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Job polarization in Virginia means fewer middle-wage jobs

Job polarization refers to a situation in the labor force where growth is concentrated among both low-and high-wage jobs, while the number of middle-wage jobs declines. Inspired by a blog post about job polarization in Oregon since the Great Recession, I found that the same trend holds true for Virginia. While the number of low-and high-wage jobs in Virginia has increased compared to pre-recession levels, middle-wage jobs have only recovered about a third of their recessionary losses.

Virginia Employment Change Since 2008 by Wage Category

Source: Bureau of Labor Statistics, 2016 Occupational Employment Statistics

For purposes of this analysis, I classified the 22 civilian occupational groups of the Bureau of Labor Statistics’ Standard Occupational Classification system into three wage categories—low, middle, and high. Middle-wage jobs were defined as those occupational groups having a 2016 Virginia median wage between 75 and 150 percent of the 2016 Virginia median wage for all occupations (roughly $30,000 to $60,000).


2016 Virginia Median Wage and Employment Distribution by Occupational Group  

Source: Bureau of Labor Statistics, 2016 Occupational Employment Statistics

Middle-wage clerical, construction, and production occupations have seen the greatest job losses in Virginia since the recession, while a mix of low- and high-wage occupations have experienced the most growth.

Virginia Employment Change Since 2008 by Occupational Group

Source: Bureau of Labor Statistics, 2016 Occupational Employment Statistics

One possible explanation for job polarization is that the more routine job tasks associated with middle-wage work are more prone to offshoring and replacement by technology. By contrast, low- and high-wage occupations often require greater levels of personal interaction or more complex reasoning and communication skills that are not possible or cost-effective to offshore or automate. Even within the middle-wage category, jobs that generally involve more routine tasks—such as those in the clerical, construction, and production occupational groups—have fared worse in terms of post-recession employment recovery than jobs in groups like education or protective services that require more complex personal skills.

Job polarization is certainly not unique to Virginia, but the trend has been more noticeable here since 2008 than in the rest of the country. One factor that has likely slowed Virginia’s post-recession job recovery compared to other states has been the federal budget sequestration. Although its economic impact has been widespread among many occupational groups, middle-wage construction and clerical jobs probably took an especially hard hit.

The fact that job polarization appears to have worsened following the recession is generally discouraging news for Virginia middle-wage earners. Lower demand for middle-wage jobs often results in lower earnings and reduced labor force participation rates for workers who do not have the education or skills required for high-wage work. Job polarization is especially hard on workers without a four-year college degree. And although there has been an uptick in middle-wage job growth in Virginia over the past few years, job polarization is a nationwide, long-term trend that has developed over the past few decades and shows no signs of resolution any time soon.