First Quarter 2017: What Do Changes in the Distribution of Jobs by Employer Size Class Reveal?October 17, 2017 Between the first quarter of 2010 recessionary trough and the first quarter of 2017, more than 357,000 jobs were added to the Oregon economy, an increase of 21.5 percent. Did these new jobs change the distribution of all jobs by employer size class? Was there uniformity in the changes in median hourly wage across size classes?
A side-by-side comparison of the percent of jobs in each of eight employer size classes in the first quarters of 2010 and 2017 suggests that the larger size classes have been disproportionally favored in gaining jobs over the time period. Is this a reasonable interpretation? What might we see during a period of economic growth? If the rate of hiring (i.e., percent increase in number of jobs) were roughly the same for small employers as for large employers, we could expect to see an increase in the share of jobs with large employers. In fact, the increase in the individual share for any employer would be proportional to its size. When jobs are added to employers in a specific size class, they may also bump the employer into a larger size class. For example, two jobs added to an employer with 18 employees moves the employer from the 10-19 to the 20-49 employees size class. (Conversely, when employers shed jobs, they may move into smaller size classes.) Even large changes over time in the size of individual employers may not show up in comparisons by size class. Generally, simple longitudinal studies of the distribution of jobs by employer size class will obscure most of the underlying dynamics of job and employer growth or decline. To observe and understand these, a closer examination of the behavior of individual employers would be required.
Across all employer size classes, the median nominal hourly wage increased over the span of seven years. However, the real, or inflation-adjusted hourly wage actually shrank during that time period – from $19.69 to $19.04. As the table shows, the median hourly wage decreased for all employer size classes. Why might this have occurred? It may seem surprising, especially in light of recent increases in the minimum wage. One possible answer might be supported by the change in the share of jobs by hourly wage category. For all employer size classes the percent of jobs in the $10.00-$19.99 category increased between the first quarters of 2010 and 2017, while the percent of jobs in the aggregated $20.00-$59.99 category decreased.
A reasonable explanation for this could be as follows: During the recession, employers preferentially laid off less experienced workers holding more recently created (and likely, lower paying) jobs. This would have had the effect of raising the real median wage. During the subsequent period of recovery, as Oregon added 357,000 jobs, previously terminated employees and new workers were hired, many presumably at a lower starting wage. The effect of this would be to shift the balance between the percent of jobs in the higher and lower hourly wage categories and lower the real median wage.
As measured by the Unemployment Insurance wage records, the number of jobs in a quarter is always larger than the number of workers. An employer’s job count is not a point-in-time count of workers; but rather the total number of all employees who worked for the employer in a specific quarter. The greater the amount of turnover (e.g., employees coming and going), the more the number of jobs will exceed a point-in-time count of employees.