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

04/30/2004

a. Low-Wage Job Spells

Low-wage job spells that started during the mid- to late 1990s were typically short for both men and women (Table VI.2). About one-half of spells ended within four months after job start, about three-quarters ended within one year, and nearly 90 percent ended within two years. By 44 months after job start (the longest period for which life table results could be obtained), about 95 percent of low-wage job spells had ended. Thus, there is substantial wage and job mobility among low-wage workers.

Table VI.2.
Cumulative Exit Rates For Low-Wage Job Spells, By Type Of Exit And Gender
(Percentages)
Month Total Type of Exit
Another Low-Wage Job Higher-Wage with the Same Employer Higher-Wage with a Different Employer Unemployment Out of the Labor Force
Males
Number of Months After Start of Low-Wage Job
4 51 12 13 8 9 9
8 73 17 18 11 14 12
12 81 20 21 12 15 14
16 87 21 23 12 16 15
20 90 22 23 13 16 16
24 92 22 24 13 17 16
28 94 23 25 13 17 16
32 95 23 25 13 17 17
36 96 23 26 13 17 17
40 97 23 26 13 17 17
44 97 23 26 13 18 17
Females
Number of Months After Start of Low-Wage Job
4 46 13 8 5 7 13
8 65 19 12 7 10 18
12 76 22 14 8 11 22
16 83 24 16 8 12 23
20 87 25 17 8 12 24
24 90 26 18 9 13 25
28 92 26 18 9 13 26
32 93 27 19 9 13 26
36 94 27 19 9 13 27
40 95 27 19 9 13 27
44 96 27 19 9 14 27
Source: 1996 SIPP longitudinal files using the entry cohort sample of 4,489 low-wage job spells for males and 7,401 low-wage job spells for females. Left-censored spells are excluded from the sample.
Note: All figures are weighted using the longitudinal panel weight.

Into which labor market state did low-wage workers most often exit? The answer is that there is considerable diversity in exit states, although low-wage workers most often exited into higher-wage jobs (Table VI.2). Interestingly, most of those who entered higher-paying jobs stayed with the same employer. Looking at all exits that occurred within 12 months after job start, low-wage jobs evolved into higher-paying jobs with the same employer for 21 percent of males and 14 percent of females. Over the same one-year period, an additional 12 percent of males and 8 percent of females obtained a different higher-paying job. Thus, altogether, 33 percent of male low-wage workers and 22 percent of female low-wage workers found higher-paying employment within one year. Thereafter, the cumulative exit rates into higher-wage employment leveled off to about 39 percent for males and 28 percent for females. These findings provide further evidence of some wage mobility for the low-wage population during the strong economy of the mid- to late 1990s.

At the same time, however, many workers during the mid- to late 1990s exited their low-wage jobs directly into another low-wage job or into nonemployment (Table VI.2). For instance, 27 percent of spells for females and 23 percent of spells for males eventually ended in another low-wage job. Similarly, more than one-quarter of female workers and 17 percent of male workers exited their jobs by leaving the labor force. Finally, spells ultimately ended in unemployment for about 18 percent of males and 14 percent of females. Thus, altogether, about 41 percent of spells for females and 31 percent of spells for males ended in nonemployment.

b. Low-Wage Employment Spells

Thus far, we have examined the length of low-wage job spells from the start of these spells until the worker exited into another low-wage job, a higher-paying job, or nonemployment. As discussed, we also examined the duration of low-wage employment spells, which were allowed to continue if a worker moved continuously from one low-wage job to another. Thus, these spells could end only if the worker found a higher-paying job or became nonemployed.

Low-wage employment spells tend to be slightly longer than low-wage job spells (Tables VI.2 and VI.3, the top two lines in Figure VI.1, and Tables E.3 and E.4). For example, among male low-wage workers, about 74 percent of low-wage job spells ended within one year after job start, compared to 81 percent of low-wage employment spells. The differences between the duration distributions of low-wage job and low-wage employment spells reflect the fact that about one-quarter of low-wage workers in our sample moved from a low-wage job directly into another low-wage job.

Examining the types of exits from low-wage employment spells and low-wage job spells tells a somewhat similar story (Table VI.3). As expected, transition rates into higher-wage jobs and into nonemployment are somewhat larger for low-wage employment spells (because transitioning into another low-wage job is no longer a possible exit state). For instance, about 43 percent of males eventually exited their low-wage employment spells into medium-wage jobs and an additional 6 percent exited into high-wage jobs. Thus, nearly one-half of males exited their low-wage employment spells directly into higher-paying jobs, which is somewhat larger than the corresponding figure of 39 percent for male low-wage job spells. Similarly, about 38 percent of females eventually exited their low-wage employment spells because they left the labor force, whereas the corresponding figure is 27 percent for female low-wage job spells.

These findings support our results from the overall employment and wage progression analyses that there is substantial diversity in labor market success across low-wage workers. They also support our previous findings that female low-wage workers typically have poorer labor market outcomes than male low-wage workers.

Figure VI.1.
Cumulative Exit Rates From Job And Employment Spells
For Those Starting Low-Wage Jobs, By Gender
 
Figure VI.1a. Cumulative Exit Rates From Job And Employment Spells For Those Starting Low-Wage Jobs, By Gender

Figure VI.1b. Cumulative Exit Rates From Job And Employment Spells For Those Starting Low-Wage Jobs, By Gender

Source: 1996 SIPP longitudinal files using the entry cohort sample.
Note: All figures were calculated using the longitudinal panel weight.

Table VI.3.
Cumulative Exit Rates For Low-Wage Employment Spells,
By Type Of Exit And Gender
(Percentages)
  Total Type of Exit
Medium-Wage Job High-Wage Job Unemployment Out of the Labor Force
Males
Number of Months After Start of Low-Wage Job
4 44 20 3 11 10
8 65 28 4 17 15
12 74 32 5 19 18
16 82 36 5 21 20
20 86 38 5 22 21
24 88 39 6 23 21
28 90 40 6 23 21
32 92 41 6 24 22
36 94 42 6 24 22
40 95 43 6 24 22
44 96 43 6 24 23
Females
Number of Months After Start of Low-Wage Job
4 39 13 2 8 16
8 57 19 3 12 23
12 68 22 3 14 28
16 75 25 3 16 32
20 80 27 3 16 33
24 84 29 3 18 35
28 87 30 4 18 36
32 89 31 4 18 36
36 90 31 4 18 37
40 91 31 4 19 37
44 93 32 4 19 38
Source: 1996 SIPP longitudinal files using the entry cohort sample of 3,021 low-wage employment spells for males and 4,926 low-wage employment spells for females. Left-censored spells are excluded from the sample.
Note: All figures are weighted using the longitudinal panel weight.

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