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The Uneven Growth of High and Low-Wage Jobs Across America

It's no secret that the recovery has been incredibly uneven. Some of its biggest benefits are accruing to the one percent, while the majority of Americans have seen their economic prospects stagnate or diminish. Income inequality has surged to levels not seen since before the Great Depression.  
 
When it comes to jobs, the recovery has been terribly uneven as well. Commentators across the political spectrum agree that jobs are a key, if not the key, indicator of the strength of America's economic recovery. Overall, the U.S. economy added some 4.5 million jobs over the course of the recovery from 2009 to 2013. But even with an uptick in manufacturing jobs, the labor market continues to cleave into high-wage knowledge and low-wage service jobs.
 
Between 2009 and 2013, low-wage jobs outnumbered high-wage jobs by some 800,000, with 1.7 million versus 1.1 million jobs. Though low-wage jobs made up less than one in five (19 percent) of all employment in 2009, they accounted for nearly 40 percent (39 percent) of all new jobs created out to 2013. That's according to an analysis by the economic data and modeling firm EMSI of three broad types of jobs: low-wage jobs that pay median wages of up to $13.83 an hour; mid-wage jobs that pay between between $13.84 and $21.13 an hour; and high-wage jobs that pay above $21.14 per hour - based upon categories developed by the National Employment Law Project.
 

Looked at this way, the recovery may not have been exactly jobless, but it has certainly been dominated far by poor quality, low-paying jobs. 

Even more striking is how geographically uneven America's jobs recovery has been. It's not just that some regions have generated many more jobs. The distribution of good versus bad jobs also varies considerably by location. In some regions, low-wage jobs have grown alongside high-wage jobs. But troublingly, there are some places where low-wage positions have constituted the great bulk of recent job growth. The maps below provide detailed evidence of many of the broad trends I discussed in my essay in the October issue of The Atlantic. They chart the distribution of the three categories of jobs across America's 52 large metros, those with more than one million people.

The data were provided by EMSI, and the maps are by my Martin Prosperity Institute colleague Zara Matheson. The first set of maps charts the rate of growth of high, medium, and low-wage jobs for these 52 metros. The second set of maps is if anything more interesting, tracking the share of overall growth within these metros made up by these three types of jobs.

The first map, above, shows the rate growth of high-wage jobs by metro. Austin tops the list with 11 percent growth. Four metros saw 8 percent growth in high-wage jobs: Salt Lake City, Raleigh-Cary, Houston and Dallas. Five others experienced 7 percent growth: San Jose, Charlotte, Grand Rapids, Nashville and Denver.

Las Vegas saw a 6 percent loss and Sacramento a 4 percent loss in their respective high-wage sectors, performing the worst of these major metro areas. Philadelphia, Buffalo and Hartford also had negative growth rates for high-wage jobs, meaning their high-wage sector lost ground over the course of the recovery.

The next map looks at the growth of mid-wage jobs, those that offer median wages between $13.84 and $21.13 per hour. Grand Rapids, Michigan saw the most rapid growth in these job sectors, at 10 percent. Other top metros were largely the same cities that saw huge overall job increases Austin (9 percent growth in mid-wage jobs), Nashville and Houston (both 8 percent), Salt Lake City and Detroit (both 7 percent), and Dallas and San Jose (6 percent each). The metro areas that lost ground in these stable, mid-wage jobs were Virginia Beach (-2 percent) and Cincinnati, Cleveland, Philadelphia, Kansas City and Hartford (each of which saw a -1 percent change in mid-wage jobs).

The third map looks at the rate of growth of low-wage jobs, those between the federal minimum wage and $13.84. Sunbelt metros topped this metric — Houston (15 percent), Austin (14 percent), and Charlotte (13 percent) are islands of dark blue. Twelve other metros saw double-digit growth rates: Dallas, Salt Lake City, Boston and Raleigh-Cary (12 percent each); New York, Grand Rapids, Nashville and Orlando (11 percent each); and  San Francisco-Oakland, New Orleans, Denver, and San Antonio (10 percent each). Not a single large metro saw a shrinking pool of these low-wage jobs, indicating just how important they have been to the overall jobs recovery. But their numbers grew slowly in Birmingham, Alabama (1 percent); Sacramento, California (1 percent); Virginia Beach, Virginia (2 percent); Pittsburgh, Pennsylvania (3 percent); and Rochester, New York (3 percent).

Looking across all three maps a curious trend becomes apparent. Many of the same metros that saw significant growth in high-wage jobs also saw significant growth in low and mid-wage jobs. Austin, Houston, and several other metros top all three lists. In fact, an analysis by my MPI my colleague Charlotta Mellander identified a close association between all three kinds of jobs (with correlations in the range of .7 to .8. As usual, I note correlation doesn't imply causation). Economists have identified that the "multiplier effects" of knowledge jobs could lead to as many as five additional spin-off jobs for each good knowledge-economy job.

The scatter graph below plots the relationship between high and low-wage growth rates. While the overall association is close, many metros deviate considerably from their expected value. Some are substantially above the fitted line.These metros have rates of high-wage job growth that are significantly above what their low-wage job growth would predict. They include knowledge regions like San Jose and Austin as well as metros that have benefited from the energy boom like Oklahoma City.

Also on this list are several metros hard hit by the crisis but that appear to be recovering the high-wage jobs they lost, including Detroit, Phoenix, and Pittsburgh. Other metros are far below the fitted line and have seen substantially more low-wage growth than their high-wage growth rate would predict. These include metros like Las Vegas that were hard hit by the housing crisis, still-lagging Rustbelt metros like Buffalo and Milwaukee, and struggling New Orleans. But the list also includes large metros like New York, which has seen its job market polarize into high-wage and low-wage jobs.

This scatter graph points to why the second set of maps (below) may be far more revealing. They chart how each category of jobs contributed to overall job growth across the largest U.S. metro areas.

The first map in this section tracks the percentage of overall job growth that stems from high-wage jobs. San Jose, California, leads the way. A full 63 percent of new jobs added since 2009 are well-paying, largely high-human-capital positions. Close behind is the Washington, D.C. metro area, with 59 percent of growth coming from high wage jobs. Slightly further behind is the San Francisco-Oakland metro area, with 49 percent of growth in high-wage positions. High-wage jobs made up between 40 and 50 percent of overall job growth in five more metros: Baltimore, Maryland; Birmingham, Alabama; Tampa, Florida; Boston, Massachusetts; and San Diego, California.

Both overall job growth and the growth of high-wage jobs are associated with several key factors that reflect the strength of high-skill knowledge economies, according to Mellander's analysis. These include the share adults with a college degree, creative-class jobs, density of inventors, and venture-capital backed start-ups. Surprisingly, while energy economies have experiences substantial overall job growth over the course of the recovery, Mellander found no statistical association between high-wage job growth and employment in oil and gas industries.

The next map looks at the share of total job growth that mid-wage jobs accounted for in the country's largest metro areas. These new mid-wage jobs were far more concentrated in the middle of the country. They represented more than half of all new jobs in Nashville, Tennessee (60 percent); Grand Rapids, Michigan (59 percent); Detroit, Michigan (57 percent); Salt Lake City, Utah (56 percent); and Louisville, Kentucky (50 percent).

This final map looks at what is surely the the most troubling reality of the post-recession economy. In St. Louis, a full 90 percent of overall job growth came in this category. It's perhaps no wonder that the city's fast food workers were among those leading this summer's minimum-wage strikes. Low wage jobs made up more than half of all employment growth in Riverside, California (74 percent); New Orleans, Louisiana (59 percent); Rochester, New York (59 percent); Tampa, Florida (56 percent); Columbus, Ohio (53 percent); Orlando, Florida (52 percent); and Birmingham, Alabama (52 percent).  

Taken together, these maps  illustrates the underlying reality of America's post-recession economy. The recovery — if we can call it that — has been driven largely by low-wage jobs. Nationwide, low-wage jobs have grown at a 6 percent clip, roughly double the rate for overall job growth (3.1 percent) and the growth rate in high-wage jobs (3 percent). 

What's worse, the geography of job growth is uneven. In major knowledge-economy centers like San Jose, San Francisco, and Washington, D.C., high-wage jobs made up roughly half or more of all job growth. These places have also seen the creation of a large number of low-wage jobs as well. At the other end of the spectrum, there are many metros like St. Louis, New Orleans, Riverside and Rochester where low wage jobs have made up the bulk of new job creation. Even in Houston, the supposed center of America's booming energy economy, growth in low-wage jobs has outpaced the metro's overall employment gains. Across the nation about one-fifth of all large metros saw net losses in high or mid-wage jobs.

Across the country and in virtually every large metro area, low-wage jobs have propelled the recovery. This is the biggest takeaway. The real geographic difference comes among metros that have managed to both see significant job growth and create more well-paying positions to go along with this low-wage, low-skill boom. This is what really separates a place like the Bay Area from one like Las Vegas.

The stark reality is of a low-wage recovery and of a country that continues to sort and divide into two distinct nations, one populated by the third of the workforce who work with their minds and who are doing fine, the other made up of the 66 percent who work for low wages in dead end jobs, if they work at all. To put the economy and job market back on track, America needs a two-fold strategy for creating more good jobs and also for upgrading the millions of low-wage service jobs our economy is generating.

 

Richard Florida is Co-Founder and Editor at Large at The Atlantic Cities. He's also a Senior Editor at The Atlantic, Director of the Martin Prosperity Institute at the University of Toronto's Rotman School of Management, and Global Research Professor at New York University. He is a frequent speaker to communities, business and professional organizations, and founder of the Creative Class Group, whose current client list can be found here. All posts »

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