The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Low-Wage Labor Markets: The Business Cycle and Regional Differences . Main Findings and Policy Implications

02/22/2000

The main findings of the first two sections can be summarized in three points:

  • First, in good times and bad times alike, women with high school only or less than high school have far higher unemployment rates than women with more education.
  • Second, the labor market for low-wage workers has not improved in concert with the improving opportunities for high-skilled workers during the economic recovery of the 1990s.  In particular, the unemployment rate of women with less than high school has remained at roughly the level it reached during the last recession.
  • Third, the number of low-wage jobs is highly cyclical, falling disproportionately during the recession of the early 1990s.

In short, former welfare recipients face formidable barriers in making the transition to employment.  The main reasons for the problems facing low-wage workers are long-term rather than cyclical.  There has been a long-term decline in the demand for low-skilled workers, and the labor force participation rate for women with high school or less has been rising secularly.

In the third and fourth sections, the differences in the labor market prospects of former welfare recipients were examined (a) across the four major regions of the United States and (b) among central cities, suburbs, and nonurban areas.  Only the Midwest has a labor market that appears to be highly favorable to former welfare recipients.  In the Northeast, South, and West, labor market indicators suggest that the job prospects for former welfare recipients are far less favorable.  The job prospects of former welfare recipients in central cities are less favorable than in suburbs or nonurban areas.  The implication is that efforts to find jobs for former welfare recipients will face greater difficulties in the central cities of the Northeast and West than in suburbs, nonurban areas, and the Midwest generally.

Overall, the trends discussed in this paper suggest that policymakers will need to anticipate the consequences of the next recession and consider measures to assist former welfare recipients when the inevitable downturn arrives.  Efforts to upgrade the skills of former welfare recipients and to place them in jobs using various forms of job search assistance will, of course, be helpful.  Ultimately, though, the findings suggest that weak demand for low-skilled labor is the greatest barrier facing former welfare recipients.