Low Unemployment Is Meaningless When So Many Jobs Are Dead End Low Pay

Macleans

Low-wage work is more pervasive than you think, and there aren’t enough “good jobs” to go around

Brookings.Edu - November 21, 2019

Even as the U.S. economy hums along at a favorable pace, there is a vast segment of workers today earning wages low enough to leave their livelihood and families extremely vulnerable. That’s one of the main takeaways from our new analysis, in which we found that 53 million Americans between the ages of 18 to 64—accounting for 44% of all workers—qualify as “low-wage.” Their median hourly wages are $10.22, and median annual earnings are about $18,000. (See the methods section of our paper to learn about how we identify low-wage workers.)

The existence of low-wage work is hardly a surprise, but most people—except, perhaps, low-wage workers themselves—underestimate how prevalent it is. Many also misunderstand who these workers are. They are not only students, people at the beginning of their careers, or people who need extra spending money. A majority are adults in their prime working years, and low-wage work is the primary way they support themselves and their families.

Low-wage work is a source of economic vulnerability

There are two central questions when considering the prospects of low-wage workers:

  1. Is the job a springboard or a dead end?
  2. Does the job provide supplemental, “nice to have” income, or is it critical to covering basic living expenses?

We didn’t analyze the first question directly, but other research is not encouraging, finding that while some workers move on from low-wage work to higher-paying jobs, many do not. Women, people of color, and those with low levels of education are the most likely to stay in low-wage jobs. In our analysis, over half of low-wage workers have levels of education suggesting they will stay low-wage workers. This includes 20 million workers ages 25-64 with a high school diploma or less, and another seven million young adults 18-24 who are not in school and do not have a college degree.

As to the second question, a few data points show that for millions of workers, low-wage work is a primary source of financial support—which leaves these families economically vulnerable.

  • Measured by poverty status: 30% of low-wage workers (16 million people) live in families earning below 150% of the poverty line. These workers get by on very low incomes: about $30,000 for a family of three and $36,000 for a family of four.
  • Measured by the presence or absence of other earners: 26% of low-wage workers (14 million people) are the only earners in their families, getting by on median annual earnings of about $20,000. Another 25% (13 million people) live in families in which all workers earn low wages, with median family earnings of about $42,000. These 27 million low-wage workers rely on their earnings to provide for themselves and their families, as they are either the family’s primary earner or a substantial contributor to total earnings. Their earnings are unlikely to represent “nice to have” supplemental income.

The low-wage workforce is part of every regional economy

We analyzed data for nearly 400 metropolitan areas, and the share of workers in a particular place earning low wages ranges from a low of 30% to a high of 62%. The relative size of the low-wage population in a given place relates to broader labor market conditions such as the strength of the regional labor market and industry composition. ...
Read full report at Brookings

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