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


Researchers have used several definitions of the low-wage labor market. One approach has been to define low-wage workers as those whose hourly wages are below a cutoff value. Some researchers have defined the cutoff value as the hourly wage at which a full-time worker would have annual earnings below the poverty level for a family of three or four (Bernstein and Hartmann 1999; Mitnik et al. 2002; and Ryscavage 1996).(4) The wage cutoff value has also been defined as the minimum wage (Smith and Vavrichek 1992).

Some researchers have defined low-wage workers as those whose annual earnings are below a cutoff value to account both for hourly wages that workers receive and for the amount that they work (that is, to adjust for the possibility that workers may not work enough hours to meet their families' needs). Mishel et al. (2001) define low-wage workers as those who worked full- or part-time involuntarily, but whose annual earnings were not high enough to reach the poverty level for a family of three, which was $15,208 in 1998. Similarly, Carnevale and Rose (2001) use an annual earnings cutoff value of $15,000 a year, and Holzer et al. (2001) use a cutoff value of $12,000 a year for three consecutive years.

Another approach used in the literature is to define low-wage workers as those whose hourly wages are in the bottom percentiles of the wage distribution (that is, a "relative wage" rather than an "absolute wage" approach). For example, Gladden and Taber (2000a) define low-wage workers as those whose hourly wages are below the 20th percentile of the wage distribution. Similarly, Long and Martini (1990) focus on those with earnings below the median value for full-year, full-time workers. This relative wage approach has also been used in studies that have examined changes over time in income inequality (see, for example, Gottschalk 1997).

Still another approach has been to define low-wage workers as those with low education levels or test scores (Gladden and Taber 2000b; and Holzer and LaLonde 2000). This approach does not use wage or earnings information directly; instead, it relies on the fact that low-wage workers usually have only a high school degree or less. One problem with this approach is that a substantial number of higher-wage workers also have low education levels (see below).

Finally, some studies have focused on the working poor. They define a person as a low-income worker if the total annual income of the person's family is below a given level and if the person worked a minimum number of hours during the year. For example, three papers by U.S. Bureau of Labor Statistics (BLS) researchers define a worker as a low-wage worker if his or her family's total income was below the federal poverty level (the official U.S. Census Bureau definition) and if he or she worked or looked for work in at least 27 weeks over the past calendar year (Gardner and Herz 1992; Hale 1997; and Klein and Roens 1989). Similarly, Acs et al. (2001) consider a family to be poor if its total annual income was below twice the federal poverty level and as working if all adult family members worked an average of half-time or more during the year.

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