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June 29, 2021

Are low-paying jobs also dead end jobs?

Are low-paying jobs also dead end jobs?

In the US at the moment fast-food wages are competing with those in manufacturing, reports Bloomberg Opinion. This fact goes to show that the news stories of employers boosting pay and introducing bonuses, amongst other perks, in order to attract and retain workers in lower-paying sectors, are true. In recent months, those working in retail, leisure, and hospitality have seen a significant boost in their average hourly wages. Their pay has risen by 7.8% and 7% respectively, meanwhile, all workers have received an increase of only 6.4%.

Whilst raising the pay for those in low-wage jobs is important, IZA World of Labor author Claus Schnabel believes that training is also vital for those holding such jobs. “Various studies have shown that transitions from low to higher pay are more likely for those workers who have received training or vocational courses, particularly those who get on-the-job training. In principle, employers should be interested in continuously training their workforce to maintain productivity, but in practice this is not always the case,” he responds in a recent Q&A conducted by IZA World of Labor Editor-in-Chief Daniel S. Hamermesh.

The good news about the current fast wage growth is that market forces are driving the increase in pay. Since the number of working-age people able to participate in the workforce has been flat for a year now, employers have found that they need to compete hard for workers and thus compensation is increasing and diversifying. However, with the upcoming economic stimulus coming to an end and the increase of people entering the job market, mean wage growth will return to normal rates.

According to Bloomberg Opinion, this will not necessarily mean that low-paying jobs will become dead end jobs. Many workers will be able to use these jobs in order to acquire better jobs and the evidence is there. For instance, someone who earns a low wage in a grocery store could take advantage of the labor market to find a higher-paying position as a machine operator. Crucially, policymakers should also focus on helping workers to increase their skills in order to be able to climb the employment ladder.

Read Daniel S. Hamermesh and Claus Schnabel’s latest Q&A on low-paying jobs: Low pay jobs, do they “scar” future job prospects?