December, 2001, Vol. 124, No. 12
Which earnings group was affected by the slowing economy ?
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Excerpt from "At Issue":
The labor market weakened considerably between late 2000 and the third quarter of 2001. Overall employment growth slowed, large job losses occurred in manufacturing, and the unemployment rate rose by 0.8 percentage point, from 4.0 to 4.8 percent. (See chart below.) The data presented herein do not reflect the impact of the terrorist attacks of September 11. The labor market clearly had been weakening before the attacks, and those events exacerbated this weakness.
Even prior to the events of September 11, questions had arisen as to who had been adversely affected to the greatest degree. There is little doubt that many workers in manufacturing and related industries had lost jobs, and that those losses affected every major demographic group. But, were higher paid, highly skilled individuals affected to a greater extent than lower paid, less skilled workers?
Data from the Current Population Survey indicate that, between third-quarter 2000 and third-quarter 2001, net employment declined only among job categories with mid-level earnings, largely reflecting the job losses in manufacturing. In the third quarter of 2001, employment also declined substantially in higher paid job categories. These findings are based on employment changes of occupation-industry categories that have been subdivided by their relative earnings into highest, middle, and lowest earnings groups.1
High earnings group. In recent years, employment in the highest earnings group has generally trended upward, and employment gains have far surpassed those in either of the other two earnings groups. (See chart p. 42.) In the third quarter of 2001, however, employment among higher paid workers fell by about half a million. Virtually all of the high-paying managerial and professional occupations are concentrated in this group. The highest earnings group also includes technical occupations in a variety of industries as well. Those most severely affected by the recent employment decline in the highest earnings group include managers in manufacturing and sales representatives in wholesale trade and in finance, insurance, and real estate.
1 For a more detailed description of this methodology, see Randy E. Ilg, "The nature of employment growth, 1989–95," Monthly Labor Review, June 1996, pp. 29–36. Following methods employed earlier by Ilg, major occupation-industry pairs (such as professionals in manufacturing) were ranked in descending order by their median weekly earnings in 1996. The categories were then divided into three groups—highest, middle, and lowest earnings—each of which accounted for approximately one-third of employment in 1996. An employment time series for each occupation-industry category from January 1996 through September 2001 was developed, and data for the job categories were sorted into the appropriate earnings groups.
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