U.S. Department of Commerce Economics and Statistics Administration

Current Dynamics of Economic Well-Being:

Labor Force, 1992-93

A Perspective on Low-Wage Workers

By Paul Ryscavage

C E N S U S B U R E A U

Population Reports

 P70-57

 August 1996

Household Economic Studies

Introduction

Employment in jobs paying low

wages is an important aspect of

the National debate over growing

economic inequality in our society

and the job creating capacity of

our economy. Concern over the

growth of low-paying jobs has

been raised in both the media and

policy circles, and proposals for

raising the Federal minimum wage

from its current level of $4.25

have been discussed.

What is known about employment

in low-wage jobs comes from research using government surveys.1 Although conceptual issues

abound in defining low-wage employment (some of these are discussed in the Note at the end of

the report), there is a general belief that low-wage workers are relatively more numerous today than

in previous decades. Indeed, data

on workers with low earnings from

the Census Bureau tend to corroborate this. In 1994, 16.2 percent of all persons who usually

worked full-time (35 hours or more

a week), year-round (50 to 52

weeks) had annual earnings below the poverty threshold for a

four-person family (or $13,828); in

1984, the comparable proportion

was 14.6 percent.2

Research and statistics about lowwage workers are based primarily

on cross-sectional data from

1 For an example of the research in this

area, see Sheldon Danziger and Gregory

Acs, “Educational Attainment, Industrial

Structure, and Male Earnings Through

the 1980s,” Journal of Human Resources, Vol. 28, No. 3, Summer 1993,

pp. 618-648 and John McNeil, Workers

With Low Earnings: 1964 to 1990, Current Population Reports, Consumer Income, Series P-60, No. 178 (Washington, DC, Bureau of the Census, March

1992).

2 See McNeil, Workers With Low Earnings: 1964 to 1990.

household surveys which relate 

to a point or period of time; for 

example, a month or a year. Such

statistical “snapshots,” however,

do not capture the fluidity of the

labor market. People are continually moving into and out of jobs

and the labor force. Consequently, it is important to observe the

occurrence of low-wage employment during periods of time—and

this can be done with data from

longitudinal surveys. These surveys, therefore, can provide a

“panoramic” view of individuals’

earnings experiences across time.

The data in this report were collected in the Survey of Income

and Program Participation (SIPP),

a longitudinal survey which follows

the same people over nearly 2 1/2

years. Most of the data discussed

here were obtained from the 1992

panel of SIPP and relate to the

experiences of persons in 28

months occurring primarily in 1992

and 1993. The focus of the report

is on the occurrence of low-wage

employment during this period

among the 53.9 million workers

who had wage and salary 

earnings in each of the 28

months.3 These workers are 

referred to as full-time, full-period

jobholders.

Highlights

 Of all full-time, full-period 

jobholders in the 28-month

1992-93 period, over onequarter (27.1 +0.8 percent) 

had average hourly earnings

below $5.70—the definition of

low-wage employment used in

3 In calendar year 1993, 82.5 million persons worked between 50 to 52 weeks for

35 hours a week or more in the majority

of those weeks according to the Bureau

of Labor Statistics.

this report—in at least 1 month

of the 28-month period.4

 Only 5.7 (+ 0.4) percent of all

full-time, full-period jobholders

experienced more than 12

months of low-wage employment in the 28-month period.

 The occurrence of low-wage

employment for 1 month 

or more among full-time, fullperiod jobholders increased 

slightly between 1983-85 and

1992-93, going from 25.9 (+0.8)

to 27.1 (+0.8) percent; the proportion experiencing low-wage

employment for 13 to 28

months rose proportionately

more—from 4.2 (+0.4) to 

5.7 percent (+0.4).

 The average hourly earnings for

adult men age 25 to 54 who experienced between 1 to 6

months of low-wage employment was $10.27 (+1.10). As

the number of such months increased, average earnings fell,

reaching $3.90 (+ 0.86) for

those with 25 to 28 months of

low-wage employment. This

decline also held for women.5

 Of the 3.1 million full-time, 

full-period jobholders in the

1992-93 period that experienced low-wage employment

for 13 to 28 months, 77.9 

(+ 1.9) percent were workers

with high school education 

or less.

4 The figures in parentheses signify the

90-percent confidence intervals of the 

estimates.

5 The decline in earnings of women with

7 to 12 months in low-wage jobs ($6.62)

was not statistically different from those

with 13 to 24 months ($5.46). The decline in earnings of men with 7 to 12

months in low-wage jobs ($6.74) was not

statistically different from those with 13 to

24 months ($5.61).
2 P70-57

Defining Low-Wage

Employment

Since the focus of this report is on

workers employed in jobs paying

low wages, the definition of lowwage employment we use here is

job-oriented. An attempt was

made to isolate that part of the

Nation’s stock of jobs which required a strong attachment and

long-term commitment. To make

this estimate in the context of

SIPP, it was decided that, for the

purpose of this definition, workers

must have received wage and

salary earnings in each of the 28

months of the survey and worked

at a full-time job (35 hours or more

a week) in at least 1 week of each

month.6 For each of these workers, an estimate of average hourly

earnings in each month was made

by dividing monthly wages and

salaries by the number of hours

worked that month. These 

persons are referred to as fulltime, full-period workers.7

Average hourly earnings in the

course of a month were considered low if they were below $5.70

an hour. This wage level would

approximate the average of the

1992 and 1993 Federal Govern6 Because of SIPP’s sample design, the

28-month period for which data are available differs by rotation group. Consequently, the 28-month period for the first

rotation group in the field covers the 

October 1991 to January 1994 period; the

second from November 1991 to February

1994; the third from December 1991 to

March 1994; and the fourth from January

1992 to April 1994. As a result, most of

the data relate to months in the 1992-93

period.

7 This definition of full-time, full-period

workers parallels that of the definition of

full-time, year-round workers used in the

Census Bureau’s report on low earners,

but there are three important differences.

First, and most obvious, the period of employment is considerably longer (28

months versus 12 months). Second, only

wage and salary earnings are examined

while the report on low earners includes

earnings from self-employment. And third,

the SIPP definition measures the actual

weekly hours worked each month, while

“usual” weekly hours are used in the Census Bureau’s report on low earners.

ment’s poverty thresholds for a

three-person family when divided

by 2,000 hours.8 This poverty

threshold averaged $11,354 and

an hourly wage of $5.70 for 2,000

hours of work would place one’s

annual income just above that

amount.9 Obviously, this definition

of low-wage employment is a subjective one, but it does conform to

the general concept of low earnings used by other researchers.

(The Federal Government’s minimum wage was $4.35 an hour in

1992 and 1993.)

According to the SIPP, 127.1 million persons had wage or salary

earnings in at least 1 or more of

the 28 months covered by the survey.10 Of that number, 53.9 million persons, or 42.4 percent, had

earnings in every month and held

a full-time job for at least 1 week

of every month.11 From this smaller universe then, estimates were

made of workers experiencing

months of low-wage employment.

It is very important to note that by

restricting the analysis to full-time,

full-period workers, however, the

findings reported below are most

likely an underestimate of the proportion of all workers with lowwage employment.

Not surprisingly, full-time, full-period jobholders are disproportionately adult men. As shown in

figure A, approximately 50 percent

of all full-time, full-period workers

were men between the ages of 25

8 As was mentioned, the Census Bureau’s report on low earners uses the

poverty threshold for a family of four persons for identifying low earners. In 1993,

family size in the country averaged 3.2

persons and household size, 2.7 persons.

9 It would not be sufficient, however, for a

household of a larger size since the poverty thresholds are higher.

10 This was a period of economic recovery from the 1990-91 recession and the

monthly unemployment rate was dropping. In 1992 it averaged 7.5 percent

and in 1993, 6.9 percent.

11 This proportion is lower than the proportion which full-time, year-round workers made up of the total number of persons with work experience in 1992 (60.6

percent) according to the Current Population Survey (CPS). This is because the

SIPP data relate to 2 years compared to

the 1-year period in the CPS.

and 54. Women of the same

ages accounted for about 34 percent of the total. Consequently,

the vast majority of full-time, fullperiod jobholders were adults, age

25 to 54. Young persons age 16

to 24 and older workers age 55

and over each accounted for

about 8 percent of the total.

Incidence and Frequency

Table A presents data on the incidence and frequency of low-wage

employment among full-time, fullperiod jobholders, in other words,

how often and for how long these

workers’ hourly earnings fell below

$5.70 an hour during the 1992-93

period.12 As the data show, 27.1

percent of the total experienced at

least 1 month in which their hourly

wage and salary earnings could

be considered low.13

This relatively high proportion of

workers who experienced at least

1 month in a low-wage job, however, may be misleading. As

shown in table A, 60.4 percent of

those with low-wage employment

for at least 1 month were in lowwage jobs for between 1 and 6

months, while 20.9 percent—3.1

million workers—were in low-wage

jobs for 13 months or more.14

Therefore, while the chance of experiencing at least 1 month of lowwage employment is relatively

high, even for those strongly committed to the labor market, the

proportion of persons experiencing

long periods of low-wage employment is not particularly large (this,

of course, excludes those workers

who may have become unemployed or dropped out of the labor

12 Hourly earnings in the 1992-93 period

are expressed in terms of 1992-93 dollars.

13 Hourly earnings which are above the

low-wage level in 1 month could fall below it in the following month for several

reasons: A worker might quit, be laid off,

or discharged from a job and then quickly

find another, but lower-paying job; or a

worker may be asked to work additional

hours but for no additional earnings.

14 Low-wage employment may not necessarily have been all in one spell (although for those who had 13 or more

months of low wage employment, consecutive months are likely).
Figure A.

Persons With Wage and Salary Earnings in at

Least 1 Month and Persons With Earnings in 

28 Months by Age-Sex Groups: 1992-93

Source: U.S. Bureau of the Census, Survey of Income and

Program Participation.

Men, 25 to 54

35.2%

Women, 25 to 54

33.3%

Both sexes, 55+

10.2%

Both sexes, 16 to 24

21.3%

Men, 25 to 54

50.2%

Women, 25-54

33.6%

Both sexes, 55+

8.3%

Both sexes, 16 to 24

7.9%

Persons with at

least 1 month of

earnings

Persons with 

28 months of

earnings

Table A.

Full-Time, Full-Period Jobholders by Their 

Frequency of Low-Wage Employment and 

Major Age-Sex Groups: 1992-93

(Numbers in thousands)

Both Both

sexes, Men, Women, sexes,

Frequency Total 16-24 25-54 25-54 55+

Total 53,887 4,223 27,048 18,151 4,465

Percent 100.0 100.0 100.0 100.0 100.0

No low-wage

employment 72.9 44.9 79.8 69.0 73.2

Low-wage

employment 27.1 55.1 20.2 31.0 26.8

Percent 100.0 100.0 100.0 100.0 100.0

1-6 month 60.4 54.1 64.7 58.8 60.5

7-12 months 18.6 22.3 17.8 18.2 17.2

13-24 months 14.3 18.8 11.5 15.6 12.5

25-28 months 6.6 4.8 6.0 7.3 9.8

Source: U.S. Bureau of the Census, Survey of Income and 

Program Participation.

P70-57 3

force after experiencing a period

of low-wage employment).

This finding is mirrored in the data

for adult men age 25 to 54 and, to

some extent, for adult women of

the same ages. While 20.2 percent of the adult men had a month

or more in a low-wage job, only

17.5 percent of these workers, or

947,000 adult men, did so for over

1 year. For women, 31.0 percent

were in a low-wage job for a

month or more and 22.9 percent

of these workers, or 1.3 million

adult women, had a low-wage job

for over a year. Despite these relatively low proportions, approximately 2.2 million adult men and

women worked in jobs paying less

than $5.70 an hour for between

13 to 28 months in the 1992-93

period. 

The occurrence of low-wage employment was high for young persons (those between the ages of

16 and 24) who worked at full-time

jobs for the full period. Approximately 55.1 percent of them 

experienced low-wage employment. Of young workers who experienced low-wage employment,

23.6 percent did so for 13 to 

28 months. These workers, of

course, are typically at the beginning of their work careers and are

probably receiving entry level

wages in their jobs.

Hourly Earnings

Figure B shows the average hourly earnings of adult men and adult

women 25 to 54 years old who

worked at full-time jobs for 28

months in the 1992-93 period by

the number of months in which

they experienced low-wage employment. For the 3.5 million adult

men who experienced 1 to 6

months of employment in jobs

paying less than $5.70 an hour,

the average hourly earnings during the entire 28 months was

$10.27. In other words, while

these men experienced low earnings for several months within 

the 1992-93 period, on average,

their hourly earnings were approximately twice as high as the lowwage level (working full-time,

year-round at $10.27 an hour

would result in annual earnings of
Figure B.

Average Hourly Earnings by Months of

Low-Wage Employment for Adult Full-Time,

Full-Period Jobholders: 1992-93

Source: U.S. Bureau of the Census, Survey of Income and

Program Participation.

$2

$4

$6

$8

$10

$12

$14

$16

$18

No months 1-6

months

7-12

months

13-24

months

25-28

months

Hourly earnings

Men, 25-54

Women, 25-54

Table B.

Frequency of Low-Wage Employment Among Adult Men

and Adult Women Who Have College Educations or

More and High School Educations or Less: 1992-93

(Numbers in thousands)

Adult men, 25–54 Adult women, 25–54

College High school College High school

Frequency or more or less or more or less

Total 8,469 12,257 4,224 8,518

Percent 100.0 100.0 100.0 100.0

No low-wage

employment 90.6 70.0 83.1 57.9

Low-wage

employment 9.4 30.0 16.9 42.1

Percent 100.0 100.0 100.0 100.0

1–6 months 70.5 61.5 80.9 53.0

7–12 months 13.5 18.3 10.1 18.9

13–24 months 9.6 13.6 3.7 19.9

25–28 months 6.4 6.6 5.2 8.2

Source: U.S. Bureau of the Census, Survey of Income and 

Program Participation

4 P70-57

approximately $20,000). It should

be pointed out, however, that

these data do not indicate when

the periods of low-wage employment occurred. It is possible that

the occurrence of low-wage employment took place at the beginning or end of the 1992-93 period

and represented only a part of a

much longer spell of a job paying

low wages. 

The average hourly earnings of

the 947,000 men who had low

hourly wages for over a year were

considerably lower than those with

1 to 6 months of low-wage employment. For the full-time, fullperiod jobholders with 13 to 24

months of employment at low

wages, average hourly earnings

were only $5.61, while for those

with 25 to 28 months, the average

was only $3.90 an hour.15 Hourly

wages at these levels, of course,

would result in poverty if these

men were the sole supporters of

families with three or more persons.

The average hourly earnings for

adult women who experienced between 1 to 6 months of low hourly

wages was $8.99. Many of these

3.3 million women, no doubt, were

single parents and the primary

earner in the family. Although

most of their working time was

spent in jobs above the low-wage

level, the fact that women typically

earn less than men places many

of them closer to the edge of lowwage employment. The hourly

earnings for the 1.3 million adult

women with 13 to 24 months of

low wages averaged $5.46 an

hour and with 25 to 28 months,

$4.37 an hour.16

15 Although the latter is below the Federal minimum wage of $4.25 an hour, it

should be remembered that not all employment is subject to minimum wage

coverage. Furthermore, a certain amount

of imprecision can be expected in hourly

earnings estimates when they are derived

by dividing monthly wages and salaries

by the number of hours worked that

month.

16 Average hourly earnings of men who

had low hourly wages for over a year

were not statistically different than those

of women.
P70-57 5

Education

The relationship between 

earnings and education is a wellestablished one and it is very evident in the data shown in table B.

Among adult men with 4 years of

college or more, the incidence of

low-wage employment was just

less than 10 percent compared to

30.0 percent for adult men with a

high school education or less.

The earnings differential between

college-educated and high schooleducated workers was also large

among women, as can be seen in

table B. For example, while only

16.9 percent of college-educated

women had 1 month or more of

employment below $5.70 an hour,

42.1 percent of the adult women

with high school educations or

less did.

If one looks at the overall pool of

workers with 13 or more months

of low-wage employment (including young workers and older workers in addition to the men and

women aged 25 to 54) one can

also see the effect of education.

Of the 3.1 million full-time, full-period jobholders in the 1992-93 period who had low wages for 13 to

28 months, 77.9 percent of them

were workers with high school

education or less.

Comparing 1992-93 

With 1983-85

It is possible to compare the 

low-wage employment situation 

for various groups of full-time, fullperiod workers in 1992-93 to the

situation prevailing in the 1983-85

period using data from an earlier

SIPP panel.17 The comparison is

presented in table C.

As shown in table C, the incidence

of low-wage employment of fulltime, full-period jobholders increased from 25.9 to 27.1 percent.

The proportion of these jobholders

experiencing more than 12

months of low-wage employment

also rose, from 4.2 to 5.7 percent.

Amongst those persons with 1 or

more months of low-wage employment, a significant increase in the

incidence occurred for adult men

age 25 to 54 (from 17.1 to 20.2

percent). Amongst those with lowwage employment at 13 months

or more, a significant increase occurred for adult women age 25 to

54 (from 5.8 to 7.1 percent).18

17 Average hourly earnings in the

1983-85 period were adjusted for inflation

by using the Consumer Price Index for All

Urban Consumers (CPI-U) and are in

1992-93 dollars.

18 The increases in the incidence were

not significantly different between men

and women 25 to 54 years of age.

In recent years, considerable

attention has been focused on 

the effects of downsizing on whitecollar workers and especially

workers with college educations

who no longer seemed immune

from job displacement. The data

in table C tend to confirm the fact

that not only has the incidence

and duration of low-wage employment increased among workers

with high school education and

less, but it has as well among the

college-educated. Although the

incidence and frequency figures

are relatively low for the collegeeducated, periods of low-wage

employment were somewhat more

common for them in the early

1990’s than in the early 1980’s.

Note: Issues in Defining

Low-Wage Employment

The first and most difficult conceptual issue in defining low-wage

employment is what constitutes a

low-wage job. Implicit in the word

“low” is a sense of adequacy or

need. But persons of different

backgrounds (that is, age, sex,

educational level, household income) will have different opinions

regarding what is a low wage. For

example, a corporate lawyer might

consider $20 an hour as low, while

a high school student might be

Table C.

Full-Time, Full-Period Jobholders With at Least 1 Month of Low-Wage

Employment and 13 or More Months of Low-Wage Employment by Major Age-Sex

Groups and Educational Attainment: 1983-85 and 1992-93

(Numbers in thousands)

Age-sex and education group 1983–85 1992–93 1983–85 1992–93 1983–85 1992–93

Total 44,551 53,887 25.9 27.1 4.2 5.7

Both sexes, 16 to 24 5,728 4,223 51.7 55.1 9.1 13.0

Adult men, 25 to 54 23,016 27,048 17.1 20.2 1.8 3.5

Adult women, 25 to 54 11,397 18,151 31.4 31.0 5.8 7.1

Both sexes, 55 and over 4,409 4,465 23.7 26.8 5.7 5.9

College, 4 or more years 10,629 15,374 11.1 13.5 0.9 1.6

College, 1 to 3 years 9,321 12,763 20.9 22.4 2.5 3.3

High school, 12 years or less 24,600 25,750 34.1 37.6 6.2 9.3

Source: U.S. Bureau of the Census, Survey of Income and Program Participation.

Total

With low-wage employment at least 1 month

(percent)

With low-wage 

employment 13 months

or more (percent)
6 P70-57

delighted to find a part-time job

paying the minimum wage. One

approach that has been used to

define “low” employs the Federal

Government’s poverty thresholds.

Historically, low earners have often

been defined as those workers

who usually worked full-time 

(35 hours or more a week), yearround (50 to 52 weeks) and had

annual earnings below the poverty

threshold for a four-person family.

The assumption, of course, is that

annual earnings below such a 

level would not be adequate to

support a family. Family sizes,

however, have declined over time.

In 1993, the average family size

was 3.2 persons and the average

household size was 2.7 persons.

Therefore, an updated version of

this approach (used in this report)

is to use a poverty threshold for a

three-person family.

Related to this issue is the role of

the wage earner in the family or

household. One might argue that

any definition of low-wage employment should apply only to the

householder or the primary earner

because this is the person who

has major responsibility for the

household. But others might argue that, in today’s economy,

more than one earner in a household is necessary to get by, even

to maintain a household above the

poverty level.

Another conceptual issue concerns the strength of a person’s

attachment to the labor force. 

Research in this area has typically

focused only on persons with a

strong attachment to the work

force; for example, those usually

working full-time, year-round. By

doing this, variability in labor supply is presumably controlled for,

resulting in a more precise measurement of the wage rate. However, it is well known that among

those households at the low end

of the income distribution, workers

are more likely to experience 

unemployment and job market

discouragement and have intermittent employment. A measure

of low-wage employment that 

requires a strong attachment to

the labor market would miss 

these people.

Some of the issues involved in defining low-wage employment are

discussed by Bradley R. Schiller in

The Economics of Poverty and

Discrimination, 6th Ed., (Englewood Cliffs, Prentice Hall, 1995),

Chapter 4.

Source and Accuracy 

of Estimates

All statistics are subject to sampling error, as well as nonsampling

error such as survey design flaws,

respondent classification and reporting errors, data processing

mistakes, and undercoverage.

The Census Bureau has taken

steps to minimize errors in the

form of quality control and edit

procedures to reduce errors made

by respondents, coders, and interviewers. Ratio estimation to independent age–race–sex population

controls partially corrects for bias

attributable to survey undercoverage. However, biases exist in the

estimates when missed persons

have characteristics different from

those of interviewed persons in

the same age–race–sex group.

Analytical statements in this report

have been tested and meet statistical standards. However, because of methodological

differences, use caution when

comparing these data with data

from other sources. Contact Peter

Siegel, Demographic Statistical

Methods Division, at

301-457-4228 or on the Internet at

peters@census.gov for information on (1) the source of the data,

(2) the accuracy of the estimates,

(3) the use of standard errors, and

(4) the computation of standard

errors.