Can Low-wage Workers Find Better Jobs?

38 Pages Posted: 19 Apr 2018

See all articles by Jaison R. Abel

Jaison R. Abel

Federal Reserve Bank of New York

Richard Florida

Martin Prosperity Institute, Rotman School of Management, University of Toronto; New York University (NYU)

Todd M. Gabe

University of Maine - School of Economics

Date Written: April 1, 2018

Abstract

There is growing concern over rising economic inequality, the decline of the middle class, and a polarization of the U.S. workforce. This study examines the extent to which low-wage workers in the United States transition to better jobs, and explores the factors associated with such a move up the job ladder. Using data covering the expansion following the Great Recession (2011-17) and focusing on short-term labor market transitions, we find that around 70 percent of low-wage workers stayed in the same job, 11 percent exited the labor force, 7 percent became unemployed, and 6 percent switched to a different low-wage job. Troublingly, just slightly more than 5 percent of low-wage workers found a better job within a 12-month period. Study results point to the importance of educational attainment in helping low-wage workers move up the job ladder.

Keywords: low-wage jobs, career ladder, labor market dynamics

JEL Classification: J01, J24, J61, J62

Suggested Citation

Abel, Jaison R. and Florida, Richard and Gabe, Todd M., Can Low-wage Workers Find Better Jobs? (April 1, 2018). FRB of New York Staff Report No. 846, Available at SSRN: https://ssrn.com/abstract=3164963 or http://dx.doi.org/10.2139/ssrn.3164963

Jaison R. Abel

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Richard Florida

Martin Prosperity Institute, Rotman School of Management, University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

New York University (NYU)

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Todd M. Gabe (Contact Author)

University of Maine - School of Economics ( email )

Orono, ME 04469-5774
United States

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