A few decades ago, a theoretical framework for viewing the low-wage labor market was articulated by political economists. Their discussions of "segmented labor markets" still provide a useful framework through which to view the problem (Bernstein & Hartmann, 1999). Jobs are "organized into two institutionally and technologically disparate segments, with the property that labor mobility tends to be greater within than between segments. Core jobs, those in the primary segment, pay higher wages and are more likely to provide fringe benefits (such as health insurance and paid vacations). Jobs in this segment also have ladders upward (often within the firm, called "internal labor markets"), whereby workers can improve their earnings and living standards over time.
Conversely, jobs in the secondary segment tend to lack upward mobility. They pay lower wages, offer fewer benefits, tend to be non-union, and generally offer worse working conditions than primary-sector jobs. They are also less stable than core jobs, leading to higher levels of job turnover and churning in this sector. Race and gender based discrimination are more common here than in the primary segment.
Today's literature is much less theoretical and ten...
s in regard to the sample of interest: are we interested in all low-wage workers regardless of family income or are we only interested in the low earnings of workers in low-income families Examining the overall sample of low-wage workers is the best way to learn about the structure of low-wage labor: what types of jobs are there, what do they pay, both in terms of wages and fringes, who holds them, what determines their growth or diminution The other group, a sub-sample of the first, is conditioned on income and focuses more on the living standards of low-income working families, a group that has much currency in discussions of welfare reform and working poverty.
The distinctions are useful from a policy perspective. Policies such as the Earned Income Tax Credit, a wage subsidy targeted at low-income working families, are wholly focused on the subset conditioned on income. Such policies do not aim to lift the living standards of low-wage workers in higher-income families. On the other hand, policies such as the minimum wage are universal (not income-tested) and aim to set labor standards in the low-wage sector regardless of income level.
Interestingly, with few exceptions shares have changed relatively little over time. A smaller share of low-wage workers are in manufacturing (there are also a smaller absolute number of such jobs), but this change is no larger than the overall decline in manufacturing employment as a share of total employment. Otherwise, the industry values show no large shifts. Similarly, a smaller share of low-wage workers are in clerical work; here again, however, the decline reflects the shrinking share of clerical jobs over time. Thus, low wages are less likely to be found in manufacturing and slightly more likely to be in service