Since 2009, nearly a quarter of all new jobs in the U.S. -- more than 1.1 million -- have been in just five low-skill occupations, according to EMSI's most recent data: food prep and serving workers (which includes fast food); personal care aides; retail salespersons; home health care aides; and waiters and waitresses.
The immense growth in these low-paying service fields helps explain why 53 percent of all new jobs since the end of the recession have come in occupations that pay less than $13.83 per hour. Yes, it's been a mostly low-wage recovery, and one in which wages for the lowest-level workers aren't budging.
Still, the further removed we get from the recession, the more high-wage job growth is likely to pick up -- and with it will come more jobs and better earnings potential for lower-skilled workers.
This trend is reinforced by the findings of a new report from EMSI and CareerBuilder on America's job outlook through 2017. The report makes clear that the labor market is becoming increasingly bifurcated, with the number of high- and low-wage jobs expected to expand at or near 5 percent through 2017, while 75 percent of all occupations projected to lose jobs are in the middle-wage category.
Furthermore, for metro areas with strong projected job growth in high-wage occupations, low-wage job growth -- especially in the service sector -- is a natural corollary.
Among metropolitan areas with a population of 1 million or more, Austin, Houston, and San Antonio are expected to achieve the biggest overall expansions in employment in percentage terms over the next five years. In each of these Texas metros, high-wage and low-wage job growth are projected to track each other. In Austin, EMSI projections indicate low-wage employment (which we define as $13.83 an hour or less) will grow 10.6 percent, while high-wage jobs ($21.14 an hour and up) will grow 9.4 percent. (Even mid-wage jobs in Austin are expected to grow 8.5 percent, bucking a national trend of the hollowing out of mid-skill occupations.)
The same theme is projected to play out in Raleigh-Cary, N.C., a fast-growing metro area in the Research Triangle where the high- and low-wage growth rates are expected to almost be the same: 8.7 percent and 8.8 percent, respectfully.
This concept of high-wage and low-wage job growth going hand-in-hand might sound strange, but it's been well-documented by regional economists. Jobs created in high-wage, export-oriented industries do more than increase the number of well-paid workers in those industries; they also lead to job openings in lower-paying service industries in their city or region -- which means more jobs for the baristas, cashiers, and retail clerks who make up a large portion of any local economy.
This is because export-serving industries -- those that bring outside money into the region -- have large multiplier effects. The wages of workers in these industries ripple through the local economy, creating more job opportunities in grocery stores, doctor's offices, and the like.
Economist Enrico Moretti emphasized this point in his book, The New Geography of Jobs, specifically in regard to the high-tech or innovation sector. And Hank Robison, EMSI's chief economist, made a similar argument in the Talent Equation, a new book co-authored by CareerBuilder CEO Matt Ferguson.
"Policymakers looking to vitalize their economies need to understand the implications of multiplier effects," Robison said. "In many cases, the best way to boost employment and wages for lower-skilled workers is to pursue industries otherwise known for higher-paying workers."
For example, EMSI's input-output model suggests that every 100 jobs created in Washington, D.C.'s biological product manufacturing industry lead to an additional 400 jobs in the metro area, many in the local service economy, through increased spending.
The low-wage boost that Robison talked about can also be seen in the metros that are projected to have the largest share of high-wage job growth in the next five years. In the Washington, D.C., Seattle, Boston, and Baltimore metros, at least half of new jobs from 2013 to 2017 are expected to be in the high-wage category.
Conversely, cities in the Southwest and Southern California -- Tucson, Riverside-San Bernardino-Ontario, Las Vegas, and Los Angeles -- are the lowest-ranked large metros for projected high-wage job creation. In Tucson, only 25 percent of new jobs are projected to be high-wage, while in Riverside-San Bernardino-Ontario and Las Vegas, it's 26 percent. And in the huge Los Angeles-Long Beach-Santa Ana metro area, just 28 percent of new jobs through 2017 are projected to be in occupations that pay $21.14 and above.
For the metros at the top of this list, the large share of high-wage jobs is a byproduct of their high cost of living compared to the national average. But it's also related to their highly skilled, well-educated workforces.
In the government-driven D.C. metro area, more than 25 percent of new jobs since 2009 (as well as a quarter of projected new jobs from 2013 to 2017) have come in occupations that pay $40 or more per hour. That's a staggering number of high-wage jobs, many of which are clustered among finance, computer, and professional services occupations -- management analysts, software developers, financial analysts, interpreters and translators, et al.
The share of new $40-an-hour jobs since 2009 is slightly smaller in Boston and Seattle. In the last four years, though, both metros have added more than 6,000 software developer jobs with median wages of around $50 an hour locally.
It's these type of high-skill, hard-to-fill occupations that will drive high-wage growth as the economy continues to stabilize. And as more of these high-wage jobs are created, more entry-level opportunities will arise for less-skilled workers.
The question is, what about mid-wage employment? Middle-class job opportunities are vital for people with less than a graduate or bachelor's degree that are searching for family-sustaining careers. In recent years, the news has been sobering on the middle-skill front: The share of medium-wage jobs has plummeted nationally as a result of technology advances and offshoring, forcing many mid-skill workers to move into low-wage jobs since the recession.
Nonetheless, a diverse group of mid-wage occupations are indeed growing in manufacturing, health care, oil and gas, transportation, and other sectors. And the metros like Austin that are cultivating mid-wage employment -- as well as high-wage job growth and the low-wage jobs that come with it -- are in the best position to flourish.
Full List: The Cities Creating The Most High-Paid Jobs
Joshua Wright is senior editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. Contact him here or follow him on Twitter at @ByJoshWright.
