The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Background


Increased emphasis on moving welfare recipients into employment as a result of welfare reform has raised questions about the labor market facing low-wage workers. What are the characteristics of this market (as opposed to the labor market as a whole)? Will it be able to absorb the welfare leavers? How is it affected by changes in the larger economy? What opportunities do low-wage workers have for advancement once they enter the labor market?

To help policy makers answer these questions, nine papers by experts in labor market analysis were commissioned by the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, to review current literature on the low-wage market and highlight policy implications that flow from the review. (The Data Appendix provides a statistical portrait of the labor market as a whole and the characteristics of low-wage workers.)

The important role of the low-wage labor market as welfare recipients and other economically disadvantaged persons move into employment is clear from the evidence marshaled in the review. There is a strong consensus that this labor market will be able to absorb people leaving the rolls, as long as the economy retains its current strength. However, there is often little opportunity for job advancement in this market. Suggestions made by the authors for improving economic opportunity for low-wage workers include ways to increase wages and sustain income directly, improve labor market access and job retention, support occupational mobility and job advancement, and enhance employment security.