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by

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

May 1999

III. A Profile of Low-Wage Workers

This profile of low-wage workers first establishes the size and scope of the problem--how many workers can be considered low-wage and how many are supporting families with children. Then I examine how low-wage workers and low-wage/low-income workers differ from all workers in their work effort, skills, location, types of jobs, and demographic traits.

A. Size and Scope of the Problem

Table 1 shows that 27.9 percent of all workers earned less than $7.50 an hour in 1997. Nearly three out of five low-wage workers in 1997 were still low-wage workers in March of 1998. There are two ways to view this statistic: first, it indicates that a significant number of low-wage workers (nearly 40 percent) will not be low-wage workers in the following year. Second, if we assume that a low-wage worker in one year has a 60 percent chance of still being a low-wage worker the following year, then we would expect one out every five low-wage workers to earn less than $7.50 an hour for four consecutive years.(3)

Table 1: Share of Low-Wage Workers Among All Workers: 1997

Worker Type Percent
Low-Wage 27.9%
Low-Income 13.2
Low-Wage/Low-Income 9.6
Low-Wage/Low-Income with Children 5.0
Share of Low-Wage Workers Who Are Persistently Low-Wage 61.8

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. A persistently low-wage worker fell into the low-wage category in both 1997 and March 1998.

Table 1 also shows that 9.6 percent of all workers are low-wage workers living in low-income families; hence, only about one-third of all low-wage workers (9.6/27.9) live in families with incomes below $24,600. In addition, the share of workers in low-income households is 13.2 percent, indicating that 3.6 percent of all workers (13.2-9.6) live in low-income families even though they earn more than $7.50 an hour. As figure 1 summarizes, over one-quarter of all workers are low-wage workers, but only one out of every ten workers is a low-wage worker living in low-income family. Further, only one out of every twenty workers is a low-wage worker in a low-income family with children.

Figure 1: Share of Workers Who Are Low-Wage
[Text Version]

Figure 1: Share of Workers Who Are Low-Wage

Next, consider the role low-wage workers' earnings play in total family income. As Table 2 and Figure 2 show, 49 percent of low-wage workers have earnings that represent less than one-quarter of their families' incomes. However, Figure 3 shows that among low-wage/low-income workers, nearly one-third are the only source of income for their families and two-thirds provide more than 50 percent of their families' incomes. By contrast, only 11.3 percent of all workers and 14.2 percent of low-wage workers have earnings that account for all of their families' incomes.

Table 2: Share of Total Family Income Earned, by Type of Worker: 1997 [Text Version]

Family Income Share Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All
All 14.2% 31.9% 21.8% 11.3%
Most: between 1/2 and All 17.9 31.9 32.6 42.3
Some: between 1/4 and 1/2 18.9 15.2 18.0 23.6
Less than 1/4 49.0 21.1 27.6 22.8

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 14.2% of low-wage workers earn all of their family's income.

Figure 2: Share of Total Family Income Earned by Low-Wage Workers [Text Version]

Figure 2: Share of Total Family Income Earned by Low-Wage Workers

Figure 3: Share of Total Family Income Earned by Low-Wage/Low-Income Workers [Text Version]

Figure 3: Share of Total Family Income Earned by Low-Wage/Low-Income Workers

The lack of income among low-wage/low-income workers may be of particular concern if they are supporting families. Table 3 shows that 39.8 percent of low-wage/low-income workers and 35.0 percent of low-wage workers are unmarried and childless. But low-wage workers and especially low-wage/low-income workers are more likely to have children than workers in general. Indeed, 52.0 percent of low-wage/low-income workers have children and 25.9 percent have children under age six, compared 44.8 and 18.0 percent for all workers. And low-wage/low-income workers are more than twice as likely to be single parents than workers in general. Data in Table 4 underscore the importance of family structure. Over half of all single parents are low-wage workers and 26.2 percent of single mothers are low-wage/low-income workers. Figure 4 shows that among low-wage/low income workers with children, 21.8 percent are the sole source of income for their families and half are their families' main bread winner.

Table 3: Family Composition by Type of Worker: 1997

  Low-Wage Low-Wage/Low-Income All
Unmarried, No Children 35.0% 39.8% 30.5%
With Children 47.7 52.0 44.8
With Children Under 6 Years Old 17.2 25.9 18.0
Married Women 25.5 13.9 25.7
Married Men 14.0 16.8 30.7
Single Mothers 15.5 22.3 8.1
Single Fathers 10.0 7.2 5.0

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 35.0% of low-wage workers are unmarried with no children. Column categories are not mutually exclusive.

Table 4: Probability of Being a Low-Wage Worker by Family Composition: 1997

  Low-Wage Low-Wage/Low-Income
All 27.9% 9.6%
With Children 29.8 11.1
Unmarried, Without Children 32.1 12.5
Married Women 27.7 5.2
Married Men 12.8 5.3
Single Mothers 53.0 26.2
Single Fathers 55.6 13.8

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: in all categories of family composition combined, the probability of being a low-wage worker is 27.9%. Among workers with children, 29.8% are low-wage. Column categories are not mutually exclusive.

Figure 4: Share of Total Family Income Earned by Low-Wage/Low-Income Workers with Children [Text Version]

Figure 4: Share of Total Family Income Earned by Low-Wage/Low-Income Workers with Children

Overall, a substantial share of workers are low-wage workers. However, for many low-wage status is only temporary. Further, many low-wage workers either have no dependents or are secondary workers in their families. Only one out of six low-wage workers are in low-income families with children. Thus, only about 5 percent of all workers are low-wage/low-income workers supporting children.

B. Work Effort

Table 5 shows that two-thirds of all workers worked full-time and year round in 1997. In contrast, 42.4 percent of low-wage workers and 38.5 percent of low-wage/low-income workers were full-time, full-year workers. Low-wage and low-wage/low-income workers were far more likely to only work part of the year than workers in general (43.2 and 48.7 percent v. 25.9 percent). On average, low-wage workers worked 1,490 hours in 1997, compared to 1,841 for all workers. Low-wage/low-income workers averaged only 1,393 hours; those with children averaged 1,413 hours. These statistics indicate that low-wage workers do not work continuously through the year and their incomes would rise if they worked more even at their current rate of pay.

Table 5: Work Effort by Type of Worker: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All
Full-time/Full-year 42.2% 38.5% 39.7% 65.3%
Part-time/Full-year 14.5 12.8 10.8 8.9
Part-time 43.2 48.7 49.5 25.9
Average Annual Hours Worked 1490 1425 1413 1841

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 42.2% of low-wage workers work full-time/full-year.

C. Educational Attainment

Not surprisingly, low-wage workers have considerably less education, on average, than workers in general. Table 6 shows that while 53.9 percent of all workers have some post-secondary education, only 35.5 percent of low-wage workers and 28.5 percent of low-wage/low-income workers had more than 12 years of schooling. Interestingly, low-wage/low-income workers with children are even less likely to have post-secondary schooling with only 22.4 percent attending school beyond the twelfth grade. In addition, only 14.3 percent of all workers failed to complete high school, as compared to 29.2, 35.1, and 40.4 percent for low-wage workers, low-wage/low-income workers, and low-wage/low-income workers with children, respectively. Indeed, low education places workers at extreme risk of having low wages. For example, 56.9 percent of workers who did not complete high school were low-wage workers and 23.4 percent were low-wage workers in low income households (Table 7). These findings suggest that interventions aimed at raising the work skills of low-wage workers potentially could improve the status of low-wage workers.

Table 6: Educational Attainment by Type of Worker: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All
Less Than High School 29.2% 35.1% 40.4% 14.3%
High School 35.3 36.4 37.2 31.8
More Than High School 35.5 28.5 22.4 53.9

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 29.2% of all low-wage workers have not completed high school.

Table 7: Probability of Being a Low-Wage Worker by Educational Attainment: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children
All 27.9% 9.6% 5.0%
Less Than High School 56.9 23.5 14.1
High School 31.0 10.9 5.8
More Than High School 18.4 5.1 2.1

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: in all categories of educational attainment combined, the probability of being a low-wage worker is 27.9%. Among workers who have not completed high school, 56.9% are low-wage.

D. Location

Next, consider the geographic distribution of workers. Table 8 shows low-wage workers are not disproportionately concentrated in any one of the four major geographic regions; however, low-wage/low-income workers are more likely to live in the South than are workers in general (39.9 percent v. 34.8 percent). This reflects the fact that wages tend to be lower in the South than elsewhere.

Table 8: Geographic Distribution of Workers by Type of Worker: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income Worker with Children All
Northeast 16.1% 13.7% 13.1% 18.9%
Midwest 23.9 20.1 19.5 24.0
South 37.5 39.9 41.7 34.8
West 22.4 26.2 25.7 22.4
         
Rural 27.3 28.7 29.9 21.0
Suburban 42.9 33.8 34.0 50.9
Urban 29.9 37.5 36.1 28.2
20 Largest Urban Areas 23.5 24.6 25.2 27.3

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 16.1% of low-wage workers reside in the Northeast.

Interestingly, low-wage/low-income workers are disproportionately located in both rural and urban areas relative to all workers. While 21.0 percent of all workers live in rural areas, 28.7 percent of low-wage/low-income workers do so. And 37.5 percent of low-wage/low-income workers live in urban areas, compared to 28.2 percent of all workers. Low-wage/low-income workers, however, are not concentrated in the 20 largest urban areas. This may indicate that workers (and their spouses) in larger cities have more job options than workers in smaller cities and/or in rural areas and are thus not disproportionately low-wage/low-income workers. As a result, geographically focused programs aimed at raising wages and incomes should not be targeted at the largest urban areas; targeting rural areas may be fruitful, but it is challenging because the population is spread out over a large area.

E. Occupation and Industry

Tables 9 shows the distribution of low-wage, low-wage/low-income, and all workers across occupations and industries. Low-wage/low-income workers are over-represented in service occupations (expect protective and household) and in retail trade. While only 12.1 percent of all workers are in non-protective, non-household service occupations, over a quarter of low-wage workers and low-wage/low-income workers are so employed. And almost one third of low-wage workers are employed in retail trade compared to 17.9 percent of all workers. Low wage workers are under-represented in the ranks of executive and professional occupations (11.2 percent v. 27.8 percent of all workers) and in manufacturing industries (10.0 percent v. 15.6 percent).

Table 9: Occupational and Industry Distribution by Type of Worker: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All
Occupations        
Executive and professional 11.2% 8.5% 6.8% 27.8%
Technicians and related support 1.5 1.0 1.1 3.3
Sales 16.4 15.0 14.7 12.3
Administrative support, including clerical 13.1 9.6 10.7 14.2
Private household and protective service 3.0 3.4 3.1 2.4
Service, except protective and household 25.0 29.1 29.6 12.1
Farming, forestry, and fishing occupations 4.3 5.3 6.0 2.1
Precision production, craft and repair 7.2 8.8 8.7 10.9
Machine Operators, assemblers and inspectors 7.3 8.2 8.7 6.1
Transportation and material moving 3.4 3.5 2.9 4.0
Handlers, equip cleaners, helpers, laborers 7.2 7.5 7.6 4.2
Farming, forestry, and fishing 0.5 0.2 0.3 0.6
Industries        
Agriculture, forestry, and fisheries 3.9 4.7 3.9 2.0
Mining and construction 5.2 6.7 5.2 7.2
Manufacturing 10.0 10.5 10.0 15.6
Transportation, communications, and utilities 3.5 3.4 3.5 7.0
Wholesale trade 2.3 2.0 2.3 3.6
Retail trade 32.6 32.7 32.6 17.9
Finance, insurance and real estate 3.5 2.4 3.5 6.3
Service 37.1 36.1 37.1 35.8
Public administration 1.9 1.4 1.9 4.7

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 11.2% of all workers in executive and professional occupations are low-wage.

F. Demographic Characteristics

Table 10 shows the probabilities of being a low-wage worker and a low-wage/low-income worker by race/ethnicity as well as by foreign born and citizenship status. Hispanics are far more likely to be low-wage workers than whites and blacks (43.2 percent v. 27.1 percent for whites and 33.7 percent for blacks). Over one out of every five Hispanic workers are low-wage and live in low income families compared to 8.6 percent of whites and 16.8 percent of blacks. Recent immigrants and non-citizens are also disproportionately likely to be low-wage workers (46.3 and 43.7 percent, respectively, compared to 27.9 percent of all workers), low-wage/low-income workers (23.8 and 22.5 percent, respectively, compared to 9.6 percent), and low-wage/low income workers in families with children (13.0 and 13.4 percent, respectively, compared to 5.0 percent).

Table 10: Probability of Being a Low-Wage Worker by Race, Ethnicity, and Immigration Status: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children
All 27.9% 9.6% 5.0%
White 27.1 8.6 4.3
Black 33.7 16.8 9.9
Hispanic 43.2 21.4 13.7
Foreign Born 36.0 17.1 10.1
Foreign Born, In US Less than 10 Years 46.3 23.8 13.0
Non-Citizen 43.7 22.5 13.4

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: in all categories combined, the probability of being a low-wage worker is 27.9%. Among white workers, 27.1% are low-wage. Column categories are not mutually exclusive.

While Hispanics and recent immigrants are disproportionately likely to be low-wage workers and in low-income families, they represent only a small share of the low-wage workforce. As Table 11 illustrates, only 15.7 percent of low-wage workers and 10.1 percent of low-wage/low-income workers are Hispanic. Similarly, only 7.4 percent of low-wage workers and 4.4 percent of low-wage/low-income workers are recent immigrants. Thus, even highly effective policies targeted at these population sub-groups will have a modest impact at best on the overall proportion of workers with low wages and low family incomes.

Table 11: Race, Ethnicity, Citizenship, and Immigration Status of Workers: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All Workers
White 81.6% 75.2% 73.3% 83.9%
Black 13.8 20.2 22.7 11.5
Hispanic 15.7 22.7 27.9 10.1
Foreign Born 14.8 20.6 23.4 11.5
Foreign Born, In US Less than 10 Years 7.4 11.1 11.6 4.4
Non-Citizen 11.1 16.7 19.2 7.1

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 81.6% of low-wage workers are white. Column categories are not mutually exclusive.

Finally, Table 12 shows that low-wage workers are appreciably younger than workers in general. While 17.3 percent of all workers are less than 25 years old, 37.8 percent of low-wage workers are young workers. Only 31.9 percent of low-wage/low-income workers and 28.8 percent of low-wage/low-income workers with children are less than 25 years old. Interestingly, 7 out of 10 low-wage workers in low-income families with children are prime-age workers (ages 25 to 54), almost exactly the same proportion found among all workers.

Table 12: Age of Workers: 1997 [Text Version]

  Low-Wage Low-Wage/Low-Income Low-Wage/Low-Income with Children All
< 25 years old 37.8% 31.9% 28.8% 17.3%
25 - 54 years old 54.2 62.0 70.0 72.4
> 55 years old 8.1 6.0 1.1 10.2

Source: Urban Institute tabulations on data from the 1998 March Current Population Survey.

Note: A low-wage worker averaged less than $7.50 an hour in earnings in 1997; a low-wage/low-income worker is a low-wage worker who lived in a family with a total annual family income below $24,600. An example of how to read the table: 37.8% of low-wage workers are less than 25 years old.

G. Section Summary

This profile of low-wage workers finds that:

  • Over one-quarter of all workers are low-wage workers.
  • Only one in ten workers are low-wage/low-income workers.
  • Only one in twenty workers are low-wage/low-income workers with children.
  • Low-wage/low-income workers are a diverse group--compared to all workers, they are disproportionately likely to be unmarried without children and to be single mothers:
    • 2 out of five low-wage/low-income workers are unmarried without children;
    • Almost one-quarter are single mothers.
  • Compared to all workers, low-wage, and low-wage/low-income workers work fewer hours and have less education.
  • Low-wage/low-income workers are disproportionately located in the South and in rural areas.
  • Low-wage/low-income workers are more likely to work in retail trade and less likely to work in manufacturing than workers in general.
  • While Hispanics and recent immigrants are more likely to be low-wage/low-income workers than workers in general, they represent a small portion of the total number of low-wage/low-income workers.
  • Although low-wage workers are disproportionately young, the proportion of low-wage/low-income workers with children who are prime-age (25 to 54 years old) is virtually the same as the proportion of all workers in the age range--70 percent.
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