The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Work as a Stepping Stone for Welfare Recipients: What Is the Evidence? . Introduction

02/16/2000

This essay reviews the evidence on the extent to which low-skilled workers gain from labor market experience.  Entry-level jobs for workers with few skills are viewed by some as stepping stones to better jobs.  Others see them as the first in a string of dead-end jobs.  Is the empirical evidence consistent with either of these views?

The answer to this question is particularly important given the recent shift to a work-based welfare strategy.  Will the work requirements lead to early labor market experience that will in turn raise future wages  Will the increase in wages be sufficiently large to lead to self-sufficiency  This hope for the success of work programs designed under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) is clearly articulated in the following program descriptions:

  • Work First programs share a common philosophy regarding work: any job is viewed as a good job and program efforts should be geared toward helping recipients enter the paid labor force as quickly as possible (Holcomb et al. 1998, p. 4).
  • The best way to succeed in the labor market is to join it.  It is believed that job advancement and higher wages will come from the experience of working rather than from first building skills through education and/or training (Holcomb et al. 1998, p. 13).

If early labor market experience does have long-term consequences, then these and other work-oriented programs will provide the initial push that will lead to self-sufficiency.

This essay is divided into three parts.  The first describes the difficult methodological issues that must be addressed in any study trying to measure the impact of early labor market experience for low-skilled workers.  The two sections that follow provide evidence based on experimental and nonexperimental evidence.  The final section contrasts the state of knowledge on this question to the state of knowledge about the effects of human capital programs.