-offs and opportunity costs in the wake of SEA1.

Time to Fix Economic Development PolicyAllocating tax dollars to land development won’t cause economic growth.

The Unanticipated Effects of SB1Businesses, governments and households may all feel the effects.

The Stupidest of PoliciesThis whipsawing of tariff rates has unnerved financial markets, which on Wednesday, were toying with a liquidity crisis.

View archives

Top Tags

jobs and employment 261
economics 201
state and local government 188
education 186
economic development 171
indiana 171
budget and spending 145
taxes 144
law and public policy 142
workforce and human capital 139
Browse all tags
Reporter / Admin Login

February 15, 2015

Jobs Report and the Polarized Labor Market

The monthly Employment Situation Summary (aka the jobs report) offers good detail on the state of employment in the United States. Despite claims that the job market is unambiguously happy, there is real evidence of deepening problems along with the good news. A look at job creation from January 2014 to January 2015 paints a clear picture of the continuing challenge in our labor markets.

The good news is that over the course of a year, the economy has grown by a tad more than 3 million jobs. The unemployment rate has dropped from 7.0 percent to 5.7 percent, and the labor force participation rate has risen by 0.4 percent. Also, the share of long-term unemployed has dropped by 2 percentage points, as have the levels of discouraged workers. One could hardly blame the administration for boasting about these numbers. Still, the remainder of the report is a good bit less sanguine.

Of the 3.026 million jobs created over the past year, precisely 75.05 percent were in management, professional and related occupations. Almost 45 percent of new jobs nationally occurred in the professions: law, medicine, science, engineering and the like, while almost a third was in management and financial operations professions. These are jobs that require a four-year college degree or more.

In contrast, service occupations grew slowly, accounting for fewer than 2 percent of all net new jobs over the past year. Sales and office occupations, including administrative support, lost 118,000 positions over the year. Jobs in mining, construction, agriculture, and maintenance and repair accounted for only 86,000 new jobs, or 3.8 percent of total job growth over the past year. The only real bright spot for blue collar workers was in the manufacturing and transportation occupations, which saw growth of 731,000 or a quarter of total job growth over the past year. It is worth noting that more than half of these jobs probably require some college education.

It is very blunt news that in 2014 there were 25 percent more jobs created for the roughly one-third of folks with four-year degrees than in all the other educational attainment categories combined.

Other than temporarily quieting those folks who think college is unimportant, these facts offer no good news. This jobs report clearly depicts the hastening of what we economists call the polarization of labor markets. Forget the nonsense about the “1 percent" crowd, the real problem­facing American income distribution is that there is a shrinking middle set of job opportunities.

There are many reasons for this phenomenon. Some are purely market-based and inevitable. Technology will make redundant many jobs. Ill-conceived labor market policies raise the cost of hiring lower wage workers, cutting off job opportunities. We also suffer from long neglect of educational attainment in the U.S., which leaves many men and women unprepared for an economically productive life.

This problem is cause for national concern, and ought to spur discussions around every dinner table in this country. For regions plagued by low educational attainment, this is a looming disaster.

Link to this commentary: https://commentaries.cberdata.org/773/jobs-report-and-the-polarized-labor-market

Tags: jobs and employment, education


About the Author

Michael Hicks cberdirector@bsu.edu

Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

© Center for Business and Economic Research, Ball State University

About Ball State CBER Data Center

Ball State CBER Data Center is one-stop shop for economic data including demographics, education, health, and social capital. Our easy-to-use, visual web tools offer data collection and analysis for grant writers, economic developers, policy makers, and the general public.

Ball State CBER Data Center (cberdata.org) is a product of the Center for Business and Economic Research at Ball State University. CBER's mission is to conduct relevant and timely public policy research on a wide range of economic issues affecting the state and nation. Learn more.

Terms of Service

Center for Business and Economic Research

Ball State University • Whitinger Business Building, room 149
2000 W. University Ave.
Muncie, IN 47306-0360
Phone:
765-285-5926
Email:
cber@bsu.edu
Website:
www.bsu.edu/cber
Facebook:
www.facebook.com/BallStateCBER
Twitter:
www.twitter.com/BallStateCBER
Close