Characteristics of Low-Wage Workers and Their
Labor Market Experiences:
Evidence from the Mid- to Late 1990s

Final Report

April 30, 2004

By:
Peter Schochet and Anu Rangarajan

Submitted to:
U.S. Department of Health and Human Services
Office of the Assistant Secretary for Planning and Evaluation

Project Officer:
Susan Hauan

Submitted by:
Mathematica Policy Research, Inc.

Project Director:
Anu Rangarajan

Project Investigator:
Peter Schochet

Contract No.: 282-98-002; Task Order 34
MPR Reference No.: 8915-600

This report is available on the Internet at:
http://aspe.hhs.gov/hsp/low-wage-workers04/

Printed Copy (in PDF format)

Contents

Executive Summary

Acknowledgements

Chapters

1. INTRODUCTION
   1. Overview of Data, Wage Definitions, Analysis Samples, and Methodological Approach
      1. Data
      2. Defining Low-Wage Workers
      3. Wage Construction, Samples, and Methodological Approach
   2. Roadmap of Report
2. LITERATURE REVIEW
   1. Defining Low-Wage Workers
   2. Characteristics of Low-Wage Workers and Their Jobs
      1. What is the Size of The Low-Wage Working Population?
      2. Who are Low-Wage Workers?
      3. What are the Job and Overall Employment Characteristics of Low-Wage Workers?
   3. Wage Progression for Low-Wage Workers
   4. Summary
3. CHARACTERISTICS OF LOW-WAGE WORKERS AND THEIR JOBS
   1. Size of the Low-Wage Population
   2. Demographic Characteristics of Low-Wage Workers
      1. Individual Characteristics
      2. Household Characteristics
      3. Changes Over Time
      4. Typologies of Low-Wage Workers
   3. Job and Overall Employment Characteristics of Low-Wage Workers
      1. Hourly Wages
      2. Hours Worked Per Week
      3. Weekly Earnings
      4. Availability of Health Insurance Coverage
      5. Self-Employment Status
      6. Occupations, Industries, and Union Membership
      7. Other Employment-Related Characteristics
      8. Changes Over Time
4. OVERALL EMPLOYMENT EXPERIENCES OF LOW-WAGE WORKERS
   1. Descriptive Analysis Findings, By Gender
      1. Overall Employment Rates in Low-, Medium-, and High-Wage Jobs
      2. Number of Job and Employment Spells
      3. Employment Rates Over Time
      4. Time Spent in Labor Market Activities
   2. Subgroup Findings
      1. Findings From The Univariate Analysis
      2. Findings From The Multivariate Analysis
5. WAGE GROWTH AND PROGRESSION AMONG LOW-WAGE WORKERS
   1. Descriptive Analysis Findings, By Gender
      1. Trends in Wages Over Time
      2. Extent of Wage Growth Over Time
      3. Changes in Job Characteristics
   2. Subgroup Findings
      1. Findings From The Univariate Analysis
      2. Findings From The Multivariate Analysis
6. SPELL DURATION ANALYSIS
   1. Methodological Approach
      1. Defining Spells
      2. Life Table Methods
      3. Spell Information
   2. Findings From The Life Table Analysis
      1. Duration of Low-Wage Job and Employment Spells and Types of Exits
      2. Duration of Alternative Job and Employment Spells
      3. Including Left-Censored Spells
      4. Comparing The Duration of Low-, Medium-, and High-Wage Spells
      5. Reentry Into The Low-Wage Labor Market
      6. Subgroup Results
7. SUMMARY AND CONCLUSIONS

References

Appendix A: Data, Wage Definitions, Analysis Samples, and Methodological Approach

1. Data
   1. Advantages of the SIPP Data for the Study
   2. Description of the 1996 SIPP Panels
   3. The 1996 SIPP Longitudinal Research File
   4. Topical Modules
   5. State-Level Data
2. Defining Low-Wage Workers
3. Wage Construction, Samples, and Methodological Approach
   1. Sample Inclusion Criteria
   2. Construction of Hourly Wages
   3. Overview of Samples and Methodological Approach by Topical Area

Appendix B: Supplementary Tables To Chapter III

1. Table B.1. Distribution of Individual and Household Characteristics of Low-, Medium-, and High-Wage Workers In March 1996, By Gender
2. Table B.2. Distribution of The Characteristics of Low-Wage Workers By Cluster/Typology and Gender
3. Table B.3. Distribution of Job Characteristics of Low-, Medium, and High-Wage Workers In March 1996, By Gender
4. Table B.4. Distribution of Job Characteristics of Low-Wage Workers In March 1996, By Typology and Gender
5. Table B.5. Distribution of Job Characteristics of Low-Wage Workers In March 1996 For Those In Jobs and Businesses, By Gender

Appendix C: Supplementary Tables To Chapter IV

1. Table C.1. Distribution of Characteristics of Low-Wage Workers In The Entry Cohort and March 1996 Cross-Sectional Samples, By Gender
2. Table C.2. Employment Rates and The Number of Job and Employment Spells During The Three and One-Half Years After Job Start For Low-, Medium-, and High-Wage Workers, By Wage Type and Gender
3. Table C.3. Time Spent In Labor Activities During The Three and One-Half Years After Job Start For Low-, Medium-, and High-Wage Workers, By Wage Type and Gender
4. Table C.4. Multivariate Analysis Findings For Additional Overall Employment Measures During The 42-Month Period, By Gender

Appendix D: Supplementary Tables To Chapter V

1. Table D.1. Distribution of Initial Demographic and Job Characteristics of Low-Wage Workers Employed Three Years Later Compared With Those Not Employed Three Years Later
2. Table D.2. Average Real Wages Over Time Among All Job Starters, By Wage Type
3. Table D.3.Real Wages Relative To Poverty, at The Time of The Follow-Up Period, By Wage Type and Gender
4. Table D.4. Growth In Real Hourly Wages Over Three Years, By Worker Type
5. Table D.5. Distribution of Job Characteristics Across Initial Job and Most Recent Job Three and Half Years Later of Low-, Medium, and High-Wage Workers, By Gender
6. Table D.6. Multivariate Analysis Findings On The Percentage of Low-Wage Workers Switching To A Medium- Or High-Wage Job and The Percentage of Low-Wage Workers Experiencing at Least A 50 Percent Increase In Wages By The End of The Followup Period, By Gender

Appendix E: Supplementary Tables To Chapter VI

1. Table E.1. Job Spell Information
2. Table E.2. Employment Spell Information
3. Table E.3. Cumulative Exit Rates From Job Spells, By Wage Level and Gender
4. Table E.4. Cumulative Exit Rates From Employment Spells, By Wage Level and Gender
5. Table E.5. Cumulative Exit Rates From Employment Spells Among Male Low-Wage Workers, By Subgroup
6. Table E.6. Cumulative Exit Rates From Employment Spells Among Female Low-Wage Workers, By Subgroup

Tables

• III.1 Percentage of All Workers In March 1996 Who Were Low-Wage Workers, According To Alternative Definitions of Low-Wage Workers
• III.2 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Key Worker Subgroups, By Gender
• III.3 Distribution of Individual Characteristics of Low- Wage and All Workers In March 1996, By Gender
• III.4 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Key Household Subgroups, By Gender
• III.5 Distribution of Household Characteristics of Low- Wage and All Workers In March 1996, By Gender
• III.6 Distribution of Low-Wage Workers, By Subgroup and Year
• III.7 Distribution of Job Characteristics of Low-Wage and All Workers In March 1996, By Gender
• III.8 Distribution of Occupations, Industries, and Union Membership of Low-Wage and All Workers In March 1996, By Gender
• III.9 Distribution of Other Employment-Related Characteristics of Low-Wage and All Workers In March 1996, By Gender
• III.10 Distribution of Key Job Characteristics of Low-Wage Workers, By Year
• IV.1 The Number of New Job and Employment Spells During The Three and One-Half Years After Job Start For Low-Wage Workers, By Wage Type and Gender
• IV.2 Average Percentage of Time Spent In Labor Market Activities During The Three and One-Half Years After Job Start For Low-Wage Workers, By Gender
• IV.3 Distribution of Months In Labor Market Activities During The Three and One-Half Years After Job Start For Low-Wage Workers, By Gender
• IV.4 Time Spent Employed During The Three and One-Half Years After Job Start For Subgroups of Low-Wage Workers Defined By Individual and Household Characteristics at Job Start
• IV.5 Time Spent Employed During The Three-and-One-Half Years After Job Start For Subgroups of Low-Wage Workers Defined By Initial Job Characteristics
• IV.6 Multivariate Analysis Findings On The Percentage of Time Low-Wage Workers Spent Employed In Medium- Or High-Wage Jobs During The 42-Month Follow-Up Period, By Gender and Model
• V.1 Growth In Real Hourly Wages Among Low-Wage Workers Who Remained Employed Three Years Later
• V.2 Characterisitics of Initial Low-Wage Job and The Job Held Three Years Later
• V.3 Measures of Wage Progression After Job Start For Subgroups of Low-Wage Workers Defined By Individual and Household Characteristics at Job Start
• V.4 Measures of Wage Progression After Job Start For Subgroups of Low-Wage Workers Defined By Initial Job Characteristics
• V.5 Multivariate Analysis Findings On The Percentage of Low-Wage Workers Earning at Least $10 Three and A Half Years Later, By Gender and Model
• VI.1 Job and Employment Spell Information For Workers Starting Low-Wage Jobs, By Gender
• VI.2 Cumulative Exit Rates For Low-Wage Job Spells, By Type of Exit and Gender
• VI.3 Cumulative Exit Rates For Low-Wage Employment Spells, By Type of Exit and Gender
• VI.4 Cumulative Exit Rates For Overall Employment Spells of Low-Wage Workers With and Without Left-Censored Spells, By Gender
• VI.5 Cumulative Reemployment Rates For Workers Who Exited Low-Wage Jobs Into Nonemployment, By Gender
• VI.6 Cumulative Exit Rates From Higher-Wage Jobs For Workers Who Exited Low-Wage Jobs Into Higher-Wage Jobs, By Gender
• VI.7 12-Month Cumulative Exit Rates From Low-Wage Job Spells For Males, By Type of Exit and Subgroup
• VI.8 12-Month Cumulative Exit Rates From Low-Wage Job Spells For Females, By Type of Exit and Subgroup

List of Figures

• III.1 U.S. Unemployment Rate, By Year
• III.2 Percentage of Workers Who Were Low-, Medium-, and High-Wage Workers: March 1996 To March 1999
• III.3 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Gender, Age, and Race/Ethnicity Groups
• III.4 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Education Groups, By Gender
• III.5 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Household Groups, By Gender
• III.6 Percentage of All 1996 Workers Who Were Low-Wage Workers Within Poverty Groups, By Gender
• III.7 Share of Low-Wage Workers, By Typology and Gender
• III.8 Average Hourly Wage For Low-Wage Workers In March 1996, By Age
• III.9 Percentage of Low-Wage and All Workers Who Worked at Least 35 Hours Per Week, By Gender
• III.10 Percentage of Low-Wage and All Workers With Available Health Insurance On The Job, By Gender
• IV.1 Percentage of Workers Starting Low-Wage Jobs Who Subsequently Held Higher-Wage Jobs, By Wage Category and Gender
• IV.2 Percentage of Low-Wage Workers Who Held Higher-Wage Jobs But Who Returned To The Low-Wage Labor Market, By Gender
• IV.3 Average Number of Jobs and Employment Spells of Low-Wage Workers, By Gender
• IV.4 Quarterly Employment Rates of Male Workers Who Initially Started Low-Wage Jobs, By Wage Type
• IV.5 Quarterly Employment Rates of Female Workers Who Initially Started Low-Wage Jobs, By Wage Type
• IV.6 Average Percentage of Months Spent In Labor Market Activities For Low-Wage Workers, By Gender
• IV.7 Average Number of Hours Per Week Spent Employed, By Wage Type of Job and Gender
• IV.8 Average Percentage of Time Spent In Medium- or High-Wage Jobs, For Job Switchers and Job Stayers
• V.1 Trends in Real Wages Over Time Among Those Who Start a Low Wage Job, By Gender
• V.2 Real Wages Relative to Poverty, at The Time of The Follow-Up Period
• VI.1 Cumulative Exit Rates From Job and Employment Spells For Those Starting Low-Wage Jobs, By Gender
• VI.2 Cumulative Exit Rates From Low-, Medium- and High-Wage Employment Spells of the Same Wage Type, By Gender
• VI.3 Cumulative Exit Rates From Low-, Medium-, and High-Wage Employment Spells of any Wage Type, By Gender

Acknowledgements

We would like to thank those whose efforts have made this report possible. Susan Hauan, from the Office of the Assistance Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services, the project officer for the study, provided invaluable guidance throughout the course of the study, and provided very helpful comments on both the substance and presentation of material in this report. We also received valuable comments throughout the course of the study from other people at ASPE: Julia Issacs, Kelleen Kaye, and Don Oellerich. At Mathematica Policy Research, Jim Ohls and Rob Wood provided useful comments on the analysis and findings at various stages of the project. Jigar Bhatt provided outstanding programming assistance in constructing the large and complex data files and in writing the computer programs to conduct the myriad analyses that were performed for this study. Carol Razafindrakoto and Tim Novak also provided helpful programming assistance. Finally, Jennifer Chiaramonti and Bryan Gustus expertly produced the report, and Patricia Ciaccio provided valuable editorial assistance. We gratefully acknowledge these contributions.

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Last updated:  09/07/04