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


Thus far, we have examined worker characteristics one at a time. However, many of these characteristics are highly correlated with each other. Thus, we conducted a cluster analysis to identify typologies of low-wage workers using a combination of worker characteristics. In this analysis, each worker was "optimally" assigned to a cluster on the basis of the similarity of that worker's characteristics to those of other workers within the cluster. A distance measure between two workers was constructed by calculating the sum of squared differences between each of the workers' characteristics. Workers were then allocated to clusters to minimize the within-cluster variance and maximize the between-cluster variance. Separate analyses were conducted for males and females.

Table III.6.
Distribution Of Low-Wage Workers, By Subgroup And Year
Subgroup March 1996(a) March 1997(a) March 1998(a) March 1999(a)
    Male 43 42 42 42
    Female 57 58 58 58
    Younger than 20 4 4 4 4
    20 to 29 30 29 28 27
    30 to 39 28 27 26 26
    40 to 49 21 22 23 24
    50 to 59 13 15 15 16
    60 or older 3 4 4 4
    White and other non-Hispanic 73 72 71 72
    Black, non-Hispanic 14 14 15 15
    Hispanic 14 14 13 13
Educational Attainment
    Less than high school/GED 19 19 19 18
    High school/GED 44 45 44 43
    Some college 17 17 17 18
    College graduate or more 20 20 20 21
Has a Health Limitation
    Yes 9 7 6 6
    No 91 93 94 94
Marital Status
    Married 52 52 52 52
    Separated, divorced, widowed 18 18 18 18
    Single, never married 30 29 30 30
Household Type
    Single adults with children 15 15 15 15
    Married couples with children 37 38 39 38
    Married couples without children 25 27 26 27
    Other adults without children 23 21 20 21
Household Income as a Percentage of the Poverty Level
    100 percent or less 13 14 13 12
    101 to 200 percent 29 31 31 29
    More than 200 percent 59 56 56 59
Sample Size of All Workers 30,730 26,581 24,990 25,148
Source: SIPP 1996 March cross-sectional samples.
Note: All figures are weighted using the 1996 calendar year weight.
a. The interpretation of the statistics can be illustrated using the Hispanic figures, which show that 14 percent of all Low-Wage workers were Hispanic in 1996 and 1997. and 13 percent of all Low-Wage workers were Hispanic in 1998 and 1999.

Our cluster analysis revealed that both male and female workers could effectively be grouped into three clusters that captured the diversity of the low-wage population (Figure III.7 and Table B.2). The distinguishing features of the three clusters for males can be described as follows:

  1. Young, Single, Educated. These workers are characterized by their high education levels; about 55 percent attended college (compared to only 35 percent of all male low-wage workers). A disproportionate number of these workers are under age 40, white, and unmarried, and nearly all are from well-to-do households. This cluster contains 39 percent of all male low-wage workers.
  2. Older, Middle-Income, Low-Education, White. In March 1996, about 84 percent
    of these workers were age 30 or older, and 93 percent were white. In addition, only 23 percent attended college. These workers are concentrated in middle-income households (those with incomes between one and two times the poverty level). They account for about 36 percent of all male low-wage workers.

    Figure III.7.
    Share Of Low-Wage Workers, By Typology And Gender
    Figure III.7. Share of Low-Wage Workers, By Typology and Gender.
    Source: SIPP March cross-sectional samples.
    Note: All figures were calculated using the 1996 calendar year weight.
  3. Minority, Married, Low-Income, Low-Education. Nearly all of these workers are minorities (about 95 percent in 1996), and have low education levels (38 percent were high school dropouts in 1996). These workers tend to be married (nearly 80 percent in 1996). In addition, they tend to live in poor households. These workers make up about 25 percent of the male low-wage worker population.

The three clusters for females can be categorized as follows:

  1. Married, Educated, White. These workers are characterized by their high marriage rates and education levels. In 1996, more than 80 percent of these workers were married, although many did not have children. Nearly half had attended college. In addition, the majority had spouses who worked. Nearly all were white. Not surprisingly, nearly all of these workers were in households with incomes above twice the poverty level. Thus, many of these workers are secondary workers who have low-wage and part-time jobs to supplement their husbands' incomes. These workers account for the largest share of female low-wage workers  56 percent in 1996.
  2. Older, Middle-Income, Minority. These workers tend to be older than average, and nearly two-thirds are minorities. Most live in households with incomes between one and two times the poverty level. In addition, they tend to be married with children. Their education levels are typical of other low-wage female workers. This cluster contains about 27 percent of all low-wage workers.
  3. Single-Parent, Low-Income. These workers tend to be single parents and live in poor households. In 1996, more than three-quarters lived in single-parent households, and about 16 percent received public assistance in the previous year (compared to only 4 percent of all female low-wage workers). More than one-half of these workers lived in households with incomes below the poverty level. Not surprisingly, these workers tend to have low education levels. However, they are not characterized by their age or race/ethnicity. In 1996, about 17 percent of all female low-wage workers were in this cluster.

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