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Why Job Growth Remains Mushy in the Middle After the Recession

Without degrees, the middle class can't keep up.

A new report Monday by Georgetown University's Center on Education and the Workforce finds that while high- and low-wage jobs have rebounded to near pre-recession levels, middle-income jobs are trailing in the recovery. The big reason, the authors found, is that new middle-class jobs require a college education or specialized training, and growing numbers of Americans don't have either.

"What you're looking at is the decline of the blue-collar economy," said Anthony Carnevale, director of the center. "It's that the skill distribution in that sector is shifting."

Middle-wage jobs, defined as those that pay between $32,000 and $53,000 annually for someone working full-time, are still 900,000 shy of their pre-recession numbers, while the job tiers on both sides of the middle have regained their recession-induced losses. (Job creation in the recovery has failed to keep up with other metrics like population growth, which is why a return to pre-recession figures, although positive, doesn't yield full employment.)

Jobs where a worker with a high school diploma could previously earn a middle-class salary in fields like construction, clerical work and manufacturing haven't rebounded to the same degree because many have been automated or outsourced, Carnevale said.

"There's been this big shift in what constitutes the middle… and the old middle is shrinking faster than the new middle is growing," said Harry Holzer, professor of public policy at Georgetown and a senior economics fellow at the Brookings Institution.

"The new middle job is a health technician or a precision welder or machinist," all jobs that require an associate's degree or, at the very least, a certificate. "This new middle requires more skills," Holzer said.

"There is a substitution for higher skill jobs that give you middle wages," Carnevale said, but that increasingly means investing in education — a burden generally borne by the worker. Although some training programs and partnerships with employers exist to bring workers up to speed, acquiring these skills is often the responsibility of the job-seeker.

Those who can't or don't do so risk tumbling out of the middle class and into the lowest-paid jobs. Many of these jobs are in the service sector so they can't be outsourced, but they don't provide much financial security.

"The people who are really hurt by this… high school grads are basically ones who are bumped down into the bottom tier or out of the labor market," Carnevale said.

Aside from lower income, the new report shows that working lower-wage jobs has other negative consequences. While more than half of middle-sector jobs offer health insurance, only a third of low-wage ones do, and only a quarter offer workers any kind of retirement plan.

Even those who do have access to a retirement plan might not be able to take advantage of it, said Greg McBride, chief financial analyst at Bankrate.com.

"It increases the odds that they're working for an employer that doesn't have a plan, but it also makes money that much tighter, so it's difficult for them to save at a healthy pace for retirement," he said.

"The college degree is really the line of demarcation in this labor market," McBride said.

Some people don't think degrees are a silver bullet to solve the middle class's job woes, though.

"We have college jobs and we have non-college jobs. Both of them have done very poorly in terms of wage growth over the past dozen years," said Larry Mishel, president of left-leaning think tank the Economic Policy Institute and a labor market economist. "What we should be focusing on is why have wages done so poorly," he said.

Mishel said the the wage stagnation is largely attributable to a decline in the bargaining power of the middle class, due largely to a drop in union membership. "For the middle class ... the union decline is a really, really big deal," he said.

For less-educated Americans who find themselves unable to gain a foothold in the new middle economy, obtaining the necessary education to land and keep a middle-class job may be easier said than done.

"A lot of people get stuck in remedial education," Holzer said. Inadequate education at the K-12 level makes employers reluctant to invest in applicants who can't pass college-level coursework.

"We're sending a lot of people into the pipeline and not a lot are coming out (adequately prepared). We have to figure out how to enable these people to pass these classes."