Chutes and Ladders:

1
Chutes and Ladders

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

2
Motivations for the No Shame project

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

3
The View from 1996

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

4
No Shame Evidence for Bleak Outlook

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

5
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

6
Demography of the Dual Labor Market

• Demographic match
• Minorities
• Youth
• Women
• Low Educated workers

7
Stigmatized careers

• Causal directions unclear
• Lack of commitment ? job hopping ? stigma ?trap
• Low wages ? job hopping ? stigma ? trap

8
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)

9
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

10
Newmans Gloom

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

11
1997 Realities
12
1997 Realities
13
Wage Change Among the Employed1993-97
14
Wage Trajectories 1993-2002
20.00
18.00
16.00
14.00
12.00
Constant 2002
10.00
8.00
6.00
4.00
2.00
-
1993
1997
1998
2002
less educ, scs
less educ, skld or unskld
more educ, pscs
15
Questions for follow up

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

16
Wage Trajectories of Workers in Poor Households

• The National Experience

17
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

18
Methodology

• Create four SIPP samples
• Qualifying Criteria for Every Sample
• 18-40 years old
• Family income lt1.5 x poverty cutoff
• Job pays hourly rate
• Non-managerial job
• 1993 or later

19
SIPP Samples from Poor andNear Poor Households
20
Distribution of Annual Wage Growth
21
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)

22
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

23
Context matters

• Extremely tight labor markets unprecedented
  growth
• Union jobs still available
• Welfare policy permitted schooling to meet work
  requirement

24
Context can change

• Labor markets lax
• Unions busted or closed
• Welfare policy puts work first

25
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