Report

Worker Advancement in the Low-Wage Labor Market: The Importance of ‘Good Jobs’

Fredrik Andersson, Harry J. Holzer and Julia I. Lane

Findings

An analysis of data on low-wage workers and their employers from 1996 to 2001 reveals that:

  • Smaller firms, and those in the retail trade and service industries, pay lower wages than other employers when worker characteristics are held constant. Worker turnover is also closely associated with wages: three-fourths of low-wage firms experience at least 100 percent turnover on an annual basis, compared to about one-third of high-wage firms.

  • Almost half of workers who had persistently low earnings from 1996-98 earned somewhat higher incomes in 1999-2001. Low earners who changed jobs during that time were considerably more likely to achieve higher earnings in the latter period than those who stayed at the same job.

  • Most low-wage workers who increased their earnings over time did so by gaining employment at a higher-wage firm. Low earners who began working at “temp” agencies were more likely to gain subsequent employment at high-wage firms than were other low earners.

  • Medium- and high-wage firms are more heavily concentrated in urban counties than in suburban or rural ones. At the same time, certain better-paying industries that employ large numbers of less-educated workers, such as construction and manufacturing, are located outside urban counties more often than are other industries.

Giving for-profit and non-profit agencies a greater role in matching low earners to “good jobs” could raise earnings prospects for less-skilled workers, thereby enhancing their economic security over time.

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