Press Release
New York Fed Study Examines Job Polarization and Rising Wage Inequality
October 1, 2012
Note to Editors

Over the past three decades, employment opportunities in both the United States and the New York-northern New Jersey region have become increasingly polarized into high- and low-skilled jobs, according to a recent New York Fed study. Technological advances and globalization have created new jobs for workers at the high end of the skill spectrum and largely spared the service jobs of workers at the low end, but have displaced many middle-skill workers.

In their study, authors Jaison Abel and Richard Deitz explore the phenomenon of job polarization and examine its impact on the New York-northern New Jersey region. They examine the economic forces behind job polarization, chiefly technology and globalization. The computer revolution, for example, created jobs for high-skill workers such as engineers and scientists, but displaced many routine middle-skill jobs, particularly in manufacturing and administrative support. Low-skill jobs that require personal contact, such as health care aides and food service workers, were largely shielded from these forces.

The study finds that in the region, as in the nation, the high-skill and low-skill segments of the workforce experienced the most rapid employment gains since the 1980s, with middle-skill groups experiencing little or no job growth. Thus, the share of people employed in the middle has shrunk considerably.

At the same time, wages have risen faster for high-skill workers than for other groups, contributing to increased wage inequality. The rise in inequality has been particularly sharp in downstate New York and northern New Jersey, where inequality is now above U.S. levels, while the increase in inequality has been slower than average in upstate New York. 

Richard Deitz is an assistant vice president at the New York Fed; Jaison Abel is a senior economist. Their study, “Job Polarization and Rising Inequality in the Nation and the New York-Northern New Jersey Region,” can be read in full in the latest issue of Second District Highlights.

Job Polarization and Rising Inequality in the Nation and the New York-Northern New Jersey Region »

Contact:
Kevin Sajdak
212-720-6143
kevin.sajdak@ny.frb.org

Eric Pajonk
212-720-1735
Eric.pajonk@ny.frb.org