Panel Paper: Increasing Instability and Uncertainty Among Low-Wage Workers: Implications for Inequality and Potential Policy Solutions

Thursday, November 7, 2019
I.M Pei Tower: Majestic Level, Majestic Ballroom (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Elizabeth Ananat1, Anna Gassman-Pines1 and Yulya Truskinovsky2, (1)Duke University, (2)Wayne State University

Workers in the U.S. currently find themselves in a context of economic volatility that has increased over time, particularly among low-income and low-skilled workers. In this paper, we identify how recent trends combine to increase instability and uncertainty among low-wage workers, discuss the effects of instability and unpredictability on workers and families, and consider potential policy solutions.

Through review and analyses of the extant literature, we show that there are several trends in demographics and in the U.S. labor market that are combining to increase instability and uncertainty among low-wage workers. First is the long-run move of low-skilled employment demand toward the service sector, which is lower paying and less stable than manufacturing. Pressures of globalization and trade, and trends in automation, have led to the destruction of many industries, particularly those such as manufacturing that in the past were a path to stability for low-skilled workers. High paying and often union-protected jobs in these sectors have been replaced by rapid growth in low-skill healthcare and retail services, where the majority of jobs are characterized by low wages, low tenure and higher rates of uncertainty.

Second is the related rise of both dual-earner and single-headed households, which have dramatically reduced the share of households with a stay-at-home caregiver. The working population is increasingly the primary source of care for young children and the growing population of elderly and disabled, facing growing, and often unpredictable, caregiving demands.

Increasing female labor force participation, population aging and the rise of dual earner and single headed households, have led to an increase in caregiver-breadwinners: workers who are their family’s primary care provider as well as the primary or sole income earner.

Third is growth of the elderly population in the context of our societal dependence on informal caregiving, typically by family members who also work for pay, for both children and the elderly. Together these changes have increased strain on low-skilled workers, particularly the growing group of such workers who combine caregiving and breadwinning.

Fourth is decreasing schedule and earnings stability within service employment, which increases income volatility and decreases family functioning for caregiver-breadwinners. Managerial innovations such as dynamic scheduling have eroded stability even within the service sector such that workers experience much more daily uncertainty in both pay and hours.

The combination of these trends leads to an increase in not only income but family and schedule instability. High-skilled workers can address these challenges through paid help, insurance, and other forms of consumption smoothing, while the increasing stress on low-skilled workers represents another, insidious form of inequality. We demonstrate how earning and schedule instability can inhibit children’s human capital development, transmitting this inequality to future generations.

Finally, we identify and evaluate the evidence regarding a number of policy solutions, including schedule stability legislation, universal care supports, and paid family leave, aimed at alleviating strain on low-skilled workers, particularly the growing group of such workers who combine caregiving and breadwinning, and highlight the legislative pathways for positive policy change.