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Participation in Low‐Wage Labor Markets by Young Men

R. Mark Gritz and Thomas MaCurdy


Some of the most controversial issues encountered in public debates over governmental intervention in labor markets involves questions concerning the circumstances underlying individuals participation in low-wage jobs. Competing views of the labor market suggest different policy prescriptions. Nowhere is this more evident than in the case of minimum-wage legislation. Those holding the view that some individuals become trapped in low-paying jobs and that the earnings from these jobs contribute significantly to household income advocate raising the minimum wage as an anti-poverty program. Alternatively, policymakers who view participation in low-wage markets as temporary position offering individuals the opportunity to acquire the work experience and the additional skills needed to move on to higher-paying jobs frequently argue against minimum-wage legislation or for the inclusion of sub-minimum training wages in such legislation. These two divergent views of the role played by low-wage jobs in economic mobility are often at the root of many disputes over labor-market policy.

This report develops a comprehensive picture of the experiences of youths in the low-wage sector and the role that this experience plays in future employment and earnings prospects. This picture identifies where low-paying employment fits into the career paths of individuals in the initial stages of their life-cycle, and how these career paths vary across race-ethnic groups and educational attainments for men. We carry out our empirical analysis using data from the National Longitudinal Survey Youth cohort (NLSY). Youths are, of course, an ideal demographic group for studying involvement in low-wage sectors because they are major participants, and they are in the formative years of their lifetime employment activities. The availability of the rich information on job experiences provided by the NLSY on a diverse group of individuals, in conjunction with log observation periods, offers the opportunity to assess both the short- and the long-term consequences of involvement in low-paying employment and to determine whether such employment appears to influence subsequent mobility.