Middle class downsizes as its jobs vanish, move away

WASHINGTON — The good-paying, predominantly white-collar jobs that once sustained many American communities are disappearing at an alarming pace, keeping the unemployment rate stubbornly high despite the end of the Great Recession.

More troubling, these jobs in accounting, financial analysis, commercial printing and a broad array of other mostly white-collar occupations are unlikely to come back, experts predict.

There isn't a single cause. Some of it is explained by changing technology, some of it is the result of automation.

Sending well-paying jobs to low-cost centers abroad is another big part of the story. So is global competition from emerging economies such as China and India.

The result is the same in all cases, however. Jobs that paid well, required skills and produced vital communities are going away and aren't being replaced by anything comparable.

"Unfortunately, the evidence is that you see a form of downward mobility of workers who are displaced from middle-skilled, stable career occupations," said David Autor, an economist at the Massachusetts Institute of Technology.

Autor published a much-discussed paper in April, suggesting the U.S. labor market has become polarized, with employment growth in the high-skill, high-wage end, and the low-skill, low-wage end. The vast middle, he concluded, is shrinking.

As it stands, 14.8 million Americans were unemployed in September, 6.1 million of them for six months or longer. The unemployment rate has hovered around 9.6 percent for half a year, and few economists expect it to dip below 8 percent for years to come.

Lois Williams-Norman is on the upper end of what could be called a middle-skill job, working her entire career in corporations as an internal financial and budget expert. Like millions of Americans, she's had to step down the income ladder.

"I've gone from a six-figure income to seriously looking at positions that are going to be paying probably half as much. So over the past 10 years, my income has continued to decline year after year," Williams-Norman said in Rochester, N.Y.

Her problems began in 2001 when she was downsized out of a job at Xerox after 20 years.

Williams-Norman, who holds an MBA, was forced to take a 20 percent salary cut when she landed her next job at a pharmaceutical firm. She stayed there four years until her company was bought during the frenzy of mergers and acquisitions.

Finding work at corporate headquarters with eye-care company Bausch & Lomb in Rochester, Williams-Norman was put on the street 18 months later after private equity firm Warburg Pincus bought the company in 2007.

She eventually landed with a small local manufacturer that tapped her strategic-planning skills, but the economic downturn ended that job last year.

After going through four corporate employers in 10 years, Williams-Norman, who's in her 50s, has been out of work for more than a year. She's sober about her job search.

"I know a lot of them aren't going to come back, and the new jobs aren't going to pay as much," she said.

While older workers fight it out for a scant number of jobs, younger ones are voting with their feet, departing what once was prime turf for corporate America.

"We've had this white-collar work force, highly educated ... nevertheless, we've gotten almost no (employment) growth. In fact, there's been a decline; young people are leaving," said Ron Hira, a professor at the Rochester Institute of Technology and a co-author of the 2008 book "Outsourcing America," which warned about larger dangers from sending jobs abroad.

This loss of middle-skill jobs — what Autor calls polarization of the job market — intersects with another discouraging trend, the concentration of wealth at the highest rungs of the income ladder.

Research from University of California, Berkeley economist Emmanuel Saez shows that from 1993 to 2006, average real income per family grew by an annual rate of 1.9 percent.

But when subtracting out the top 1 percent of income earners, the rate of growth is 1.1 percent annually. Instead of income growth of 28 percent over the 15-year period, it's almost half that, 15 percent.

This suggests that the top 1 percent of earners in the nation captured almost half the growth in income over a period of stellar growth in the U.S. economy.

And this came against the backdrop of disappearing good-paying union jobs in manufacturing, and what now appears to be an escalating departure of well-paying middle-skill jobs.

"The middle class think they will be rich someday. The chance that people are going to become super rich is negligible. In fact, what we know is that income mobility up the ladder is slowing down, it's not increasing," said former Labor Secretary Robert Reich.

"It's harder now for a kid born into a middle-class family to make it. It's harder for a kid in a lower middle class to do well ... the story is obvious and so clear that it really needs to be laid out to people."

Reich, the author of a new book on the topic called "Aftershock," advocates taxing the wealthy and providing greater tax relief to the vast middle class. But that only tackles income, and not the more difficult issue of jobs moving abroad or being replaced by automation and technology.

For some in the Rochester area, the answer lies in reviving the dwindling manufacturing sector.

"The only way you generate wealth is you make it, you mine it or you grow it. Just exchanging things back and forth, services, it doesn't generate wealth. It just moves it, and I think there's starting to be a realization of that," said Bob Trouskie, a regional director for the Workforce Development Institute, a union-affiliated employment and retraining group partly funded by the New York legislature.