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ABQ Economy 10 Years later: More Lower Paying Jobs

Within the next few months, the Albuquerque metro area will reach a milestone that will be cause for really muted celebration. After 10 years of economic stagnation, the area will have finally reached its pre-recession jobs level.

That's right, it will have taken 10 years for the area to recover all the jobs it lost during the recession. And while some will indeed celebrate what has been the worst metro area economy in the region, they'll mostly likely be ignorant of the economy's real story.

And that story is that in those 10 years, the economy has changed for the worst. There are more lower paying jobs than there were 10 years ago, and fewer higher paying jobs.

And, the area is even more dependent on government jobs than it was a decade ago. As of October, 21.5 percent of the metro area's jobs were in government, up from 20.3 percent in 2007, according to the U.S. Bureau of Labor Statistics.

But the big story is the structural change in the economy. The percentage of jobs in the higher paying industry sectors has fallen, while the percentage of jobs in the lower paying sectors have increased.

Ten years ago, the top five paying industry sectors accounted for 36.2 percent of all the area's jobs. Today, that has fallen to 31.6 percent. And, in 2007, the lowest paying sectors accounted for 43 percent of the area's jobs, compared 46 percent today.

Two industries – Professional and Business Services, and Leisure and Hospitality – are indicative of just how the economy has shed higher paying jobs and loaded up on those that don't pay much.

The Professional and Business Services sector includes lawyers, architects, accountants and engineers and has the highest paying jobs. On the opposite end is Leisure and Hospitality, which, with an average annual wage of $17,631, is the lowest paying sector.

In December of 2007, which is when the metro area reached its jobs high point, the Professional and Business Services sector accounted for 16.2 percent of the area's jobs, while the Leisure and Hospitality sector accounted for 9.7 percent of all jobs.

Today, though, the Professional and Business sector's share of the jobs has dropped to 14.9 percent, while Leisure and Hospitality has jumped to 10.8 percent.

Three other higher paying industries – Information, Manufacturing and Construction – have also seen their share of the area's economy fall in the past decade.

One shinning star in the area's economy has been the education and Health Services sector, which has seen its share of jobs grow from 12.4 percent in 2007 to 16.2 percent today. That sector's average wage is $42,186 a year. But that sector includes lower paying jobs like home health care workers and nurses aids, said Jeff Mitchell, director of the University of New Mexico's Bureau of Business and Economic Research.

Mitchell said that while there has been a structural change in the economy in terms of lower-versus-higher paying jobs, it's difficult to come to a firm conclusion without looking at the wages of specific job categories, of which there are dozens.

But Mitchell added that any change that Albuquerque might have seen isn't unusual because the nation's economy has changed as well. Cities and regions are focusing on specific sectors, jobs and industries. And the area's with highly skilled and highly educated workforces are outpacing those with less skilled and educated workers.

And, gone are the days when areas with lousy education systems and poorly educated workers will be able to attract higher paying jobs, Mitchell said, adding that that could be bad news for Albuquerque.

“There is a global pattern. We are seeing a division of labor,” Mitchell said. “Different geographies tend to focus on different types of industries and occupations. Some places are growing more rapidly and some places are growing less rapidly because of the types of jobs they have.

“The very broad story is that on a global and national level, since the recession there has been a greater movement to skills and to human capital and to education. People who have jobs that have high education requirements are going to do well, while people that have lower skilled jobs [won't do as well]. The places that have a highly skilled and well educated workforces are doing well, while places that have less educated workforces are doing less well.”

Mitchell continued: “Thus we see places like Silicon Valley or Seattle or Denver, they are doing extremely well, while places like Albuquerque and New Mexico are doing less well. Pre-recession, it used to be that skills and education were less rewarded. Before, we had a lot of higher paying jobs that didn't require a lot of education.”

A good education system is the key to attracting talent and higher paying jobs, Mitchell said.

“Another implication is that perhaps the failure of New Mexico and Albuquerque to really promote a strong education system. the cost of those failures are becoming evident,” Mitchell said. “This is not a story of a short-term cyclical bump, but it is laying bare much longer-term dynamics.

“You are not quickly going to turn around the economy unless you turn around the education system.”

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