What Upward Mobility?

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Heather Boushey of the Center on Economic and Policy Research has a new report (pdf) out on minimum wage workers that has a few important findings. First, contrary to the claims of many conservatives, minimum wage jobs simply aren’t the confine of young workers looking to get a start on their careers. Less than one-in-five minimum wage workers was under the age of 20 in the early 2000s, and many of these workers are supporting families with their earnings. And the earnings are bleak: working full-time for a full year at the minimum wage earns you just $10,300, which is $3,000 under the poverty line for a one-parent, one-child family. Clearly, boosting the minimum wage will help these families out, and as economists like David Card and Alan Krueger have pointed out, this can be done in ways that don’t severely impact the employment rate. (See here for more on why minimum-wage boosts won’t lead to employment Armageddon.)

But that’s not the whole story. What Boushey also found was that many “prime-age” minimum-wage workers actually get stuck in those jobs. Many young workers move up, but over a third of minimum-wage workers are still working those jobs three years later. The lack of upward mobility here is a big problem.

On one level, of course, policies to promote full employment can help generate the sort of pressure that helps workers move up the pay scale. (In the late ’90s, low unemployment helped workers move out of low-wage jobs.) On the other hand, as the New York Times recently pointed out in its excellent series on class in America, the United States is still less upwardly mobile than many European countries that have relatively high unemployment rates. Policymakers looking to boost mobility in this country may need to look for structural solutions. Promoting a strong labor movement can help; one of Boushey’s key findings is that unionized workers “have a significantly lower probability of staying in a low-wage job.” Harry Holzer of Brookings has outlined another proposal. Nevertheless, the idea that Americans simply need to find work and then can automatically rise the ranks through hard work alone is a bit wrong-headed—clearly the “job ladders” aren’t extending as high as they could be.

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