Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Duration of Alternative Job and Employment Spells

04/30/2004

We examined also the duration of low-wage jobs using two alternative definitions of spell end dates. First, we examined job spells, where a spell continued as long as the worker remained with their initial employer regardless of the wage received. Second, we examined employment spells, where a spell continued as long as the worker was employed in any job (regardless of the wage level received).

Not surprisingly, job spells tend to be longer than low-wage job spells (Figure VI.1 and Tables E.3 and E.4). For example, nearly 80 percent of low-wage job spells in our sample ended within one year after job start, compared to only 67 percent of job spells. Similarly, more than 90 percent of low-wage spells ended within 24 months, compared to only about 80 percent of job spells. These findings are due to the significant numbers of low-wage workers who obtained higher-wage jobs with the same employer.

Despite these findings, however, job spells are not long. About two-thirds ended within a year after job start, and more than three-quarters ended within two years. Thus, low-wage workers sometimes obtain higher-wage jobs with the same employer, but many do not remain in these higher-wage jobs for a substantial period of time.

The finding that job spells are not long, however, is not necessarily a negative result, because as discussed in the previous two chapters, among workers who were continuously employed during the follow-up period, those who switched jobs tended to have more positive labor market outcomes than those who remained with their initial employers. Thus, job turnover is an avenue for wage growth for some low-wage workers.

We also find that spell durations tend to be longer for overall employment spells than for overall job spells (Figure VI.1 and Tables E.3 and E.4). For example, one-year cumulative exit rates were about 67 percent for job spells, compared to about 51 percent for employment spells. The two duration distributions differ because a sizeable fraction of low-wage workers moved continuously from a low-wage job to another one or to a higher-paying job with a different employer.

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