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COMMENTARY

David Robinson: Where have all the mid-wage jobs gone?

David Robinson

The Middle Class is feeling an especially tight squeeze across Buffalo Niagara and upstate New York.

The culprit: A slow, but steady decline in middle-income jobs. While those jobs are growing more slowly across the country, they're actually disappearing here and across upstate, according to new research from Federal Reserve Bank of New York economists.

It's a trend that affects not just factory workers, but truck drivers, bookkeepers and office clerks. All of those jobs have been disappearing in recent years across upstate, even while they've been growing nationally.

And it's been going on for a while.

It was the middle-wage jobs that mostly were hit the hardest during the Great Recession, especially as the decades-long decline in manufacturing accelerated.

Since then, the Buffalo Niagara factory sector has stabilized, but the ongoing trend toward automation is keeping a lid on job growth among manufacturers, who often can use machines to replace mid-level employees.

But it's not just factory workers who are being squeezed.

Office and administrative jobs are going away, too. Bookkeepers and clerks are being replaced by computerized systems as new technology continues to move up the job chain.

While automation and technology first devastated repetitive jobs that required relatively low-level skills, today's more advanced systems are a growing threat to the mid-level jobs – defined as paying between $30,000 and $60,000 a year – that form the backbone of the middle class.

And the squeeze hasn't been letting up.

"This trend has continued all through the recovery and expansion," said Jaison Abel, a regional economist in the Federal Reserve Bank of New York's Buffalo office, who studied the decline in middle-wage jobs across upstate.

Abel's findings are significant because middle-wage jobs – from teachers and fire firefighters and police officers to construction workers and repairmen – make up about half of all jobs. Those jobs are the backbone of Middle Class America.

Of course, not all middle-wage jobs are in decline. Social services occupations have been growing swiftly. The growth in education jobs has been slow, but steady, as have occupations in protective services.

But it's a different story in manufacturing, where there were 4 percent fewer jobs locally  at the end of 2017 than there were just two years before. The decline was even steeper in office and administrative positions, which fell by 5 percent over the two-year period, the Fed research found.

There is a bright spot in the Fed research, though. High-wage jobs – which the Fed defined as any occupation where wages average more than $60,000 a year – are the fastest-growing segment of the Buffalo Niagara economy, even if it's not expanding quite as rapidly as the rest of the country.

High-wage jobs grew by 4.4 percent here from 2015 to 2017, which was only slightly slower than the 5.2 percent growth in those jobs nationwide.

One reason for that slower overall growth is the region's stagnant population. While most other parts of the country have growing populations – which expands the local labor pool – the Buffalo Niagara region doesn't have that. In fact, as the solid economy has spurred slow but steady hiring, our aging population base and flat population has kept the local labor force from swelling in pace with the rising demand for new hires.

"What we see in upstate New York is that a dwindling supply has shifted labor markets," said John Williams, the president of the Federal Reserve Bank of New York during a recent discussion of the upstate economy.

But that tight labor market is no guarantee that workers can find good jobs. The problem is that some workers don't have the right skills to fill the jobs that are available, Williams said. That makes it especially important to have training programs in place that are in tune with the skills that employers are seeking.

In fact, the worker shortage may be acting as a drag on job growth across Buffalo Niagara and the rest of upstate, said Jaison Abel, a regional economist in the New York Fed's Buffalo office.

While "help wanted" signs are easy to find as you drive around the region, the skills gap is making it harder for companies to find the right workers to fill those openings, Abel said.

"That's contributed to the slowdown" in job growth, Abel said. "It's been hard for companies to find workers and that's put upward pressure on wage growth."

That's especially true for manufacturers, which are expecting 17,000 openings in the coming years because of an ongoing wave of retirements. Many of those jobs that need to be filled fall squarely in the tier of mid-wage jobs.

Local training centers, like the recently opened facility in the Northland complex that is funded by the second phase of the Buffalo Billion, are trying to tailor their programs toward high-demand skills, rather than the one-size-fits-all approach that has made many of the area's training initiatives less successful in the past.

Some types of jobs and industries present workers with more opportunities than others, especially for workers who don't have a four-year college degree, according to researchers at the Brookings Metropolitan Policy Program.

Traditional blue-collar occupations in the maintenance, construction, production and transportation fields tend to provide more than their fair share of the so-called "good jobs" that pay middle-income wages, according to Brookings researchers Chad Shearer and Isha Shah. Those fields also are a good source of so-called "promising jobs" –  entry-level positions that also come with opportunities to advance into other jobs that fall within the "good job" category.

In Buffalo Niagara, just 13 percent of the jobs held by workers with less than a four-year college degree are considered by the Brookings researchers to be "good jobs" and only 11 percent are classified as "promising jobs." Together, that's almost equal to the 21 percent of the jobs held by workers with bachelor's degrees that are considered to be both good and promising.

Manufacturing, construction, utilities and logistics jobs are the biggest sources of jobs for non-college graduates that rank in the top half of the local pay scale, according to the Brookings research. Administrative and office work is one of the biggest sources of promising jobs that provide workers with a springboard to other, better-paying positions, often in different industries.

Most of those sectors were singled out by the Fed research as being under pressure locally as mid-wage jobs disappear.

That's where Williams thinks the region's focus on growing industries, like health care and education, can help.

"It's a city that is clearly putting a big investment in two sectors that are really important: health care and education," said John Williams, the president of the New York Fed. "Those are the areas that I think offer long-term growth."

And unlike much of the Buffalo Billion, which focused on making big bets on individual companies, from Tesla to IBM and Albany Molecular Research, the focus on the so-called "eds and meds" sector is more broad-based.

"It's not attracting one business. It's really about developing a cohesive strategy around areas like innovation," Williams said.

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