Early Career Wage Trajectories of Low-Wage Workers and the Predictors of Wage Growth

Background and Purpose

Almost a quarter of workers in the United States earn less than two-thirds of the median wage. These low-wage workers are at high risk of in-work poverty, challenging the notion that employment alone can lift individuals out of financial hardship. While low-wage employment can be a temporary status leading workers to better jobs, it can also result in dead-end positions that lead to ongoing precarity. This study addresses these pathways by (1) identifying distinct wage trajectories of low-wage workers during their early careers and (2) examining factors associated with these trajectories.

Methods

The study utilized data from the National Longitudinal Surveys of Youth 1997, which has been tracking a cohort of individuals born between 1980 and 1984 since 1997. The analysis included participants who earned low wages for at least one period between the ages of 25 and 40 (N=4,450). Group-based trajectory modeling (GBTM) was employed to delineate wage trajectories based on the hourly wages from the primary job held each year. Subsequent multinomial logistic regression was used to examine factors associated with membership in different trajectory groups. These factors included individual demographics (gender, race/ethnicity), human capital attributes (educational attainment, vocational training), family background (parents’ education level, household income during adolescence), employment history (cumulative weeks unemployed, number of distinct jobs held), and household structure (marital status, number of children, and number of other adult household members at age 40).

Results

Using GBTM, four distinct wage trajectories were identified: “High Achievers” (14.8% of the sample), who started with the highest wages and exhibited rapid growth; “Modest Growers” (29.8%) who experienced moderate initial wages and growth; “Late Growers” (22.2%), who displayed exponential growth from lower starting wages; and “Persistent Low” (33.1%), a trajectory with the lowest starting wages and minimal growth. The analysis identified several factors significantly associated with trajectory group membership at a significance level of p<0.05. Specifically, the likelihood of remaining in the Persistent Low trajectory was higher among women, Black people, those without a bachelor’s degree or vocational training, and those with unstable employment histories. Other factors predictive of this trajectory included lower level of parental education, lower household income at age 18, increased weeks not worked, and being unmarried.

Conclusions and Implications

This study revealed that one-third of individuals who were initially low-wage earners remained in these positions throughout their early careers. Particularly affected were women and Black workers, who were more likely to experience this 'Persistent Low' wage trajectory. Furthermore, disparities before labor market entry—reflected by parental education levels and household income during youth—were found to exacerbate wage inequalities in later life. Given that education and vocational training significantly reduce the likelihood of remaining in low-wage trajectories, policy interventions should prioritize the enhancement of human capital among disadvantaged young adults to foster economic mobility and mitigate long-term wage disparities.