Earnings mobility and low-wage workers in the United States

Monthly Labor Review

Volumn 129, Issue 7, 2006, Pages 34-47

  Theodos, Brett ^a   Bednarzik, Robert ^b  

^a URBAN INSTITUTE   (United States)

^b GEORGETOWN UNIVERSITY LAW CENTER   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33747440058     PISSN: 00981818     EISSN: 00981818     Source Type: Journal    
DOI: None     Document Type: Article

References (51)

1. The Panel Study of Income Dynamics (PSID) is a nationally representative longitudinal study of the economic, health, and social behavior of nearly 8,000 U.S. families. The study, conducted by the University of Michigan's Institute for Social Research, has followed the same families and individuals since its inception in 1968. For more information, visit the Institute's Web site on the Internet at psidonline.isr.umich.edu.
2. Robert Crutchlield and Susan Pitchford, "Work and Crime: The Effects of Labor Stratification," Social Forces, September 1997, pp. 93-118.
3. The States with higher minimum wages are Alaska, California, Connecticut, Delaware, Florida, Illinois, Hawaii, Maine, Maryland Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin. The minimum-wage levels above the federally mandated level range from $5.70 in Wisconsin to $7.63 in Washington State. Tliree States - Oregon, Washington, and Florida - index their minimum wage to inflation.
4. Jeff Chapman and Michael Ettlinger, "The Who and Why of the Minimum Wage," Economic Policy Institute Issue Brief no. 201, Aug. 6, 2004.
5. For a more comprehensive review of the prevalence of poverty and the working poor in the United States see, for example, Holly Sklar, Laryssa Mykyta, and Susan Wefald, Raise the Floor: Wages and Policies That Work for All of Us (New York, Ms. Foundation for Women, 2001);
6. and William Julius Wilson, When Work Disappears: The World of the New Urban Poor (New York, Knopf, 1996).
7. Sklar, Mykyta, and Wefald, Raise the Floor go on to report that if the minimum wage had kept pace with corporate profits during 1968-2000, it would currently stand at $13.02 per hour.
8. See Bradley Schiller, "Relative Earnings Mobility in the United States," American Economic Review, December 1977, pp. 926-41. Though not focused specifically on the low-wage population, this seminal paper presented some early findings on earnings mobility within the United States.
9. Ibid
10. For a review of previous dual labor market studies and an assessment of the dual labor market theory, see Arthur Sakamoto and Meichu Chen, "Inequality and Attainment in a Dual Labor Market," American Sociological Review, June 1991, pp. 295-308.
11. David Neumark and Olena Nizalova, Minimum Wage Effects in the Longer Run, Working Paper No. 10656 (National Bureau of Economic Research, 2004).
12. Paul Swaim, "Earnings inequality, low-paid employment and earnings mobility," Employment Outlook (Paris, Organization for Economic Cooperation and Development, 1997).
13. The use of this term is from Gosta Esping-Andersen, Gotz Rohwer, and Leth Sorensen, "Institutions and Occupational Class Mobility: Scaling the Skill Barrier in the Dannish Labour Market," European Sociological Review,. September 1994, pp. 119-34.
14. See Peter Gottschalk, "Earnings Mobility: Permanent Change or Transitory Fluctuations?" Review of Economics and Statistics, August 1982, pp. 450-56;
15. Ralph Smith and Bruce Vavrichek, "The Wage Mobility of Minimum Wage Workers," Industrial and Labor Relations Review, October 1992, pp. 82-88;
16. and Swaim, "Earnings inequality."
17. Neumark and Nizalova, Minimum Wage Effects.
18. Swaim, "Earnings inequality."
19. Susanna Loeb and Mary Corcoran, "Welfare, Work Experience, and Economic Self-Sufficiency," Journal of Policy Analysis and Management, winter 2001, pp. 1-20.
20. Neumark and Nizalova, Minimum Wage Effects.
21. Esping- Andersen, Rohwer, and Sorensen, "Institutions and Occupational Class Mobility."
22. Fredrik Andersson, Harry Holzer, and Julia Lane, Moving Up or Moving On: Who Advances in the Low Wage Labor Market? (New York, Russell Sage, 2005).
23. Ibid.
24. Gottschalk, "Earnings Mobility."
25. Thomas Boston, "Segmented Labor Markets: New Evidence from a Study of Four Race-Gender Groups," Industrial and Labor Relations Review, October 1990, pp. 99-115.
26. David Maume, "Occupational Segregation and the Career Mobility of White Men and Women," Social Forces, June 1999, pp. 1433-59.
27. Schiller, "Relative Earnings Mobility"
28. Smith and Vavrichek, "The Wage Mobility"
29. and Gottschalk, "Earnings Mobility."
30. Sakamoto and Chen,"Inequality and Attainment."
31. Esping-Andersen, Rohwer, and Sorensen, "Institutions and Occupational Class Mobility."
32. Andersson, Holzer, and Lane, Moving Up or Moving On.
33. Paul Swaim, "Earnings mobility: taking a longer run view," Employment Outlook (Paris, Organization for Economic Cooperation and Development, 1996).
34. Ibid.
35. Like the United States, the United Kingdom has been a strong advocate of a welfare-to-work policy as a means of enhancing upward wage mobility. Beginning in the 1990s, the United Kingdom adopted the Welfare to Work and Making Work Pay programs in an effort to encourage workers to leave poverty through participation in the labor force. Also in the early 1990s, Canada enacted several programs in an effort to reduce welfare costs and "make work pay." In 1996, these efforts culminated in the enactment of the Canada Health and Social Transfer program, which replaced previous welfare programs and operated at a lower cost.
36. Rachael Rosenfeld, "Job Mobility and Career Processes," Annual Review of Sociology, 1992, pp. 39-61.
37. Ibid.
38. Swaim, "Earnings inequality."
39. The data were compiled and harmonized in the Cross-National Equivalent File, available through the Cornell College of Human Ecology. The years 1993-95 constitute the base period, with 1996-2001 providing the observations for earnings growth. Data for 1998 and 2000 were not available through the Cornell College, so those years are omitted. When necessary mobility was measured in 2-year span, between 1997 and 1999 and between 1999 and 2001.
40. The minimum age in the sample is 17 years. Traditionally, college-age students are excluded from earnings mobility studies due to their low labor force participation and low earnings growth. They are included here for two reasons. First, the study has a 3-year base period and a 6-year period during which earnings were observed, making up a sufficientlenght of time for youths to realize earnings gains. Second, less than 1 percent of the base sample and less than 2 percent of the annual hours sample are 22 years or younger.
41. Andersson, Holzer, and Lane, Moving Up or Moving On.
42. See, for example, Esping_Andersen, Rohwer, and sorensen, "Institutions and Occupational class Mobility"
43. Gottschalk, "Earnings Mobility"
44. Schiller, "Relative Earnings Mobility"
45. and Swaim, "Earning inequality."
46. However, health status in 1995 is a good predictor of health status in future years: eighty-five percent if indiviuals in the low-income cohort had the same health status between 1995 and 1996, and 78 percent had the same health status between 1995 and 2001.
47. The data are from the low-income cohort of the PSID. The 1997-99 and 1999-2001 comparisons ara, of course, not consecutive years, but they are the next-available-year observations.
48. The data are from the low-income cohort of the PSID. Each individual's transition is compared with this his or her employment status in 1995.
49. The data are from the low-income cohort of the PSID. The "decreased" category comprises earners who exhibited earnings losses greater than 5 percent, the "increased" category encompasses earners who exhibited earnings gains greater than 5 percent, and the "neutral" category consist of earners who exhibited eranings changes between a loss of 5 percent and a gain of 5 percent, inclusive. (For why the first two periods are 1-year spans and the last two 2-year intervals, see note 34.)
50. See note 39 for the source of the data and an explanation of the categories.
51. The data are from the low-income cohort of the PSID. Individuals are ranked by earnings growth, and returns are shown for quarter, median, and three-quater individuals. Earnings are in real terms.