YOU DECIDE: How is the job market like weightlifting?

Date posted: September 13, 2013

Dr. Michael Walden is William Neal Reynolds professor of agricultural and resource economics at N.C. State University.Dr. Michael Walden is William Neal Reynolds professor of agricultural and resource economics at N.C. State University.

Media Contact: Dr. Mike Walden, 919.515.4671 or michael_walden@ncsu.edu

By Dr. Mike Walden
North Carolina Cooperative Extension

For over 40 years I’ve enjoyed weightlifting as a break from economics and as a form of exercise. I’ve even participated in some contests (however, never winning any trophies). Age has forced me to slow down a bit, although I can still “deadlift” — lifting the weight off the floor to a standing position — close to 600 pounds.

If you hang around weight rooms like I do, you’ll notice a common shape to much of the equipment. Take a dumbbell, for instance. It has an equal amount of weight on both sides, connected by a narrow handle used for griping. Or when I do a deadlift off the gym floor, I hold and lift a relatively light bar that has much heavier weights (in the form of plates) on both sides.

I’m telling you this because our current job market looks a lot like a dumbbell or the bar and plates I pull for a deadlift. What we’re seeing in the job market is job growth at the two ends of the market, the high-pay end and the low-pay end, with very little job growth in the middle.

A recent study confirmed this description for the national economy. Since early 2010, when the job market started to improve, through 2012, the occupations adding the most jobs were food preparers and personal-care workers at the low end of the pay scale and management, computer, finance and advanced health care practitioners at the high end of the pay scale. Traditional middle-paying jobs in construction and teaching actually experienced losses.

I was curious to see if the same results have occurred in North Carolina, so I checked the statistics. The answer is yes, a similar pattern has happened, although with some slight differences. For the two years from 2010 to 2012, the largest job gains have been for food prep and personal-care workers paying relatively low wages and for finance and advanced health care workers receiving relatively high wages. In our state, protective service jobs, paying mid-level wages, also was a big job gainer but high-paying management jobs, which gained at the national level, lost positions in North Carolina.

Why is this pattern occurring? A big part of the answer is technology. Computers and other information technology devices have taken the place of people for many routine-oriented jobs; that is, jobs that a machine can be programmed to do. Factory jobs are a good example. Many say the factory of the future will have robots doing all the work, with only a few people behind the controls.

In contrast, it’s more difficult to use technology to replace workers where direct personal contact is needed — as with food prep and personal care jobs — or where decisions are very complex — like in finance, management and medical diagnoses.

There are other possible reasons for the pattern. Traditionally, construction and construction-related jobs have been mainstays of middle-paying positions. Yet these occupations were devastated with the crash of the residential housing market. And although the housing market is now staging a comeback, construction jobs have not. Indeed, in the last two years, North Carolina has still lost jobs related to building.

Most economists think there will eventually be a rebound in construction jobs, and if they’re right, that will be good news for shoring up the middle of the pay ladder. In the late 1990s and early 2000s, losses in manufacturing jobs were absorbed by gains in construction jobs.

Perhaps the most interesting explanation for the lack of growth in middle-paying jobs has to do with supply and not demand. That is, it’s not that companies don’t want to hire people for jobs in the mid-range of the pay distribution. Instead, the problem is there aren’t individuals with the needed kind of training and skills for these jobs.

This issue was highlighted in a recent study from a national business consulting firm. They forecasted that by 2020, the nation could face a shortage of close to 900,000 skilled manufacturing and technical workers, such as machinists, welders and machinery operators. They recommend more be done in schools — especially high schools – to offer training in these fields. The consultants also call on businesses to become more involved in promoting — and maybe in help to finance — these skills and the jobs tied to them.

The dumbbell shape of today’s job market has impacts beyond just where people work. Our country has long been known as a middle-class nation; indeed, most people identify themselves as middle-class. But the growth in jobs at both ends of the pay scale (low-pay and high-pay) reduces the size of the middle class, leaving profound implications for social cohesion, income inequality and income mobility.

What, if anything, can we do about this, and who needs to do it? You decide. Now let’s go pump some iron!

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Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks. Previous columns are available at http://www.cals.ncsu.edu/agcomm/news-center/tag/you-decide

Related audio files are at http://www.cals.ncsu.edu/agcomm/news-center/category/economic-perspective/

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