Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Overall Employment Rates in Low-, Medium-, and High-Wage Jobs

04/30/2004

Most low-wage workers in our sample left the low-wage labor market for higher-paying employment--either in the same job or a different job--within three to four years after starting their low-wage job (Figure IV.1). About 69 percent of males held medium-wage jobs and 13 percent held high-wage jobs during the follow-up period; only 30 percent held low-wage jobs only. Employment rates in higher-paying jobs were somewhat lower for females than males, suggesting that females experienced less upward mobility than males. However, female employment rates in higher-paying jobs were still high; about one half of women workers ever held medium-wage jobs.

Figure IV.1.
Percentage of Workers Starting Low-Wage Jobs Who Subsequently
Held Higher-Wage Jobs, By Wage Category and Gender
 
Figure Iv.1. Percentage Of Workers Starting Low-Wage Jobs Who Subsequently Held Higher-Wage Jobs, By Wage Category And Gender.
Source: 1996 SIPP longitudinal files using workers who started low-wage jobs within six months after the start of the panel period
Note: All figures were calculated using the longitudinal panel weight and pertain to a 42-month follow-up period.

Although many low-wage workers held higher-paying jobs at some point, many returned to the low-wage labor market (Figure IV.2). Altogether, about 67 percent of low-wage males and 69 percent of low-wage females who obtained higher-paying employment during the 42-month follow-up period subsequently returned to the low-wage labor market.

These high mobility rates may be due in part to workers who had initial wages near the low-wage cutoff value used for this study and who periodically crossed the low-wage boundary because of changes in their labor supply effort or for other reasons. However, as discussed in the previous chapter, most low-wage workers in our sample earned considerably less than the low-wage cutoff value. Hence, we believe that our findings reflect real movements of low-wage workers into and out of the low-wage labor market.

Figure IV.2.
Percentage of Low-Wage Workers Who Held Higher-Wage Jobs But
Who Returned to The Low-Wage Labor Market, By Gender
 
Figure IV.2. Percentage Of Low-Wage Workers Who Held Higher-Wage Jobs But Who Returned To The Low-Wage Labor Market, By Gender.
Source: 1996 SIPP longitudinal files using workers who started low-wage jobs within six months after the start of the panel period
Note: All figures were calculated using the longitudinal panel weight and pertain to a 42-month follow-up period.

There is also some movement across wage categories for medium- and high-wage workers (Table C.2). For example, among medium-wage workers, about 45 percent of males and females held low-wage jobs, and 45 percent of males and 33 percent of females held high-wage jobs. Similarly, nearly one-half of high-wage workers spent some time in the medium-wage labor market sector. Thus, wage mobility is common both for low earners and higher earners.

In sum, the low-wage population is not static. Rather, a substantial number of workers move between low- and medium-wage jobs.

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