Low-wage mobility during the early career

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Abstract

Despite the size of the low-wage workforce, knowledge of the low-wage labor market is markedly sparse. In particular, little is known about the mobility patterns of low-wage workers. Using data from the Panel Study of Income Dynamics, I analyze low-wage mobility during the early career. I find that exits from low-wages are common, but the odds of exit and the permanence of an exit vary by social group membership and have changed in recent decades. Women, African Americans, residents of the South, and the less educated fare worse in the low-wage labor market. My findings also suggest that low-wage mobility has changed since the 1970s, with low-wages becoming more difficult to avoid.

Introduction

There are over 40 million low-wage workers in the United States (Boushey, Fremstad, Gragg, & Waller, 2007). Despite the size of the low-wage workforce, knowledge of the low-wage labor market is markedly sparse (Andersson, Holzer, & Lane, 2005, p. 2). In particular, little is known about the mobility patterns of low-wage workers (Osterman, 2001, p. 78).

Recently, scholars have shown interest in studying low-wage work, largely concentrating on describing and understanding the employment trajectories of low-wage workers (see Andersson et al., 2005, Bernhardt et al., 2001, Newman, 2006). Unfortunately, despite the nascent academic interest in low-wage work, investigations into low-wage mobility patterns remain limited. Notably, research that considers changes in mobility over time is conspicuously absent.

This research gap is especially remarkable because of the dramatic changes in work structures and employment relations that have occurred over the past 40 years (for summary, see Ackerman, Goodwin, Doughtery, & Gallagher, 1998). However, while this gap in the literature is notable, it is perhaps not surprising: data limitations greatly restrict the ability to study low-wage mobility over time (Bernhardt et al., 2001, p. 12). Still, historical studies of low-wage work have yielded important conclusions, including the documentation of the increase and spread of low-wage work (Appelbaum, Bernhardt, & Murnane, 2003).

While the growth of low-wage work is striking, the economic and social significance of low-wage work is ultimately conditioned by the amount of individual mobility into and out of low-wages. If low-wages are a rare and temporary phenomenon with high mobility, then there is less cause for concern. If, on the other hand, low-wages are common and sticky, marked by little churning and low mobility, then the prevalence of low-wages is more troublesome.

Low-wage jobs are frequently characterized as either “stepping stones” or “dead ends” (Connolly & Gottschalk, 2000). Within the “stepping stones” framework, low-wage jobs are seen as transitory and leading to better-paying jobs. Under this scenario, low-wage jobs provide an initial entry point into the labor market; workers spend some time in low-wage jobs collecting work experience and skills, and then move on to better paying jobs. If low-wage jobs serve as pathways to better jobs, then low-wages should be concentrated among new labor market entrants.

Conversely, the “dead ends” perspective views low-wage jobs as persistent and offering few prospects for wage growth. Rather than accruing skills and advancing to better paying jobs, the “dead ends” perspective sees workers as caught in low-wage jobs, unable to move to higher paying jobs. If low-wage jobs are indeed “dead ends,” then some workers will consistently experience low-wages, leaving some workers with low-wage careers.

The simplicity of the dichotomy between “stepping stones” and “dead ends” is appealing; however, such a broad distinction ignores the possibility that low-wage jobs may function differently for different individuals. Moreover, this account of low-wage jobs discounts the possibility that the function of low-wage jobs has changed in recent decades. Unfortunately, existing research does not speak to possible dissimilarities in low-wage mobility between different groups or changes that have occurred over time.

Here, I evaluate low-wage mobility during the early career—a stage of the career typified by high upward mobility. Using data from the Panel Study of Income Dynamics (PSID), I offer an account of low-wage mobility among different social groups, as well as document changes that have occurred since the 1970s. Are some workers more likely to exit low-wages than others? Are some workers more likely to never experience low-wages? Are experiences with low-wages different for men and women? Do whites and African Americans have similar low-wage trajectories? How permanent are exits from low-wages? Did low-wage mobility change between the 1970s and 2000s?

Section snippets

Background

While low-wage mobility remains understudied, recent research offers strong accounts of the distribution of low-wage jobs and the working conditions found at low-wage jobs. The industrial and occupational distribution of low-wage work is quite broad. Firms in all segments of the economy employ low-wage workers (Appelbaum et al., 2003). Within these industries, low-wage workers hold an array of occupations (Osterman, 2001). Still, the abundance of low-wage jobs in certain industries and

Stepping stones, dead ends, or both?

Despite the recent scholarly attention directed toward low-wage work, accounts of low-wage mobility are limited. The absence of mobility research, in part, can be attributed to disciplinary shifts. Mobility research, once a bastion for sociologists, is now dominated by economists. This has resulted in a focus on strategies for exiting low-wages while largely overlooking who is upwardly or downwardly mobile.

Research on mobility at the bottom of the wage distribution is contentious. Newman (2006)

Data and data structure

Examining low-wage mobility requires individual level longitudinal data on the earning histories of individuals. The analyses presented here use data from the Panel Study of Income Dynamics (PSID). The initial wave of the PSID was conducted in 1968. The original sample included 4800 families, with data collected for each individual member of a family. As members of the original families formed their own families, these newly created families were added to the sample. The PSID collected data

Findings

The bottom panel of Table 1 presents the descriptive statistics for outcome variables of interest. The descriptive statistics show that low-wages is not a rare phenomenon. By the end of the early career, 44 percent of all workers have experienced low-wages. Rather than an uncommon occurrence, a large portion of the workforce at some point during their early career earns low-wages.

While close to half of all workers experience low-wages during their early career, Table 1 does not provide

Discussion

Belief in the stepping stones perspective is pervasive. The dominant ideology holds that economic opportunity is widely available and that hard work will result in economic advancement (Kluegel & Smith, 1986). Even individuals who identify as “lower class” or “working class” believe low-wages are temporary. When asked, “In the next five years, how likely are you to be promoted?” Close to half, 46 percent, of lower and working class individuals think their chances for promotion are promising.4

Acknowledgements

I am grateful to Arne Kalleberg, Ted Mouw, Larry Griffin, members of the UNC Sociology Department's Inequality Workshop, and anonymous reviewers for valuable critiques and comments.

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