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August Jobs Report Shows Gains Across the Service Economy

Nearly all of the jobs the economy gained in August were in the services sector, with a "barbell" of high- and low-wage jobs doing the heavy lifting.

The 151,000 new jobs created last month were in diverse sectors including retail, leisure and hospitality, while healthcare, finance and professional services also notched gains.

Job seekers stand in line to meet prospective employers at a career fair in New York City
Job seekers stand in line to meet with prospective employers at a career fair in New York City. REUTERS/Mike Segar

"Growth at the top and the bottom reflects this polarization," said Arne Kalleberg, professor of sociology at the University of North Carolina at Chapel Hill. "It's the continuation of a trend."

Early in the recovery, economists documented low-wage professions bouncing back; now, high-paying jobs that demand specialized financial, technical or medical skills are joining them.

"There's been a lot of growth in some highly paid roles in healthcare and finance and professional services," said Andrew Chamberlain, chief economist at Glassdoor.com.

These gains come even as the goods-producing portion of the labor market — work that comprised the backbone of the 20th century "good job" — continues to shrink.

"Jobs that have often filled in the middle of that barbell are in manufacturing and mining and construction. All of them are doing poorly now, for different reasons," Chamberlain said.

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"The middle is not coming back anytime soon because the kinds of jobs that used to be in the middle — high pay, unionized, low-skill jobs — are gone," Kalleberg said. A challenge that vexes policymakers and labor economists, and which has become a main touchpoint in this year's presidential race, is how the workers who used to hold those jobs can be taught the skills that are viable in today's job market.

But as the high-income part of that barbell expands, that job growth will have positive ripple effects on the economy overall, experts predict.

"The jobs have begun to start to turn towards middle- and upper-income, family-sustaining jobs," said Jeff Strohl, director of research at Georgetown University's Center on Education and the Workforce.

The good news for workers who have — or can acquire — the professional, technological or medical skills that employers want today is that salaries are growing much more rapidly than the tepid 2.4 percent annual wage growth rate reported by the Bureau of Labor Statistics.

In a new report, Glassdoor found that annual salaries for sales managers have grown roughly 13 percent over the past year, and financial advisers are earning nearly 8 percent more. Certified nursing assistant salaries have climbed by 11 percent in that same time frame, and front-end developers are making an average of 6 percent more.

"What we are seeing is very fast wage growth in roles that are getting a lot more productive," Chamberlain said. "Each worker can produce so much more than they used to… Those people are having a bigger impact on economic activity and we see that having an effect on their salaries."

These higher earnings boost consumer confidence, which leads to an increase in spending, Strohl said. "You'll end up seeing people more willing to go out and spend money," he said. "Once those people begin to spend, then you have a Keynesian consumption effect."

This, in turn, fuels demand for other services — at both ends of the income spectrum.

CareerBuilder's labor market analysis arm Emsi identified lifestyle trends that affect job growth and found double-digit percentage increases job growth for cooks, drivers, personal trainers, financial advisers and cybersecurity pros between 2012 and this year.

"The employment effect on lower-end services only happens when you've got demand," Strohl said. "The tide is turning in favor of the middle and upper-middle class."