William Dudley, the president of the New York Federal Reserve, spoke yesterday about the state of the New York, New Jersey, and U.S. economies.
The quote you need to know: “There have been significant and long-lasting changes to the nature of work,” he said. That’s true, both in the Empire State and nationwide. And though the changes began prior to the Great Recession, they have accelerated since its end.
New York Fed senior economist Jaison Abel then gave a follow-up presentation that pinpointed what Dudley was referring to: middle-skill jobs are vaporizing.
First, here’s how the skill levels are defined:
Here’s what happened in the country at large. During the Great Recession, middle-skill jobs plummeted 9.3%:
During the recovery, there’s been just a 1.9% increase in middle-skill jobs, compared with much more robust increases in high- and low-skill ones:
And here’s the breakdown for the New York Fed region (which includes Puerto Rico). During the recession, middle-skill jobs fell across the board, with the most severe declines in Puerto Rico and northern New Jersey:
During the recovery, middle-skill job growth has been either negative or nonexistent, while high- and low-skill jobs have surged, especially in the New York City area:
In a later post on Liberty Street Economics, Abel and NYFed senior vice president Richard Deitz offered more context:
These patterns primarily reflect three trends. First, they show that the decades-long process of job polarization — that is, a loss in middle-skill jobs combined with job growth at the upper and lower ends of the skills distribution — has continued through the latest business cycle. Second, ongoing weakness in housing has meant that there has been little bounceback in construction jobs. Finally, fiscal pressures in the public sector, which accelerated after the recession as stimulus spending wound down, have resulted in fewer teachers and cuts in state and local government jobs.
So while a growing number of places in the region have gained back the number of jobs lost during the Great Recession, the types of jobs in the region have changed: job growth has been geared toward higher- and lower-skilled workers, with job opportunities in the middle continuing to shrink.
This is the death of the middle class in real time.
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