The health of the U.S. labor market depends not only on the number of jobs created, but also the types of jobs created. One concern about the labor market is the issue of job polarization, or the idea that demand for high-skill and low-skill workers has increased while demand for middle-skill workers has decreased. Research has shown that job polarization existed for the past 30 years and was reinforced, rather than reversed, during the Great Recession.1
In a recent Economic Synopses essay, St. Louis Fed Economist Maria Canon and Senior Research Associate Yang Liu examined data suggesting that job polarization in the U.S. persisted after the Great Recession. Canon and Liu showed that from December 2007 through May 2014:
Job polarization is expected to continue going forward. The Bureau of Labor Statistics (BLS) projects high-skill and low-skill occupations to average annual growth of 1.28 percent and 1.44 percent, respectively, over the next eight years. However, middle-skill occupations are expected to continue to decline, losing 0.9 percentage points of their share in total employment and growing on average 0.79 percent annually, a rate lower than the national average.
Canon and Liu concluded, “The U.S. trend toward job polarization has continued since the Great Recession and according to BLS projections is likely to continue in the coming decade. Specifically, the U.S. labor market is projected to increase demand for high- and low-skill workers, while its demand for middle-skill occupations will continue to diminish.”
1 Economist David Autor, for example, has authored several papers on the subject.