Good Jobs/bad Jobs and the Declining Middle, 1967-1986
Concern about the impact of a number of structural changes in the economy on the creation of "good" and "bad" jobs (i.e., high and low paying) has surfaced in recent years. It is speculated that the shift in employment to the services sector, technological change, the changing demographic composition of the workforce, contracting out and other effects are resulting in a polarization of the distribution of wages and earnings; that is, more workers and jobs at the bottom and top of the distributions and fewer in the middle. Using data on employment earnings of full-time, full-year workers from 1967 to 1986, this paper examines the degree to which polarization occurs, and whether the changing age and sex composition of work force accounts for this polarization. It is found that earnings distribution has become more polarized for this population since 1967, and that much of it remains after accounting for demographic effects. During the 1970's, after eliminating the effect of the changing age and sex mix, all of the shift was towards the top of the earnings distribution. During the late 60s and 1980s there was a shift towards both the top and bottom of the earnings distributions. In the 1980's demographic effects were less pronounced, but polarization continued and if anything accelerated. The changing industrial and occupational composition of jobs (Eg. the shift to the services) accounts for little of the observed polarization in the 1980s. Rather, a decline in the relative wages of young people is behind much of the observed change, at least to 1986. The degree to which the polarization of the earnings distribution is due to changes in hourly wage rates or changes in hours worked is also examined, and it is found that in the 1980s, both contributed about equally to earnings polarization.