The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Can the Labor Market Absorb Three Million Welfare Recipients?. Where Do the Jobs Come From?

12/01/1999

As we have seen, the educational and skill deficiencies of welfare recipients restrict their access to well-paying occupations, but they do not preclude employment altogether.  An unskilled welfare recipient, if she is able-bodied and moderately resourceful, can usually find an employer willing to offer her a job if she is willing to accept a low enough wage and an inexpensive package of fringe benefits.  In many urban labor markets, for example, jobless workers with few qualifications apply to temporary employment agencies for short-term work.  Although the pay is uncertain and irregular, workers who are diligent and persistent can usually obtain temporary work assignments, at least occasionally, and can often find permanent employment if their job performance impresses a manager who has provided a short-term assignment. Other job opportunities for less-qualified workers can be found in low-wage retailing, cleaning services, agriculture, manual labor, and informal child care.  With relatively little training, less-educated women can work as home health aides.

None of these job opportunities offers bright promise of high income or steady promotions, however.  Many jobs bring a large risk of layoff or recurring unemployment.  Of the 11 low-skill occupations listed in table 1, only one (teacher aides and educational assistants) has below-average risk of unemployment; 6 carry a high risk of unemployment; the other 4 carry a very high risk of unemployment.(19)  Work hours in these occupations are often short, which is an advantage for mothers attempting to rear young children but a disadvantage for mothers attempting to earn a high weekly income.  All but one of the occupations listed in table 1 ranks "high" or "very high" in terms of the percentage of workers who are on part-time schedules.

The experiences of welfare recipients in Milwaukee County who were required to participate in Wisconsin's new state welfare initiative can shed light on the job prospects of current and future recipients.(20)  As reflected in quarterly wage records from Wisconsin's unemployment insurance (UI) program, of the 25,125 single parents receiving AFDC in Milwaukee County in December 1995 and covered by Wisconsin's work obligations, 72 percent (18,000) found at least one job between January 1996 and March 1997.

A total of 7,508 single parents who received AFDC in December 1995 were no longer receiving benefits in September 1996.  Of these parents who left welfare, 66 percent had UI-covered earnings in the October-December 1996 quarter; 16 percent had earnings high enough so that on an annual basis their earnings would place them above the poverty threshold; and 34 percent had no UI-covered earnings at all.  Despite the high employment rates of single parents leaving Wisconsin's welfare program, many parents' employment experiences were cut short by a spell of joblessness.  One-third of the parents who entered employment in the first quarter of 1996, for example, had no recorded earnings in the first quarter of 1997, and about one-quarter of the remaining parents earned less than $500 in the first quarter of 1997.

The same experiences also provide insight into the nature of jobs that welfare recipients find.  The 18,000 AFDC recipients in Milwaukee County who found work after December 1995 held a total of more than 42,000 jobs over the next year  about 2.3 jobs per working recipient.  Over half of these jobs were obtained from temporary help agencies (30 percent of all jobs) or in retail trade (23 percent of jobs).  The large number of jobs per working recipient implies that many recipients found jobs that ended quickly.  For example, only about 60 percent of workers who entered a job in one quarter of 1996 were still employed in the same job one quarter later.  Although the UI wage records do not provide evidence about the exact timing of job finding and job loss, it seems likely that most workers who moved from one employer to another suffered at least a brief spell of unemployment.  Wisconsin welfare recipients certainly found jobs.  Few landed good ones, however, and many exited quickly from the jobs they found.(21)