Labor Markets & Poverty

Overview

Labor Markets & Poverty

In 1996, the United States reformed its welfare system, linking benefits more directly to paid work. Combined with the expansion of the Earned Income Tax Credit, which subsidizes low wage workers through the tax code, work has become a cornerstone of American anti-poverty policy. At the same time, rising income inequality and stagnant real wages among less-skilled workers mean that working one’s way out of poverty is more challenging than ever before.

See below for more information on research projects and other resources related to this topic.

Overview

Research on Labor Markets & Poverty

In 1996, the United States reformed its welfare system, linking benefits more directly to labor force participation. When combined with the expansion of the Earned Income Tax Credit, which subsidizes low wage workers through the tax code, work has become a cornerstone of American anti-poverty policy. At the same time, rising income inequality and stagnant real wages among less-skilled workers mean that working one’s way out of poverty is more challenging than ever before.

With these trends as a backdrop, a number of new questions are emerging. For example, how can government programs best address poverty if full-time work itself does not provide sufficient income to move many families out of poverty? Given the evolving consensus that poor mothers should be expected to work, how will women’s employment, family structure and poverty evolve in the 21st Century?

Our Research Affiliates are tackling these questions, as well analyzing trends in immigration and related demographic changes that have important implications for labor market opportunities available to the poor.

Labor Markets and Poverty in the US: Basic Facts, Policy and Research Needs
By Ann Huff Stevens and Ariel Marek Pihl

The connection between poverty and labor markets is complex. High, stable wages and stable full-time employment can keep many out of poverty. However, the stagnation of wages at the bottom of the US wage distribution over the past several decades and continuing low rates of full-time work, especially in single-parent households, work will often leave families below the official poverty threshold. 

Research Paper Ryan Finnigan

Work Variability and Unionization in the Great Recession
Ryan Finnigan and Jo Hale (Affiliates in Sociology)

Millions of workers experienced increased variability in the regularity and predictability of their working hours in the Great Recession. This volatility brings negative consequences for their economic security and family lives, which can be as profound as job loss. The growth of work variability was facilitated by the decline of labor market institutions protecting workers from such volatility, particularly the profound decline of labor unions.

Research Paper Marianne P. Bitler

The More Things Change, the More They Stay the Same? The Safety Net and Poverty in the Great Recession
Marianne Bitler and Hilary Hoynes (Affiliates in Economics)

Much attention has been given to the large increase in safety net spending, particularly in Unemployment Insurance and Food Stamp spending, during the Great Recession. In this paper we examine the relationship between poverty, the social safety net, and business cycles historically and test whether there has been a significant change in this relationship during the Great Recession. We do so using an alternative measure of poverty that incorporates taxes and in-kind transfers.

Overview

Policy Briefs on Labor Markets & Poverty

These briefs are short and informative analyses of our research relating to poverty policies. Policy Briefs deliver our cutting-edge research directly to policy makers, researchers, and stakeholders in an accessible format. 

Prejudice and Supervisors’ Race May Impact Wages for Black Workers
By Timothy Bond, Purdue University Krannert School of Management and Jee-Yeon K. Lehmann, Analysis Group, Inc.

During a job interview, workers cannot tell whether an employer is prejudiced. However, they can observe the race of a potential supervisor. In a new study of racial inequality in the labor market, we tested a model of Black and White workers’ wages and job stability using a unique dataset that includes the race of the worker’s supervisor and state-level measures of prejudice. Our findings suggest that higher levels of prejudice in the state may cause Black job applicants to accept lower wages in exchange for the security of working for a Black supervisor. This could lead to lower average wages for Black workers.

Employers Don’t Prefer For-profit Degrees over Degrees from Community Colleges
By Paco Martorell, UC Davis; Rajeev Darolia and Cory Koedel, University of Missouri; and Katie Wilson and Francisco Perez-Arce, Pardee RAND Graduate School

Students raising hands in a college classroom

In recent years, for-profit colleges have seen sharp increases in enrollment despite public community colleges being much cheaper. In a recent study,[1] we sent almost 9,000 fictitious resumes of young job applicants who recently completed their schooling to online job postings in seven major U.S. cities across six occupational categories to track employer callback rates. We find no evidence that employers prefer applicants with resumes listing a for-profit college relative to those whose resumes list either a public community college or no college at all.

Growth in Irregular Work Increased Poverty During and After Great Recession
By Ryan Finnigan and Joanna Hale, UC Davis

Jobs that offer hours that vary from week to week present significant challenges for low-wage workers. In a new study[1] we find that the number of workers with inconsistent work hours increased significantly throughout the Great Recession and recovery. These workers had lower incomes and higher poverty rates than those with steady hours. However, the increase in inconsistent hours was smaller among union members and in states with higher-than-average unionization. This suggests unionization could improve the chances a worker will have the steady income needed to plan for even short-term basic needs.

Overview

Podcasts on Labor Markets & Poverty

Center podcasts are a great way to keep up with today’s poverty research and public policy. We record most of our conference presentations and talks by our seminar speakers. We also produce exclusive content, such as our Poverty in Focus series, as well as expert discussions on research.

Policy Discussion and Q&A: Raising Labor Standards at the Local Level
Ken Jacobs, University of California, Berkeley

Ken Jacobs moderates this policy discussion and Q&A on raising labor standards at the local level. Jacobs is the Chair of the UC Berkeley Labor Center, where he has been a Labor Specialist since 2002.

Podcast

Is Tinkering with Safety Net Programs Harmful to Beneficiaries? Evidence from the Medicaid Notch and the Minimum Wage
Jeffrey Clemens, University of California, San Diego

In this presentation, Jeffrey Clemens discusses his work on how the Great Recession affected employment and income for low-skilled workers. Clemens is an assistant professor in the Department of Economics at UC San Diego.

The Stigma of Low-Wage Work: Field- and Survey-Experimental Evidence
David Pedulla, The University of Texas at Austin

In this presentation, David Pedulla discusses his work on the stigma of low-wage work based experimental field and survey evidence. Pedulla is an Assistant Professor in the Department of Sociology and a Faculty Research Associate of the Population Research Center at the University of Texas at Austin.

Commands