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

04/30/2004

Workers, as a group, who started a low-wage job experienced a steady increase in wages during the three-year follow-up period (Figure V.1). Real wages for male workers were just over $7, on average, during period 1 (which reflects the 7- to 12-month period after job start).(40) They increased steadily over time and were just under $9 three years later, representing about a 25 percent increase in real wages. Increases in wages for male workers were the largest during the early periods after job start. Wages continued to increase at relatively high rates during the first couple of years after job start, then tapered off. Although the extent of wage increases is large, the average wage for male low-wage workers was only at about 125 percent above the federal poverty level for a family of four at the end of the follow-up period. Nearly half still had wages below the federal poverty level, and another quarter had wages between 100 and 125 percent of the federal poverty level (Figure V.2).

Figure V.1.
Trends In Real Wages Over Time Among Those Who Start A Low Wage Job, By Gender
 
Figure V.1. Trends In Real Wages Over Time Among Those Who Start A Low Wage Job, 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.

Female workers had lower wages than male workers (about $6.50 on average for females, compared to $7.06 on average for males, during period 1). However, wages of female workers steadily increased, and their average wages were about $8 at the end of the three-year follow-up period (Figure V.1). Female low-wage workers also experienced about a 25 percent increase in real wages over the three-year period, and their wages at the end of the three-year period put their average earnings right around the federal poverty level for a family of four. (41) Sixty percent of female workers continued to have earnings that put them below the federal poverty level, and about 25 percent had incomes between 100 to 125 percent of the federal poverty level (Figure V.2).

The percentage increases in real wage we observed for low-wage workers were considerably larger than the wage increases we observed for medium- and high-wage workers. Medium-wage workers, as a group, experienced a real wage increase of about 10 to 12 percent over the three-year period, and high-wage workers experienced a real wage increase of less than 5 percent over the same period (Table D.2). The average increase in wages across all workers who started jobs, where we do not classify them into worker type and hence are not worried about any contamination, is 12 to the same period (Table D.2). The average increase in wages across all workers who started jobs, where we do not classify them into worker type and hence are not worried about any contamination, is 12 to 15 percent for the three-year period.(42)

Figure V.2.
Real Wages Relative To Poverty, At The Time Of The Follow-Up Period
 
Figure V.2. Real Wages Relative To Poverty, At The Time Of The Follow-Up Period
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.

View full report

Preview
Download

"report.pdf" (pdf, 1.02Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®