2. Moving Up Or Moving On: Workers, Firms and Advancement in the Low-Wage Labor Market Fredrik Andersson Harry Holzer Julia Lane

3. Overview Research Question Research Question Data, Definitions and Measurement Data, Definitions and Measurement Approach Approach Results Results Summary Summary

4. Research Questions 1. How frequently do low earners transition into higher earnings categories over time? 2. How important are the characteristics of firms – especially the wage premia they pay - in accounting for these transitions? 3. Do low-earners make more progress through job retention (i.e., staying with the same firm and accumulating seniority and training there) or job mobility (i.e., moving to firms with higher wages and better advancement opportunities)? 4. Does earlier work experience matter for the progress made in later jobs by these workers? If so, which characteristics of earlier work matter? Does early work for a temp agency generate more advancement later on?

5. Research Design 1. Define low-earners: Prime-age workers who work at least one quarter a year but who consistently earn less than $12,000 annually over a 3-year base period (1993- 95) 2. Measure transitions out of low earnings (partial v. complete) over subsequent 3-year periods (1996-98, 1999-2001) 3. Analyze relationship between earnings transitions and primary firm characteristics in the subsequent periods 4. Analyze relationship between job mobility/retention and transitions – comparing move/movers, move/stayers, stay/movers and stay/stayers 5. Analyze characteristics of earlier jobs that contribute to later transitions for those who change jobs

6. The Longitudinal Employer - Household Dynamics Program Link Record Person-ID Employer-ID Data Business Register Employer-ID Census Entity-ID Data Economic Censuses and Surveys Census Entity-ID Data Demographic Surveys Household Record Household-ID Data Person Record Household-ID Person-ID Data

7. Data - UI and Es202 data from 5 states (CA, FL, IL, MD and NC): almost 1 billion quarterly observations, on some 58 million employers 1992-99 - We use a subset of workers aged 25-54 and with some labor force attachment in the 1993-95 period resulting in 500 million observations on 19 million individuals and 1.2 million employers (5% sample) - Demographics added from Census Numident - Longitudinal in firms and workers - Individual and firm fixed effects

10. The Big Winners

11. The Big Losers

21. Findings 1. Most low-earners eventually transition out of this status; but few make complete transitions. 2. The characteristics of firms – and especially their earnings premia – are major determinants of advancement in the low-wage labor market. 3. Job changers generally make greater progress than job stayers, primarily because they move to better firms and jobs; but it is best to move early and then accumulate some seniority and skills. 4. Accumulating seniority in a low-wage job can help in subsequent jobs, but working for a higher-wage firm earlier helps even more. Working for a temp agency can help as well.

22. Policy Implications Two Broad Implications: Improve job placements of low earners Improve job placements of low earners Create more higher-wage firms and jobs Create more higher-wage firms and jobs How to Do So: Use labor market intermediaries Use labor market intermediaries Integrate training and job placements (e.g., sectoral strategies) Integrate training and job placements (e.g., sectoral strategies) Sequence of appropriate job placements/training over time Sequence of appropriate job placements/training over time Provide relevant data and technical assistance to WIB’s Provide relevant data and technical assistance to WIB’s