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

04/30/2004

  • Female workers are more likely than male workers to hold low-wage jobs. In 1996, more than one-third of all employed females were in the low-wage labor market, compared to 22 percent of employed males (Figure III.3 and Table III.2). Importantly, females made up about 57 percent of all low-wage workers even though they comprised only 46 percent of all workers (Table III.3). Thus, there were more female than male low-wage workers, even though there were fewer females than males in the workforce. These findings are similar to those found in Bernstein and Hartmann (2000) using March 1997 CPS data. The finding that females make up a larger share of the low-wage population than males is critical for understanding the characteristics of low-wage workers, because many of the results discussed in the rest of this section stem from these gender differences. For example, low-wage workers are more likely than higher-wage ones to be in single-adult households with children and to be on public assistance.

Figure III.3.
Percentage Of All 1996 Workers Who Were Low-Wage Workers
Within Gender, Age, And Race/Ethnicity Groups
 
Figure III.3. Percentage Of All 1996 Workers Who Were Low-Wage Workers Within Gender, Age, And Race/Ethnicity Groups
Source: SIPP 1996 March cross-sectional samples.
Note: All figures were calculated using the 1996 calendar year weight.

Table III.2.
Percentage Of All 1996 Workers Who Were Low-Wage Workers Within Key Worker Subgroups, By Gender
Individual Subgroup Males(a) Females(a) Full Sample(a)
Percent of All Workers Who Were Low-Wage Workers 22 35 28
Age
   Younger than 20 74 96 84
   20 to 29 37 46 41
   30 to 39 19 32 25
   40 to 49 15 27 21
   50 to 59 17 30 23
   60 or older 22 40 30
Race/Ethnicity
   White and other non-Hispanic 18 32 25
   Black, non-Hispanic 34 39 37
   Hispanic 43 52 47
Educational Attainment
   Less than high school/GED 46 71 56
   High school/GED 27 46 36
   Some college 22 33 27
   College graduate or more 11 18 14
Has a Health Limitation
   No 21 33 27
   Yes 36 52 44
Marital Status
   Married 16 32 23
   Separated, divorced, widowed 25 34 30
   Single, never married 41 43 42
Region of Residence
   Northeast 17 28 22
   South 20 37 27
   Midwest 27 38 32
   Northwest 22 32 26
Lives in a Metropolitan Area
   No 27 47 36
   Yes 21 31 25
Sample Size of All Workers 16,186 14,544 30,730
Source: SIPP 1996 March cross-sectional samples.
Note: All figures were weighted using the 1996 calendar year weight.
a. The interpretation of the statistics can be illustrated using the Hispanic figures, which show that, in 1996, 43 percent of all male Hispanic workers and 52 percent of all female Hispanic workers were low-wage workers.

Table III.3.
Distribution Of Individual Characteristics Of Low- Wage And All Workers In March 1996, By Gender
Individual Subgroup Males Workers(a) Females Workers(a) All Workers(a)
Low-Wage All Wage Levels Low-Wage All Wage Levels Low-Wage All Wage Levels
Gender
   Females 0 0 100 100 57 46
   Males 100 100 0 0 43 54
Age
   Younger than 20 5 1 4 1 4 1
   20 to 29 34 21 27 20 30 20
   30 to 39 27 31 29 31 28 31
   40 to 49 19 27 23 29 21 28
   50 to 59 12 16 14 16 13 16
   60 or older 3 3 4 3 3 3
Race/Ethnicity
   White and other non-Hispanic 68 82 76 81 73 81
   Black, non-Hispanic 14 9 14 12 14 11
   Hispanic 18 9 10 7 14 8
Educational Attainment
   Less than high school/GED 22 11 17 8 19 9
   High school/GED 43 35 45 34 44 34
   Some college 17 17 18 19 17 18
   College graduate or more 18 37 21 40 20 38
Has a Health Limitation
   No 91 95 91 94 91 94
   Yes 9 5 9 6 9 6
Marital Status
   Married 46 66 56 61 52 63
   Separated, divorced, widowed 15 13 21 21 18 17
   Single, never married 39 21 23 18 30 20
Region of Residence
   Northeast 15 19 16 20 16 20
   South 22 25 27 25 25 25
   Midwest 42 35 38 35 40 35
   Northwest 21 22 19 20 20 21
Lives in a Metropolitan Area
   No 27 22 29 22 28 22
   Yes 73 78 71 78 72 78
Sample Size 4,389 16,186 6,088 14,544 10,477 30,730
Source: SIPP 1996 March cross-sectional samples.
Note: All figures are weighted using the 1996 calendar year weight.
a. The interpretation of the statistics can be illustrated using the Hispanic figures, which show that 18 percent of all male Low-Wage workers and 10 percent of all female Low-Wage workers were Hispanic.
  • Not surprisingly, a much higher share of younger workers than older ones earn low wages. In March 1996, about 84 percent of employed teenagers between ages 16 and 19 held low-wage jobs (74 percent for male teenage workers and 96 percent for female teenage workers; Figure III.3 and Table III.2). The share of low-wage workers decreased with age from 41 percent for 20- to 29-year-old workers to 23 percent for 50- to 59-year-old workers, but then increased slightly to 30 percent for those older than 60. We find a similar pattern for men and women, although low-wage shares are somewhat higher for women across all age groups. These age profiles are consistent with economic theory that specifies that worker productivity, and hence, wages, increase over time as workers accumulate work experience and job-specific human capital.
  • Because young workers make up only a small percentage of the full labor force, they constitute only a small fraction of all low-wage workers. In March 1996, only about 4 percent of all low-wage workers were teenagers, and 30 percent were ages 20 to 29 (Table III.3).(11) Thus, about two-thirds of the low-wage population were prime-age working adults (that is, those at least 30 years old). This occurs because only 1 percent of the entire 1996 labor force consisted of workers who were teenagers and 20 percent of workers who were between ages 20 and 29. Thus, although younger workers have a higher rate of low-wage employment than older workers, the data do not support the argument that low-wage workers are mainly teenagers and young workers without family responsibilities.
  • A higher fraction of minority workers than white workers are in the low-wage labor market. In March 1996, about 25 percent of white workers held low-wage jobs, compared to 37 percent of African American and 47 percent of Hispanic workers (Figure III.3 and Table III.2). Stated another way, about 28 percent of all low-
    wage workers were minorities, although minorities made up only 19 percent of
    the workforce (Table III.3).(12) It should be pointed out, however, that, despite the disproportionate share of minorities in the low-wage population, nearly three-quarters of all low-wage workers in March 1996 were white (Table III.3). This finding is due to the fact that 81 percent of workers in the entire labor force were white.
  • Differences in the shares of low-wage workers by education level are especially large. For example, in 1996, about 56 percent of workers who did not complete high school were low-wage workers, compared to 36 percent of workers with a high school diploma or GED, and only about 14 percent of workers who completed college (Table III.2).(13) The differences are especially large for females: nearly three-quarters of employed females without a high school credential held low-wage jobs, compared to only 18 percent of those who completed college (Table III.2 and Figure III.4).

Figure III.4.
Percentage Of All 1996 Workers Who Were Low-Wage Workers
Within Education Groups, By Gender
 
Figure III.4. Percentage Of All 1996 Workers Who Were Low-Wage Workers Within Education Groups, By Gender
Source: SIPP March cross-sectional samples.
Note: All figures were calculated using the 1996 calendar year weight.
  • At the same time, however, low-wage workers are diverse in educational levels. For example, in March 1996, nearly 20 percent of all low-wage workers graduated college, which is the same figure as the percentage of all low-wage workers without a high school diploma or GED (Table III.3). Similarly, about one-quarter of all male high-wage workers were those with a high school credential or less (Table B.1). Thus, there is not an exact overlap between low-wage workers and workers with low levels of education.
  • Health status is associated with being a low-wage worker. Workers in 1996 who reported that they had a physical, mental, or other health condition that limited the kind or amount of work that could be done were much more likely to hold low-wage jobs than those without a health limitation (44 percent, compared to 27 percent; Table III.2).(14) In addition, more than half of female workers with a health limitation were in low-paying jobs. However, only about six percent of the workforce was made up of those with health problems for both males and females (Table III.3). Consequently, only about nine percent of all low-wage workers had health limitations.
  • Married workers tend to earn more than those not married. In 1996, only 23 percent of those married held low-wage jobs, compared to 30 percent of those separated, divorced, or widowed, and 42 percent of those single and never married (Table III.2). Interestingly, the differences are much larger for males than females; only 16 percent of married males held low-wage jobs, compared to 32 percent of married females. These findings by gender suggest that many married women hold secondary (part-time) jobs to supplement their spouses' incomes.(15)
  • Despite the overrepresentation of nonmarried workers in the low-wage population, more than one-half of all low-wage workers are married. For instance, in March 1996, 52 percent of all low-wage workers were married (Table III.3). The high share of married workers among all workers reflects the fact that married workers are the predominant group of workers in the full labor force (63 percent). These findings further demonstrate the diversity of the low-wage population.
  • Low-wage workers are roughly proportionately dispersed across all regions of the country. There is some evidence that low-wage workers in 1996 were most common in the Midwest and least common in the Northeast, but the differences are not large (Tables III.2 and III.3). Interestingly, the distribution of low-wage workers across regions does not correlate with the magnitude of state unemployment rates across regions (6.5 percent for those in Northwest states, 5.6 percent for those in Northeast states, 5.2 percent for those in Midwest states, and 4.5 percent for those in Southern states; not shown). The low-wage worker findings across regions, however, are consistent with state poverty rates and median incomes across regions. Specifically, state poverty rates and median incomes were highest in the Midwest and Northwest regions, the regions in which workers were most likely to earn low wages (not shown).
  • Low-wage workers are disproportionately concentrated in nonmetropolitan areas. This result, however, is much more pronounced for female workers than for male workers. For example, in 1996, about 47 percent of female workers in nonmetropolitan areas were low-wage workers, compared to 31 percent of female workers in metropolitan areas (Table III.2). The corresponding figures for males are 27 nonmetropolitan and 21 percent metropolitan, respectively. Despite these differences, however, because nearly 80 percent of workers lived in metropolitan areas, nearly three-quarters of low-wage workers were from them.

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