Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Characteristics of Low-wage Workers and Their Jobs

04/30/2004

In this chapter, we use nationally representative March cross-sectional samples of workers from the mid- to late 1990s to address these questions: What has the size of the low-wage working population been since the passage of PRWORA in 1996? Who are low-wage workers, and how do they compare to medium- and high-wage workers? What are the characteristics of jobs that low-wage workers hold? Did the characteristics of low-wage workers and their jobs change between 1996 and 1999?

For most of the analysis, we use a March 1996 cross-sectional sample for several reasons, including the fact that it is the earliest month in the SIPP data that is covered for all sample members (see Appendix A). However, we also conducted some analyses using the March 1997 to March 1999 cross-sectional samples to examine changes in the prevalence and characteristics of low-wage workers over time. To place our findings in perspective, we also present descriptive statistics for all workers and for medium- and high-wage workers.(7) Unless otherwise noted, all figures were calculated using our primary definition of low-wage workers: those with a wage below which a full-time worker would have annual earnings below poverty for a family of four ($7.50 in 1996, $7.72 in 1997, $7.91 in 1998, and $8.03 in 1999). All figures were calculated using the respective calendar year weights. Appendix B contains tables supplemental to those in the text of this chapter.

Because the mid- to late 1990s was a period of strong economic growth with low inflation, our findings must be interpreted carefully. The national unemployment rate decreased from 7.5 percent in 1992 (a period of recession) to 5.4 percent in 1996, and it decreased further to 4.0 percent in 2000, which is low by recent historical standards (see Figure III.1).(8) Thus, the characteristics of low-wage workers during our period of investigation may be somewhat atypical as it may include some workers who were previously unemployed or out of the labor force. Examining trends in the characteristics of low-wage workers and their jobs using earlier SIPP cohorts is beyond the scope of this study. However, we did examine changes in the composition of the low-wage labor market between 1996 and 1999 as the economy improved.

 

Figure III.1.
U.S. Unemployment Rate, By Year
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Figure III.1. U.S. Unemployment Rate, By Year
Source: U.S. Bureau of Labor Statistics.

As discussed later, we found that the characteristics of the low-wage population did not change during this period, suggesting that our findings may be representative of low-wage workers in general.

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