Good jobs/bad jobs and the declining middle: 1967-1986
by John Myles, Garnett Picot and Ted Wannell
Business and Labour Market Analysis Division
Analytical Studies Branch research paper series, No. 028
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 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 the work
force accounts for this polarization.
It is found that the earnings distribution has become more polarized
for this population since 1967, and that much of it remains after accounting
for demographic effects. During the 1970s, 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 1980s demographic effects were less pronounced, but polarization
continued and if anything accelerated. The changing industrial and occupational
composition of jobs (e.g. 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.
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