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


What are the overall employment experiences of low-wage workers over a three-and-one-half year follow-up period after job start? How many eventually find a higher-wage job? How many move in and out of the low-wage labor market? What fraction of time are they in low-wage jobs, higher-wage jobs, and no jobs? Do employment rates increase over time? How do the employment patterns of low-wage workers compare to those of higher-wage workers? Which groups of workers have the best outcomes?

This chapter addresses these questions using a nationally representative sample of workers in the SIPP longitudinal panel file who started jobs during the first six months of the panel period (roughly in the first half of 1996). As discussed in Chapter II, to minimize misclassification errors, we defined a worker as a low-, medium-, or high-wage worker on the basis of the worker's average wage during the month of job start and the subsequent six months. We then examined the labor market experiences of these workers over a 42-month (three-and-one-half year) follow-up period from the month of job start. We conducted a descriptive (univariate) analysis by gender, as well as a multivariate analysis to efficiently summarize key labor market outcomes for subgroups of low-wage workers. To place our findings in context, we also present selected descriptive statistics for medium- and high-wage workers (a group whom we often refer to collectively as higher-wage workers).(27) All statistics were calculated using the longitudinal panel weight. Supplemental tables to those presented in the main text are found in Appendix B.

The entry cohort sample used in the overall employment analysis is conceptually different than the March 1996 cross-sectional sample used to describe the characteristics of low-wage workers and their jobs in the last chapter. The entry cohort sample consists of workers who started a job spell during a six-month window, whereas the cross-sectional sample consists of workers in the middle of their job spells, and hence, contains a disproportionate share of workers with longer-than-average spells. The demographic and job characteristics of the two sets of workers reflect these differences (Table C.1). Workers in the entry cohort sample tend to be younger and to live in poorer households than those in the cross-sectional sample. Similarly, workers in the entry cohort sample typically worked fewer hours, had lower weekly earnings, and were much less likely to have employer-based health insurance coverage. There are few differences, however, between the education levels, racial and ethnic composition, hourly wages, and occupations of workers in the two samples.

In the remainder of this chapter, we present descriptive findings by gender for the full set of outcome measures, and then present findings from the subgroup and multivariate analyses for selected outcomes. We caution readers again that the 1996 to 1999 follow-up period covered by our data was a period of strong economic growth with a high demand for labor. These strong economic conditions may have produced more positive labor market outcomes for our sample than would have been the case under a weaker economy.

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