Characteristics of Low-Wage Workers and Their Labor Market Experiences: Evidence from the Mid- to Late 1990s. Wage Construction, Samples, and Methodological Approach


We conducted our analysis using employed SIPP sample members who were between ages 16 and 64 and who were not enrolled in school. We excluded students and older workers, because their labor market experiences are likely to be very different from those of the population that is the focus of this study.

The main analysis sample that we used in Chapter III to examine the prevalence of low-wage jobs and the characteristics of low-wage workers and their jobs is a cross-sectional sample of workers in March 1996. We selected March 1996 as the reference point for several reasons, including the fact that it is the earliest month in the SIPP data that is covered for all sample members (see Appendix A). We also constructed cross-sectional samples of workers in March 1997, March 1998, and March 1999 to examine changes in the prevalence and profiles of low-wage workers over time, due to changing economic conditions and TANF program parameters.

The analysis of the overall employment experiences of low-wage workers (see Chapter IV ) and the wage-growth analysis (see Chapter V ) were conducted using only those who started low-wage jobs or businesses during the first six months of the panel period. We selected this timing to ensure a sufficient follow-up period for examining medium-term labor market experiences and adequate analysis sample sizes. We identified the first new job that the worker held during the six-month period. If the sample member had more than one job or business at the same time, we selected the job or business at which the sample member worked the most hours. We classified a sample member as a low-, medium-, or high-wage worker on the basis of the worker's average hourly wage during the month of job start and the subsequent six months (for those months in which the worker was employed). We used this six-month period to help distinguish "true" low-wage workers from those who held low-wage jobs for only a very short time due to temporary changes in earnings or labor supply effort or to data errors. For similar reasons, we "smoothed" temporary wage fluctuations for the follow-up period using adjacent wages.

Our analysis to examine the distribution of the length of continuous job and employment spells for low-wage workers and the extent to which these spells end in higher-wage jobs or in nonemployment focused on the low-wage spell rather than on the low-wage worker (see Chapter VI). The sample for this duration analysis included an entry cohort of low-wage job and employment spells that began at any time during the follow-up period. Spells were classified as low-wage (or higher-wage) on the basis of the hourly wage rate at the start of the spell.

We used both descriptive and multivariate regression analytic methods to address the research questions for the study. We conducted the analysis for the full sample. In addition, because of differences in labor market participation decisions and experiences by gender, we conducted separate analyses for males and females. Within each gender group, we calculated statistics for the full sample, as well as for key subgroups defined by worker and job characteristics. We used sample weights from the SIPP files in all analyses (either the longitudinal or calendar year weights, depending on the analysis) to make our findings representative of all workers nationally.

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