# Presentation: 284409

## Chutes and Ladders:

- Navigating the Low Wage
- Labor Market
- Katherine S. Newman
- Princeton University

## Motivations for the “No Shame” project:

- Deficiencies of underclass theory
- Political impact of equating poverty with unemployment

## Welfare reform floods the low wage labor market
Skill-biased technological change dampens prospects
De-industrialization removes well-paid jobs
Immigration increases competition

- Skill-biased technological change dampens prospects
- De-industrialization removes well-paid jobs
- Immigration increases competition

-   The View from 1996

## “No Shame” Evidence for Bleak Outlook

- Saturated labor market
- Teen workers locked out
- Wage differentials between suburbs and city
- Racial preferences of employers

## Dual Labor Market Theory of the 1970s (Averitt, Horan, Beck, Doeringer/Piore)

- Discontinuous labor markets: primary vs. secondary
- 	Characteristics of secondary market:
- Low wages
- No training, no employer investment
- No job ladders
- High turnover
- Workers trapped

## Demography of the Dual Labor Market

- Demographic “match”:
- Minorities
- Youth
- Women
- Low Educated workers

## Stigmatized careers

- Causal directions unclear
- Lack of commitment  job hopping  stigma trap
- Low wages  job hopping  stigma  trap

## Dual Labor Market Theory Reborn

- African Americans (Hudson, Waddoups, Kaufman)
- Immigrants, Enclaves, Ethnic Competition  (Tejo, Portes, Waldinger)
- Gender and Queues (Lorence, Ferdousi, Reskin)
- Youth (DeFreitas, Marsden)
- Concurrence on limited mobility (Gottfires and McCormick, Wial, Lichter et al)

## Another View of the Low Wage World

- more skill than generally assumed
- more commitment
- value of being employed
- stigma of holding service job
- “Virtuous Association” (a la Sutherland)
- Employer investments

## Newman’s Gloom:

- Under high unemployment, workers cannot
-     capitalize on their virtues.
- Too many people higher up clogging the queue.
- Flooded markets undercut worker mobility.

## 1997 Realities

## 1997 Realities

## Wage Change Among the Employed1993-97

## Wage Trajectories: 1993-2002  

**Wage Trajectories: 1993-2002****  **

- $-

- $2.00

- $4.00

- $6.00

- $8.00

- $10.00

- $12.00

- $14.00

- $16.00

- $18.00

- $20.00

-  1993

-  1997

- 1998

- 2002

**Constant 2002 $**

- less educ, scs

- less educ, skld or unskld

- more educ, pscs

## Questions for follow up:

- 1.	Representativeness?
- 2.	Generalizability?
- 3.	High Flyers vs. Low Riders

## Wage Trajectories of Workers in Poor Households

- The National Experience

## Data

- Survey of Income and Program Participation (SIPP)
- Large nationally-representative longitudinal data sets
- Panels last 24 to 48 months
- 1986-1996 Panels
- October 1985 – February 2000

## Methodology

- Create four SIPP samples
- Qualifying Criteria for Every Sample
- 18-40 years old
- Family income <1.5 x poverty cutoff
- Job pays hourly rate
- Non-managerial job
- 1993 or later

**Notes:**
BULLET 1:
We use SIPP to create four samples, which we compare to the Harlem Burger Barn sample.

BULLET 2:
Every sample we use in the tabulations has these features in common.

## SIPP Samples from Poor andNear Poor Households 

| Sample 1(Base) | Sample 2 | Sample 3 | Sample 4
(Full) |
| --- | --- | --- | --- |
| Food Service Job | Non-managerial Job | Non-managerial Job | Non-Managerial Job |
| Black or Hispanic | Black or Hispanic | All Races | All Races |
| Metropolitan Area | Metropolitan Area | Metropolitan Area | All Geographic Areas |

**Notes:**
Other samples build from the base sample.

LEAD-IN:
We’ve now defined the individuals we want to compare to the Harlem sample.

## Distribution of Annual Wage Growth

## Pathways to individual mobility

- Unionized jobs at low skill and high pay
- Private sector: Adam, Pedro
- Public sector: Kyesha
- Internal mobility in high growth firm
-  Latoya
- Human capital increase leads to higher wage job
- Laura (welfare funded)
- David (family funded)

## Household mobility:

- Worker remains in low wage job, but
- o	Marries
- o	Long term cohabitation
- o	Children enter labor market
- Worker exits market, but finds stable, high wage partner.
- o	Ana

## Context matters

- Extremely tight labor markets; unprecedented growth
- Union jobs still available
- Welfare policy permitted schooling to meet “work requirement”

## Context can change:

- Labor markets lax
- Unions busted or closed
- Welfare policy puts “work first”

## Concluding Thoughts

- --Dead ends  stepping stones dead ends
- --Semi-permeable membranes
- --Policies that matter
- 	 * college for welfare
- 	 * public tuition
-     * open unions
-     * summer youth programs
-     * EITC