Unemployment is hovering near a five-decade low, workforce participation is at the highest level in six years and Federal Reserve Chairman Jerome Powell recently called the labor market “strong.” Yet, 44% of Americans age 18 to 64 are low-wage workers, according to a Brookings Institution report.
An estimated 53 million Americans are earning low wages, according to the study. Their median wage is $10.22 an hour and their annual pay is $17,950.
While many are benefiting from high demand for labor, the data indicated that not all new jobs are good, high-paying positions. The definition of “low wage” differs from place to place. The authors define low-wage workers as those who earn less than two-thirds of the median wage for full-time workers, adjusted for the regional cost of living.
“We have the largest and longest expansion and job growth in modern history,” Marcela Escobari, co-author of the report, said in a phone interview. That expansion “is showing up in very different ways to half of the worker population that finds itself unable to move.”
The millions of Americans in low-wage jobs are likely to stay there. Workers who make $10 to $15 an hour have a 52% chance of remaining in that wage bracket when they switch jobs. For middle-wage workers, or those earning $19 to $24 an hour, there’s a 46% chance that a job transition would result in lower pay. That’s bad news for the nearly 3.5 million workers who quit their jobs in September alone.
The demographics of low-wage workers span race, gender and geography, but women and minority groups are more likely to earn low wages. Black workers are 32% more likely to earn low wages than whites, and Latinos are 41% more likely.
Nearly half of low-wage workers are concentrated in just 10 occupations, like cooks, cleaners, construction and retail sales, according to the report.
As for the future, while some jobs will be replaced by automation and robots, the main concern is displacement, Escobari said. “Both the industries that are growing and the industries that are shrinking are low wage,” and available work “is going to be more low-wage work,” she said.
Escobari and co-authors Ian Seyal and Michael Meaney suggest a variety of potential solutions to allow low-wage workers to avoid becoming trapped in those positions, including reskilling and help managing barriers to lifelong education, like child care and financial insecurity.