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


We found that many low-wage workers experienced some increase in wages during the mid- and late 1990s. At the same time, however, some low-wage workers experienced little to no wage growth, even in this time of strong economic conditions. This section addresses the important question: Which groups of low-wage workers experience significant wage increases over time and which groups do not? This question is important, because examining differences in the extent of wage growth across subgroups of the low-wage population has implications for targeting appropriate services to those who are at most risk of experiencing poor wage outcomes.

We conducted our subgroup analysis in a manner similar to that done in Chapter IV. First, we examined key wage growth outcomes for selected subgroups one at a time. These subgroups were defined by worker and job characteristics at the time the workers started their low-wage jobs. Second, we conducted a multivariate analysis to examine the association between a particular explanatory (subgroup) variable and key labor market outcomes, holding constant the effects of other explanatory variables. The multivariate analysis accounts for correlations among the subgroup variables and also allows us to efficiently examine wage growth outcomes for a large number of subgroups.

We examined three key outcomes for the wage growth subgroup analysis for low-wage workers:

  1. Whether the worker was in a medium- or high-wage job at the end of the follow-up period (that is, earned more than $8 per hour)
  2. Whether the worker earned $10 or more at the end of the follow-up period
  3. Whether the worker experienced more than a 50 percent increase in wages between period 1 and period 6 (three years later)

While these measures are related, they capture somewhat different elements of wage growth. For example, the percentage of workers who were in medium- or high-wage jobs at the end of the follow-up period indicates the fraction that escaped the low-wage labor market. The fraction with hourly wages over $10 provides some indication of the fraction of individuals whose earnings are 20 percent higher than the $8 per hour cutoff point for low-wage workers. The fraction that experienced a wage increase of over 50 percent allows us to examine the extent of progress workers have made over the three-year period relative to their starting wage in period 1.

We conducted the subgroup analysis separately by gender. Furthermore, all figures were calculated using the longitudinal panel weight. We estimated the multivariate models using logit maximum likelihood methods, as all outcomes measures are binary outcomes. In the multivariate analysis, we conducted statistical tests to gauge the statistical significance of differences in labor market outcomes across subgroups. For some subgroups with small sample sizes (see Table III.1), the standard errors of the estimates are large. Consequently, some relatively large parameter estimates are not statistically significant.

Similar to the analysis in Chapter IV, we included the following categories of explanatory variables in the regression models:

  • Individual and household characteristics measured at the month of initial job start (from the longitudinal panel file)
  • Prepanel employment information (from the wave 1 topical module)
  • Job characteristics measured at the month of initial job start (from the longitudinal panel file)
  • Area characteristics and state economic indicators measured at the start of the job, as well as changes in unemployment rate indicators between the start and end of the follow-up period (from published data sources  Methodological Appendix A)(43)

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