The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency

Edited byKelleen Kaye and Demetra Smith NightingaleU.S. Department of Health and Human ServicesOffice of the SecretaryAssistant Secretary for Planning and EvaluationWashington, D.C.2000The Low-WageLabor MarketChallenges and Opportunities forEconomic Self-Sufficiency Copyright © 2000. This material may not be reproduced without attribution to the Urban Institute.The views expressed are those of the authors and do not necessarily reflect those of the Urban Institute,its board, or its sponsors.The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of pub-lic consideration. The views expressed are those of the authors and should not be attributed to the UrbanInstitute, its trustees, or its funders. Table of ContentsPageChapter AuthorsvPrefaceviiExecutive SummaryixIntroduction and Overview1by Kelleen Kaye and Demetra Smith NightingaleSection I: What Is the Low-Wage Labor Market and Has13It Changed over Time?1.Defining and Characterizing the Low-Wage 15Labor Marketby Jared Bernstein and Heidi Hartmann2.Low-Wage Labor Markets: Changes over the Business Cycle41and Differences across Region and Locationby David M. Smith and Stephen A. WoodburySection II: Policies Affecting the Low-Wage Labor Market633.Can the Labor Market Absorb Three Million65Welfare Recipients?by Gary Burtless4.Do Minimum Wages Help or Hurt Low-Wage Workers?85by Mark D. Turner5.Job Creation for Low-Wage Workers: An Assessment of Public 101Service Jobs, Tax Credits, and Empowerment Zonesby Burt S. Barnow PageSection III: Barriers to Entering the Low-Wage Labor Market1256.Mismatch in the Low-Wage Labor Market: Job Hiring Perspective127by Harry J. Holzer7.Mismatch in the Low-Wage Labor Market: Job Search Perspective145by Julia R. HenlySection IV: Barriers to Advancement in the Low-Wage Labor Market1698.Work as a Stepping-Stone for Welfare Recipients:171What Is the Evidence?by Peter Gottschalk9.The Role of Job Turnover in the Low-Wage Labor Market185by Julia LaneAppendix: Statistical Data and Background Information199About the Editors239ivThe Low-Wage Labor Market Chapter AuthorsBurt S. Barnow, Principal Research ScientistJohns Hopkins UniversityInstitute for Policy StudiesJared Bernstein, EconomistEconomic Policy InstituteGary Burtless, EconomistThe Brookings InstitutionPeter Gottschalk, Professor of EconomicsBoston CollegeHeidi Hartmann, Director and PresidentThe Institute for Women’s Policy ResearchJulia R. Henly, Assistant ProfessorUniversity of ChicagoThe School of Social Service AdministrationHarry J. Holzer, Chief EconomistU.S. Department of LaborKelleen Kaye, Senior Policy AnalystDepartment of Health and Human ServicesOffice of the Assistant Secretary for Planning and EvaluationJulia Lane, Associate Professor of EconomicsAmerican UniversityDemetra Smith Nightingale, Principal Research Associate andDirector, Welfare and Training Research ProgramThe Urban Institute David M. Smith, Assistant ProfessorGeorge Graziadio School of Business and ManagementPepperdine UniversityMark D. Turner, Research AssociateThe Urban Institute andInstitute for Policy Studies, Johns Hopkins UniversityStephen A. Woodbury, Professor of Economics,Michigan State University andEconomist, W.E. Upjohn Institute for Employment Research PrefaceThis volume was prepared at the Urban Institute, a nonprofit nonpartisan research organi-zation, for the U.S. Department of Health and Human Services under Contract NumberHHS-100-95-0021, Delivery Order 23. Individual experts were commissioned to write inde-pendent and objective papers. Opinions expressed are those of the separate authors and do notrepresent official policies of HHS, nor should they be attributed as positions of the UrbanInstitute, its trustees, or other sponsors.Many individuals at HHS and the Urban Institute in addition to the authors participated inthis project, and a few deserve special acknowledgment for their important contributions. FromHHS, Matt Lyon constructed the data appendix, bringing together a broad array of importantlabor market indicators. Kelleen Kaye, Susan Hauan, Reuben Snipper, and Matt Lyon pro-vided guidance and oversight for the project.At the Urban Institute, Demetra Smith Nightingale directed the project; MildredWoodhouse capably handled the numerous administrative details that are essential when somany authors are involved; and Scott Forrey of the Urban Institute Press coordinated the pro-duction of the manuscripts. Finally, Felicity Skidmore’s excellent editing of various parts of thevolume was critical to the final product and very much appreciated. Executive SummaryThe low-wage labor market has come increasingly into the policy spotlight following wel-fare reform, as states strive to move welfare recipients into employment. In this volume,experts in labor market analysis synthesize the current literature on the low-wage labor marketand highlight important