Post-Recession Labor Market Trends in the Fifth District

Occupation Trends

The chart illustrates the employment losses during the downturn and employment gains since by industry for each of the six jurisdictions in the Fifth District. The level of payroll employment is indexed at 100 for January 2008, when payroll employment peaked in the United States; the level of employment in January 2010, the trough in employment, is shown with an "x" and the August 2015 level with a circle. Thus, if an industry lost jobs during the recession, there would be an x at a level below 100 for January 2010. Employment growth during the recovery is indicated by a circle at an index level to the right of the corresponding "x." Circles at index levels greater than 100 indicate that the state's industry sector more than fully recovered the jobs lost during the recession; for example, an index value of 103 in August 2015 would indicate that employment was 3 percent higher than at the beginning of the recession (January 2008).

What is also notable is that industries that employ more higher-skilled workers (professional and business services, education and health sector) and those that employ more lower-skilled workers (leisure and hospitality) saw the largest increases over the past five years. At the same time, the industries with more middle-skilled workers (production and trades) experienced the weakest recoveries. These observations are just suggestive, however. It would also be useful to look at the changes in occupations during the recovery to get a better sense of whether higher-skilled and lower-skilled workers fared better during the recovery than middle-skilled workers.

The BLS publishes detailed labor market data by occupation. There are 22 major occupation groups and over 800 detailed occupations for which the bureau publishes data on the number of people employed as well as the distribution of wages. The occupation data is not normally used as a source for evaluating the labor market over the business cycle, however, due to the nature of the survey. The Occupational Employment Statistics survey (OES) is reported annually, but the data is collected from establishments in six semiannual panels for three consecutive years. Every six months, a new panel is added and the oldest is dropped. In addition, there have been numerous classification and methodological changes to the survey. As a consequence, the BLS cautions that it is difficult to use OES data for comparisons across short time periods. Still, a careful use of the data to examine two periods far enough apart and after the changes made to the survey should allow for a comparison — with the important caveat that the BLS did not create this survey with the intention of the data being used for time series analysis.

The table below lists the largest 10 major occupation groups in the Fifth District, including each group's share of total occupations for each jurisdiction and median annual salary. The five largest occupation groups within the Fifth District are office and administrative support (15.1 percent of all occupations), sales (10.3 percent), food preparation and serving (9.0 percent), transportation and material moving (6.3 percent), and education, training, and library (6.3 percent); this is very similar to the top five occupation groups for the entire United States.

The differences in salaries among occupations typically reflect the education level and experience required. For the highest-paying occupation group, management, the majority of the detailed occupations require a bachelor's degree or higher with five years or more of experience. In contrast, production occupations require moderate- to long-term training instead of a postsecondary or college degree.

Within the major occupation groups, there is significant variation. For example, the median annual salary in Maryland for the office and administrative support occupation category is $35,650, but the annual salary at the 10th and 90th percentile is $19,550 and $59,610, respectively; for the sales and related occupations category, the annual salary at the 10th and 90th percentile is $16,730 and $73,760, respectively. So it is important to note that the median salary for the major occupation categories incorporate the median education and skills level across all detailed occupations and that some occupations within a major occupation group will have higher (or lower) education level and perhaps additional skills requirements. As a consequence, they will command a higher (or lower) salary.

So how have occupations changed since the end of the Great Recession in terms of employment and wages? The table below lists the changes in Fifth District employment and median annual salary from 2010 to 2014 for the 22 major occupation categories; the categories are ranked by 2010 median annual salary. The categories above the box had median annual salaries at least 15 percent greater than the 2010 median annual salary; the categories within the box were within 15 percent of the median; and the categories below had salaries at least 15 percent lower. Each of these three major divisions of the categories represents roughly one-third of all occupations. 

Overall, total employment grew by 5.1 percent from 2010 to 2014 according to the OES data, while wage growth was very weak — just 4.5 percent in total over the four-year period. When taking inflation into account, real median annual salaries were negative as inflation grew by 7.3 percent from 2010 to 2014, based on the personal consumption price index. Wages grew faster in percentage terms for higher-salary occupations than for middle-salary or lower-salary occupations: The average increase for higher-salary occupations was 5.6 percent across occupations versus 4.9 percent and 3.3 percent for middle- and lower-salary occupations, respectively.

With respect to the structure of demand for workers, the occupational data show much the same pattern as the industry data: Higher-salary and lower-salary occupations grew at faster rates than middle-salary occupations. Of the nine major occupation groups that had higher 2010 median annual salaries, six experienced an increase in employment and three were relatively flat (below a 1 percent change). Across all higher-salary occupations combined, there was a 6.2 percent increase in employment. Of the seven occupations that had salaries close to the median annual salary in 2010, three experienced an increase, three saw a decline, and one was flat. Overall, employment rose by 1.8 percent for this group. Finally, for the six major occupation categories that had lower median annual salaries in 2010, five experienced an increase while one was flat. In the lower-salary occupations combined, employment rose by 7.9 percent.

The differences in median salary generally reflect education and skill requirements. Of the nine major categories in the higher-salary group, all but a few require at least a college degree or a college or higher degree and on-the-job training. Also, arts and design as well as education and training are broad categories that contain a mix of occupations, some of which require college or advanced degrees while others require a degree and specific skills or on-the-job training, and still others require no college degree. In contrast, the six lower-salary occupation categories typically do not require a college degree but instead represent occupations that require some on-the-job training. In the middle group, a good number of the occupations require some education (community and social service, some office occupations) or specific skills learned from medium-term to long-term training (installation, maintenance, repair, construction, production).

These results are broadly consistent with work that looks at national occupation trends in prior periods. In his 2010 paper "U.S. Labor Market Challenges over the Longer Term," David Autor of the Massachusetts Institute of Technology looks at the change in occupation growth from 1979 to 2009 for 10 major occupations. He finds that for the highly educated and highly paid occupations (managerial, professional, and technical), employment growth was robust over the past three decades; growth for service occupations, which disproportionately do not require postsecondary degrees and earn low wages (protective services, food and cleaning services, personal care), was also rapid. In contrast, Autor finds that middle-educated and middle-paid occupations (office workers, production, craft and repair, and operators, fabricators and laborers) grew at slower pace and that the pace declined over time.

These trends are evident within the Fifth District at the state level, as well. With the exception of the District of Columbia, the middle-salary occupation group grew slower than higher- and lower-salary occupations. In three of the Fifth District jurisdictions, lower-salary occupations grew faster than higher-salary occupations (Maryland, North Carolina, and Virginia); two experienced faster growth of higher-salary occupations than lower-salary (District of Columbia and West Virginia); and in one state, the growth rates were the same (South Carolina).

Conclusion

There has been significant improvement in the labor market since the end of the Great Recession. Total payroll employment growth has fully recovered in each jurisdiction in the Fifth District; however, employment levels in some sectors remain below their pre-recession levels. Notably, in most jurisdictions, employment in the sectors hit the hardest remains well below its pre-recession level.

At the same time, employment growth in several service sectors that were least affected by the recession have shown strong growth in recent years. Relatedly, there has been significant growth in higher-salary and higher-skilled occupations and lower-salary and lower-skilled occupations in recent years. Growth in middle-salary and middle-skilled occupations has been more modest, however. This pattern is consistent with studies that have shown a widening gap between higher- and lower-skilled occupations and middle-skilled occupations in the United States and other advanced economies. Lastly, wage growth was very weak from 2010 to 2014. The annual median salary did not keep pace with inflation, although occupations with higher skill levels fared better than those with lower skill levels.