The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Mismatch in the Low-Wage Labor Market: Job Hiring Perspective . Wage Levels, Expectations, and Illegal Alternatives to the Labor Market


One final source of mismatch might be considered here: a gap between the wages that workers can earn on the demand side of the market, and what they expect or consider acceptable, that is, their "reservation wages." Recent evidence suggests that, while reservation wages are lower among blacks than whites at an "absolute" level, they are somewhat higher among the former relative to what they might actually be offered in the labor market(34); and less-educated young black men appear to have dropped out of the labor force at greater rates than comparable young white men in response to declining wages.(35)

For the former, the opportunities they face in the legitimate labor market may not compare favorably with what they perceive to be available in the illegal market. But, once they become incarcerated and fail to accumulate some early labor market experience, their ability to reenter the legitimate market, and to earn anything above very minimal wage levels, appears to be seriously impaired.(36)

On the other hand, these results also imply that policies that improve the access of unskilled young workers to jobs with higher wages/benefits or potential wage growth over time might raise their willingness to accept early employment, lower their turnover rates out of employment, and thus enable them to gain early market experience that should help them improve their long-term earnings potential.(37)