Tech Rebound Fuels Growth in Higher-pay Jobs

For the first time in four years, industries that traditionally offer higher-paying hourly jobs like technology, health services and construction are starting to grow faster than retail and other industries that provide lower-paying jobs.

The reversal in what had been a dismal trend is good news, says Elise Gould of the Economic Policy Institute, who spotted the shift by crunching Department of Labor statistics for the first quarter of 2005. Expanding industries were paying about 3 percent better than contracting industries, she says.

Tracking higher-paying jobs is one way economists have of judging growth in job quality. When the economy is strong, as it was between 1996 and 2001, industries with better-paying jobs, like professional and technical services, were growing much faster than lower-paying industries.

Despite the positive development, Gould is cautious in interpreting the numbers. “I’m hoping it’s part of a long-term trend, but I think it’s too early to say,” she says.

Gould notes that growth in part-time jobs has been stronger than full-time jobs during the recovery. She also says that real wage growth has not been keeping up with inflation. The average inflation-adjusted wage in May was $16.03 an hour, 10 cents an hour less than what the average worker made in January, she says.

“Incredible gains in productivity haven’t translated into real wage gains, which you would expect to have in a recovery period,” she says.

Sanford Jacoby, a professor at UCLA’s Anderson School of Management, says the improving picture is being fed by the rebound of the technology industry.

“It’s pretty consistent with underlying economic trends as well as longer-term trends,” he says of the report. “We’ve had fairly slow hiring in industries that employ highly educated workers, like technology. They are coming back.”

Longer term, Jacoby says the EPI research reflects a growing divide between highly paid better-educated workers and those with more limited educations and lower levels of pay.

Ron Blackwell, chief economist for the AFL-CIO, also is concerned about the disparity.

“These are the best of times for some people,” he says. “But we have had a generation-long stagnation in wages, and that is why the middle class is so stressed.”

Still, Gould says the development is welcome.

“We’re in positive territory,” she says. High-wage industries are expanding rather than contracting. “Hopefully that is a sign of increased wages to come.”    

—Douglas P. Shuit