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

04/30/2004

Our findings on the percentage of time low-wage workers spend in various labor market activities corroborate our employment rate findings. Low-wage workers in the mid- to late 1990s were typically employed for most months during the three and one-half years after job start (Figure IV.6 and Tables IV.2 and IV.3).(28) The average male worker was employed for 83 percent of the months, and the average female worker was employed for 76 percent of the months (where females spent most of the rest of their time out of the labor force). About three-quarters of male workers and two-thirds of female workers were employed for at least 32 months (that is, three-quarters of the time), and about 37 percent were employed every month. Only 30 percent of workers were employed for less than half the period. (29) These results provide further evidence that low-wage workers are active participants in the labor force.

Figure IV.6.
Average Percentage Of Months Spent In Labor Market Activities
For Low-Wage Workers, By Gender
 
Figure Iv.6 Average Percentage Of Months Spent In Labor Market Activities For Low-Wage Workers, 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.

Over the entire follow-up period, sample members typically spent considerable more time in low-wage than higher-wage jobs (an average of 57 percent of months in low-wage jobs, compared to 23 percent of months in higher-wage jobs). However, consistent with the employment rate results, over time, workers increasingly spent more time in medium-wage jobs. For example, the average male actually spent about the same amount of time in low-wage and higher-wage jobs during the second half of the follow-up period (42 percent of months, compared to 40 percent of months; Table IV.2).

Table IV.2.
Average Percentage Of Time Spent In Labor Market Activities During The Three
And One-Half Years After Job Start For Low-Wage Workers, By Gender
(Percentages)
Labor Market Activity Males Females All Workers
In All Months(a)
    All Jobs 83 76 79
   Low-wage jobs 55 58 57
   Medium-wage jobs 26 17 21
   Higher-wage jobs 3 1 2
Unemployment 7 5 6
Not in the Labor Force 10 19 15
In Months 1 to 21(a)
All Jobs 84 79 81
   Low-wage jobs 67 68 68
   Medium-wage jobs 16 11 13
   Higher-wage jobs 1 0 1
In Months 22 to 42(a)
All Jobs 82 73 77
   Low-wage jobs 42 48 46
   Medium-wage jobs 36 24 29
   Higher-wage jobs 4 2 3
In All Weeks
All Jobs 81 73 76
   Low-wage jobs 52 55 54
   Medium-wage jobs 25 17 20
   Higher-wage jobs 3 1 2
Sample Size 522 817 1,339
Source: 1996 SIPP longitudinal files using the entry cohort sample of workers who started jobs within six months after the start of the panel period. All workers were followed for 42 months after job start.
Note: All figures are weighted using the longitudinal panel weight.
a. An individual was defined to have been employed in a month if he or she was employed for at least one week during the month.

Table IV.3.
Distribution Of Months In Labor Market Activities During The Three And
One-Half Years After Job Start For Low-Wage Workers, By Gender
(Percentages)
Labor Market Activity(a) Males Females All Workers
All Jobs (Percent)
   0 to 25 5 10 8
   25 to 50 6 11 9
   50 to 75 13 14 13
   75 to 99 36 30 32
   100 40 35 37
Low-Wage Jobs (Percent)
   0 to 25 20 20 20
   25 to 50 25 22 23
   50 to 75 24 21 22
   75 to 99 21 22 22
   100 10 15 13
Medium-Wage Jobs (Percent)
   0 to 25 59 74 67
   25 to 50 19 11 15
   50 to 75 14 12 12
   75 to 99 9 3 6
High-Wage Jobs (Percent)
   0 to 25 96 98 97
   25 to 50 3 1 2
   50 to 75 2 1 1
   75 to 99 0 0 0
Unemployment (Percent)
   0 to 25 93 96 95
   25 to 50 6 4 4
   50 to 75 1 1 1
   75 to 99 1 0 0
Not in the Labor Force (Percent)
   0 to 25 87 72 78
   25 to 50 8 13 11
   50 to 75 2 8 6
   75 to 99 3 8 6
Sample Size 522 817 1,339
Source: 1996 SIPP longitudinal files using the entry cohort sample of workers who started jobs within six months after the start of the panel period. All workers were followed for 42 months after job start.
Note: All figures are weighted using the longitudinal panel weight.
a. An individual was defined to have been employed in a month if he or she was employed for at least one week during the month.

We find results on the number of hours per week worked during the follow-up period similar to those on the number of months employed (Figure IV.7). Males worked an average of 33 hours per week during the 42-month period. This high figure reflects the high percentage of time the males were employed, as well as the fact that most worked full-time while employed (as discussed in the previous chapter). The corresponding figure for female workers was slightly lower (27 hours per week). Over the whole period, workers typically worked about twice as many hours in low-wage jobs than in medium-wage jobs. For example, males worked an average of 21 hours per week in low-wage jobs during the entire follow-up period (or 3,822 hours in total), compared to an average of 11 hours per week in medium-wage jobs (or 2,002 hours in total).(30) However, hours worked in medium-wage jobs increased over time (not shown).

Figure IV.7.
Average Number Of Hours Per Week Spent Employed,
By Wage Type Of Job And Gender
 
Figure Iv.7. Average Number Of Hours Per Week Spent Employed, By Wage Type Of Job 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. Additionally, the average number of hours per week employed by wage type of job refers to the average hours worked in that type of job over the entire follow-up period and includes zero hours worked in any job type.

Despite the evidence of some wage progression for the typical low-wage worker, it is important to realize that many low-wage workers do not experience wage gains across wage categories (Table IV.3). About 57 percent of workers were employed in low-wage jobs for more than one-half the period (55 percent of males and 58 percent of females). Similarly, about two-thirds of workers spent little time (less than one-quarter of months) in medium-wage jobs. Thus, although there is some upward mobility for many low-wage workers, a significant portion remain entrenched in low-wage jobs. In the next section, we attempt to identify workers in each group.

An important policy issue to consider is whether employment outcomes are better for low-wage workers who stay in their jobs or for those who change jobs. It is not clear from economic theory which group of workers is likely to do better. On the one hand, outcomes might be better for those who remain in their jobs, because these workers might experience increased productivity as they gain job-specific human capital. On the other hand, job search theory suggests that those who switch jobs might eventually find job matches that better fit their skills. Thus, it is an empirical question as to which effect is stronger.

To address this issue, we used the sample of those who were employed during the entire follow-up period (that is, those who were continuously employed), and divided these workers into two groups: (1) those who held one job, and (2) those who held multiple jobs. Then, for each group, we tabulated the average percentage of time that these workers spent in medium- or high-wage jobs during the 42-month follow-up period.

We find that those who switched jobs had somewhat better labor market outcomes than those who remained in their starting jobs, although the differences are larger for females than males (Figure IV.8). Among continuously-employed female workers, those who switched jobs spent an average of 28 percent of months in medium- or high-wage jobs, compared to 19 percent of months for those who stayed in their initial jobs. The corresponding figures for male job switchers and job stayers are 36 and 34 percent, respectively. Thus, there is some evidence that job turnover can be beneficial for low-wage workers, especially for female workers. We address this topic further in the wage growth analysis in the next chapter.

Figure IV.8.
Average Percentage Of Time Spent In Medium- Or High-Wage Jobs,
For Job Switchers And Job Stayers
 
Figure Iv.8. Average Percentage Of Time Spent In Medium- Or High-Wage Jobs, For Job Switchers And Job Stayers
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.

Finally, as expected, we find that higher-wage workers spent more time employed than low-wage workers for both males and females (Table C.3). For example, medium- and high-wage males were employed for about 93 percent of months on average (compared to 83 percent for low-wage workers). Interestingly, medium-wage workers spent most of their time in medium-wage jobs, and high-wage workers spent most of their time in high-wage jobs. Thus, there was more movement between wage categories for workers initially in low-wage jobs than for workers initially in higher-wage jobs, even though both groups had a similar number of jobs.

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