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by

Gregory Acs
The Urban Institute
2100 M Street NW
Washington, DC 20037

May 1999

II. Low-Wage Workers: Concepts, Definitions, and Data

There is no generally accepted and widely used definition of the term, "low-wage worker." The term connotes an image of a worker paid far less than the median wage in a job offering little upward mobility; the job offers little in the way of benefits and it may have an irregular schedule. In addition, discussions about low-wage workers often not only include the workers themselves but also non-workers, like welfare recipients, who would be low-wage workers if they had jobs.

For this descriptive analysis, I rely on a very basic definition of the term "low-wage worker" based solely on the hourly wage rate of people who worked: any worker whose average hourly earnings in the previous calendar year across all jobs falls below $7.50 is deemed a low-wage worker.(2) This definition sets the low-wage line 45 percent above the minimum wage and about 30 percent below the median wage for all workers in 1997. It also falls slightly below the $8 per hour level used to demark "good and bad jobs" in other research (Edin and Lein, 1997 and Pavetti and Acs, 1997). As such, even though the definition used in this paper does not take into account non-wage attributes of jobs, workers earning below $7.50/hour are likely to fit most peoples expectations of a low-wage worker. Indeed, the definition may even be somewhat too strict.

To the extent that concern about low-wage workers reflects concern about low-income families, I also define the related concept of a low-income family. A low-income family has a total annual income below 150 percent of the poverty line for a family of four ($24,600 in 1997). Thus, unless a low-wage worker's family has other sources of income, it will be a low-income family; in fact, a low-wage worker earning exactly $7.50/hour and working full-time and year round would earn $15,600-- $9,000 below the low-income family threshold.

For this profile of low-wage workers, I use data from the March 1998 Current Population Survey (CPS); the data reflect income and earnings in 1997 and all monetary figures are reported in 1997 dollars. Anyone with positive wage and salary income and/or positive non-farm self-employment income is counted as a worker.

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