Research Highlights Featured Chart

January 15, 2018

Growth at the extremes

A Coca-Cola bottling line in Fort Scott, Kansas, in 1958.

National Archives and Records Administration

There has been a hollowing out of the US labor market over the past few decades; most of the job expansion has happened at the extremes.

Wage and employment growth has been dominated by highly paid and lowest-paid positions. Meanwhile, middle-wage jobs requiring moderate skills training have become a smaller share of overall employment.

This phenomenon has been well documented since the 1980s. However, in a paper that appears in the January issue of The American Economic Journal: Macroeconomics, researchers Zsófia Bárány and Christian Siegel say the polarization began much earlier, possibly back to the 1950s or 1960s.

Figure 2 from Barany et al. (2018)

The bar graphs above, from Figure 2 in the paper, show the decade-by-decade change in hours worked and wages for ten broad occupational categories. The three groups on the right — managers, professionals, and technicians — are the most educated and highest paid. The three on the left are the least educated and lowest paid. Middle-skilled are the four in the middle.

There is no clear pattern in the employment growth of these occupational categories between 1950 and 1960. However, from 1960 onwards there is a U-shaped pattern in which total hours worked and wage growth rates began growing at the higher and lower ends of the skill distribution.