The Low Wage “Recovery” – Evidence from Chicago

THE CHICAGO METROPOLITAN STATISTICAL AREA LOST MORE THAN 150,000 jobs between 2001 and 2011, despite adding hundreds of thousands of new residents and many new jobseekers over that period. As more job-seekers chase fewer jobs, the number of low-wage workers has grown. Just as significant, the identity of those workers has changed. Compared to a decade ago, the typical low-wage worker in the Chicago region is likely to be older. She is more likely to have a college degree, and to support a family. And a growing number of these low-wage workers contribute their earnings to households that receive all of their income from low-wage jobs:

31.2 percent of payroll employees ages 18-64 worked in lowwage jobs (paying $12 or less per hour) in 2011. This represents a substantial increase from the 23.8 percent of workers employed in low-wage jobs in 2001.

With few exceptions, low-wage job holders are not teenagers working for disposable income. Fully 94 percent of lowwage job holders in 2011 were 20 years or older, and more than half (57.4 percent) were over the age of 30.

In 2001, fewer than 10 percent of low-wage job holders had a college degree. Today, more than 16 percent, or approximately 1 in 6, hold college degrees.

As job opportunities dwindle across the labor market, the low-wage workforce has become marginally more male and marginally whiter. The available evidence suggests that women and African-American workers displaced from lowwage jobs have exited the labor market altogether, rather than moving into higher-wage positions.

Increasingly, low-wage jobs play a crucial role in supporting households, rather than augmenting core income. More than half of the Chicago area’s low-wage workers (56.7 percent) live in households that get all of their income from low-wage jobs. This represents a substantial increase from the 45.7 percent of households fully reliant on low-wage jobs in 2001.

$12 per hour represents a modest and conservative measure of low-wage work. At this wage level, a full-time worker living by herself will barely be able to cover life’s basic costs without public assistance. When a worker earning $12 per hour is supporting family or other household members, public assistance programs will likely be indispensable to household subsistence.


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