Job Polarization in Oregon

Oregon Economic Forum October 24th, 2013 Josh Lehner

Disclaimer
The views expressed in this presentation are the views of the author and do not necessarily reflect the views of the State of Oregon, the Governor or the Legislature.
Oregon Office of Economic Analysis

Occupations & Median Wages

$0 Management Health Practitioners Legal Arch / Eng Comp / Math Business & Finance Scientists Construction Teachers Protective Service Install, Maint, Repair Arts, Design, Ent Community Service Admin Support Production Transportation Health Support Sales Bldg Maint Agriculture Personal Care Food Prep $20,000 $40,000 $60,000 $80,000 -5% 0%

2010-12 Growth
5% 10% 15% 20% 25%

State: $35,650

State: 2.6%

Source: U.S. Bureau of Labor Statistics

Oregon Office of Economic Analysis

Most Pronounced In Recession

Changes in Recession (2008-2010)
TOTAL
0%

Changes in Recovery (2010-2012)

Low Wage
8% Oregon U.S.

High Wage

Upper Middle Lower Middle

-2%

6%

-4% 4% -6%

-8%

2%

-10% Oregon -12% U.S. 0%

TOTAL

High Wage

Upper Middle Lower Middle

Low Wage

Source: U.S. Bureau of Labor Statistics

Oregon Office of Economic Analysis

What is Job Polarization?

Shrinking opportunities in the middle
Larger losses in recession, slower growth in expansion

Growth concentrated at the high and low ends

Reshaping the state and national economy for decades

MIT Professor David Autor (and colleagues)
Oregon Office of Economic Analysis

Why is it Occurring?
Technology & Globalization
Abstract Tasks - Problem solving - Intuition - Persuasion - Creativity - Typically highly educated - Analytical capability - Benefit from computers Routine Tasks Manual Tasks - Situational adaptability - Visual/Language recognition - Dexterity - In-person interaction - Skills not scare - Computers cant do - Generally low wages

- Organizing, storing, retrieving, manipulating information - Exactly defined physical movements - Routine task-intensive - Blue- and white-collar - Computers excel at these

Source: Autor, David and David Dorn. How Technology Wrecks the Middle Class. New York Times 24 August 2013.

Different Types of Polarization

Replacing middle-wage jobs with high-wage jobs is a great thing, on net Replacing with low-wage jobs is the problem
Occurs for some segments of the labor force

Measure for Good Polarization: Changes in High-wage + Middle-Wage

Oregon Polarizing just like the U.S.

Job Growth by Wage Group (1980 - 2010)
120% 100%

80%

60%

Oregon U.S.

40%

20%

0%
High Wage Upper Middle Lower Middle Low Wage

Source: Federal Reserve Bank of New York, U.S. Census Bureau

Oregon Office of Economic Analysis

Strong 1990s stemmed the tide

Job Growth 1990-2000
40%
35% 30% 25% 20% 15% 10% 5% 0% High Wage Upper Middle Lower Middle Low Wage
Bottom Quintile 4th Quintile Middle Quintile 2nd Quintile Top Quintile

Good Polarization 1990-2000

U.S.

Oregon

Source: Federal Reserve Bank of New York, U.S. Census Bureau

Oregon Office of Economic Analysis

but weak 2000s reversed some gains

Job Growth 2000-2010
40% 35% Oregon U.S.

Good Polarization 2000-2012

30%
25% 20% 15% 10% 5% 0% -5% High Wage Upper Middle Lower Middle Low Wage
Bottom Quintile 4th Quintile Middle Quintile 2nd Quintile Top Quintile

Source: Federal Reserve Bank of New York, U.S. Census Bureau, Bureau of Labor Statistics

Oregon Office of Economic Analysis

Occupational Change (2000-2012)

30% 25% 20% 15% 10% Metro Oregon Oregon Nonmetro Oregon 0% -5% -10% -15% High Wage Upper Middle Lower Middle Low Wage

Regional Divide
Polarization most pronounced in metro areas
Also where the high-wage jobs are created

5%

Rural areas are replacing middlewage jobs with low-wage ones

Oregon Office of Economic Analysis

Metro Oregon: Corvallis, Eugene, Medford, Portland, Salem

Source: U.S. Bureau of Labor Statistics

High-Wage Jobs
Share of employed residents working in Management, Business, Finance and Professional occupations

Census Bureaus American Community Survey, Public Use Microdata Sample, 2007-11

Middle-Wage Jobs
Share of employed residents working in Health Support, Protective Service, Sales, Administrative Support, Construction, Production and Transportation occupations

Census Bureaus American Community Survey, Public Use Microdata Sample, 2007-11

Low-Wage Jobs
Share of employed residents working in Food Preparation, Building Maintenance, Personal Care and Agriculture occupations

Census Bureaus American Community Survey, Public Use Microdata Sample, 2007-11

What Do We Do?

Occupations, Wages and Education

$90,000 Management $80,000 Health Practitioners Legal $70,000 Median Wage, 2012 Comp / Math Arch / Eng Business / Finance

Education, Education, Education

$60,000

Scientists
$50,000 Construction Protective Install & Repair Production Admin Support Trans. Health Support Sales Bldg Maint Personal Care Food Prep $10,000 0% 15% 30% 45% 60% 75% 90% Share with Bachelor's Degree or Higher Arts, Design, Ent Teachers

$40,000

Community Service

Wide differences in formal education even within similar wage groups

Wide differences in wages within similar education groups
Oregon Office of Economic Analysis

$30,000

$20,000

Ag

Occupations, Wages and Education

$90,000 Management $80,000 Health Practitioners Legal $70,000 Median Wage, 2012 Comp / Math Arch / Eng Business / Finance

High Educational Attainment

Teachers

Technology assists these occupations Wide range of pay for similar educational backgrounds Management STEM Lifestyle occupations
Oregon Office of Economic Analysis

$60,000

Scientists
$50,000 Arts, Design, Ent $40,000 Community Service

$30,000

$20,000

$10,000 0% 15% 30% 45% 60% 75% 90% Share with Bachelor's Degree or Higher

Occupations, Wages and Education

$90,000

$80,000

Upper Middle-Wage Jobs

Skilled labor even if formal education differs Blue-collar

$70,000 Median Wage, 2012

$60,000

$50,000

Construction Protective Arts, Design, Ent

Teachers

$40,000

Install & Repair Community Service

$30,000

Repetitive tasks yet situational adaptability Apprenticeships and on the job training important

$20,000

Can be thought of as population driven jobs

0% 15% 30% 45% 60% 75% 90% Share with Bachelor's Degree or Higher

$10,000

Oregon Office of Economic Analysis

Population Driven Middle-Wage Jobs

40% 35% Upper Middle-Wage Job Growth 30% 25% R = 0.3603

Upper Middle-Wage Jobs and Population Excluding Construction, 2000 - 2012

20%
15% 10% 5% OR 0% -5% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% US

Population Sources: Natural Increase Domestic Migration International Migration

Population Growth

Oregon Office of Economic Analysis

Occupations, Wages and Education

$90,000

$80,000

Lower Middle-Wage Jobs

Largest wage group, but also the most impacted by polarization
Repetitive routine tasks: Admin Support, Production, Sales

$70,000 Median Wage, 2012

$60,000

$50,000

$40,000 Admin Support

Production Trans.

Educational Attainment
Blue-collar: High School White-collar: Some College

$30,000

Health Support

Sales

$20,000

$10,000 0% 15% 30% 45% 60% 75% Share with High School or Less

Lower Middle-Wage can be thought of as Business Support jobs

Oregon Office of Economic Analysis

Occupations, Wages and Education

$90,000

Low-Wage Jobs
Formal education requirements minimal
Food Prep & Personal Care some college or certification

$80,000

$70,000 Median Wage, 2012

$60,000

$50,000

$40,000

Technological advancements do impact jobs

Bldg Maint

$30,000

$20,000

Personal Care Food Prep

Ag

Face-to-face interactions, situational adaptability and dexterity do insulate from automation today
Oregon Office of Economic Analysis

$10,000 0% 15% 30% 45% 60% 75% Share with High School or Less

Transitions Are Not Costless

Former RV Workers Take A Pay Cut
Distribution of Hourly Earnings
25% 2007q3 (RV Manufacturing) 2011q3 (Different Industry)

20%
Percent of Workers

Median wage down 11% overall

$14.57 to $13.00

15%

10%

64% took pay cut

Median decline 27%

5%

0%

Hourly Wage
Source: Oregon Employment Department

Oregon Office of Economic Analysis

The Outlook
Most Oregonians will continue to be employed in middle-wage occupations

Over extended horizon, polarization will continue to put pressure on these middle-wage jobs
Growth concentrated at the high and low ends

Near-term outlook is for somewhat muted polarization, given some cyclical rebound
Education helps obtain high-wage but not necessarily middle-wage
Need to match career training with business needs
Oregon Office of Economic Analysis

More Information
Report released today www.OregonEconomicAnalysis.com

Supplemental information on regions within Oregon and state comparisons in near future