Posts Tagged ‘service class’
The past week or so, I’ve been tracking where new jobs will be created in America. Today, I look at the sector of the economy that accounts for the largest share of all jobs – the service class. More than 60 million American workers do this kind of low-skill, low-wage, routine service work, making up 45 percent of the work force. These service class jobs are projected to make up more than roughly half of all projected new jobs out to 2018 – 7.1 million new jobs, including 835,000 projected new home health and personal care aides, 400,000 new customer service positions, 400,000 new food preparation workers, and 375,000 new retail sales clerks. (more…)
The U.S. unemployment rate is 9.7 percent, the highest in some time, but the burden of unemployment is spread unevenly across the economy. Production workers face a 15.1 percent unemployment rate, while unemployment among construction and extraction workers stands at 17 percent. But unemployment among management and professional workers is only 5.4 percent. Researchers at the Martin Prosperity Institute (MPI) previously identified long-run differences in the unemployment rates faced by industrial workers and knowledge, professional, and creative workers.
New analysis by the MPI team tracks unemployment among management and professional – or creative class – workers from 1983 to the present. While unemployment among creative class workers as a whole is far below the rate faced by production and construction workers, there is considerable variation in unemployment among the various occupations, professions, and job types that make up the creative class.
Creative workers in arts, design, and entertainment occupations consistently face higher unemployment rates and significant spikes during recessions. In contrast to other creative fields, the unemployment rate for arts, design, and entertainment workers sometimes runs higher than the overall unemployment rate.
Computer, sciences, and engineering professionals experience lower rates of unemployment than arts, design, and entertainment workers. But the lowest rates of unemployment and the most stable employment are found in meds and eds occupations – health and education – where unemployment stays consistently low, even during downturns.
The full analysis is here.
The U.S. economy has shed 7.2 million jobs since the onset of the recession. But the economic pain of unemployment has not been spread equally, according to a new analysis by my colleagues at the Martin Prosperity Institute.
The graph below, compiled by Ulrich Atz, tracks the unemployment rate for three broad groups or classes of employment – the working class, the service class, and the creative class from 1971 to May 2009.
The report finds that:
Unemployment for all three groups has spiked since the onset of the recession. But the downturn has hit hardest on working class. . . The working class has been hard hit by every downturn since 1971. Working class unemployment spiked from 6.2 percent in 1973 to 14.5 percent in the 1975 downturn. It spiked again from 7.7 percent in 1979 to 16.8 percent in 1983. It reached 12.0 percent in 1992.
In contrast, the unemployment rate for the creative class has hardly ever reached the 4 percent mark. Unemployment rates among the working and service class are typically about 3-4 and 2-3 times respectively the rate of those in the creative class.
A closer look at monthly data (available starting in 2000) reveals that unemployment rates among the working and service classes typically move together while creative class unemployment lags the other two by several months.
The unemployment rate surged to 9.4 percent today. But unemployment continues to fall heavily on certain demographic and class groups and in certain cities and regions of the country, according to the latest figures from the Bureau of Labor Statistics.
Greater Detroit still posts the highest rate for large regions (those with a million or more people), 13.6 percent, down from 14 percent in March. Los Angeles, Tampa Bay, Las Vegas, and San Jose also have rates above 10 percent. Greater Portland, Oregon saw the largest jump in its unemployment rate (+6.9 percentage points), followed by Detroit (+6.6 points) and greater Charlotte (+6.4 points). Iowa City (3.2 percent), Des Moines (4.6 percent), and Salt Lake City (five percent) post the lowest unemployment rates.
Ryan Avent notes the resilience of Washington, D.C. and of the Bos-Wash mega-region across the board as well as college towns. He also points to the surprising strength of the “eastern Rust Belt” especially Buffalo, Scranton, Syracuse, and Pittsburgh. These places all experienced the kind of hit Detroit is taking today roughly a generation ago. They have had time to stabilize the economic trauma and to begin to rebuild around universities, heath care, technology, and creative industries.
Large increases in regional unemployment remain heavily concentrated in regions with large fractions of blue-collar working class jobs. The change in unemployment from April ‘08 to April ‘09 is closely correlated (0.39) with the regional concentration of working class jobs – that is, jobs in industrial production, transportation, and construction, according to an analysis by my colleague Charlotta Mellander.
Regions with higher levels of the creative class and higher levels of human capital have fared much better. (Year-over-year, change in unemployment is negatively correlated with both the creative class, -0.29, and human capital levels, -0.35, the percentage of adults with at least a bachelor’s degree).
Unemployment does not appear to be related to regional income levels (the correlation between the two is insignificant). And it tends to fall more heavily on regions with higher housing prices (with a significant positive correlation between the two of 0.18) – perhaps an artifact of the bubble.
Interestingly, regions with large concentrations of lower-end service jobs (like food prep, building maintenance, and personal care services, which are typically seen as the worst and least secure kinds of jobs) are holding up much better than those with large working class concentrations. (Change in unemployment is negatively correlated, -0.29, with large concentrations of these standardized service jobs).
Seems to me, we’d be much better off developing new strategies to improve wages and working conditions in this sector – by say speeding the dissemination of better management models and improving innovation and productivity – instead of bemoaning the loss of blue-collar jobs or, worse yet, bailing out failed manufacturing firms.
How to create good, stable, high-paying jobs for less skilled workers? How to maintain a strong middle class? Where will a large number of good jobs come from in the wake of massive restructuring and globalization of industrial jobs which once served this function?
A big part of the answer lies in upgrading service class jobs – the largest class of jobs in virtually every advanced industrial nation. Look at the trendline below.
But, service class jobs currently pay low wages and are insecure work – they seem to be a poor substitute for the long-run, stable, high-wage jobs that are being lost in manufacturing. But many service jobs have the advantage of being strongly tied to location. It’s hard to outsource personal services, or restaurant work, or retail sales jobs.
The upgrading of service work is a key challenge for the advanced world. Just as we transformed industrial work from harsh, dangerous, and low-paying work during the New Deal and after, we can and must upgrade service work – transforming current service jobs into the same kind of stable, high-paying, secure work that can support middle class families.
A team of researchers at the Martin Prosperity Institute has been looking closely at this critical issue. Here are the first two discussion papers the group has produced as part of the project on Ontario in the Creative Age.
My Rotman school colleague, Anil Verma, provides a detailed profile of low-wage service workers and their jobs including four case studies of firms that are actively upgrading service work. Amy Cervenan examines the potential upgrading of service class work in light of the broader transformation of the economy. Download copies here.