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For millions, low-wage work really is a dead end

American "wage theft"
The $15 billion problem in America's workplaces 01:50

The U.S. economy is booming, unemployment is at a 17-year low and wages appear to be picking up. So what's not to like?

If you're one of the approximately 65 million Americans in low-paid service jobs, getting a share of that economic prosperity may be unbearably difficult. Jobs may be plentiful, but finding one that pays better than your current gig is much more rare than commonly believed, according to new research paper from the Federal Reserve Bank of New York.

"If you start in one of those low-wage occupations, you have a higher probability of becoming unemployed than moving up the career ladder," said Todd Gabe, a co-author of the paper, titled "Can Low-Wage Workers Get Better Jobs?" 

The answer seems to be, "With extreme difficulty." 

The authors looked at 175,000 workers in so-called low-quality jobs -- with low pay, unpredictable scheduling and few or no benefits -- and examined how those people's jobs changed over a six-year period ending in 2017. Of this group, only 5.2 percent were in a higher-paying job one year later, the authors found. By contrast, more than 10 percent left the workforce and 6.7 percent became unemployed. 

In other words, a low-wage worker was three times more likely to stop working altogether than to move to a better job in a given year.

Among those who did move from low-wage to higher-wage work, some common threads appeared. Typical jobs they upgraded to included work as nursing aides, customer service representatives, administrative assistants or wholesale and manufacturing sales. None of the "better" jobs typical for workers leaving low-wage work were in production, the paper notes.

Behind the push to help military spouses find jobs 05:03

The single most common "better" job that low-wage workers moved into was truck driving. About one in 300 made this move. That's in line with other research that has found some kind of truck driving a common "opportunity job," paying around the national average and accessible to people without college degrees. Other opportunity jobs included clerks, automotive technicians and repair workers.

Those who had a four-year college degree and were younger were also more likely to move into higher-paid work than their peers. "Don't underestimate the value of getting an education," Gabe said.

These findings directly contradict the rosy discussion of today's job market. Those who favor minimal regulation and oppose raising wages for service jobs often say such jobs are short-term and entry-level, providing workers with a first step on the ladder up job mobility. 

The New York Fed study's authors say, "If low-wage jobs are simply a stepping stone to higher-quality jobs, then the problem of low-wage work can be solved via the labor market." But, they added, "If, on the other hand, people tend to get trapped in low-wage jobs that are difficult to escape, then some more proactive policies may be warranted."  

However, proactive policies don't seem to be coming. Instead, public policy is pushing more people into the workforce while rescinding many protections working people have previously enjoyed.

Still, the role of low-paid work in the U.S. is important. Nine years after the Great Recession began, the largest and fastest-growing sector of the economy is in low-paid, "service class" jobs. 

Labor advocates and some academics have argued that rolling back economic polarization requires upgrading the jobs at the very bottom. As Richard Florida, a co-author of the New York Fed paper, said in another paper he co-wrote: "The only way to create a large number of family-supporting jobs that will rebuild the middle class is by upgrading the millions of precarious, low-skill, and low-wage service class jobs we already have."

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