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


Thus far, we have examined the overall employment experiences and wage growth of low-wage earners over a three-and-one-half-year period after job start. For these analyses, the worker was the unit of analysis, and we examined aggregate measures of potentially discontinuous employment and nonemployment spells that workers experienced over the fixed follow-up period. Another interrelated way to examine the labor market experiences of low-wage workers is to directly examine the duration of their employment and nonemployment spells. For these analyses, the spell, rather than the worker, is the unit of analysis.

These spell analyses allow us to address the following important study questions:

  • What are typical job and employment spell lengths for those who start low-wage jobs? How do they vary across subgroups of low-wage workers?
  • At what rate do low-wage workers exit their low-wage jobs directly into higher-wage jobs? At what rate do they exit into other low-wage jobs and into nonemployment?
  • How soon do those who exit the low-wage sector into nonemployment become reemployed in low- or higher-wage jobs? At what rate do those who exit low-wage jobs into higher-wage jobs return to the low-wage labor market?
  • How do job spell lengths of low-wage workers compare to those of medium- and high-wage workers (a group whom we refer to collectively as higher-wage workers)?

We addressed these questions using information on the duration of job, employment, and nonemployment spells that started during the panel period. We used life table statistical methods to examine spell durations for the full sample, by gender, and for key subgroups of low-wage workers.

Our spell analysis paints a complex picture of the labor market dynamics of low-wage workers. Most importantly, we find that the job, employment, and nonemployment spells of low-wage workers during the mid- to late 1990s were short, and that there was substantial diversity in the ways in which these spells ended. For instance, the median duration of low-wage job spells was about four months for both males and females; about 80 percent ended within a year, and more than 90 percent ended within two years. About 39 percent of male low-wage workers and 28 percent of female low-wage workers exited their low-wage jobs directly into higher-wage employment within three-and-one-half years after job start; at the same time, however, 31 percent of spells for males and 41 percent of spells for females ended in nonemployment (with the remainder of spells ending in another low-wage job). Similarly, more than one-half of those who exited their low-wage jobs into higher-wage jobs returned to the low-wage labor market within two years, and about 87 percent of males who exited their low-wage jobs into nonemployment became reemployed within two years (with one-quarter entering high-wage jobs and the remainder entering low-wage jobs).

These results suggest that job mobility was very common; many workers bounced in and out of the low-wage and higher-wage labor markets.(45) Furthermore, our results indicate that the pathways that led to general improvements in economic prospects over time (discussed in the overall employment and wage progression analyses) differed significantly across workers and were not smooth for most workers. Finally, and not surprisingly, we find that the same subgroups of workers who typically had the best overall employment experiences and wage growth also had the best spell-related outcomes.

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