By Katherine Izzo
Gordon Hanson and Enrico Moretti’s “Where Have All the Good Jobs Gone? Changes in the Geography of Work in the U.S., 1980-2021” examines how shifts in local labor markets have affected the availability and location of relatively high-paying industries, referred to as “good jobs.” This study focuses on where these high-paying industries are located in the U.S. and how their geographic distribution has changed between 1980 and 2021.
What is a good job?
In the paper, “good jobs” are defined as jobs in industries that pay higher wages relative to other industries after accounting for workers’ characteristics, including education and experience, and regional differences. Earnings are compared conditional on education, work experience, and demographic traits. An industry is, therefore, considered “good” if it pays more than expected given those characteristics. Industries are ranked based on these wage advantages, and the top third, weighted by how many full-time, prime age workers the industries employ nationwide, are classified as good job industries.
Of course, many factors besides wages go into a good job. People also value things like benefits, opportunities for career advancement, and sense of purpose. However, for broad empirical analysis as in this paper, wages are the most readily available data, and they tend to be correlated with the other factors, so they provide a very good starting point.
Why are economists interested in good jobs?
By examining good jobs, economists aim to evaluate why some jobs pay better, are more stable, and offer better career ladders than others. Historically, access to these industries has enabled less-educated workers to achieve middle-class incomes. As a result, creating and sustaining “good jobs” has become an increasingly important policy goal.
Good jobs benefit the people who have them, and they also benefit the people around them. There are good jobs externalities: positive spillovers on families, communities, and the country. They promote health and education and reduce crime and political polarization.
Why focus on industries?
Research shows that rising wage differences between industries are a major contributor to overall earnings inequality in the U.S. The authors find that good job industries are heavily concentrated in large commuting zones, meaning access to high-paying jobs is uneven across regions. These industry clusters imply that economic opportunity has increasingly depended on where workers live.
How have good job industries changed over time?
The authors group industries into five broad sectors: (1) agriculture, construction, mining, and utilities; (2) manufacturing; (3) trade and transport; (4) business and professional services; and (5) other sectors. Their findings reveal a few major shifts in the U.S. economy since 1980. Tracking the relocation of high-wage industries reveals how economic opportunity has become more geographically concentrated over time. Second, there has been a sharp decline in the share of good jobs within manufacturing, even though manufacturing jobs themselves remain high-paying. Finally, human capital-intensive services, such as finance, tech, and real estate, now account for three times as many “good jobs.” This occurred because these sectors grew overall, with their highest-paying segments growing the fastest. As a result, the composition of good jobs has shifted toward skill-intensive industries.
