The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Low-Wage Labor Markets: The Business Cycle and Regional Differences . Differences in Jobs and Unemployment Rates by Urban Location

12/01/1999

There has also been concern that, as a result of locational mismatches, former welfare recipients in central cities will have greater difficulty in making the transition to work than will former welfare recipients in suburbs and nonurban areas.  A complete examination of this issue would require a careful look at the location of current welfare recipients and the corresponding location of low-wage and near low-wage jobs.  Although such an examination is beyond the scope of this paper, in this section the variation in low-wage labor markets among central cities, suburbs, and nonurban areas are examined using the same three labor market indicators examined in section 3 above:

  1. The growth of hourly paid jobs,
  2. The mix of jobs, and
  3. The unemployment rate facing women with high school or less.

Figure 8 displays data on the first two of these indicators.  As noted at the beginning of the third section, the job prospects for former welfare recipients depend both on the overall growth of jobs in an area and on the mix of low-wage, near low-wage, and higher-wage jobs in an area.  Figure 9 shows data on the third indicator, the unemployment rate for women with high school or less in each urban location.  The data in figures 8 and 9 are used to examine the job prospects for welfare recipients in central cities, urban areas outside central cities, and non-urban areas.

Figure 8. Hourly paid jobs by wage level and urban location, 19988, 1992, and 1997.

Figure 8. Hourly paid jobs by wage level and urban location, 1998, 1992, and 1997.

Figure 9. Unemployment rate for women with high school or less by urban location, 1998, 1992, and 1997.

Figure 9. Unemployment rate for women with high school or less by urban location, 1998, 1992, and 1997.

 

Slack in Central Cities

Figure 8 shows that, between 1988 and 1997, hourly job growth in central cities was about 13 percent — below the growth of jobs in either the suburbs (urban areas that are not within a central city) or non-urban areas.  Also, although the mix of hourly jobs shifted toward low-wage and near low-wage jobs in all three locations, the shift was most pronounced in central cities, where low-wage and near low-wage jobs accounted for 34.4 percent of all hourly jobs in 1988, and grew to 42.6 percent of all hourly jobs by 1997.  The relatively slow overall job growth and the strong shift toward low-wage and near low-wage jobs both suggest that labor markets in central cities are slack.  It follows that the job prospects for former welfare recipients are relatively weak in central cities, where welfare recipients are disproportionately located

A look at the unemployment rate for women with high school or less in central cities tends to confirm that the job prospects for former welfare recipients in central cities are relatively bleak.  Figure 9 shows that the unemployment rate for women with high school or less rose more in central cities than elsewhere during the last recession (that is, between 1988 and 1992).  Moreover, during the recovery the unemployment rate for women with high school or less has fallen less in the central cities than elsewhere.  In short, concerns that former welfare recipients face greater labor market difficulties in central cities than in other locations seem well justified.

Tight Suburban Labor Markets

In contrast to central cities, suburbs (urban areas that are not within a central city) had strong hourly job growth between 1988 and 1997.  Figure 8 shows that, between 1988 and 1997, hourly job growth was over 23 percent in suburbs.  In addition, the mix of hourly jobs shifted less toward low-wage and near low-wage jobs in suburbs than in central cities:  In the suburbs, low-wage and near low-wage jobs grew from 33 percent to 38 percent of all hourly jobs.  Both of these factors suggest that suburban labor markets are relatively tight.

The suburban unemployment rate for women with high school or less also suggests a relatively favorable employment outlook in the suburbs.  Although the unemployment rate for women with high school or less rose to slightly over 8 percent in 1992, it had fallen to 6.5 percent by 1997 — lower than in either central cities or non-urban areas (see figure 9).

A Mixed Picture in Non-urban Labor Markets

In non-urban areas, hourly job growth between 1988 and 1997 was 15.5 percent — in between the growth of hourly jobs in central cities and suburbs (see figure 8).  Also, the shift of hourly jobs toward low-wage and near low-wage jobs was less pronounced in non-urban areas than elsewhere; in non-urban areas, low-wage and near low-wage jobs grew from 44 percent to 47 percent of all hourly jobs.  These factors suggest a relatively favorable outlook for former welfare recipients in non-urban areas.

Nonetheless, the proportion of low or near low-wage work remains quite high in non-urban areas.  Furthermore, the unemployment rate in non-urban areas for women with high school or less has been persistently higher than in suburbs.  That rate was above 8 percent in both 1988 and 1992, and fell by less than one point, to 7.7 percent, by 1997 (see figure 9).

Summary

Overall, the job prospects for former welfare recipients appear to be weakest in central cities and strongest in the suburbs.  The outlook in central cities is clouded by slow overall job growth, a strong shift toward low-wage jobs, and a high unemployment rate.  These are potentially troubling trends, given the relative concentration of former welfare recipients in central cities.