What Works

for
Workers?

-1
0
+1

13502-00_FM-4thPgs.indd 1 12/10/13 8:32 AM

13502-00_FM-4thPgs.indd 2 12/10/13 8:32 AM
 What Works
for
Workers?
Public Policies and
Innovative Strategies for
Low-Wage Workers

Stephanie Luce,
Jennifer Luff,
Joseph A. McCartin,
and Ruth Milkman,
Editors

Russell Sage Foundation

-1
New York 0
+1

13502-00_FM-4thPgs.indd 3 12/10/13 8:32 AM

 The Russell Sage Foundation

The Russell Sage Foundation, one of the oldest of America’s general purpose foundations,
was established in 1907 by Mrs. Margaret Olivia Sage for “the improvement of social and
living conditions in the United States.” The Foundation seeks to fulfill this mandate by fos-
tering the development and dissemination of knowledge about the country’s political, social,
and economic problems. While the Foundation endeavors to assure the accuracy and objec-
tivity of each book it publishes, the conclusions and interpretations in Russell Sage Founda-
tion publications are those of the authors and not of the Foundation, its Trustees, or its staff.
Publication by Russell Sage, therefore, does not imply Foundation endorsement.

BOARD OF TRUSTEES
Robert E. Denham, Esq.

Larry M. Bartels Kathryn Edin Nancy L. Rosenblum

Kenneth D. Brody Lawrence F. Katz Claude M. Steele
Karen S. Cook Nicholas Lemann Shelley E. Taylor
W. Bowman Cutter III Sara S. McLanahan Richard H. Thaler
Sheldon Danziger

Library of Congress Cataloging-in-Publication Data

What works for workers? : public policies and innovative strategies for low-wage workers /
Stephanie Luce, Jennifer Luff, Joseph A. McCartin, Ruth Milkman, editors.
pages cm
Includes bibliographical references and index.
ISBN 978-0-87154-571-8 (alk. paper)
1. Unskilled labor—United States. 2. Working poor—United States. 3. Minimum wage—
United States. 4. Labor policy—United States. I. Luce, Stephanie.
HD8072.5.W465 2013
331.12’0424—dc23
 2013030555

Copyright © 2014 by Russell Sage Foundation. All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a retrieval sys-
tem, or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the publisher.

Reproduction by the United States Government in whole or in part is permitted for any
purpose.

The paper used in this publication meets the minimum requirements of American National
Standard for Information Sciences—Permanence of Paper for Printed Library Materials.
ANSI Z39.48-1992.

Text design by Genna Patacsil.

RUSSELL SAGE FOUNDATION

112 East 64th Street, New York, New York 10065
10 9 8 7 6 5 4 3 2 1

-1
0
+1

13502-00_FM-4thPgs.indd 4 12/10/13 8:32 AM

 Contents

Tables and Figures vii

Contributors xi

Introduction 1
Stephanie Luce, Jennifer Luff,

Joseph A. McCartin, and Ruth Milkman

PART I Low-Wage Work in Historical

Perspective 17

Chapter 1 An Economy That Works for Workers 19

Alice O’Connor

Chapter 2 What Can Labor Organizations Do for

U.S. Workers When Unions Can’t Do
What Unions Used to Do? 50
Richard B. Freeman

PART II Workers on the Edge: Marginalized

and Disadvantaged 79

Chapter 3 Connecting the Disconnected:

Improving Education and
Employment Outcomes Among
Disadvantaged Youth 81
Peter B. Edelman and Harry J. Holzer

Chapter 4 Mending the Fissured Workplace 108

David Weil -1
0
+1
v

13502-00_FM-4thPgs.indd 5 12/10/13 8:32 AM

 vi   Contents

Chapter 5 Holding the Line on Workplace

Standards: What Works for
Immigrant Workers
(and What Doesn’t)? 134
Jennifer Gordon

Part III Innovative Labor Market Interventions 163

Chapter 6 Career Ladders in the Low-Wage

Labor Market 165
Paul Osterman

Chapter 7 Employment Subsidies to Firms

and Workers: Key Distinctions
Between the Effects of the Work
Opportunity Tax Credit and the
Earned Income Tax Credit 186
Sarah Hamersma

Chapter 8 Living Wages, Minimum Wages,

and Low-Wage Workers 215
Stephanie Luce

Part IV Social Insurance Programs and

Low-Wage Work 245

Chapter 9 Improving Low-Income Workers’

Access to Unemployment Insurance 247
Jeffrey B. Wenger

Chapter 10 Can the Affordable Care Act Reverse

Three Decades of Declining Health
Insurance Coverage for Low-Wage
Workers? 273
John Schmitt

Chapter 11 Low-Wage Workers and Paid Family

Leave: The California Experience 305
Ruth Milkman and Eileen Appelbaum

Index 329
-1
0
+1

13502-00_FM-4thPgs.indd 6 12/10/13 8:32 AM

 Tables and Figures

Table I.1 Top Ten U.S. Occupations with a Median

Hourly Wage Below $12, 2012 3
Table I.2 Occupations with the Largest Projected
Job Growth with a Median Hourly Wage
Below $12, 2010 to 2020 4
Table 2.1 Eleven Innovative Non–Collective Bargaining
Labor Organizations 59
Table 3.1 Employment and Education Outcomes,
by Race and Gender, Among Less-Educated
Youth, 1979, 2007, and 2010 84
Table 3.2 Educational and Behavioral Outcomes of Youth,
2004 to 2005 86
Table 6.1 Replacement Hiring, 2010 to 2020 168
Table 6.2 Employees Receiving Employer-Provided
Training, 1995 and 2001 169
Table 7.1 Earned Income Tax Credit: Number of Recipients
and Amount of Credit, 1975 to 2009 191
Table 7.2 Work Opportunity Tax Credit and Welfare-to-Work
Certification Patterns, 1997 to 2008 195
Table 7.3 Earned Income Tax Credit Participation Rate
Estimates, 1990, 1999, and 2005 202
Table 7.4 Work Opportunity Tax Credit Participation
Rate Estimates, 1997, 1999, 2003, and 2007 204
Table 8.1 Union Density for Low-Wage Occupations, 2012 225
Table 8.2 Estimated Impact of New Living Wage Campaigns 237
Table 9.1 State-Level Earnings Requirements and Median
Wages, 2010 260
Table 9.2 States That Raised the Base Period Earnings
Requirement Faster Than the Median Wage, -1
1990 to 2010 263 0
+1
vii

13502-00_FM-4thPgs.indd 7 12/10/13 8:32 AM

 viii   Tables and Figures

Table 10A.1 Adjusted Health Insurance Coverage of Low-Wage

Workers, Age Eighteen to Sixty-Four, 1979 to 2010 288
Table 10A.2 Adjusted Health Insurance Coverage of Second-
Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010 290
Table 10A.3 Adjusted Health Insurance Coverage of Middle-
Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010 292
Table 10A.4 Adjusted Health Insurance Coverage of Fourth-
Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010 294
Table 10A.5 Adjusted Health Insurance Coverage of Top-
Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010 296
Table 11.1 Paid Family Leave Awareness Among Respondents
Who Voted in the Previous General Election,
2003 and 2011 313
Table 11.2 Knowledge of Paid Family Leave Program Details
Among Respondents Aware of PFL, by Job Quality,
2009 to 2010 314
Table 11.3 Wage Replacement During Family Leave, by Paid
Family Leave Use and Job Quality, 2009 to 2010 318
Table 11.4 Median Length of Family Leave (in Weeks),
by Gender, Leave Type, and Job Quality,
2009 to 2010 320
Table 11.5 Family Leave Effects on Caregiving Ability and
Health of Care Recipients, by Job Quality and
Use of Paid Family Leave, 2009 to 2010 324

Figure 2.1 Approval of Labor Unions Among Americans,

1936 to 2011 54
Figure 2.2 Americans’ Attitudes on the Influence of Labor
Unions, 2000 to 2012 55
Figure 2.3 Approval of Labor Unions, by Political Party,
1999 to 2011 56
Figure 2.4 Americans’ Attitudes on the Future Strength
of Labor Unions, 2000 to 2012 56
Figure 3.1 Effects of Adverse Labor Demand Shifts and
Labor Supply Response Among Less-Educated
Young Men 88
-1 Figure 6.1 A Typology of Intervention Strategies 167
0 Figure 7.1 Labor Market Effects of a Subsidy 187
+1

13502-00_FM-4thPgs.indd 8 12/10/13 8:32 AM

 Tables and Figures   ix

Figure 7.2 Federal Earned Income Tax Credit Benefits 189

Figure 7.3 Work Opportunity Tax Credit Benefit Structure 193
Figure 9.1 U.S. Total and Insured Unemployment, 1980 to 2011 248
Figure 9.2 UI Recipiency Rates (by Region), 2011 257
Figure 10.1 Health Insurance Among Workers Age Eighteen to
Sixty-Four, Own-Employer, by Wage Quintile,
1979 to 2010 276
Figure 10.2 Health Insurance Among Workers Age Eighteen to
Sixty-Four, Other Family Member’s Employer,
by Wage Quintile, 1979 to 2010 277
Figure 10.3 Health Insurance Among Workers Age Eighteen to
Sixty-Four, Other Private Insurance, by Wage
Quintile, 1979 to 2010 278
Figure 10.4 Health Insurance Among Workers Age Eighteen to
Sixty-Four, All Public Sources, by Wage Quintile,
1979 to 2010 279
Figure 10.5 Health Insurance Among Workers Age Eighteen to
Sixty-Four, Medicaid, by Wage Quintile, 1979 to 2010 279
Figure 10.6 No Health Insurance Among Workers Age
Eighteen to Sixty-Four, from Any Source,
by Wage Quintile, 1979 to 2010 280
Figure 10.7 No Health Insurance from Any Source,
by Race-Ethnicity, 1979 to 2010 281
Figure 11.1 Awareness of Paid Family Leave Among
Registered Voters in California, by Selected
Respondent Characteristics, September 2011 312
Figure 11.2 How Respondents Learned About Paid Family
Leave, 2009 to 2010 314
Figure 11.3 Reasons Cited by Selected Respondents Who
Were Aware of Paid Family Leave and Who Did
Not Apply for Paid Family Leave, 2009 to 2010 316
Figure 11.4 Wage Replacement During Family Leave Among
Workers in Low-Quality Jobs, by Use of Paid
Family Leave, 2009 to 2010 319
Figure 11.5 Workers Who Were “Very Satisfied” or “Somewhat
Satisfied” with Length of Family Leave, by Job
Quality and Use of Paid Family Leave, 2009 321
Figure 11.6 Workers Who Returned to Former Employer
After a Family Leave, by Job Quality and Use
of Paid Family Leave, 2009 322
-1
0
+1

13502-00_FM-4thPgs.indd 9 12/10/13 8:32 AM

-1
0
+1

13502-00_FM-4thPgs.indd 10 12/10/13 8:32 AM

 Contributors

Stephanie Luce is associate professor of labor studies at the Murphy

Institute, School of Professional Studies, CUNY.

Jennifer Luff is lecturer in the Department of History at Durham Univer-

sity in the United Kingdom.

Joseph A. McCartin is professor of history and director of the Kalmano-

vitz Initiative for Labor and the Working Poor at Georgetown University.

Ruth Milkman is professor of sociology at the City University of New

York Graduate Center and academic director of labor studies at CUNY’s
Murphy Institute.

Eileen Appelbaum is senior economist at the Center for Economic and

Policy Research and former director of the Center for Women and Work
at Rutgers University.

Peter B. Edelman is professor of law at the Georgetown University

Law Center and faculty director of the Georgetown Center on Poverty,
Inequality, and Public Policy.

Richard B. Freeman is the Ascherman Chair in Economics at Harvard

University and faculty codirector of the Labor and Worklife Program
at the Harvard Law School, as well as senior research fellow in labour
markets at the London School of Economics’ Centre for Economic Perfor-
mance and fellow of the American Academy of Arts and Science.

-1
0
+1
xi

13502-00_FM-4thPgs.indd 11 12/10/13 8:32 AM

 xii   Contributors

Jennifer Gordon is professor of law at Fordham University School

of Law.

Sarah Hamersma is assistant professor of public administration and

international affairs in the Maxwell School at Syracuse University.

Harry J. Holzer is professor of public policy at the Georgetown

Public Policy Institute and is institute fellow at the American Institutes
for Research.

Alice O’Connor is professor of history at the University of California,

Santa Barbara.

John Schmitt is senior economist at the Center for Economic and Policy
Research in Washington, D.C.

Paul Osterman is NTU Professor of Human Resources and Management

at the MIT Sloan School.

David Weil is professor of markets, public policy and law and Everett
W. Lord Distinguished Faculty Scholar at Boston University School of
Management, as well as codirector of the Transparency Policy Project at
Harvard’s Kennedy School of Government.

Jeffrey B. Wenger is assistant professor of public policy analysis at the

University of Georgia and NIH/NIA research fellow in the study of aging
at the RAND Corporation in Santa Monica, California.

-1
0
+1

13502-00_FM-4thPgs.indd 12 12/10/13 8:32 AM

 Introduction

Stephanie Luce, Jennifer Luff,

Joseph A. McCartin, and Ruth Milkman

The other America, the America of poverty, is hidden today in a way that it never
was before. Its millions are socially invisible to the rest of us.
—Michael Harrington, 1962

Half a century ago, in his best-selling book The Other America, Michael
Harrington awakened the nation to the persistence of grinding pov-
erty alongside its unprecedented postwar affluence. Harrington revealed
an “economic underworld” in urban tenements and remote Appalachian
towns, populated largely by the aged, the unemployed, and racial minori-
ties. Chronic unemployment, inadequate housing, racial discrimination,
a thin social safety net, and a culture of hopelessness were characteris-
tic features of this “other America.” Harrington’s book helped persuade the
federal government to launch the War on Poverty by creating new federal
programs like Medicaid, Medicare, and Head Start, institutionalizing what
was then a pilot food stamp program, and launching a massive expansion of
housing assistance and job training programs.
In Harrington’s America, poverty was strongly associated with un-­
employment, apart from workers in occupations excluded from fed-
eral minimum wage laws and collective bargaining protections, such as
farmworkers and domestic workers, or in a few other industries with
dirty and dangerous poorly paid jobs, such as mining. African Ameri-
can workers were highly concentrated in these fields. But in 1962, when
The Other America appeared, unemployment accounted for a far more
significant share of poverty. Harrington (1962/1993, 37) highlighted the
plight of “old and obsolete workers who are over forty, the married and
family men at the wrong place in the economy, the ones with no skill or
the wrong skill,” who had been shut out of the labor market entirely. The
primary problem for them was not low pay or bad working conditions, -1
but not working at all. 0
+1
1

13502-01_Introduction-3rdPgs.indd 1 12/10/13 8:32 AM

 2    What Works for Workers?

Two decades later, however, Harrington noticed a change. In the original

edition of The Other America, Harrington never used the phrase “working
poor.” But in his afterword to the 1981 edition, entitled “Poverty and the
Eighties,” he pointed out that nearly half of all families below the poverty
line in 1976 had an employed head of household. “Obviously, these are peo-
ple with low-paying jobs,” Harrington (1962/1993, 219) wrote, “perched just
above the poverty line.” The War on Poverty had made progress—albeit
halting and inadequate—toward improving the situation of the “other
America.” But by the early 1980s, Harrington hinted, a new problem was
growing: the problem of employment that did not eradicate poverty but
rather perpetuated it.
Since then, the ranks of the “working poor” have continued to expand.
While poverty persists among the populations that Harrington identified
fifty years ago—the aged, rural dwellers, and the chronically unemployed—
employed workers account for a large and growing share of those living
below the official poverty line. Since the mid-1970s, a dramatic polarization
of the U.S. labor market has generated many jobs in high-wage, high-skill
occupations, but far more in low-wage, low-skill fields (Kalleberg 2011). In
the same period, wages, working conditions, benefits, and social supports
have steadily deteriorated at the bottom of the labor market, well before
the Great Recession of 2007 to 2009 added double-digit unemployment
to the increasingly dismal picture. By 2011, as the economy struggled to
recover from that crisis, more than one-fourth (28 percent) of the U.S. labor
force earned poverty-level wages (Mishel et al. 2012).
The proliferation of the twenty-first-century “working poor” is the
result of developments that had already begun when Harrington’s book
appeared in 1962, including deindustrialization and technological change,
de-unionization, and deregulation. The relentless offshoring of manufac-
turing, which dates back to the 1950s but accelerated in the late 1970s and
1980s, has eliminated most of the high-wage factory jobs that were the bul-
wark of midcentury American prosperity. In addition, the proliferation of
computer-based technology has automated many of the data management
and record-keeping functions that once provided reasonably paid employ-
ment for secretaries, bookkeepers, and other office workers and has also
mechanized many jobs in those factories that remain inside the United
States (Autor 2010).
Today’s working poor are heavily concentrated in the service sector. A
worker would need to earn $23,492 a year, or $12 an hour, to meet the 2012
poverty threshold for a family of four.1 The U.S. Bureau of Labor Statistics
(BLS) Occupational Employment Statistics (OES) show ninety-five occu-
-1 pations with a median hourly wage below $12, accounting for 38 million
0 workers, or nearly 30 percent of total employment. Table I.1 shows the ten
+1

13502-01_Introduction-3rdPgs.indd 2 12/10/13 8:32 AM

 Introduction   3

Table I.1  Top Ten U.S. Occupations with a Median Hourly Wage

Below $12, 2012
Occupational Title Total Employment
Retail salespersons 4,340,000
Cashiers 3,314,010
Combined food preparation and serving workers, including 2,943,810
fast food
Waiters and waitresses 2,332,020
Laborers and freight, stock, and material movers, hand 2,143,940
Janitors and cleaners, except maids and housekeepers 2,097,380
Stock clerks and order fillers 1,806,310
Nursing assistants 1,420,020
Security guards 1,046,420
Cooks, restaurant 1,000,710
Total 22,444,620
All occupations 130,287,780
Percent of Total 17.2%
Source: Authors’ calculations based on data from the U.S. Department of Labor, U.S. Bureau
of Labor Statistics (2012a).

largest low-wage occupations, which account for over 22 million workers,

or 17.2 percent of the total. These occupations are primarily in the retail
and restaurant industries. (Of course, not all workers in these occupations
earn less than $12 per hour; exactly half of them do).2
Data on new job growth are fairly similar, as table I.2 shows. Twelve of
the thirty occupations that the U.S. Bureau of Labor Statistics expects to grow
most through 2020 have a median wage below $12 per hour, accounting for
about 4.4 million jobs. Taken together, the data in these two tables suggest
that certain occupations must be targeted by policies aiming to improve the
circumstances of a significant number of low-wage workers. Those key occu-
pations include retail sales, food preparation, waitstaff, home health aides,
personal care aides, and cashiers.
The decline of U.S. labor unions, which reached their membership peak
in the 1950s, when they covered about one-third of the private-sector labor
force, also contributed greatly to the erosion of pay and working condi-
tions, especially for non-college-educated workers. In the midtwentieth
century, strong unions set wage floors and enforced labor standards for
their members and indirectly helped improve pay and conditions for non- -1
union workers as well. The systematic erosion of federal protections for 0
+1

13502-01_Introduction-3rdPgs.indd 3 12/10/13 8:32 AM

 4    What Works for Workers?

Table I.2  Occupations with the Largest Projected Job Growth

with a Median Hourly Wage Below $12, 2010 to 2020
Employment
(In Thousands) Job
Growth Median
Occupation 2010 2020 (In Thousands) Wage
Retail salespersons 4,262 4,968 707 $10.15
Home health aides 1,018 1,724 706 10.01
Personal and home care aides 861 1,468 607 9.57
Combined food preparation 2,682 3,080 398 8.78
and serving workers,
including fast food
Laborers and freight, stock, 2,068 2,387 319 11.49
and material movers, hand
Nursing aides, orderlies, and 1,505 1,807 302 11.74
attendants
Child care workers 1,282 1,544 262 9.38
Cashiers 3,363 3,613 250 9.12
Janitors and cleaners, except 2,310 2,557 246 10.73
maids and housekeeping
cleaners
Landscaping and grounds­ 1,152 1,392 241 11.33
keeping workers
Waiters and waitresses 2,260 2,456 196 8.92
Security guards 1,036 1,231 195 11.52
Source: Authors’ calculations based on data from U.S. Department of Labor, U.S. Bureau of
Labor Statistics (2012b, 2012c).

collective bargaining and sustained resistance to unionization by employ-

ers throughout the private sector have contributed to a steep secular decline
in wages and fringe benefits across the economy. Loss of the union wage
premium—on average, approximately 13 percent—directly reduced the
incomes of workers who had previously enjoyed union contracts; simulta-
neously, union decline removed the indirect boost to non-union workers’
compensation. Defined-benefit pensions and employer-sponsored health
insurance, once standard features of unionized jobs, declined in tandem
with wages as deunionization swept across the economy. Whereas in the
past, unionization disproportionately benefited workers without college
degrees, the deunionization of recent years has disproportionately harmed
-1 them, turning many formerly sustainable jobs into precarious ones (Mishel
0 and Walters 2003).
+1

13502-01_Introduction-3rdPgs.indd 4 12/10/13 8:32 AM

 Introduction   5

Deregulation and the erosion of laws buttressing workplace standards

also contributed to the deterioration of working-class jobs. The federal
minimum wage is a case in point. Beginning in the late 1970s, Congress
failed to pass regular increases, and the legal minimum wage soon began
to lag behind increases in the cost of living. By 2012, the federal minimum
wage was $7.25 an hour, but had it kept pace with the Consumer Price
Index (CPI) since 1968 it would have been $10.52. Furthermore, if it had
increased at the same pace as worker productivity in the same period, the
minimum wage would have been $21.72 in 2012 (Schmitt 2012).
Whereas the War on Poverty, inspired in part by Harrington’s book,
included expanding the coverage of the Fair Labor Standards Act (FLSA),
which sets maximum working hours and overtime rules (as well as minimum
wages), in recent years the coverage and effectiveness of FLSA has declined.
In part this reflects the growing shift toward the employment of “indepen-
dent contractors,” including many workers who are improperly classified
as contractors. At the same time, the steady erosion of federal enforcement
capacity permitted the spread of outright violation of wage and hour laws,
with many employers simply not paying workers the wages legally due to
them. “Wage theft” is rampant in a variety of industries, from manufactur-
ing and residential construction to retail, restaurants, and personal services
(Bernhardt et al. 2009). In the past half-century, the gap separating workers
in the “affluent society” from Harrington’s immiserated poor has widened
dramatically.
Demographic shifts have intersected in a complex way with the rise of
the working poor. In the early 1960s, African American workers earned
on average less than 60 percent of what their white counterparts earned,
as Harrington (1993, 62) noted. By 2011, the gap had narrowed somewhat:
African American men’s median hourly wage was 74 percent of that of
their white counterparts, while for African Americans overall the figure
was 83 percent (Mishel et al. 2012). Yet these aggregate figures obscure an
internal polarization among African Americans: the growth of the black
middle class has widened earnings inequality between low-wage and
college-educated black workers, as in the U.S. labor force as a whole.
Moreover, deunionization disproportionately affected African Americans,
particularly females, who were overrepresented among private-sector
union members relative to their share of the labor force and thus suffered
disproportionate earnings losses as union density declined (Rosenfeld
and Kleykamp 2012).
Today African Americans continue to make up a large share of the work-
ing poor, but race is no longer as strong a proxy for poverty as it was in
Harrington’s time. He had remarkably little to say about the situation of -1
women workers or female poverty in 1962, but the changes that have taken 0
+1

13502-01_Introduction-3rdPgs.indd 5 12/10/13 8:32 AM

 6    What Works for Workers?

place for women workers in the past half-century have been even more dra-
matic than for African Americans. Owing in part to the growth of female
labor force participation and the reduction in job segregation by gender that
began in the 1970s, the overall gender gap in pay has been reduced over
the past fifty years, although, at 7.6 percent, a slightly greater proportion
of female than male workers were in the ranks of the working poor in 2010
(U.S. Department of Labor 2012a). Yet pay disparities between female col-
lege graduates and their less-educated counterparts have grown as well,
even as female college graduation rates have overtaken those of males. And
within many dual-earner households, the economic gains of female work-
ers over the past fifty years have been offset by the economic losses of male
workers (Autor 2010, 10–11).
The growth of the immigrant workforce complicates the story still fur-
ther. Harrington made little mention of foreign-born workers, apart from
a brief discussion of California farmworkers, because he was writing
during a period of sharp restriction of immigration to the United States.
That changed in 1965 when the passage of the Immigration and National-
ity Act (the Hart-Cellar Act) led to a massive increase in immigration to
the United States from Latin America, Asia, and Africa. Undocumented
immigration also surged, especially after the passage of the Immigration
Reform and Control Act (IRCA) in 1986. These changes in immigration
policy helped stimulate the growth of a vast new low-wage labor force, not
only in agriculture (where undocumented immigrants were initially con-
centrated after the end of the bracero program in 1964) but increasingly in
low-wage jobs throughout the economy. As U.S.-born workers abandoned
once-desirable jobs that had deteriorated as a result of deunionization and
other types of restructuring, many employers began hiring immigrants,
both those with legal status and the undocumented, who were even more
susceptible to minimum wage and other FLSA violations than other work-
ers. Although Latino immigrant workers often proved more willing than
many native-born workers to engage in labor protest and union orga-
nizing, the scale of such activity was limited (Milkman 2006). By 2010,
Latinos (including U.S.-born Latinos, immigrants with legal status and
the undocumented) were more likely than African Americans, whites, or
Asians to be among the working poor (U.S. Department of Labor 2012a).
At the same time, inequalities between Latinos with college degrees and
those with more limited education expanded, paralleling the situation of
African Americans.
For the U.S. population as a whole, income inequality has spiked dra-
matically since Harrington’s day. In 1968 the bottom 40 percent of U.S.
-1 households took home 15.3 percent of the nation’s total income; by 2010
0 their share had fallen to only 11.8 percent. In sharp contrast, over the same
+1

13502-01_Introduction-3rdPgs.indd 6 12/10/13 8:32 AM

 Introduction   7

period the income share of the top 5 percent rose from 17.2 to 21.3 percent.3
The nation’s poverty rate has soared to a level higher than that in any other
OECD country (Mishel et al. 2012). The “other America” of the twenty-first
century is different in some respects from what Harrington described half
a century ago, and the modest progress that followed the reception of his
book has been sharply reversed in recent decades.
Although there is extensive documentation of the ways in which the
economic playing field has tilted to increasingly disadvantage low-wage
workers, their plight has received limited attention from elected offi-
cials. If their rhetoric is any indication, Democrats and Republicans alike
believe that the creation of “jobs, jobs, jobs” must be the top priority of
national economic policy, with little or no attention to job quality. Each
major political party touts its job-creating credentials while blaming the
other party for destroying jobs. Republicans assert that the only legitimate
way to create new jobs is via the market and regularly deride public policy
interventions, from the Patient Protection and Affordable Care Act of 2010
to the minimum wage, as “job killers.”
Democrats all too often fail to challenge the logic of this approach or to
promote a theoretically coherent program of their own. As a result, their
policies are often haphazard in relation to job creation and job quality. For
example, during the Clinton administration, millions of jobs were gener-
ated in what was then labeled “the great American jobs machine”—in con-
trast to Europe. However, the new jobs were disproportionately low-wage
jobs, to a much greater extent than in an otherwise comparable period
of job growth in the 1960s (Wright and Dwyer 2003). In addition, both the
Clinton and Obama administrations have promoted free trade agreements
as a solution to job creation, despite research that shows the deleteri-
ous impact of free trade on jobs, and in particular on the non-college-
educated workers who are increasingly overrepresented among the working
poor. Economist Laurie Kletzer (2004) found that 21 percent of workers
displaced from manufacturing jobs in the 1990s were high school drop-
outs and that they were more likely than other displaced workers to be
from racial minority groups.
Instead of promoting a comprehensive jobs program, Democrats have
more often sought to gain short-term political advantages over their oppo-
nents on the jobs issue. They have directed their energies toward criticizing
the policy failures of Republicans, accusing them of aiding and abetting
the corporations and private equity firms that profit by laying off workers
and shipping jobs overseas, while portraying the Democratic Party as the
champion of the middle class. As a result, neither side has focused public
attention on the quality of the jobs created in the U.S. economy or fought for -1
a comprehensive set of policies addressing the needs of low-wage workers. 0
+1

13502-01_Introduction-3rdPgs.indd 7 12/10/13 8:32 AM

 8    What Works for Workers?

If the working poor have been ignored by mainstream politicians, the

Great Recession, the Occupy Wall Street movement, and a wave of grass-
roots labor protests have increasingly attracted public and media attention
to the issues of poverty and low-wage work, creating new opportunities
for those who are concerned about the fate of the working poor. However,
the substantial research literature that has recently documented the expe-
riences of low-wage workers has also all too often ignored the arena of
public policy interventions. Nor have recent political debates shed much
light on the ways in which public policies interface with or help to shape
the situation of low-wage workers. This is unfortunate, for just as previ-
ous public policies helped to create and reproduce the nation’s burgeon-
ing low-wage job market, a new set of policy interventions could improve
the lot of the nation’s most exploited and insecure wage-earners. Thus, the
time is ripe for a renewed discussion of the policy options—and specifi-
cally about policies that can work for low-wage workers.
By contrast, on the ground there has been a burst of experimentation in
recent years with innovative interventions and strategies that address the
rapid growth of low-wage work. They range from traditional approaches
like raising the minimum wage and fostering unionization, to invest-
ments in primary and secondary education and job training, to more
innovative “living wage” laws and efforts to leverage and secure effec-
tive enforcement of labor and employment standards in existing law.
Yet systematic empirical analysis of the efficacy of these various efforts
has been limited.
Which policy approaches are most effective, and under what condi-
tions have they succeeded? What is the impact of each approach on the
most vulnerable populations, such as low-wage immigrants and African
Americans? What elements of these efforts might contribute most to a
reformulated national approach to the problems facing the working poor?
Developing answers to questions like these is essential if we are ever to get
beyond the current political polarization and renew the nation’s commit-
ment to ensuring that work provides social and economic security.
The Murphy Institute for Worker Education and Labor Studies of the
City University of New York and the Kalmanovitz Initiative for Labor
and the Working Poor of Georgetown University collaborated on a con-
ference, organized by this volume’s editors and held at Georgetown in
February 2012, to examine public policy interventions and their impact
on low-wage workers. Designed with the goal of “bringing the state back
in,” the conference featured leading academic researchers in a range of
fields, including economics, sociology, history, and law, and put them in
-1 a sustained dialogue with practitioners, including government officials,
0 advocates, and organizers, who brought their own experiences and obser-
+1

13502-01_Introduction-3rdPgs.indd 8 12/10/13 8:32 AM

 Introduction   9

vations to the table. The essays in this volume reflect the dialogue that
took place at the conference.
The conference participants—scholars and practitioners alike—were
all aligned with one of Harrington’s essential insights: public policy is
consequential, and a crucial resource in the fight against poverty. Each
chapter in this volume has a different angle, but they all start from that
perspective. Part I, “Low-Wage Work in Historical Perspective,” describes
the origins of public policy for low-wage workers and the recent trans-
formations that underlie current conditions. Alice O’Connor’s chapter,
“An Economy That Works for Workers,” opens the volume with an anal-
ysis that historicizes the assumptions and politics behind today’s social
policies. She embeds her analysis in the context of the broader political
economy, illuminating just how narrow contemporary debates about low-
wage work have become. O’Connor examines key developments in social
provision for low-income workers in relation to broader shifts in eco-
nomic policy and reform politics since the late 1960s, showing how New
Deal norms of economic citizenship were eroded by a radically altered
public policy atmosphere in which the assumptions of free-market indi-
vidualism increasingly predominated. Through this approach, she high-
lights the historical transformations in politics and political economy that
have undermined both the material living standards and the longer-range
social and political prospects of low-wage workers and the U.S. working
class. O’Connor argues that any efforts to advance the interests of low-
wage workers are inextricably tied to the pursuit of “fairness, freedom,
and political as well as economic democracy” and must therefore begin
not with menus of specific policy options but rather with a staking out of
the “moral high ground of American democracy.”
The next chapter, “What Can Labor Organizations Do for U.S. Workers
When Unions Can’t Do What Unions Used to Do?” by Richard Freeman,
explores in detail one of the primary causes of increased working poverty:
the decline of unions. Reframing a question that he and James Medoff (1984)
famously asked three decades ago in their classic study What Do Unions Do?
Freeman begins by acknowledging that most experts no longer believe that
unions can do much for low-wage workers at this historical juncture. How-
ever, he then goes on to contest this conventional wisdom, arguing that the
surprisingly energetic mobilization of public-sector unions against legislative
efforts to eliminate the right to bargain collectively and the emergence
of new opportunities for dissidents to use the Internet and social media
to galvanize citizens for change have created an opening for a possible
union resurgence. Nevertheless, he suggests, any such resurgence will
require unions to move beyond traditional collective bargaining and col- -1
laborate with other community actors, while using the new social media 0
+1

13502-01_Introduction-3rdPgs.indd 9 12/10/13 8:32 AM

 10    What Works for Workers?

to obtain and disseminate information. In this way, organized labor could

help organize workers and citizens on a broader basis and break out of the
narrow channels to which it has recently been confined.
Part II, “Workers on the Edge: Marginalized and Disadvantaged,”
exposes the challenges faced by workers who are especially disadvantaged
in the twenty-first-century U.S. labor market: young workers, especially
those of color; immigrants; and employees whose labor is subcontracted.
These chapters point to the disparities between the existing policy regime
and the current structure of the workplace and workforce. Chapter 3, Peter
Edelman and Harry Holzer’s essay “Connecting the Disconnected: Improv-
ing Education and Employment Outcomes Among Disadvantaged Youth,”
examines a key population that has chronically suffered over the last three
decades and was hit hardest by the Great Recession. Edelman and Holzer
survey a range of efforts to improve education and employment outcomes
among disadvantaged youth, especially young black men, and they argue
that programs that offer a combination of skill development and paid work
experience, those that incentivize employment by “making work pay,” and
those that target the most troubled groups, such as ex-offenders, have often
shown strong results at improving employment outcomes for these youth.
In chapter 4, “Mending the Fissured Workplace,” David Weil argues
that the nation’s increasingly anachronistic workplace policies are in
urgent need of revision. Since the New Deal era, he points out, U.S. work-
place policies have been primarily designed around an employment model
that presumes a relationship between stable, long-term workers who labor
for large firms in markets where competition is limited. That model no
longer corresponds to labor market realities: employment has increasingly
shifted to smaller business units that seek a more flexible relationship with
their workers. These new units typically operate in far more competitive
markets than the large-scale firms of the past, and the quality of the jobs
they offer tends to be poorer. Employers in this sector have often failed to
comply with existing labor regulations, and Weil suggests several ways to
address that problem. Drawing on recent innovations in labor standards
and health and safety enforcement, he explores policies that can harness
existing enforcement tools in new ways, focusing regulatory pressure at
higher levels of subcontracting chains to tackle the structures that often
drive noncompliance in low-wage jobs.
In chapter 5, “Holding the Line on Workplace Standards: What Works
for Immigrant Workers (and What Doesn’t)?,” Jennifer Gordon focuses on
the impact of immigration law and highlights the situation of low-wage
immigrant workers. She points out that U.S. immigration law and policy
-1 are often very different in theoryand in practice. Although in theory immi-
0 grants have the same rights as other workers, she explains, actual immigra-
+1 tion enforcement has had largely negative effects on foreign-born workers.

13502-01_Introduction-3rdPgs.indd 10 12/10/13 8:32 AM

 Introduction   11

Gordon sketches the evolution of current policy since the passage of IRCA
in 1986, focusing on the failure of employer sanctions and later of efforts
to achieve comprehensive immigration reform. She documents the ways
in which immigrant workers have organized effectively nonetheless, with
the help of worker centers and community-based organizations as well as
unions. Comparing the U.S. experience to that of the United Kingdom and
the European Union, she argues that ensuring the free mobility of immi-
grants across borders, though a necessary policy goal, would be insufficient
by itself to address the problem facing low-wage immigrant workers. She
calls instead for innovative government enforcement of labor standards
as well as fuller collaboration among unions, community groups, worker
centers, and government agencies to transform low-wage immigrants’
theoretical rights into reality on the ground.
What about existing labor market policy interventions? In part III, the
volume turns to assessments of the efficacy of three key programs. In the
chapter entitled “Career Ladders in the Low-Wage Labor Market,” Paul
Osterman examines the role of job training and career ladders in improving
the quality of work in low-wage settings. Drawing on his own fieldwork as
well as previously published accounts, he assesses the effectiveness of train-
ing programs administered by unions, business associations, nonprofits,
and community groups. In addition, he examines the crucial and in some
respects untapped role of community colleges in helping workers move up
career ladders. Osterman argues that the available evidence demonstrates
the effectiveness of career ladder programs in reducing the extent of low-
wage employment, suggesting that this is one key tool to help workers climb
out of low-wage employment. What is lacking, he suggests, is an adequate
level of commitment to such training programs from employers, political
leaders, and policymakers.
In chapter 7, “Employment Subsidies to Firms and Workers,” Sarah
Hamersma compares the differential impact on labor markets of two
types of tax subsidies, one aimed at employers (the Work Opportunity
Tax Credit) and the other at workers (the Earned Income Tax Credit).
Both programs have low administrative costs and offer the promise
of increased employment and income for low-wage workers, but as
Hamersma points out, they operate in fundamentally different ways, pro-
ducing vastly different participation patterns and employment outcomes.
The WOTC firm subsidy operates at lower costs, but also furnishes far
fewer credits and has a minimal impact on employment; by contrast, the
more expensive EITC delivers a far greater impact. Hamersma’s findings
highlight the effectiveness of the EITC, in spite of its increasing costs, in
protecting low-wage workers. -1
In her chapter “Living Wages, Minimum Wages, and Low-Wage Work- 0
ers,” Stephanie Luce offers a review of the literature on minimum wage +1

13502-01_Introduction-3rdPgs.indd 11 12/10/13 8:32 AM

 12    What Works for Workers?

policy, showing how economists have slowly improved their research tech-
niques and changed their assessment. Whereas the dominant view a few
decades ago was that raising minimum wages leads to job loss, more recent
research finds that this negative prediction does not hold in practice. Raising
the minimum wage can help large numbers of low-wage workers, although
the raises are mostly small and do not lift a worker above poverty. In that
context, Luce offers a candid assessment of one of the most prominent
forms of worker-oriented public policy activism to have emerged in recent
decades. Living wage ordinances have been enacted in over 125 cities and
counties around the country since Baltimore passed the first one in 1994. The
goals of living wage campaigns have included forging coalitions that build
political power, influencing public debate on wages and economic develop-
ment, laying the groundwork for new union organizing, and strengthening
unions’ bargaining power. The impact of living wage laws on directly rais-
ing the incomes of low-wage workers has been difficult to measure, how-
ever, because, as Luce points out, enforcement is often lax. Nonetheless, her
research dispels the myth that living wage laws primarily cover teenagers as
well as the myth that their enactment has a negative impact on workers at the
bottom of the labor market by encouraging employers to replace them with
more skilled workers. In documenting the ways in which living wage ordi-
nances have helped workers, Luce points out that, unlike minimum wage
laws, they cover only a tiny portion of the nation’s low-wage workforce.
Finally, part IV looks at “Social Insurance Programs and Low-Wage Work.”
Jeffrey B. Wenger’s chapter, “Improving Low-Income Workers’ Access to
Unemployment Insurance,” examines the U.S. unemployment insurance
(UI) system in the context of changes in work organization, the increased
presence of women in the workplace, and growing concern regarding care-
giving and the issues associated with sick leave and family leave. Over time,
he argues, the UI system has become less effective in meeting the needs of
workers. Fewer than half of the nation’s unemployed have applied for bene-
fits in recent years, and denied claims are on the rise. Wenger explores states’
efforts to raise earnings requirements and erect other barriers to UI eligibility
while simultaneously reducing benefits, linking those shifts to the decline in
the use of UI by low-wage workers. He calls on the federal government to
require that states maintain adequate UI reserves and raise the taxable base
of income that funds the program, and also to set limits on the mechanisms
that states use to disqualify workers from receiving benefits.
Chapter 10, “Can the Affordable Care Act Reverse Three Decades of
Declining Health Insurance Coverage for Low-Wage Workers?” looks
closely at the crucial and contentious area of health insurance. Using Cur-
-1 rent Population Survey (CPS) data, John Schmitt reviews trends in health-
0 insurance coverage rates for low-wage workers over time, highlighting the
+1

13502-01_Introduction-3rdPgs.indd 12 12/10/13 8:32 AM

 Introduction   13

dramatic increase in the proportion of low-wage workers who lack coverage,

a figure that had reached 38 percent by 2010, primarily owing to the steady
decline of employer-provided health insurance. Although public insurance
coverage for low-wage workers has expanded, the increase has been insuf-
ficient to offset the decline in private insurance. The evidence suggests that
the Affordable Care Act could have a substantial positive effect on health
insurance coverage rates for low-wage workers, although it does not offer a
comprehensive solution to the nation’s health care crisis.
Ruth Milkman and Eileen Appelbaum conclude the volume with their
chapter on California’s pioneering paid family leave program, which began
operating in 2004. It was designed especially to benefit low-wage workers,
who seldom have access to employer-provided wage replacement when
they need to take time off to care for a new child or a seriously ill family
member. California was the first state to develop a paid leave program,
and Milkman and Appelbaum collected data on its effectiveness through
original surveys of employers and workers. Their chapter analyzes the gap
between the promise and the reality of this innovative program, focusing
particularly on the needs of low-wage workers.

The chapters collected in this volume address a broad range of specific

topics, but taken together they highlight some themes that merit further
attention. First, the fluidity of labor markets and “flexible” work can pose
methodological challenges; policymakers and scholars, for instance, do not
have a consensus definition of what counts as “low-wage work” or agree-
ment on what the primary target of public policy should be. None of the
policies discussed here operate in isolation from the others, and low-wage
workers may move through different types of policies over time—moving,
for example, from job training and gaining access to jobs at one point, to
surviving periods of unemployment and underemployment at another.
Second, much of this research shows that public policy is effective only
if it is properly enforced. The policy examples analyzed in this volume
are often complex and may even require multiple agencies to implement.
Workers are not always educated about their rights or about the existence
of programs that could benefit them. Policy guidelines are often revised
and rewritten in the course of the legislative process. Advocates must not
abandon their efforts when a law is passed but must continue to monitor
its implementation to ensure the best outcomes for meeting the initial
policy goal.
Third, none of the policies analyzed here offers a panacea. Each benefits
some group of workers, but each has limitations. To be effective, a new
“war on poverty” would have to develop a comprehensive framework -1
defining how each of these policies can best be used and how each inter- 0
+1

13502-01_Introduction-3rdPgs.indd 13 12/10/13 8:32 AM

 14    What Works for Workers?

sects with other interventions such as unionization, education, and civic

and political engagement.
Taken together, these contributions echo the central point that Michael
Harrington advanced so eloquently decades ago. Although these authors
show how complex and deeply entrenched the structures of poverty are
for low-wage workers today, their analyses also remind us that these struc-
tures are not immutable. To the contrary, the structural developments that
have worsened the plight of low-wage workers in recent years reflect the
policy choices of men and women. It follows that different policy choices
could meet Harrington’s challenge and build a different kind of political
economy that genuinely works for its workers.

Notes
1. This assumes that an individual is working forty hours a week for fifty weeks
a year (with two weeks of unpaid leave).
2. In twelve occupations in the 2012 OES—including “combined food preparation”
and “cashiers”—the seventy-fifty percentile wage is less than $10.64 an hour.
Those earning this wage make up about 7 percent of all workers.
3. For census data on household income, see U.S. Census Bureau, “Table H-2: Share
of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All
Races, 1967 to 2010,” Current Population Survey, Annual Social and Economic Supple-
ments, available at: http://www.census.gov/hhes/www/income/data/historical/
household/2010/H02AR_2010.xls.

References
Autor, David. 2010. “The Polarization of Job Opportunities in the U.S. Labor Mar-
ket: Implications for Employment and Earnings.” Washington, D.C.: Center for
American Progress (April).
Bernhardt, Annette, Ruth Milkman, Nik Theodore, Douglas Heckathorn, Mirabai
Auer, James DeFilippis, Ana Luz Gonzalez, Victor Narro, Jason Perelshteyn, Di-
ana Polson, and Michael Spiller. 2009. Broken Laws, Unprotected Workers: Viola-
tions of Employment and Labor Laws in America’s Cities. Available at: http://www.
nelp.org/page/-/brokenlaws/BrokenLawsReport2009.pdf?nocdn=1 (ac­ces­­sed
September 2013).
Freeman, Richard B., and James L. Medoff. 1984. What Do Unions Do? New York:
Basic Books.
Harrington, Michael. 1993. The Other America. New York: Simon & Schuster. (Orig-
inally published in 1962.)
-1 Kalleberg, Arne. 2011. Good Jobs, Bad Jobs: The Rise of Polarized and Precarious
0 Employment Systems in the United States, 1970s to 2000s. New York: Russell
+1 Sage Foundation.

13502-01_Introduction-3rdPgs.indd 14 12/10/13 8:32 AM

 Introduction   15

Kletzer, Laurie. 2004. “Trade-Related Job Loss and Wage Insurance: A Synthetic
Review.” Review of International Economics 12(5): 724–48.
Milkman, Ruth. 2006. L.A. Story: Immigrant Workers and the Future of the U.S. Labor
Movement. New York: Russell Sage Foundation.
Mishel, Lawrence, Josh Bivens, Elise Gould, and Heidi Shierholz. 2012. The State of
Working America, 12th ed. Ithaca, N.Y.: Cornell University Press.
Mishel, Lawrence, and Matthew Walters. 2003. “How Unions Help All Workers.”
Briefing paper no. 143. Washington, D.C.: Economic Policy Institute. Available
at: http://www.epi.org/publication/briefingpapers_bp143 (ac­ces­­sed September
2013).
Rosenfeld, Jake, and Meredith Kleykamp. 2012. “Organized Labor and Racial Wage
Inequality in the United States.” American Journal of Sociology 117 (5, March):
1460–1502.
Schmitt, John. 2012. “The Minimum Wage Is Too Damn Low.” Issue brief. Wash-
ington, D.C.: Center for Economic and Policy Research (March).
U.S. Department of Labor. U.S. Bureau of Labor Statistics. 2012a. “A Profile of
the Working Poor, 2010.” Report 1035. Washington: U.S. Department of Labor
(March).
———. 2012b. “May 2012 National Occupational Employment and Wage Estimates.”
Washington: U.S. Department of Labor. Available at: http://www.bls.gov/oes/
(accessed July 2013).
———. 2012c. “Employment Projections: 2010–2020 Summary.” Washington: U.S.
Department of Labor. Available at: http://www.bls.gov/news.release/ecopro.
nr0.htm (accessed September 13, 2013).
Wright, Erik Olin, and Rachel Dwyer. 2003. “The Patterns of Job Expansions in
the USA: A Comparison of the 1960s and 1990s.” Socio-Economic Review 1(3):
289–325.

-1
0
+1

13502-01_Introduction-3rdPgs.indd 15 12/10/13 8:32 AM

-1
0
+1

13502-01_Introduction-3rdPgs.indd 16 12/10/13 8:32 AM

 Part I L ow-Wage Work in Historical
Perspective

-1
0
+1

13502-02_CH01-2ndPgs.indd 17 12/10/13 8:32 AM

-1
0
+1

13502-02_CH01-2ndPgs.indd 18 12/10/13 8:32 AM

 Chapter 1  n Economy That Works
A
for Workers

Alice O’Connor

For the past three decades, the problem of low-wage work has become
a central preoccupation among poverty analysts and advocates. While
it would be an exaggeration to say they have coalesced around a uni-
fied policy agenda, collectively they have produced an impressive body
of knowledge about the deteriorating prospects for low-wage workers in
our New Gilded Age economy (see, for example, Danziger and Gottschalk
1995; Ehrenreich 2001; Freeman 2007; Greenhouse 2008; Handler and
White 1999; Holzer and Nightingale 2007; Munger 2002). As subsequent
chapters in this volume show, they also point us to a variety of strategies
to empower low-wage workers or otherwise “make work pay” through
tax subsidies and other targeted policy interventions, unionization and
living wage campaigns, education and training programs, and employee
profit-sharing plans.
As most people involved in this work would acknowledge, however,
such strategies can only do so much in the face of the seemingly relent-
less long-range trends—rising income and wealth inequality, declining
unionization rates, the global outsourcing of once-better-paying jobs,
and now the vastly unequal fallout from the Great Recession—that keep
workers from getting a stable foothold in the economy, let alone getting
ahead. What workers really need is an economy that is not so steeply
stacked against them—one that certainly would look very different from
the deeply inequitable and otherwise undemocratic version of capitalism
that prevails in the United States today. A discussion about what works
for workers, then, must situate strategies to improve the conditions of
low-wage workers within a broader strategy of political economic and -1
social policy reform. 0
+1
19

13502-02_CH01-2ndPgs.indd 19 12/10/13 8:33 AM

 20    What Works for Workers?

In this chapter, I provide some historical grounding for that discussion by

examining trends in social policy since the late 1960s, when federal policy­
makers first began to focus on the needs of a group that would only later
be commonly referred to as the “working poor.” At the time that group
consisted largely of workers who had been left out of the rights and pro-
tections of the New Deal social contract, through racially stratified occupa-
tional exemptions among other means; the task of social policy, as liberal
and progressive advocates saw it, was to break down or otherwise reform
restrictive provisions to make a New Deal for all. Since then, the “working
poor” has come to include growing numbers of workers in covered occu-
pations who are nevertheless experiencing deteriorating wage and labor
standards, alongside increasingly diminished sources of social support.
These trends signal the erosion of the New Deal social contract itself.
My discussion focuses on income support and housing, tracing policy
measures that have figured prominently in efforts to improve low-wage
workers’ living conditions and that are historically significant for other rea-
sons as well. One reason is that these measures reflect the more general—
and growing—tendency in social policy to target individuals and families
for compensatory assistance rather than intervening directly to improve,
regulate, or prevent the deterioration of market standards and conditions:
they deal with the problem of low-wage work by providing relief rather
than structural reform, as a problem of inadequate income and assets
rather than of labor and employment more broadly conceived. The other is
that viewing income and housing policies in tandem underscores the critical
importance of a whole host of non-employment social welfare provisions—
including subsidies for homeownership—to the well-being of the compara-
tively privileged segments of the postwar working class and to the relative
disadvantage of racially disenfranchised middle- and working-class minor-
ities. Such provisions, and the disparities they generated, would only grow
in importance amid post-1970s wage declines. The juxtaposition of income
and housing policies also underscores the critical importance of more recent
ideological shifts in social politics as social policy has come over the past
three decades to focus more heavily on individual ownership rather than on
wage-earning as the gateway to economic citizenship. Taken together, then,
historical developments in income and housing policy offer insights into
the much diminished policy environment facing low-wage workers—past,
present, and future—as a consequence of the late-twentieth-century shift in
economic policy and reform politics from its moorings in New Deal norms
of full employment, wage-earner rights, and collective social provision to
a regime built around debt-financed growth, private property ownership,
-1 and a public philosophy of free market individualism. In drawing atten-
0 tion to the impact of this broader shift, I aim to expand the focus of policy
+1

13502-02_CH01-2ndPgs.indd 20 12/10/13 8:33 AM

 An Economy That Works for Workers    21

agenda-setting for low-wage workers to include the political and economic

transformations that have been undermining both the immediate material
living standards and the longer-range social and political prospects of the
American working class.
Foremost among these transformations has been the global restructuring
of capitalism through government and corporate strategies of globalization,
deregulation, financialization, and deunionization that have left American
workers more exposed to wage-lowering competition from global labor mar-
kets as well as to the labor-reducing logic of maximum shareholder value.
The fortunes of workers have similarly been undermined by a fundamental
shift in American political economy away from its Keynesian commitment
to high (if not full) employment, fiscally managed growth, mass purchasing
power, and a moderately redistributive welfare state and toward variants
of the neoliberal or “free market” economics popularized by economist Mil-
ton Friedman (among others), with its emphasis on deregulation, limited
government, low taxation, monetarist inflation-fighting, and the “trickle-
down” benefits of privately accumulated wealth. Changes in the tax code
have only reinforced the shift in priorities from wage-earning to wealth,
while contributing to a shocking degree of income and wealth concentra-
tion at the very top. As reported in a recent Congressional Research Service
(CRS) study, reductions in capital gains and dividend income tax rates since
2001 have only exacerbated the already steepening rise in inequality, while
the overall tax code has continued to grow less progressive in its impact,
as well as in its design.1 The bottom fifth have actually paid more of their
income in taxes since the “end of welfare” in 1996, principally reflecting
the impact of the admittedly regressive payroll tax (Hungerford 2011, 4;
see also Mishel, Bernstein, and Shierholz 2009). More recently, wages have
reached historic lows as a share of national income as corporate profits have
reached record highs (Aron-Dine and Shapiro 2006).
U.S. social policy has also been significantly transformed since the 1970s
as a restructuring and repurposing has left most Americans more insecure
and vulnerable to risk and a substantial proportion of the low-wage work-
force subject to the discipline of the carceral state as well as to the harsh
rules of a deregulated labor market. In the name of promoting marriage
and “personal responsibility,” discouraging “dependence,” and ending the
“era of big government,” public assistance has been cut back, time-limited,
devolved to the state and local levels, and, for working-age people, made
contingent on participation in the paid labor force and compliance with
a host of behavioral rules (Katz 2001). Wage-earning, though a necessity
for more and more people, has actually been devalued in social policy as
institutional supports such as the minimum wage, job training, employer- -1
provided health and pension benefits, and fair labor standards have given 0
+1

13502-02_CH01-2ndPgs.indd 21 12/10/13 8:33 AM

 22    What Works for Workers?

way to a reliance on more targeted, individualized, and “hidden” subsidies

provided to low-wage workers—and indirectly to low-wage employers—
through the tax code. While insisting that more and more people should
become “self-sufficient” and provide for their own needs through savings,
investment, and participation in the paid labor force, social policy has
actually undermined their capacity to do so by accommodating the transi-
tion to an economy in which lower wages, fewer benefits, and generally
degraded working conditions are accepted as the “new normal.” As other
sources of income support have declined, the Earned Income Tax Credit
has become the single most important source of public assistance for low-
income working-class families and, at significant points, has increased in
value. At the same time, as a benefit that has been used as an alternative to
higher wages, its growth and its bipartisan popularity signal a structural
shift in social policy toward heavier reliance on tax expenditures of all sorts
that works far more to the advantage of the affluent than the poor (Katz
2001, 294–98; see also Howard 1997; Mettler 2011).
Meantime, buoyed by the irrational exuberance that fueled credit mar-
ket expansion, social provision became increasingly financialized in the
1990s and 2000s. There was growing emphasis in both official and non-
governmental organization policy circles on a variety of “ownership” and
“asset-building” initiatives that hinged on access to deregulated and highly
speculative credit markets—turning the wages, the savings, and especially
the debt of the lowest wage-earners into risk capital for the profits of giant
mortgage originators and Wall Street banks. Low and moderate earners
were, in turn, that much more vulnerable to the housing market and global
financial collapse of 2008 (Bricker et al. 2012; Kearns 2012). Thus, in the shift
to a more market-based social policy, deregulated and globalized labor
markets served as instruments of discipline and reform, while deregulated
and globalized financial markets became powerful—and regressive—
instruments of upward redistribution. The “market turn” in social policy
did not, however, translate uniformly into the retreat of the state. The past
three decades have witnessed what amounts to a vast reallocation of pub-
lic resources, especially at the state and local levels, from education, social
services, youth employment and training, and a host of other opportunity-
building programs to the carceral state. Indeed, it is not an exaggeration to
say that, for the growing segment of the population—disproportionately
young, minority males—who have been jailed or otherwise caught up in it,
the system of mass incarceration has replaced the functions of social wel-
fare in what the Children’s Defense Fund (2007) has dubbed the “cradle to
prison pipeline.” The consequences for the low-wage workforce have been
-1 devastating and far-reaching, as measured in the lifetime loss of earnings
0 for inmates and their families; the long-term impact of parent incarceration
+1

13502-02_CH01-2ndPgs.indd 22 12/10/13 8:33 AM

 An Economy That Works for Workers    23

on children’s economic fortunes and social-psychological well-being; the

drain and spillover effects of high rates of incarceration on low-income
communities of color; and the basic erosion of civil rights and liberties
associated with what criminal law scholar Jonathan Simon (2009) calls
“governing through crime” (see also Alexander 2010; Gottschalk 2006;
Raphael and Stoll 2009; Thompson 2010; Western 2006; Western and
Pettit 2010).
American workers have been considerably disempowered by transfor-
mations in American politics since the 1970s as well, and most visibly
by the triumph of what scholars have come to refer to as “winner-take-all”
politics—the outcome of the growing influence of big money on both major
political parties and of well-organized economic elites in governance and
national affairs (Bartels 2010; Gilens 2012; Hacker and Pierson 2010; Lessig
2011). Organized corporate interests have grown especially aggressive in
their efforts to undermine organized labor through anti-union campaigns,
weakened labor laws, and political pressure to leave existing regulations
unenforced (Greenhouse 2008; Lichtenstein 2002). But equally consequential
for the political fortunes of workers has been the reconfiguration of social
movement and associational politics—the politics of expertise, advocacy,
and interest group influence—along more sharply polarized ideological
lines. For the past three decades, such politics has been dominated by the
powerfully if uneasily combined forces of the anti-statist, pro-corporate,
free-market, and morally “traditional” right. Joined in mutual animosity to
New Deal and Great Society liberalism, this alliance has proved especially
effective at commandeering a language of political economy that, in contrast
to that of its more technocratic liberal counterparts, frames policy issues in
terms of stark moral choices: between free-market capitalism and big gov-
ernment collectivism; between individual responsibility and welfare depen-
dency; between the right to work and “enforced” unionism (Friedman 1962;
Friedman and Friedman 1979). Similarly, when movement Republicans
swept into the U.S. House of Representatives in the 1994 midterm elections,
they came heralding nothing short of a new social contract based on the prin-
ciples of individual liberty, personal responsibility, and limited government
(Republican National Committee 1994, 4).
As a number of recent historical studies have recognized, the structural
transformations in American capitalism, social policy, and politics do not
represent the unfolding of somehow inexorable historical or economic
forces. Nor did they happen overnight. They are rooted in decades of hard-
fought political battles and in policy decisions that were not so much neces-
sitated as made possible by the storied “end” of postwar American affluence
in the 1970s and the extended bouts of economic crisis and decline, high -1
unemployment mixed with inflation, and slow growth that the decade 0
+1

13502-02_CH01-2ndPgs.indd 23 12/10/13 8:33 AM

 24    What Works for Workers?

ushered in (Cowie 2010; Rodgers 2011; Schulman 2001; Schulman and

Zelizer 2008; Stein 2010).
Organized labor, challenged and energized by insurgent leadership
and worker activism alike, stood as a countervailing force. Though never
fully or adequately implemented, the labor-backed Humphrey-Hawkins
Act of 1978 reasserted full employment as an economic policy goal
at a moment when Keynesian economic management was under fire.
Despite declining membership overall, sectors within the labor move-
ment made significant inroads in the drive to unionize service and other
groups of workers outside the more traditional industrial union mold,
and they have played an important part in the community-based living
wage campaigns that began to gain momentum in the 1990s (Boris and
Klein 2012; Luce 2004; Milkman 2006; Pollin and Luce 2000). Antipov-
erty advocates worked with some success to leverage resources from
the shrinking welfare state, often in collaboration with private nonprof-
its, and actively resisted the shredding of the federal social safety net,
including the now-ended welfare entitlement for families with children.
But even the most successful advocates recognize that they are operat-
ing within a federal policy environment that has been hollowed out by
the initially gradual, constantly escalating, and unsuccessfully contested
erosion of the New Deal commitment to making an economy in which
wage-earning is the basis of economic security, opportunity, civic stand-
ing, and, more generally, the entitlements associated with full social and
political citizenship.
Still, in order to understand the genesis of social policy for low-
wage workers, it is also important to recognize that the problems of low-
wage work did not start in the 1970s. These problems stem from deeper
and more long-standing inequities—experienced along the overlapping
lines of class, race, gender, and occupation—that the New Deal order had
been ill equipped to address and in some instances had helped to advance.
Those inequities came sharply into view in the 1960s in social movement
demands for economic justice and in President Lyndon B. Johnson’s dec-
laration of the War on Poverty. And they were at the heart of ambitious
policy initiatives that promised to respond to the neglected needs of
low-wage workers in particular: on the one hand, by eliminating outdated
and stigmatizing restrictions to extend federal income support relief to
the near-poverty- and below-poverty-earning working class, and on the
other, by extending the reach of the federal subsidy for homeownership to
employed but low-earning households. Thus, the basic elements of policies
for low-wage workers first took shape within an atmosphere of expansive
-1 public purpose and political possibility that has all but disappeared but
0 that nevertheless remains relevant for its basic understanding that social
+1

13502-02_CH01-2ndPgs.indd 24 12/10/13 8:33 AM

 An Economy That Works for Workers    25

policies, in order to “work” for low-wage workers, must first and fore-
most be embedded in an economy that produces adequate employment,
wages, and opportunities for advancement. In the context of slowed eco-
nomic growth and structural change, the failure to address those inequities
through expansive liberal programs would contribute as much as orga-
nized opposition from the right to the erosion of popular support not only
for New Deal and Great Society programs but for their ideas about shared
prosperity and the role of government in achieving it.

A New Deal for Low-Wage Workers

“It Can Be Done!” So reads the headline of an essay published in The New
Republic by the Yale University economist James Tobin in 1967. As a for-
mer member of the Kennedy-Johnson administration Council of Economic
Advisers (CEA), Tobin was recognized as one of the leading practitioners
of the liberal Keynesian “new economics” that, at least for the moment,
was credited for the country’s impressive run of economic growth and
prosperity. Exuding the blend of confidence, high expectations, and prag-
matism shared by much of the Keynesian policy establishment at the
time, Tobin laid out a six-point plan for “conquering poverty in the U.S.
by 1976” that called for federal government commitments to continued
economic growth, full employment, and an end to racial discrimination
along with increased investments in public services and education and
training. Tobin also endorsed an idea that was rapidly gaining support
from across the ideological spectrum, albeit in widely varying forms: a
basic guarantee of “adequate income” for “everyone in need” to replace
what analysts and activists considered to be the scandalously ungenerous
and unequal system of categorical public assistance (Tobin 1967). Spec-
tacularly ambitious though these proposals may seem in retrospect, what
marks Tobin’s essay as part of a bygone era are the core assumptions that
inform it—about shared social aspirations, about the role of government
in achieving them, and about wage-earning and economic citizenship—as
much as the particulars of the plan.
Thus, the plan Tobin outlined begins from the basic legitimacy of the
idea of ending poverty, not merely as an achievable goal but as a state-
ment of public purpose—a purpose that, in the world’s most affluent
democracy, he assumed would or at least should be widely shared. This
had, of course, been the central premise of Lyndon B. Johnson’s official
declaration of the War on Poverty three years before as the centerpiece
of an extraordinarily ambitious domestic policy agenda that by the end
of 1965 had succeeded in passing landmark federal civil rights legisla- -1
tion as well as major expansions of federal aid to education, housing and 0
+1

13502-02_CH01-2ndPgs.indd 25 12/10/13 8:33 AM

 26    What Works for Workers?

urban development, and Medicare and Medicaid. In these and other ways,
the policies and programs collectively known as the Great Society had
extended significantly beyond the parameters of New Deal social provi-
sion. Now, in the far more divided political environment of the late 1960s,
Tobin was joining with Office of Economic Opportunity (OEO) director
Sargent Shriver to urge Congress to finish the job, specifically by adopting
the agency’s “Ten-Year Anti-Poverty Budget,” which projected an end to
poverty by 1976. That the federal government would play a central role in
ensuring a decent standard of living for its citizens was not the issue; nor
was the idea, established decades earlier in the New Deal, that the federal
government would intervene in the economy to achieve domestic policy
goals. The issue, at least for Tobin and poverty warriors at the OEO, was
not whether but how much further to extend and otherwise revise New
Deal provisions to meet the needs of those left behind.
At the same time, it is important to recall that Tobin’s plan for ending
poverty also hinged on the original New Deal commitment to wage-
earning work as the cornerstone of its economic recovery and growth
policies as well as of the social contract between citizens and the state.
Fully employed workers would provide the mass purchasing power to
fuel economic growth, as well as the tax revenues to fund the social secu-
rity system. Wage-earning work would in turn be an entrée to the entitle-
ments of economic citizenship required of modern industrial democracy,
as enumerated by Franklin D. Roosevelt, in language deliberately evoca-
tive of the U.S. Constitution, in his “Economic Bill of Rights”: the rights to
jobs at decent wages; to health, homes, and education; and to a fair play-
ing field free of racial discrimination, economic privilege, and monopoly.
Together, these “self-evident” rights represented the New Deal’s commit-
ment to making what FDR had famously called “Freedom from Want” a
reality for every American (Roosevelt 1941, 1944; see also Donohue 2003).2
For postwar Keynesians like Tobin, delivering on this commitment meant
building on the edifice of the fair labor standards, minimum wage, and col-
lective bargaining rights established in New Deal labor legislation. More
than anything, however, it meant maintaining high economic growth and
generously defined levels of “full” employment—the two most effective
“weapons,” as CEA economists never tired of repeating, in the Great Soci-
ety’s War on Poverty (O’Connor 2001). Ending poverty, they argued, was
not only compatible with but integral to sustaining high growth, high
wages, and equitably distributed income. Tobin even called for raising
“our concept of full employment” from 4 percent unemployment to 3 per-
cent. Ending poverty, then, was about creating an economy in which the
-1 interests of the poor, and of all disadvantaged workers, could be tied to the
0 interests of everyone else.
+1

13502-02_CH01-2ndPgs.indd 26 12/10/13 8:33 AM

 An Economy That Works for Workers    27

Still, as even the most committed Keynesians were prepared to admit,

there were limits to what growth and full employment could accomplish.
Even with the combination of New Deal labor and social welfare protec-
tions and equitably distributed economic growth, full employment would
leave millions of working-age wage-earners in poverty and below socially
acceptable standards of living, according to Tobin’s and official OEO pro-
jections. Ending poverty would thus also require a more expansive concept
of what in Progressive Era and New Deal parlance had been known as the
“social economy”—the health, welfare, educational, and other quality-of-
life goods that were essential to overall social well-being and that the mar-
ket could not or would not provide (Brick 2006; U.S. Department of Health,
Education, and Welfare 1969). By the late 1960s, that concept of social econ-
omy had in many ways expanded to include rising health, educational,
and environmental standards even as, in the eyes of widely read critics
such as economist John Kenneth Galbraith and environmentalist Rachel
Carson, the gap between private affluence and public goods had increased
as well. For Tobin and a growing number of liberal economists, shoring up
and reforming the woefully inadequate system of public assistance was a
way of closing that gap and of institutionalizing a universal, if admittedly
basic, social minimum of economic security for all. With official poverty
rates for families still at 17 percent, Tobin’s critique of New Deal public
assistance focused on the low benefits, gaps in coverage, “petty surveil-
lance,” and work punishments that kept millions of poor people—the vast
majority in fact—either still in poverty or off the rolls. Especially troubling
were the categorical restrictions that confined welfare eligibility to single-
parent (mostly female) non-wage-earning families while denying benefits
to families headed by (mostly male) wage-earners. That such restrictions
had been partially removed in some states had only added to the inequi-
ties within the system. Freedom from want meant eliminating those and
other categorical restrictions and extending welfare benefits to previously
excluded workers who met the income criteria—breaking down, at least
for policy purposes, invidious distinctions between the “welfare poor”
and the “working poor.” More broadly, it meant transforming the New
Deal’s unfair, scattershot, and frequently punitive system of public assis-
tance into a system of guaranteed minimum income support (O’Connor
1998; Steensland 2008).
The real impetus for a more expansive and inclusive system of social
provision in the late 1960s, however, came from the movement politics of
the liberal left—that is, from the widening array of locally and nationally
organized movements that drew their demands (for guaranteed jobs and
income, a more equitable distribution of wealth and opportunity, univer- -1
salized health and housing benefits, and an end to the war in Vietnam) 0
+1

13502-02_CH01-2ndPgs.indd 27 12/10/13 8:33 AM

 28    What Works for Workers?

from a longer history of struggle for economic justice. These movements

also pressed for an end to the distinctions between welfare poor and work-
ing poor, but their reform agenda was considerably more far-reaching than
that. Even as they staked their claims in New Deal concepts of economic cit-
izenship and civil rights, women’s and labor movement activists had come
to these expansive demands through decades of organizing to overcome
the wider array of structural inequities built into the New Deal welfare
state. Most glaring were the categorical restrictions that had shut minority
working-class people and white working-class women out of the benefits
and labor protections of New Deal economic citizenship by excluding agri-
cultural, domestic, and certain categories of service work from access to
old-age pensions, unemployment insurance, collective bargaining rights,
and minimum wage protections under the terms of the Social Security
Act of 1935, the National Labor Relations Act of 1935 (the Wagner Act),
and the Fair Labor Standards Act (1937). The economic impact of those
original exclusions would reverberate for decades, even after they had
gradually been eliminated by the 1970s. Still, the achievement of inclusion
within the basic New Deal framework was a significant advance for mil-
lions of workers who could now claim entitlements to social security and
other employment-related protections, as well as the right to organize and
to demand a decent wage (Boris and Klein 2012; Gordon 1994; Hamilton
and Hamilton 1997; Katznelson 2005; Poole 2006).
The New Deal also provided a framework for postwar struggles against
discriminatory employment practices. Building on the model that FDR
had established under pressure from A. Philip Randolph and other civil
rights activists during World War II, women’s and civil rights activists
pushed for more robust, permanent, and far-reaching fair employment
practices legislation throughout the postwar decades. Those decades of
organizing had brought millions to the civil rights movement’s March
on Washington for “jobs and freedom” in August 1963 and found partial
realization in the employment provisions of the Civil Rights Act of 1964
(Chen 2009; McLean 2006).
But movement activists also drew attention to the need to challenge
some of the basic premises of New Deal social provision—especially as
implemented in postwar liberal policy—in their drive for economic justice
and freedom from want. These challenges spoke directly to the millions of
people employed in low-paying jobs and in what welfare rights advocates
argued was the uncompensated labor of caregiving for family members.
One set of concerns had to do with the problem of jobs, which by the
1960s was looming as the central issue for civil rights and labor activists in
-1 the deindustrializing cities and more generally among groups of workers
0 and communities who stood to suffer from the impact of jobs-displacing
+1

13502-02_CH01-2ndPgs.indd 28 12/10/13 8:33 AM

 An Economy That Works for Workers    29

technology (A. Philip Randolph Institute 1966; Countryman 2006; McGee

2008; Sugrue 1996). Although marginalized in establishment policy circles,
labor economists writing about these and other forms of structural unem-
ployment voiced an influential critique of postwar Keynesianism, which
relied heavily on fiscally stimulated growth and military-industrial spend-
ing as the road to full employment. Joined by civil rights organizations,
they called for a return to the direct job creation strategies of the New
Deal era as a way to meet the needs of structurally disadvantaged work-
ers in particular. The A. Philip Randolph Institute, for example, called for
a “structural” approach to reaching full employment in its own ten-year
plan for ending poverty, pointing explicitly to the need for a large and
permanent store of meaningful and socially useful low-skilled jobs.
While endorsing guaranteed jobs and income, National Welfare Rights
Organization (NWRO) activists also challenged a whole set of cultural and
economic biases embedded in New Deal social policy in their efforts to
establish a right to welfare and abolish the invidious distinctions between
the working and welfare poor. These biases—about single mothers, about
what constituted legitimate “work,” about who could and should be the
household breadwinner, and about the degrading influence of welfare
“dependency”—stood at the very core of the New Deal’s preference for
wage-earning as the gateway to the full benefits of social and economic
security. Among other things, challenging these biases would require tak-
ing on the institutional structure as well as the categorical restrictions of
what feminist scholars would later refer to as the “two-channel” welfare
state by shifting the administration of means-tested public assistance from
often racially biased state and local authorities to the federal government
and treating such assistance as an entitlement on par with social insurance
(Gordon 1994; Kessler-Harris 2001; Kornbluh 2007; Lieberman 1998;
Nelson 1994). More controversially, challenging these biases required trans-
gressing age-old proscriptions against cash relief for able-bodied men in
particular—a taboo, as welfare rights activists were quick to point out, that
rested on largely fictional distinctions. Large numbers of poor women,
whether categorically eligible for public assistance or not, were expected
to work in the low-wage labor force, an expectation enforced by low ben-
efits and arbitrary welfare rules keyed to the needs of local low-wage labor
markets, among other things. An adequate welfare system would empower
them to avoid exploitative labor and to raise their children in dignity. At
the same time, what these women in the unorganized low-wage labor force
needed was what their feminist counterparts in the labor movement had
long been pushing for: equal pay, employment and training for better jobs,
and, especially, access to affordable child care (Cobble 2004). This challenge -1
in turn pointed to yet another set of inequities created by the public-private 0
+1

13502-02_CH01-2ndPgs.indd 29 12/10/13 8:33 AM

 30    What Works for Workers?

or “divided” structure of the New Deal welfare state, which made access
to health coverage, child care, fuller pensions, and other benefits that many
considered to be public goods dependent on privately negotiated employee
or union contracts—leaving millions of lower-wage workers out in the cold
(Hacker 2002; Klein 2003; Michel 2000).
But what would prove to be the most divisive and fiercely resisted set
of challenges to the inequities and exclusions of the New Deal order had to
do with the largely hidden subsidies it provided for the nation’s burgeon-
ing postwar middle class in housing policy, which throughout the postwar
decades had been the largely unrecognized battleground of white racial and
class privilege. Here, too, the challenge mounted by civil rights and housing
reform advocates had important implications for a substantial proportion
of the low-wage working class.
As a system officially dedicated to providing “a decent home and a
suitable living environment for every American family,” New Deal hous-
ing policy had all the problems of income support—and then some.3 It
was structurally bifurcated into deliberately ungenerous, locally controlled
public housing and a far more generous, if hidden, system of subsidies
for working- and middle-class homeowners. By the mid-1940s, that hid-
den infrastructure had come to include a sizable public-private mortgage
market anchored by the Federal National Mortgage Association (the New
Deal–era government agency, subsequently privatized, colloquially known
as Fannie Mae), federally insured mortgages, targeted benefits for veterans
through the GI Bill of Rights, and a wide variety of tax incentives and subsi-
dies for real estate developers and homeowners alike, including the federal
income tax deduction for mortgage interest costs. The system both relied
on and helped to institutionalize an also unacknowledged structure and
geography of racial, class, and gender exclusions, upheld by the rules and
underwriting practices that regulated access to mortgage credit, judicially
sanctioned zoning laws, local land use planning, and widespread (if offi-
cially unconstitutional in the wake of the Shelley v. Kraemer decision of 1948)
use of racial covenants. Segregationist policies and practices, in the mean-
time, were justified in the neutralized language of scientifically determined
credit risk and property values (Freund 2007; Morgan 2003).
Housing policy was also beholden to a wide array of well-organized pri-
vate interests—from the real estate, mortgage banking, savings and loan,
and insurance industries to the building and construction trade unions.
Despite significant differences among them, private housing industry inter-
ests were unified in their opposition to anything that hinted of “socialist”
housing, in their deepening investment in private single-family homeown-
-1 ership, and in their interest in maintaining a steady stream of subsidies for
0 the private housing market. In the late 1940s, during the extended debates
+1

13502-02_CH01-2ndPgs.indd 30 12/10/13 8:33 AM

 An Economy That Works for Workers    31

leading up to the passage of the landmark Housing Act of 1949, private

interests had aligned with conservatives in Congress to restrict the reach
and otherwise to contain the growth of public housing by confining eligi-
bility to the very poor. They had also organized to block legislative support
for the construction of cooperative housing—an idea favored by genera-
tions of progressive housing advocates as a way to build affordable hous-
ing for the low-paid working classes (Biles 2011, 25–40; O’Connor 1999;
Radford 1996). The result was a federal housing system that was notori-
ously inadequate in its provisions for the bottom “one-third of a nation”
targeted by the New Deal housers in their initial plans. Public housing was
chronically underfunded, regularly fell short of its legislatively mandated
production goals, and was subject to the widely divergent standards and
biases of local authorities. Thanks to legislatively imposed income ceilings
and racial bias, it was also inaccessible to most of the low-wage working
class. The system was chronically inattentive and basically without institu-
tional mechanisms for maintaining affordable rental housing for the mil-
lions of working-class families who for reasons of income, race, or gender
were basically shut out of the national drive to promote affordable home-
ownership and the comparatively generous, destigmatized public subsidies
that it provided.
These gaps and inequities in provision were only compounded by the
postwar veneration of homeownership—ideological as well as material—as
a badge of solid citizenship and a source of at least modest wealth accumula-
tion for the nation’s working and middle classes. As homeownership rates
began to rise in the postwar decades—from 44 percent in 1940 to 65 percent in
1970 overall, with highs of 80 percent among affluent white households and
substantial racial gaps at all income levels—home equity became the most
important source of accumulated assets for these households. Policymakers
had also come to recognize homeownership as a hedge against inflation—a
consideration that would only grow in importance amid rapidly rising infla-
tion rates in the late 1960s and 1970s—though of course this was the case
only for homeowners with access to fixed, insured mortgages and reliably
appreciating housing markets. But even more important than its association
with wealth accumulation and financial stability was the pride of place that
homeownership quickly assumed within postwar social policy as a gateway
to the amenities of upward mobility—middle-class status, civic standing,
access to credit and to favored educational opportunities, and, especially in
the face of civil rights movement demands, a privileged political identity
(Nicolaides 2002; Self 2003). Indeed, the push for federal fair housing provi-
sions was the most stubbornly resisted plank in the civil rights movement’s
legislative agenda; such provisions were finally passed in 1968, more than -1
two decades after President Harry Truman’s Committee on Civil Rights had 0
+1

13502-02_CH01-2ndPgs.indd 31 12/10/13 8:33 AM

 32    What Works for Workers?

called for an end to discrimination in housing in its report To Secure These

Rights (President’s Committee on Civil Rights 1947).
As a major, hard-fought breakthrough for the postwar civil rights move-
ment, the 1968 Fair Housing Act was part of a more ambitious reform
agenda that defined its goals in terms of the expansive promises of the 1949
Housing Act while aiming to redress the many gaps and inequities that had
been created in its wake. Passed amid intensified pressure to invest in
the nation’s cities in the wake of mass urban uprisings and the release of the
Kerner Report (National Advisory Commission on Civil Disorders 1968), the
Johnson administration’s massive Housing and Urban Development Act of
1968 garnered approval for a huge expansion in the production of low- and
moderate-income units. It also created an expansive new program, known
as Section 235, to subsidize homeownership for white and minority low-
wage earners, especially but not exclusively in inner-city neighborhoods.
Homeownership, LBJ said in a message tying the initiative to the “crisis
of the cities,” would give low-income Americans access to a “cherished
dream” as well as the psychological boost of “something to be proud of”
within their communities (Johnson 1968).
The Section 235 program was very much built into the existing sys-
tem of public subsidy for public-private interest—which goes a long way
toward explaining its popularity in the private real estate, banking, and
home-building industries, as well as its bipartisan appeal. It operated
much like the increasingly generous homeownership benefit for veterans
under the auspices of the GI Bill, which by the mid-1950s was subsidizing
growing numbers of working- as well as middle-class soldiers and vet-
erans, with assistance for down payments, deeply subsidized mortgages,
and federally guaranteed insurance (Frydl 2009, 263–302). Under the
Section 235 program, first-time low-earning buyers—households tradi-
tionally too poor to make down payments and keep up a mortgage—paid
steeply reduced interest rates (as low as 1 percent) on mortgages issued
in the private market. Low-income homeowners were expected to pay
20 percent of their monthly income toward mortgage and insurance costs;
the Federal Housing Administration (FHA), by then absorbed within the
Department of Housing and Urban Development (HUD), subsidized
the rest through direct payments to private providers. Administration
officials also pushed the program as a way to stabilize ghetto neighbor-
hoods and to close the gap between minority and white homeownership
rates. Embarrassed by revelations of rampant and officially sanctioned
redlining practices, federal officials and private industry providers also
promised to promote homeownership in minority and mixed-race neigh-
-1 borhoods where they had not been willing to lend before, by stopping
0 past discriminatory practices.
+1

13502-02_CH01-2ndPgs.indd 32 12/10/13 8:33 AM

 An Economy That Works for Workers    33

For all its expansive promise, however, the 1968 Housing Act left criti-
cal structural imbalances intact. Keyed to private industry interests, the
Section 235 program had few mechanisms for guarding first-time buyers
against the hazards of deceptive lending practices, shoddy construction,
or the very real risks of declining housing values, especially in low-income
and segregated minority neighborhoods (Bratt 2007, 45–50). Nor, prom-
ises of change to the contrary, did it do much to change the segregated
structure of private housing markets (Civil Rights Commission 1971).
Despite the legislation’s emphasis on producing moderate-income rental
housing, low-wage workers remained at least partly shut out from its ben-
efits after conservatives insisted on maintaining restrictive income ceilings
on eligibility for subsidized housing of any kind (Biles 2011).
Like left-liberal proposals to establish an encompassing guaranteed
income, then, the Johnson administration’s expansive housing initiatives
underscored the ambitions and limitations of Great Society efforts to
extend and revise the terms of the New Deal social contract to include low-
wage workers. Despite important differences among them, what Great
Society liberals like James Tobin and movement activists of the liberal
left had in common was a basic recognition that informed their efforts to
achieve fuller guarantees of jobs, income, housing, and economic rights:
even at the height of postwar affluence, and despite all it had done to create
a genuinely prosperous working and middle class, the New Deal order was
failing a substantial proportion of the non-unionized working class—those
who, for reasons of race, gender, geography, or class, had been unequally
treated or excluded altogether. The struggle to redress these inequities
had been central to progressive working-class and civil rights politics for
decades, and it realized important successes.
And yet, in structuring their efforts around the needs of low-wage work-
ers as low-income or “working poor” families, liberal policymakers in par-
ticular tended to minimize the need for more direct interventions to deal
with the tangle of structural inequities embedded in labor and housing
markets. Nor would the idea of expanding the reach of social welfare policy
prove nearly as straightforward as it once might have seemed—raising, as
it did, all sorts of questions about deservingness and un-deservingness and
about work versus welfare “dependency” that were deeply ingrained in
American political culture as well as in the existing structure of the wel-
fare state. The very features that made the existing system inequitable, frag-
mented, and incomplete also “channeled” its social politics in ways that
made it difficult to sustain broad-based coalitions for even the more modest
versions of the universalizing reforms envisioned in their various plans to
end poverty, achieve at least a minimum level of economic security for all, -1
stabilize minority working-class neighborhoods, and extend housing and 0
+1

13502-02_CH01-2ndPgs.indd 33 12/10/13 8:33 AM

 34    What Works for Workers?

homeownership subsidies to the low-wage working class. This would be

even more the case in the face of growing division within the Vietnam
War–torn Democratic Party and increasingly well-organized opposition
from the political right. Equally significant, the viability of such plans rested
on the ability to sustain New Deal liberalism—reformed and re-envisioned
as the Great Society—as both an economic and a political proposition by
sustaining full employment, rising wages, and economic growth. In the
absence of these conditions, the quest for some version of a New Deal for
low-wage workers would prove increasingly difficult to sustain.

The End of Affluence and the Changing

Politics of Social Provision
Whatever their limitations, by the early 1970s the most ambitious Great
Society antipoverty and housing efforts were largely stalled. The guaran-
teed income did become a centerpiece of President Richard M. Nixon’s
domestic policy agenda in 1969, in the comparatively limited form of the
Family Assistance Plan (FAP), which, among other things, included work
requirements and reduced benefits for large segments of those already on
welfare. Various versions of Nixon’s FAP were subject to intense debate in
Congress (and within the administration) before its final demise in 1972 in
the face of opposition from congressional conservatives and welfare rights
advocates and waning support from Nixon himself (Steensland 2008,
chs. 3–4). From the start, however, FAP had been tuned much more to the
politics of welfare reform than to efforts to end poverty, a politics Nixon
sought to play to his own electoral advantage by stoking resentments
among the “working” poor families who stood to gain benefits from his
program and the “nonworking” welfare poor who would be eligible for
less (O’Connor 1998).4
The Section 235 homeownership program similarly experienced early
momentum followed by major roadblocks. Early assessments treated
it as a major success story, based on measurable increases in low-income
homeownership. But the program was soon tainted by an enormous
scandal when new home-buyers in ghettoized neighborhoods in Detroit,
Philadelphia, and other major cities found themselves subject to rampant
fraud, shoddy construction, fast-declining property values, and draco-
nian foreclosure proceedings—leading to widely publicized 1971 inves-
tigations and congressional hearings that found evidence of collusion
between FHA officials and unscrupulous, unregulated mortgage lenders.5
-1 By then, housing had also become the front line of the politics of backlash
0 against both civil rights and the New Deal welfare state in battles that
+1

13502-02_CH01-2ndPgs.indd 34 12/10/13 8:33 AM

 An Economy That Works for Workers    35

were beginning to spread from city neighborhoods to the hitherto racially

exclusive suburbs.
More important than these internal dynamics, however, were two
broader developments during the 1970s that undercut the income support
and housing reform initiatives first launched in the late 1960s and limited
their capacity to meet the needs of the low-wage working class. The first
was the onset of a series of destabilizing economic “shocks”—including
two recessions, major oil shortages, sustained “stagflation” in the latter
years of the decade, and industrial stagnation—that marked the end of
proverbial postwar affluence and the beginning of an era of wage declines
and rising inequality. These and related developments in turn undercut
the political-economic basis of New Deal and Great Society social provi-
sion and undermined Keynesian confidence in the capacity to sustain full
employment while keeping inflation in check.
Second, and related, was an accompanying shift in electoral and move-
ment politics in which the allegiances of the “silent” or “forgotten” white
working- and middle-class majority would figure prominently (Cowie 2010;
Lassiter 2007). Although the full contours of political change—and the role of
an ideologically charged conservative movement in bringing it about—were
still far from view, Nixon’s intense determination to dismantle the liberal
“excesses” of the Great Society, starting with the War on Poverty, was an
indicator of important shifts in the politics of social provision to come. Nixon
announced his Family Assistance Plan as part of a broader “New Federal-
ism,” a strategy to rechannel if not necessarily to stem government growth
through a combination of block grants, decentralization, privatization, and
reliance on more individualized, market-based approaches to public assis-
tance. And like the battle over his Family Assistance Plan, the struggle to
meet the housing needs of the lower-wage working class—those left out of
the New Deal promise of economic security—gave Nixon an opening to
exploit the racial fears and economic anxieties that would divide the New
Deal electoral base. It also provided an opportunity to make institutional
inroads toward a less collectivized, more market-based, and less generous
vision of government responsibility for the poor, even as market-based sub-
sidies were growing more important for the stability—as well as the sense of
entitlement—of the more affluent working and middle classes.
It was within this context that the Earned Income Tax Credit (EITC) was
created as the chief means of providing federal income support for low-
wage workers (later supplemented by earned income credit provisions in
some states). The EITC is a refundable tax credit that effectively operates
as a wage subsidy for low-income workers with dependent children. Many
consider it to be the most important and effective social policy for low-wage -1
workers, mostly because of its fairly consistent bipartisan support (at least 0
+1

13502-02_CH01-2ndPgs.indd 35 12/10/13 8:33 AM

 36    What Works for Workers?

until the late 1990s, when its rapid growth into the nation’s largest antipov-
erty program drew the ire of the more and more extremist antigovernment
factions of the conservative movement), and because it is one of the few
antipoverty programs that has expanded substantially since its establish-
ment in 1975, to the point where it now reaches low-wage earning families
above as well as below the federal poverty line.6 And yet, the dynamics of
the EITC’s evolution and growth have also been shaped by the political
and economic trends that have seriously undermined the standing of the
low-wage working class, even as they have expanded its ranks.
The origins and early genesis of the EITC point to just how much the poli-
tics of social provision had changed by the early 1970s. Where Great Society
efforts had centered on increased benefits and expanded eligibility for direct
income support, the EITC was framed as a way to provide tax relief for low-
wage workers—who at the time were facing social security payroll tax hikes
that would only rise further over the course of the next two decades—and
to keep them off the welfare rolls. The tax credit was also a product
of the extended struggles over Nixon’s FAP and welfare reform more
generally—and one reason why, from the beginning, EITC benefits have tar-
geted families with children. Among the EITC’s lead sponsors in Congress
was Senator Russell Long, a conservative Democrat (Louisiana) well known
for his animosity toward welfare rights; he proposed the credit as a “work
bonus” scheme designed to supplement low-wage workers’ incomes while
providing an incentive to stay in the workforce rather than turn to welfare.
After several failed attempts, the EITC was passed as part of the Tax Reduc-
tion Act of 1975. It initially offered modest benefits and remained limited in
reach (Howard 1997).
Starting in the 1980s, the EITC would figure more and more promi-
nently in efforts not just to reform welfare and boost the incomes of low-
wage workers but to bring the era of “big government” liberalism to an
end, through a growing emphasis on wealth-favoring tax cuts, selective
spending limits, cutbacks in direct spending for the poor, and tax code
changes that made the system less progressive. The first major expan-
sion in EITC coverage and benefits came in the wake of dramatic tax and
spending cuts in the first years of the Reagan administration that severely
restricted welfare eligibility, ended provisions that had allowed recipients
to retain income from work, and raised poverty rates among low-wage
workers while lowering taxes for the affluent. EITC expansion was incorpo-
rated into the Tax Reform Act of 1986, which effectively eliminated federal
income tax (though not payroll tax) liability for families at the very bottom
of the income distribution, in part as a way of offsetting the distributional
-1 impact of the tax rate reductions at the upper end (Howard 1997, 145–49).
0 These and subsequent EITC expansions (in 1990 and 1993) also took place
+1

13502-02_CH01-2ndPgs.indd 36 12/10/13 8:33 AM

 An Economy That Works for Workers    37

during a period when federal policymakers showed little inclination to

stem the tide of declining wages and had decisively turned away from full
employment in favor of inflation-fighting in economic policy. Indeed, the
EITC had bipartisan appeal for conservative Democrats and Republicans
in part because it was an alternative to a minimum wage hike (Gitterman
2009; Howard 1997, 150–52).
Low-income housing policy showed a similar pattern of escalating retreat
from Great Society spending and direct provision commitments accompa-
nied by a shift toward more modest, indirect, and privatized measures deliv-
ered as market subsidies and through the tax code. Using the Section 235
scandals and rising inflation fears as justification, the Nixon administration
pursued a strategy of massive resistance—most overtly to the civil rights
provisions of the 1968 housing acts, but more broadly to their expansive
affordable housing production goals. In a public and humiliating standoff,
the administration forced a halt to Housing and Urban Development Secre-
tary George Romney’s efforts to enforce antidiscrimination legislation and
otherwise to back integration in the suburbs (Bonastia 2006). In 1973 Nixon
declared a moratorium on public and subsidized housing production and
subsequently implemented a major overhaul of the entire system by shift-
ing away from construction altogether to individual (Section 8) vouchers
for use in the private rental market. Low-income housing was targeted for
even deeper cutbacks during the early years of the Reagan administration.
In 1986, as part of the same sweeping tax reform legislation that expanded
the EITC, Congress established the Low-Income Housing Tax Credit (LIHTC)
to attract private (for-profit and nonprofit) developers into the low- and
moderate-income rental market. Although the LIHTC remains a mainstay
of affordable rental housing production for low-wage workers, it is minus-
cule in comparison to the home mortgage deduction subsidy for homeown-
ers, which disproportionately benefits upper-income households and was
preserved in the 1986 tax reforms following intensive lobbying from the
real estate and banking industries, among others. Nor has the combination
of vouchers and tax credits ever come close to bridging the gap between
what low-wage workers make and what they need to pay the rent—a gap
that continues to grow (Dolbeare and Crowley 2007; National Low Income
Housing Coalition 2012).
In the meantime, structural changes in broader housing and labor mar-
kets would prove far more consequential for low-wage workers, albeit in
ways that would only later become fully apparent. Critical to the postwar
housing boom had been a fairly stable combination of high employment,
high growth, stable (if necessarily subsidized) credit markets and housing
prices, and, especially, wages sufficient for at least the more privileged -1
segment of the white male working class to afford a down payment and 0
+1

13502-02_CH01-2ndPgs.indd 37 12/10/13 8:33 AM

 38    What Works for Workers?

fixed monthly mortgage payments. All that was to change starting in the
late 1960s and early 1970s, when the combination of falling wages, rising
inflation, the fallout from an international credit “crunch” that shook up
U.S. mortgage markets, and the ongoing squeeze from the war in Viet-
nam threatened to send the homeownership industry into decline. That
looming threat, which was especially keenly felt by the mortgage banking
industry, had led to one of the lesser-noticed provisions of the 1968 Fair
Housing Act, the semiprivatization of Fannie Mae and the authorization
of mortgage securitization. This began a sequence of interventions that, in
the name of saving the “American dream” of homeownership, completely
changed the dynamics of mortgage markets.
Over the course of several years, these interventions would lay the polit-
ical and institutional groundwork for the push to “financialize” homeown-
ership and to promote it as both a form and a source of investment capital,
beginning with the extension of Fannie Mae and newly established Freddie
Mac benefits to the “conventional” mortgage market in 1970; a spate of
judicially sanctioned challenges to state usury laws throughout the 1970s
and 1980s that opened the door first to higher interest rates and eventually,
along with a much wider array of deregulatory measures, to the exploding
market for subprime mortgages; the emergence of a new array of mostly
unregulated mortgage origination and lending institutions; and legislation
that authorized Wall Street’s entry into the market for securitized mortgage
debt, along with the ever-more “innovative” financial instruments, such as
collateralized debt obligations, designed to raise more and more invest-
ment capital—and profit—from other people’s debt. In an era of unsteady
wages and employment, homeownership—and access to the credit nec-
essary to attain it—would grow in importance as a promise of stability
for working- and middle-class families, but it would take an enormous
amount of ultimately destabilizing interventions to prop it up (Hyman
2011; Immergluck 2009). As would become all too clear in the wake of the
subprime mortgage collapse, this promise was also based on the illusion
that housing values could only go up.

The Triumph of Neoliberal Reform

More than any other set of issues, however, reforming the nation’s poor
laws would be the centerpiece of an ideological reform agenda meant,
among other things, as a definitive break from the New Deal social con-
tract and a reorientation of social policy from wage-earning to wealth. Laid
out in stark terms by the 1994 Republican “Contract with America,” the
-1 reform agenda envisioned by avowedly “limited government” conserva-
0 tives called for measures ranging from balanced budget and tax limitation
+1

13502-02_CH01-2ndPgs.indd 38 12/10/13 8:33 AM

 An Economy That Works for Workers    39

constitutional amendments to federal “tough on crime” measures, a unilat-

eralist approach to national security, and congressional term limits. Though
never fully realized, the Contract with America had immense material and
political consequences for low-wage workers, and indeed for all working-
age people facing any degree of economic hardship or insecurity. Nowhere
was this more evident than in the “end of welfare as we know it,” signed
into law as the Personal Responsibility and Work Opportunity Reconcilia-
tion Act (PRWORA) of 1996 by President Bill Clinton. Framed as an attack
on welfare “dependency,” out-of wedlock birth, the legitimacy of single-
motherhood, and the growth of a permissive “big government,” the bill
crystallized many of the resentments that Nixon had been trying to engage
in his efforts to appeal to the “forgotten men” of the white working class.
But considered as a way of responding to what, by the 1990s, was a growing
and more widely recognized crisis of low-wage work, the end of welfare
also fit in with a much older tradition—that of using poor law reform to
unshackle labor markets from the obligations and regulations imposed by
the state and in the process asserting the primacy of the deregulated market
as the ultimate arbiter of the common good. This deregulation linked the
end of welfare to the earlier reform efforts of the 1970s as part of a longer
history in which episodes of economic crisis and change have created open-
ings for reforms that involve a basic rewriting of the social contract (Block
and Somers 2003; Katz 1996; Piven and Cloward 1971; Polanyi 1944/1971).
Thus, as outlined in the Contract with America, the vision of welfare-
ending reform that would eventually become law stood in stark contrast to
the poverty-ending minimum income guarantee plans of the late 1960s. End-
ing, rather than extending, the entitlement to welfare was the new poor law’s
signature goal: no longer would public assistance of any kind be available
as a matter of right to people who met even the most stringent of eligibility
requirements. Nor would the federal government claim responsibility for
ensuring economic security for anyone, let alone for all: funding would be
allocated through block grants to the states and would also be subject to
annually reduced spending caps. Although given added leeway to design
their programs, states would be subject to escalating penalties if they did
not move quickly enough to reduce their rolls. Regardless of need, families
would no longer be eligible for assistance after variable periods of time. (Time
limits vary by state, but are federally capped at five years over the lifetime.)
Wage-earning work, rather than a gateway to the collective entitlements of
economic citizenship, would be an object lesson in the virtues of fending
for oneself: recipients of assistance from what was renamed the Temporary
Assistance for Needy Families (TANF) program would be required to work
in the paid labor force as a condition of receiving aid and to cooperate in -1
state efforts to establish paternity and collect child support. The role of the 0
+1

13502-02_CH01-2ndPgs.indd 39 12/10/13 8:33 AM

 40    What Works for Workers?

state would be to conform to the demands of the deregulated market, rather

than the other way around.
The end of welfare once again set the stage for the expansion of the
Earned Income Tax Credit, in this case as one of a wider array of so-called
nonwelfare measures to supplement the wages of a low-wage workforce
that, by design, would swell with the entry of single mothers—which is to
say, the formerly “welfare” poor. Whether supportive of the 1996 reforms
or not, advocacy groups and administrators in some localities promised to
use the combination of TANF, the EITC, child support, subsidized child
care, and education and training as a work support program, and they man-
aged, in the context of initially raised state budgets and high employment
rates, to meet with limited success. By 2005, however, in the wake of eco-
nomic downturn, rising unemployment, federal and local budget cuts, and
a new round of hard-line conservative gains in Congress, any initial gains
for the newly “working” poor had largely been reversed. Reauthorization
legislation in 2005 put even more severe limitations on TANF’s education,
training, and work support provisions, and even more aggressive pressure
was put on local administrators, and their budgets, to put people to work,
keep them off the rolls, and further shrink the social safety net (Morgen,
Acker, and Weigt 2012; National Poverty Center 2012; Trisi and Pavetti
2012; Zedlewski 2012).
Even more than the social policy particulars, the end of welfare her-
alded the triumph of an anti–New Deal political economy and economic
reform agenda. Wealth, not full employment and high wages, would be
the engine of growth. The role of government was to protect the rights
and interests of property and otherwise to step out of the market’s way.
Taxes, especially on capital gains, were to be lowered at all costs. The
balanced budget would rein in government spending. None of this could
be accomplished without concerted and ongoing government interven-
tion, whether to dismantle or, in the case of welfare, to impose an ever-
expanding host of disciplinary rules.
It was in this much-altered political economy, driven by much-altered
economic priorities, that policymakers, foundations, nonprofit organiza-
tions, and a widening cadre of academics and community-based activists
returned to the idea of promoting homeownership as a solution to pov-
erty and a ticket to upward mobility for the low-wage working class, but
more tellingly as a personally and socially transformative form of asset
accumulation that would give poor people access to the advantages of
wealth (Immergluck 2009; Katz 2009). Though it picked up on ideas about
promoting tenant ownership in public housing that had been pushed
-1 by Margaret Thatcher and the Reagan-era HUD secretary Jack Kemp in
0 the 1980s, something resembling a homeownership and assets-building
+1

13502-02_CH01-2ndPgs.indd 40 12/10/13 8:33 AM

 An Economy That Works for Workers    41

movement did not come more prominently into view until the early
1990s (McCulloch 2001; Sherradan 1991). By then, the wealth-building
approach had an ideologically eclectic but decidedly bipartisan base of
support, and it drew on analyses that focused on the material as well as
the (allegedly) cultural value of homeownership (Rohe and Watson 2007).
By the late 1990s, the most exuberant enthusiasts were touting homeown-
ership as the ultimate postwelfare solution to poverty. In this, they were
boosted by two federal initiatives—the first by the Clinton administra-
tion and the second by the George W. Bush administration—to expand
homeownership to unprecedented levels (which they reached in 2004 at
68 percent overall) by targeting low-income minorities for assistance. As
would become all too powerfully clear, these initiatives did little more
than paper over the deeper problems of inequality, declining wages, and
the growing insecurity of wage-earning itself, all of which made easy
access to ownership—and taking on huge amounts of debt—seem like
not so much a sure way as the only way to get ahead.
As even this partial survey suggests, recent history has produced a
number of ideas about social policies that provide much-needed relief for
low-wage workers—with decidedly mixed results. These interventions
pale in significance, however, in comparison to the underlying shift from
New Deal to neoliberal political and economic priorities that has contrib-
uted to the proliferation and declining conditions of low-wage work and
the workers it employs. This is especially pronounced in the demise of
full employment as a central commitment of economic policy and as the
centerpiece of a more encompassing antipoverty agenda, as envisioned by
James Tobin and other Great Society liberals more than four decades ago.
It is also evident in the political and ideological retreat from a commitment
to fair labor standards, economic security, and “freedom from want” as
signposts of economic health. In these and other ways, history points us to
where the conversation about contemporary policy and politics needs to
start and also shows us what it needs to include if we are not to lose sight of
the standards of fairness, decency, and economic justice established by ear-
lier generations of organizers and policy advocates for what an economy
that works for workers looks like and what wage-earning for all workers
can and should provide.
Thus, the contemporary policy discussion starts from the recognition
that the problem of low-wage work is not about declining income alone. It
is about the historically degraded condition of wage-earning as a valued
social and economic endeavor and the role of political choices over the
past three decades in bringing that condition about. It is about the striking
decline in mobility for all American workers since the late 1970s, especially -1
in comparison to their counterparts in advanced industrial democracies 0
+1

13502-02_CH01-2ndPgs.indd 41 12/10/13 8:33 AM

 42    What Works for Workers?

(Russell Sage Foundation and Pew Charitable Trust 2011). It is about the
millions of workers who have been left less economically secure, less well
represented in politics and in the workplace, and more subject to degrad-
ing demands from their employers (Ehrenreich 2001; Greenhouse 2008;
Shulman 2005). And it is about the by-now-familiar economic indicators
of the New Gilded Age: falling wages at the bottom; rising concentrations
of wealth at the very top; and, more recently, the decidedly top-heavy
nature of the “recovery” from the Great Recession of 2008 (O’Connor
2011; U.S. Financial Crisis Inquiry Commission 2010).
The policy agenda for low-wage workers likewise extends beyond
income and assets to encompass a broader scope, starting with economic
policies committed to achieving full employment and better jobs and
including the range of interventions considered in subsequent chapters
in this volume. Collectively, they call attention to the need for a compre-
hensive policy and political agenda that reopens channels for effective
work- and community-based organizing; establishes effective and effec-
tively enforced labor standards; creates a new version of the deliberately
shredded safety net for the poor and unemployed; and reintroduces fair
compensation and equitable distribution as baseline principles of political
economy.
History also reminds us that creating an economy that works for work-
ers does not mean simply going back to the way we (never) were. Relevant
though it remains as a framework for more just and inclusive economic
citizenship, the New Deal left many gaps and inequities that made low-
wage work an enduring problem throughout the postwar years—and that
remain unresolved today. What it does mean is using the New Deal social
contract much as movement activists did in the 1960s: as a framework
for asking how the economic rights and commitments that the New Deal
envisioned can be realized in a much-altered twenty-first-century eco-
nomic environment, and on more fully inclusive terms. This approach to
framing the issues is especially important in light of the key policy chal-
lenges ahead: the challenge of creating and sustaining high standards of
employment in an ever-more globalized economy; the challenge of mak-
ing housing affordable in a culture still entrenched in private homeown-
ership; and the challenge of creating a sense of shared need and common
fate in a political culture that has grown more skeptical of collectivized
social provision.
Finally, history offers a powerful sense of just how much is wrapped
up in the questions of work and wages—and why. While it has become
something of a cliché to tie well-paid work opportunities and shared pros-
-1 perity to the pursuit of the American dream of upward mobility, a deeper
0 look at the historical record underscores how central they have been to
+1

13502-02_CH01-2ndPgs.indd 42 12/10/13 8:33 AM

 An Economy That Works for Workers    43

the pursuit of fairness, freedom, and political as well as economic democ-

racy. To frame a discussion of an economy that works for workers in these
terms may not provide an exact blueprint for how to get there, but it estab-
lishes the discussion on the moral high ground of American democracy,
which, as history reminds us, is both a powerful and an appropriate start-
ing point for reform.

Notes
1. Binyamin Appelbaum and Robert Gebeloff, “Tax Burden for Most Ameri-
cans Lower Than in the 1980s,” New York Times, November 29, 2012; see also
Hungerford (2011).
2. FDR first laid out the Economic Bill of Rights in his 1944 State of the Union
Address, but it subsequently became a central campaign theme. It represents
a distillation of rights he had enumerated in his famous 1941 “Four Freedoms”
speech, delivered amid the looming threat of world war, in which he laid out
four “essential freedoms” fundamental to the preservation of democracy: free-
dom of speech, freedom of worship, freedom from want, and freedom from fear
(Roosevelt 1941, 1944). For a fuller discussion of the political and ideological
traditions FDR was drawing on, see Donohue (2003).
3. This was the language of the Housing Act of 1949, which would frequently be
reiterated in subsequent legislation through the 1960s.
4. The Family Assistance Plan would have provided $1,600 for a family of four
and was contingent on work requirements; Tobin’s plan would have set the
minimum at the poverty line, at the time roughly $3,000 for a family of four,
while welfare rights activists called for significantly higher levels.
5. See, for example, Donald L. Barlett and James B. Steele, “Speculators Make a
Killing on FHA Program,” Philadelphia Inquirer, August 22, 1971.
6. The maximum EITC for 2012 ranged between $5,200 and $5,800 for fami-
lies with two or three children and earning up to $45,000, or approximately
double the federal poverty line. Recent analysis from the Center on Budget
and Policy Priorities indicates that the EITC raised the incomes of 5.7 million
families above the federal poverty line (approximately $23,000 for a family
of four) (Sherman 2012).

References
A. Philip Randolph Institute. 1966. A “Freedom Budget” for All Americans: Budgeting
Our Resources, 1966–1975, to Achieve “Freedom from Want.” New York: A. Philip
Randolph Institute.
Alexander, Michelle. 2010. The New Jim Crow: Mass Incarceration in the Age of Color -1
Blindness. New York: New Press. 0
+1

13502-02_CH01-2ndPgs.indd 43 12/10/13 8:33 AM

 44    What Works for Workers?

Aron-Dine, Aviva, and Isaac Shapiro. 2006. “Share of National Income Going to
Wages and Salaries at Record Low in 2006, Share of Income Going to Corpo-
rate Profits at Record High.” Washington, D.C.: Center on Budget and Policy
Priorities.
Bartels, Larry M. 2010. Unequal Democracy: The Political Economy of the New Gilded
Age. New York: Russell Sage Foundation.
Biles, Roger. 2011. The Fate of Cities: Urban America and the Federal Government,
1945–2000. Lawrence: University Press of Kansas.
Block, Fred, and Margaret Somers. 2003. “In the Shadow of Speenhamland: Social
Policy and the Old Poor Law.” Politics and Society 31(2): 283–323.
Bonastia, Christopher. 2006. Knocking on the Door: The Federal Government’s Attempt
to Desegregate the Suburbs. Princeton, N.J.: Princeton University Press.
Boris, Eileen, and Jennifer Klein. 2012. Caring for America: Home Health Workers in
the Shadow of the Welfare State. New York: Oxford University Press.
Bratt, Rachel. 2007. “Homeownership for Low-Income Households: A Com-
parison of the Section 235, Nehemiah, and Habitat for Humanity Programs.”
In Chasing the American Dream: New Perspectives on Affordable Homeownership,
ed. William M. Rohe and Harry L. Watson. Ithaca, N.Y.: Cornell University
Press.
Brick, Howard. 2006. Transcending Capitalism: Visions of a New Society in Modern
American Thought. Ithaca, N.Y.: Cornell University Press.
Bricker, Jesse, Arthur B. Kinnickell, Kevin B. Moore, and John Sabelhaus. 2012.
“Changes in Family Finance from 2007 to 2010: Evidence from the Survey of Con-
sumer Finances.” Washington, D.C.: U.S. Federal Reserve. Available at: http://
www.federalreserve.gov/econresdata/scf/scf_2010.htm (accessed January 2013).
Chen, Anthony. 2009. The Fifth Freedom: Jobs, Politics, and Civil Rights in the United
States, 1941–1972. Princeton, N.J.: Princeton University Press.
Children’s Defense Fund. 2007. “Programs and Campaigns: Cradle to Prison Pipe-
line Campaign.” Washington, D.C.: Children’s Defense Fund. Available at: http://
www.childrensdefense.org/programs-campaigns/cradle-to-prison-pipeline/
index.html (accessed January 2013).
Civil Rights Commission. 1971. “Homeownership for Lower Income Families: A
Report on the Racial and Ethnic Impact of the Section 235 Program.” Washing-
ton, D.C.: Civil Rights Commission.
Cobble, Dorothy Sue. 2004. The Other Women’s Movement: Workplace Justice and
Social Rights in Modern America. Princeton, N.J.: Princeton University Press.
Countryman, Matthew. 2006. Up South: Rights and Black Power in Philadelphia. Phil-
adelphia: University of Pennsylvania Press.
Cowie, Jefferson. 2010. Stayin’ Alive: The 1970s and the Last Days of the Working Class.
New York: New Press.
-1 Danziger, Sheldon, and Peter Gottschalk. 1995. America Unequal. Cambridge,
0 Mass.: Harvard University Press.
+1

13502-02_CH01-2ndPgs.indd 44 12/10/13 8:33 AM

 An Economy That Works for Workers    45

Dolbeare, Cushing N., and Sheila Crowley. 2007. Changing Priorities: The Federal
Budget and Housing Assistance, 1976–2007. Washington, D.C.: National Low
Income Housing Coalition.
Donohue, Kathleen G. 2003. Freedom from Want: American Liberalism and the Idea of
the Consumer. Baltimore: Johns Hopkins University Press.
Ehrenreich, Barbara. 2001. Nickel and Dimed: On (Not) Getting By in America. New
York: Metropolitan Books.
Freeman, Richard B. 2007. America Works: The Exceptional U.S. Labor Market. New
York: Russell Sage Foundation.
Freund, David. 2007. Colored Property: State Policy and White Racial Politics in Sub­
urban America. Chicago: University of Chicago Press.
Friedman, Milton. 1962. Capitalism and Freedom. Chicago: University of Chicago
Press.
Friedman, Milton, and Rose Friedman. 1979. Free to Choose: A Personal Statement.
New York: Harcourt Brace.
Frydl, Kathleen. 2009. The GI Bill. New York: Cambridge University Press.
Gilens, Martin. 2012. Affluence and Influence: Economic Inequality and Political Power
in America. Princeton, N.J.: Princeton University Press.
Gitterman, Daniel. 2009. Boosting Paychecks: The Politics of Supporting America’s
Working Poor. Washington, D.C.: Brookings Institution Press.
Gordon, Linda. 1994. Pitied but Not Entitled: Single Mothers and the History of
Welfare. Cambridge, Mass.: Harvard University Press.
Gottschalk, Marie. 2006. The Prison and the Gallows: The Politics of Mass Incarceration
in America. New York: Cambridge University Press.
Greenhouse, Steve. 2008. The Big Squeeze: Tough Times for the American Worker. New
York: Anchor Books.
Hacker, Jacob. 2002. The Divided State: The Battle over Public and Private Social
Benefits in the United States. New York: Cambridge University Press.
Hacker, Jacob S., and Paul Pierson. 2010. Winner Take All Politics: How Washington
Made the Rich Richer—and Turned Its Back on the Middle Class. New York: Simon
& Schuster.
Hamilton, Dona, and Charles Hamilton. 1997. The Dual Agenda: Race and Social Welfare
Policies of Civil Rights Organizations. New York: Columbia University Press.
Handler, Joel F., and Lucie White, eds. 1999. Hard Labor: Women and Work in the
Post-Welfare Era. Armonk, N.Y.: M. E. Sharpe.
Holzer, Harry J., and Demetra S. Nightingale. 2007. Reshaping the American Work­
force in a Changing Economy. Washington, D.C.: Urban Institute Press.
Howard, Christopher. 1997. The Hidden Welfare State: Tax Expenditures and Social
Policy in the United States. Princeton, N.J.: Princeton University Press.
Hungerford, Thomas L. 2011. “Changes in the Distribution of Income Among Tax
Filers Between 1996 and 2006: The Role of Labor Income, Capital Income, and -1
Tax Policy.” Washington: Congressional Research Service. 0
+1

13502-02_CH01-2ndPgs.indd 45 12/10/13 8:33 AM

 46    What Works for Workers?

Hyman, Louis. 2011. Debtor Nation: The History of America in Red Ink. Princeton,
N.J.: Princeton University Press.
Immergluck, Dan. 2009. Foreclosed: High-Risk Lending, Deregulation, and the Under­
mining of America’s Mortgage Market. Ithaca, N.Y.: Cornell University Press.
Johnson, Lyndon B. 1968. “Special Message to Congress on Urban Problems: ‘The
Crisis of the Cities.’ ” Santa Barbara, Calif.: University of California, The Amer-
ican Presidency Project (February 22). Available at: http://www.presidency.
ucsb.edu/ws/index.php?pid=29386 (accessed January 2013).
Katz, Alyssa. 2009. Our Lot: How Real Estate Came to Own Us. New York: Bloomsbury.
Katz, Michael B. 1996. In the Shadow of the Poor House: A Social History of Welfare in
America. New York: Basic Books.
———. 2001. The Price of Citizenship: Redefining the American Welfare State. New York:
Metropolitan Books.
Katznelson, Ira. 2005. When Affirmative Action Was White: An Untold History of Racial
Inequality in America. New York: W. W. Norton.
Kearns, Jeffrey. 2012. “Fed Says Family Wealth Plunged 38.8% in 2007–2010 on
Housing.” Bloomberg, June 11. Available at: http://www.bloomberg.com/news/
2012-06-11/fed-says-family-wealth-plunged-38-8-in-2007-2010-on-home-
values.html (accessed January 2013).
Kessler-Harris, Alice. 2001. In Pursuit of Equity: Women, Men, and the Quest for Eco­
nomic Citizenship in Twentieth-Century America. New York: Oxford University
Press.
Klein, Jennifer. 2003. For All These Rights: Business, Labor, and the Shaping of Ameri­
ca’s Public-Private Welfare State. Princeton, N.J.: Princeton University Press.
Kornbluh, Felicia. 2007. The Battle for Welfare Rights: Politics and Poverty in Modern
America. Philadelphia: University of Pennsylvania Press.
Lassiter, Matthew. 2007. The Silent Majority: Suburban Politics in the Sunbelt South.
Princeton, N.J.: Princeton University Press.
Lessig, Lawrence. 2011. Republic, Lost: How Money Corrupts Congress—and a Plan to
Stop It. New York: Twelve.
Lichtenstein, Nelson. 2002. State of the Union: A Century of American Labor. Prince­
ton, N.J., Princeton University Press.
Lieberman, Robert C. 1998. Shifting the Color Line: Race and the American Welfare
State. Cambridge, Mass.: Harvard University Press.
Luce, Stephanie. 2004. Fighting for a Living Wage. Ithaca, N.Y.: Cornell University
Press.
McCulloch, Heather. 2001. Sharing the Wealth: Resident Ownership Mechanisms.
Oakland, Calif.: Policy Link.
McGee, Guian. 2008. Liberalism and the Problem of Jobs. Chicago: University of Chi-
cago Press.
-1 McLean, Nancy. 2006. Freedom Is Not Enough: The Opening of the American Work­
0 place. Cambridge, Mass.: Harvard University Press.
+1

13502-02_CH01-2ndPgs.indd 46 12/10/13 8:33 AM

 An Economy That Works for Workers    47

Mettler, Suzanne. 2011. The Submerged State: How Invisible Government Policies
Undermine American Democracy. Chicago: University of Chicago Press.
Michel, Sonya. 2000. Children’s Interests, Mother’s Rights: The Shaping of America’s
Child Care Policy. New Haven, Conn.: Yale University Press.
Milkman, Ruth. 2006. L.A. Story: Immigrant Workers and the Future of the U.S. Labor
Movement. New York: Russell Sage Foundation.
Mishel, Lawrence R., Jared Bernstein, and Heidi Shierholz. 2009. The State of Work­
ing America, 11th ed. Ithaca, N.Y.: Cornell University Press.
Morgan, Guy. 2003. Discriminating Risk: The U.S. Mortgage Lending Industry in the
Twentieth Century. Ithaca, N.Y.: Cornell University Press.
Morgen, Sandra, Joad Acker, and Jill Weigt. 2012. Stretched Thin: Poor Families,
Welfare Work, and Welfare Reform. Ithaca, N.Y.: Cornell University Press.
Munger, Frank, ed. 2002. Laboring Below the Line: The New Ethnography of Poverty,
Low-Wage Work, and Survival in the Global Economy. New York: Russell Sage
Foundation.
National Advisory Commission on Civil Disorders. 1968. Report of the National
Advisory Commission on Civil Disorders (Kerner Report). New York: Bantam.
National Low Income Housing Coalition. 2012. Out of Reach, 2012. Washington,
D.C.: National Low Income Housing Coalition.
National Poverty Center. 2012. “Extreme Poverty in the United States, 1996 to 2011.”
Ann Arbor: University of Michigan, Gerald R. Ford School of Public Policy.
Nelson, Barbara. 1994. “The Two-Channel Welfare State.” In Pitied but Not Entitled:
Single Mothers and the History of Welfare, edited by Linda Gordon. Cambridge,
Mass.: Harvard University Press.
Nicolaides, Becky. 2002. My Blue Heaven: Life and Politics in the Working-Class Suburbs
of Los Angeles, 1920–1965. Chicago: University of Chicago Press.
O’Connor, Alice. 1998. “The False Dawn of Poor Law Reform.” Journal of Policy
History 10(1): 99–129.
———. 1999. “Swimming Against the Tide: A Brief History of Federal Assistance
to Poor Communities.” In The Future of Community Development, ed. Ron-
ald Ferguson and William Dickens. Washington, D.C.: Brookings Institution
Press.
———. 2001. Poverty Knowledge: Social Science, Social Welfare, and the Poor in Twentieth-
Century U.S. History. Princeton, N.J.: Princeton University Press.
———. 2011. “The End of Capitalism as We Know It and the Beginning of Reform.”
Labor: Studies in Working-Class History of the Americas 8(4, December 21).
Piven, Frances Fox, and Richard A. Cloward. 1971. Regulating the Poor: The Func­
tions of Public Welfare. New York: Vintage Books.
Polanyi, Karl. 1971. The Great Transformation. Boston: Beacon Press. (Originally
published in 1944.)
Pollin, Robert, and Stephanie Luce. 2000. The Living Wage: Building a Fair Economy. -1
New York: New Press. 0
+1

13502-02_CH01-2ndPgs.indd 47 12/10/13 8:33 AM

 48    What Works for Workers?

Poole, Mary. 2006. The Segregated Origins of Social Security. Chapel Hill: University
of North Carolina Press.
President’s Committee on Civil Rights. 1947. To Secure These Rights. Available
at: Harry S. Truman Library and Museum, http://www.trumanlibrary.org/
civilrights/srights1.htm (accessed January 2013).
Radford, Gail. 1996. Modern Housing for America: Policy Struggles in the New Deal
Era. Chicago: University of Chicago Press.
Raphael, Stephen, and Michael Stoll, eds. 2009. Do Prisons Make Us Safer? The
Benefits and Costs of the Prison Boom. New York: Russell Sage Foundation.
Republican National Committee. 1994. Contract with America: The Bold Plan by Newt
Gingrich, Rep. Dick Armey, and the House Republicans to Save the Nation. New
York: Times Books.
Rodgers, Daniel. 2011. Age of Fracture. Cambridge, Mass.: Harvard University
Press.
Rohe, William M., and Harry L. Watson, eds. 2007. Chasing the American Dream:
New Perspectives on Affordable Homeownership. Ithaca, N.Y.: Cornell University
Press.
Roosevelt, Franklin D. 1941. “State of the Union Address: The Four Freedoms.”
January 6. Available at: http://americanrhetoric.com/speeches/fdrthefourfree
doms.htm (accessed January 2013).
———. 1944. “State of the Union Message to Congress.” January 11. Available at:
http://www.fdrlibrary.marist.edu/archives/address_text.html (accessed Janu-
ary 2013).
Russell Sage Foundation and Pew Charitable Trust. 2011. “Does America Pro-
mote Mobility as Well as Other Nations?” Washington, D.C.: Pew Charitable
Trusts.
Schulman, Bruce. 2001. The Seventies. New York: Free Press.
Schulman, Bruce, and Julian Zelizer. 2008. Rightward Bound. Cambridge, Mass.:
Harvard University Press.
Self, Robert. 2003. American Babylon: Race and the Struggle for Postwar Oakland.
Princeton, N.J.: Princeton University Press.
Sherman, Arloc. 2012. “Off the Charts: SNAP (Food Stamps) and Earned Income
Tax Credit Had Big Antipoverty Impact in 2011.” Washington, D.C.: Center
on Budget and Policy Priorities, September 22. Available at: http://www.off
thechartsblog.org/snap-food-stamps-and-earned-income-tax-credit-had-big-
antipoverty-impact-in-2011/ (accessed January 2013).
Sherradan, Michael. 1991. Assets and the Poor. Armonk, N.Y.: M. E. Sharpe.
Shulman, Beth. 2005. The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Ameri­
cans. New York: New Press.
Simon, Jonathan. 2009. Governing Through Crime: How the War on Crime Transformed
-1 American Democracy and Created a Culture of Fear. New York: Oxford University
0 Press.
+1

13502-02_CH01-2ndPgs.indd 48 12/10/13 8:33 AM

 An Economy That Works for Workers    49

Steensland, Brian. 2008. The Failed Welfare Revolution: America’s Struggle over Guar­
anteed Income Policy. Princeton, N.J: Princeton University Press.
Stein, Judith. 2010. Pivotal Decade: How the United States Traded Factories for Finance
in the 1970s. New Haven, Conn.: Yale University Press.
Sugrue, Thomas J. 1996. Origins of the Urban Crisis. Princeton, N.J.: Princeton
University Press.
Thompson, Heather. 2010. “Why Mass Incarceration Matters: Rethinking Crisis,
Decline, and Transformation in Postwar American History.” Journal of American
History 97(3): 703–34.
Tobin, James. 1967. “It Can Be Done! Conquering Poverty in the U.S. by 1976.” The
New Republic (June 3): 14–18.
Trisi, Danilo, and LaDonna Pavetti. 2012. “TANF Weakening as a Safety Net for
Poor Families.” Washington, D.C.: Center on Budget and Policy Priorities.
U.S. Department of Health, Education, and Welfare. 1969. Toward a Social Report.
Washington: U.S. Government Printing Office.
U.S. Financial Crisis Inquiry Commission. 2010. “The Financial Crisis Inquiry
Report.” Washington: U.S. Government Printing Office.
Western, Bruce. 2006. Punishment and Inequality in America. New York: Russell Sage
Foundation.
Western, Bruce, and Becky Pettit. 2010. Collateral Costs: Incarceration’s Effect on Eco­
nomic Mobility. Washington, D.C.: Pew Charitable Trusts.
Zedlewski, Sheila R. 2012. “Welfare Reform: What Have We Learned in Fifteen
Years?” Washington, D.C.: Urban Institute.

-1
0
+1

13502-02_CH01-2ndPgs.indd 49 12/10/13 8:33 AM

 Chapter 2  hat Can Labor Organizations
W
Do for U.S. Workers When Unions
Can’t Do What Unions Used to Do?

Richard B. Freeman

The starting point for any realistic assessment of what labor organizations
can do for American workers is recognition that the traditional union model
of organizing workers through representation elections and bargaining col-
lectively with management has reached a dead end. With private-sector
union density in single digits and falling and public-sector collective bar-
gaining under attack, the only sensible answer to this chapter’s title ques-
tion is that unions will not accomplish much unless they find ways to have
an impact on economic outcomes outside of collective bargaining.
In some ways the situation of labor in the early twenty-first century
resembles that in 1932 when George Barnett, then president of the Ameri-
can Economic Association, declared that “I see no reason to believe that
American trade unionism will . . . become in the next decade a more potent
social influence . . . trade unionism is likely to be a declining influence in
determining conditions of labor.”1 Barnett’s analysis was predicated on the
continuous fall in union density in the 1920s and Great Depression levels of
joblessness that seemed to strengthen employers’ ability to defeat any orga-
nizing efforts. Today a similar view would follow from the continuous fall in
union density from the 1960s through the early 2010s, the weak job market
during the Great Recession of 2007 to 2009, and the sluggish jobs recovery.
Barnett’s prognostication was invalidated almost immediately after his
address—millions of workers turned to unions for economic protection
during the Great Depression. But the Great Recession has seen no such
-1 response. Indeed, the recent recession has, if anything, produced the
0 opposite reaction: it has emboldened conservative attacks on public-sector
+1
50

13502-03_CH02-2ndPgs.indd 50 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    51

bargaining and union security clauses and forced unions into a circle-the-
wagons defense of existing practices.
If defending the declining percentage of workers with access to collective
bargaining was the entire story of labor in the 2000s, this chapter would end
with a short rest-in-peace epitaph. But in the 2000s, declining union density
and the Great Recession notwithstanding, labor activists, social entrepre-
neurs, and some unionists have developed new ways to mobilize workers
and the public to press for improvements in labor conditions outside of col-
lective bargaining. If unions and other labor organizations find ways to bring
these successful innovations to scale, the answer to the title question will be
“quite a bit” rather than “not much.”
This chapter explores what unions and related labor organizations have
begun to do for workers outside of collective bargaining. I begin by review-
ing the problem posed for labor by the failure of the firm-based collective
bargaining model, then examine some promising non–collective bargaining
initiatives, and conclude by considering how these initiatives might expand
to make labor a more potent influence on economic outcomes than it is today.

the Contraction of Collective Bargaining

Union density declined in many advanced countries from the 1990s to the
2010s. The loss of density weakened the ability of unions to represent labor
in society more in the United States, however, than in most other countries
because many EU countries mandate the extension of collective agreements
from signatory unions and employer federations or firms to workers or
firms in entire sectors or regions. Mandatory extension maintains collec-
tive bargaining as the mode of setting pay and conditions of work despite
falling union density. In the United States, by contrast, from the enactment
of the National Labor Relations Act (NLRA) in 1935 to the present, private-
sector unionism and collective bargaining have been coterminous. U.S.
unions view themselves primarily as bargaining agents for workers in firms
that recognize unions and as having little or no relation to other workers.
When a worker leaves a unionized workplace, most unions make little or
no effort to continue to provide services to that worker. Making collective
bargaining the core activity of unions worked well when unions bargained
for a substantial share of the workforce. But from the 1960s to the present,
the collective bargaining model has run aground on the inability of unions
to organize private-sector workers in the face of management opposition;
economic conditions that reduce union bargaining power with employers;
and political conditions that stymie union efforts to get Congress to amend
the NLRA to make it easier for workers to form unions and bargain with -1
employers. In the public sector, where union density has remained high, 0
+1

13502-03_CH02-2ndPgs.indd 51 12/10/13 8:33 AM

 52    What Works for Workers?

Great Recession–induced reductions in public-sector revenues sparked a

conservative effort to curb public-sector bargaining in the late 2000s by tak-
ing advantage of changes in density, concession bargaining, and changes in
the use of work stoppages.
Density is fundamental to union strength. In 2012 private-sector density
was at 6.6 percent—the lowest it has been since 1900, when total density,
then based almost entirely on private-sector workers, was 6.8 percent (Free-
man 1998, 291; see also U.S. Department of Labor 2013). In the 2000s, unions
initiated National Labor Relations Board (NLRB) representation elec-
tions for so few workers that even had unions won all of the elections, the
impact on density would have been barely noticeable.2 Organizing outside
the NLRB was too limited to counterbalance the natural drop in density
when union plants closed or shrank and new establishments became non-
union. Indicative of the decline of unionism, in 2009 more workers viewed
company-appointed non-union committees as representing them with
employers—presumably illegal under section 8(a)(2) of the NLRA—than
reported that elected unions represented them (Godard and Frege 2010).
Within the organized sector, economic conditions forced many unions
into concession bargaining. Consider the relation between the United Auto-
mobile Workers (UAW) and the “Big Three” auto firms. Between 2003 and
2008, plant closings and buyout and early-retirement programs reduced
UAW membership at General Motors, Ford, and Chrysler from 350,000 to
139,000 workers.3 When GM and Chrysler came close to collapse in the
Great Recession, federal bailout aid kept them alive and helped Ford sur-
vive as well. The UAW took responsibility for retiree health care, accepted
lower-pay entry jobs and profit-sharing arrangements in place of fixed pay,
and acceded to other cost-saving givebacks.4 The auto firms survived, and
in the ensuing recovery workers gained substantial bonuses.5 But from 2008
to 2011, employment in motor vehicles and motor vehicle manufacturing
dropped 24.2 percent, and even with the rescue package and recovery,
employment in mid-2012 was still 15.9 percent below its mid-1998 level.6
Work stoppages, which were once synonymous with workers striking
for higher pay or better benefits, have increasingly become an employer’s
weapon to pressure workers to accept wage or benefit cuts or to break
unions through lockouts.7 More lockouts were reported in the early 2010s
than ever before, from professional sports to manufacturing firms to the
New York City Opera.8 About 9 percent of work stoppages from 2010 to
late 2012 resulted from lockouts, double the 4.6 percent of work stoppages
that were lockouts in the 1990s and 2000s (Combs 2012a). Lockouts tend
to be longer than strikes and have increased in length as some firms use
-1 long lockouts to destroy their existing unions (Combs 2012b). The greater
0 length of lockouts means that the share of persons on a work stoppage
+1

13502-03_CH02-2ndPgs.indd 52 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    53

due to a lockout at any point in time increased more than the lockout
share of stoppages.
To arrest the decline in density unions have tried to convince Congress
to enact pro-union labor law reforms whenever the Democrats control the
federal government. Their efforts came up short in the 1970s under Presi-
dent Jimmy Carter, in the 1990s under President Bill Clinton, and in the
2000s under President Barack Obama. Efforts to invigorate union organiz-
ing by elevating former organizing directors to leadership roles in unions
and the 2005 withdrawal of several major unions from the AFL-CIO to form
the Change to Win coalition also failed to arrest the drop in density.
The public sector is the only place where unions held their own. Public-
sector union density stabilized at around 37 percent in the 2000s.9 With
private-sector density falling and public-sector density rising, public-sector
union membership surpassed private-sector membership in 2010. When
recession-induced budget crises hit cities and states nationwide, however,
opponents of unions launched a massive attack on public-sector bargain-
ing on the grounds that collective bargaining had contributed substantially
to the public-sector deficit problem (Freeman and Han 2012).10 The Ameri-
can Legislative Exchange Council (ALEC), an association of conservative
legislators, corporations, and foundations, promulgated bills to restrict
public-sector bargaining and limit dues checkoffs, agency fees, and union
political activities. The battle in Wisconsin over Republican governor Scott
Walker’s 2011 budget bill that ended public-sector collective bargaining
except for police and fire induced a massive union response (Schneider
2011).11 State petitions forced Governor Walker into a recall election but
the pro–collective bargaining forces were unable to unseat him in the elec-
tion. In Ohio, unions and their allies were more successful in overturning
a bill to end collective bargaining for all public-sector employees in a state-
wide referendum. But in December 2011, a lame-duck Republican legisla-
ture in Michigan enacted a right-to-work law that outlawed agency shops
for workers, with the exception of police and firefighters.12 In these states
and others, unions spent considerable resources defending the status quo
against well-financed opponents who seemed orc-like in their efforts to
accelerate the ongoing decline in collective bargaining.
What explains the continued decline of unions during the Great Reces-
sion and recovery compared to the spurt in unionism during the Great
Depression?
Opinion polls suggest that the two economic disasters altered public
attitudes toward unions differently. When unions had their Great Depres-
sion growth spurt between 1934 and 1939, the vast majority of Americans
appear to have strongly favored unions (Freeman 1998, 268, table 8.1). The -1
Gallup poll data in figure 2.1 show that in 1936 (the first time Gallup asked 0
+1

13502-03_CH02-2ndPgs.indd 53 12/10/13 8:33 AM

 54    What Works for Workers?

Figure 2.1  Approval of Labor Unions Among Americans,

1936 to 2011

Do you approve or disapprove of labor unions?

Approve Disapprove

80 75
72 66 65
64
60 59 59
Percentage

52

40 42
31 30 28
20 20 21 23
14
0
1936 1941 1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Year

Source: Jones (2012). Copyright (2012) Gallup, Inc. All rights reserved. The content is used
with permission; however, Gallup retains all rights of republication.

about attitudes toward unions), 72 percent approved of unions compared

to 20 percent who disapproved.13 The Depression had destroyed faith
in the established economic order and convinced workers to seek new
ways to structure their work lives and the economy. Attitudes toward
unions in the Great Recession went the other way. The percentage approv-
ing unions fell from 60 percent in 2007 to 48 percent in 2009 and remained
low, at 52 percent, through 2012. This fits with a general post–World War II
pattern in which public approval of unions rises when unemployment is
low and falls when unemployment is high (Silver 2009, data from 1948 to
2008; Madland and Walter 2010, 7).
Figure 2.2 shows a concomitant change in the responses of citizens to
whether they want unions to have less, more, or the same influence on soci-
ety. Between 2007 and 2009, the proportion who wanted unions to have less
influence increased from 28 percent to 42 percent, after which it changed little
through 2012. One possible explanation for the reduced support for unions
in the Great Recession is the concentration of unionism among government
employees, whose wages and benefits were obtained from taxes paid by
private-sector workers who had little chance of unionizing and gaining
higher wages and benefits from their employers. Many respondents may
also have viewed the bailout of the auto firms as the UAW using its politi-
-1 cal power to get the federal government to help unionized auto workers
0 at the expense of the rest of society (Madland and Walter 2010; Meyerson
+1

13502-03_CH02-2ndPgs.indd 54 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    55

Figure 2.2  Americans’ Attitudes on the Influence of Labor Unions,

2000 to 2012

Would you personally like to see labor unions in the United States have more influence
than they have today, or less influence than they have today?
Same Less More

42 42 41
40
38
36 36 36
Percentage

35 35 35
32 31 31 32
30 33 32 29 30 29
28
30 30 29 29
27 28 28 27
25 25 25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year

Source: Jones (2012). Copyright (2012) Gallup, Inc. All rights reserved. The content is used
with permission; however, Gallup retains all rights of republication.

2012). Consistent with this, while before the Great Recession a majority of
Americans believed that unions benefit not only their members but other
workers as well, after the recession a majority believed that unions mostly
harm nonmembers.14
But the most telling aspect of the increasingly negative attitudes toward
unions is its partisan nature. Figure 2.3 shows that between 1999 and 2011
Republican approval of unions fell from 51 percent to 26 percent. By con-
trast, Democrats maintained a high approval of unions, while indepen-
dents’ approval of unions fell modestly. The Democratic-Republican gap
in approval doubled from twenty-six points in 1999 to fifty-two points in
2011. The 2011 negative Republican attitude toward unionism is a far cry
from the Republican attitude in the 1950s, when President Dwight Eisen-
hower thanked unions for their “unique contribution to the general welfare
of the Republic—the development of the American philosophy of labor”
(Eisenhower 1955).
Figure 2.4 shows another factor that may help explain union weak-
ness in the current period: the widespread belief that unions will become
weaker in the future. Although Gallup did not ask, “Will labor unions
become stronger or weaker?” in the 1930s, the burst of strikes in 1933 and -1
1934, the development of industrial unionism in the mid-1930s, and the 0
+1

13502-03_CH02-2ndPgs.indd 55 12/10/13 8:33 AM

 56    What Works for Workers?

Figure 2.3  Approval of Labor Unions, by Political Party, 1999 to 2011

% Approve
Democrats Independents Republicans

77 77 80 78
76 74 75 76 76 72 71
66
56 57 58 60
Percentage

70 69 55 52
60 63 49
44
51 50
46 43 42 43
41 38 38 34
29 26

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year

Source: Jones (2011). Copyright (2011) Gallup, Inc. All rights reserved. The content is used
with permission; however, Gallup retains all rights of republication.

Figure 2.4  Americans’ Attitudes on the Future Strength

of Labor Unions, 2000 to 2012

Thinking about the future, do you think labor unions in this country will become
stronger than they are today, the same as today, or weaker than they are today?
Stronger Same Weaker

53 55
52
48 46
44 45
41
Percentage

40 41
36
30 31 30
28 35 34 25 25
24 22 22
25 24 24 25
23 21 22 21
19 19 20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year

Source: Jones (2012). Copyright (2012) Gallup, Inc. All rights reserved. The content is used
-1 with permission; however, Gallup retains all rights of republication.
0
+1

13502-03_CH02-2ndPgs.indd 56 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    57

formation of the Congress of Industrial Organizations (CIO) suggest that

a much larger proportion of Americans thought unions were the future
rather than the past in the 1930s than was the case in the 2010s.
Americans have also soured on other economic and political institutions
beyond unions in the past three decades. Reviewing diverse opinion polls,
David Madland and Karla Walter (2010) report a drop in “favorable atti-
tudes” toward and “confidence” in business from the 1970s and 1980s that
exceeds the comparable loss of favorableness or confidence in labor. Since
the Great Recession, a sizable proportion of Americans now believe that the
country is headed in the wrong direction.15 In 2011 the public rated lobbyists,
major corporations, and financial institutions as the top institutions with “too
much power” and placed unions in the middle of the pack, on par with state
government and the legal system. The average responses, however, mask
the partisan divide in attitudes toward unions. Republicans place unions just
below the arch-villain federal government in their list of institutions with too
much power, while Democrats place unions at the bottom of their list.16 But
regardless of where unions fit in the public perception of institutions with
too much power, they are the only institution under such continuous attack
as to face near-extinction unless they find new ways to operate.

Labor Organizations Without

Collective Bargaining
With the percentage of workers covered by collective bargaining steadily
shrinking, activists inside and outside of unions have sought new ways
to represent worker interests and maintain organized labor as the voice of
workers in U.S. capitalism. In 2000, Joni Hersch, Larry Mishel, and I orga-
nized a National Bureau of Economic Research (NBER) conference on
“Emerging Labor Market Institutions for the Twenty-First Century,” held
August 4–5, to examine the degree to which non–collective bargaining
institutions were beginning to fill the gap left by declining unionism (Free-
man, Hersch, and Mishel 2004). Our group examined a wide range of orga-
nizations: anti-sweatshop human rights groups; living wage campaigns;
law groups devoted to enforcing labor and employment law; Working
Today, an organization that was beginning to provide portable benefits to
freelance workers; occupational associations; and union-management and
community-based intermediaries that provided training to workers outside
their firm. The “Emerging Institutions” study found that none of the organi-
zations had developed the depth or breadth to be capable of substituting for
unions, but noted that “this volume is just the first chapter in what may be
a long story of innovations by nonmember organizations, by professional -1
and other nonunion organizations, and by unions to find the best way to 0
+1

13502-03_CH02-2ndPgs.indd 57 12/10/13 8:33 AM

 58    What Works for Workers?

represent the interests of labor in an economic environment where tradi-

tional unionism is greatly weakened” (Freeman and Hersch 2004, 11).
This section is the second chapter in that story. It gives a more positive
reading of the ability of new organizational forms to mobilize workers and
improve labor conditions than the 2000 conference. By 2012, more non–
collective bargaining institutions were operating and having an impact on
labor developments in novel ways than a decade earlier. The spread of
low-cost, Internet-based information and communication tools had made
it easier to mobilize citizens, organize demonstrations and campaigns,
and identify and appeal to workers than in earlier years.
Table 2.1 lists eleven non–collective bargaining labor institutions that
formed or developed their current structure in the late 1990s and 2000s,
categorized into three groups:

1. Groups that target broad economic and social issues and do not deal
with specific firms, occupations, or industries
2. Groups that target workers in particular occupations or industries,
seeking to improve their economic situation without gaining collec-
tive bargaining contracts
3. Groups that seek to improve the economic situation of workers in par-
ticular firms or those working for particular employers without gain-
ing collective bargaining contracts

Organizations Targeting Broad Economic and Social Issues

Bringing Attention to Big Problems: Occupy Wall Street In September
2011, Occupy Wall Street protesters sat down in Zuccotti Park near Wall
Street to demonstrate against economic inequality.17 The disparate group of
largely college graduates camped out under banners that read We Are the
99% did more to bring the problem of inequality to U.S. policy discourse
than academics or unions had done in the preceding two to three decades.18
Occupy spawned protests not only in the United States but worldwide.19
The U.S. Occupy groups ranged from Wall Street–savvy experts writing
technical critiques of financial regulations (www.occupythesec.org) to
city-based groups focused on local issues (www.occupyoakland.org)
to university-based groups targeting campus issues—Goldman Sachs
recruiting at Harvard, for instance (www.occupyboston.org).20 With its
non­partisan orientation and stress on identifying problems rather than
-1 offering solutions, the Occupy movement has shown that modern infor-
0 mation and communication technology and social media allow a small
+1

13502-03_CH02-2ndPgs.indd 58 12/10/13 8:33 AM

 Table 2.1  Eleven Innovative Non–Collective Bargaining
Labor Organizations
Institution (beginning Method of
date, numbers Problem Influencing
involved, dues) Organization Addressed Outcome
Based on Social and Economic Issues
Occupy movement Diverse; Inequality; Publicity;
(2011, thousands) many college finance demonstrations
graduates issues;
varies by
region
Change.org, Internet For-profit User Publicity via
petition site (2007, business determined petitions
thousands of peti-
tions, 123 million
signatures, 20 mil-
lion users)
Working America AFL-CIO Local issues; Ballot box
(2003, 3 million) community electoral
affiliate information;
links to
Union Plus
benefits

Based on Occupation or Industry

Worker centers (part- NGO; Workplace Help with “griev-
ner with AFL-CIO; religious issues; access- ances”; expose
2006, 139 centers foundations; ing benefits; bad practices;
servicing less fund- immigrant advocacy;
than 500 members raising; rights targeting
but service more dues employers
people)
National Domestic NGO Pay and work Publicity; exten-
Workers Alli- conditions sion of labor
ance (2007, 10,000 of domestic laws to domes-
persons in 35 local, workers tic workers;
membership-based affiliated work
organizations) centers to help
workers with
problems
New York Taxi Work- First non– Pay and ben- Helping members
ers Alliance (1998, collective bar- efits in taxi with workplace
15,000 members, gaining mem- industry problems; legal
$100/year dues) ber of NYC and political
Central Labor advocacy for
Council drivers; -1
discounted 0
benefits +1
(Table continues on p. 60.)

13502-03_CH02-2ndPgs.indd 59 12/10/13 8:33 AM

 60    What Works for Workers?

Table 2.1  (Continued)
Institution (beginning Method of
date, numbers Problem Influencing
involved, dues) Organization Addressed Outcome
Freelancers Union Worker health Worker health Provide health
(2003, created from insurance insurance; insurance
Working Today, wage arrears benefits;
170,000 members, problems information
no dues)

Employer-Based
Alliance@IBM (1999, Commu- Changes in Internet informa-
several hundred nications employment tion/publicity;
members, 5,000 sub- Workers of practices and petitions
scribers, $10/month America benefits
dues) (CWA) local
WashTech (1998, CWA local Changes in Internet
$10–11/month dues) employment information/
practices and publicity;
benefits petitions
OUR Walmart (2010, NGO, with Pay and work Publicity;
based on earlier UFCW conditions in demonstrations
UFCW campaigns, support Walmart
“several thousand”
members, $5/month
dues)
Public-sector unions Unions Wages, Politics; lobbying;
in non–collective benefits, meet-and-
bargaining states work confer
(680,000 in 2011, conditions agreements
14.5 percent
density)
Source: Author’s compilation. On Change.org, see “Start a Petition” (http://www.change.org/)
and “About” (http://www.change.org/about) (accessed December 12, 2012); on the Freelanc-
ers Union, see “History” (http://www.freelancersunion.org/about/history.html); on Working
Today, see Hersch (2004); on subscriber numbers for Alliance@IBM and on OUR Walmart,
see Steven Greenhouse, “Wal-Mart Workers Try the Nonunion Route,” New York Times, June
15, 2011; on public-sector unions, see Freeman and Han (2013).

-1
0
+1

13502-03_CH02-2ndPgs.indd 60 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    61

group without much money or organization to come together and create

ruckuses about social issues.21

Online Petition Sites: Change.org Online petition sites provide a plat-

form for citizens to use the historic mode of petitioning governments or
other organizations to change policies.22 Change.org, a for-profit, certified
B-corporation,23 is currently the world’s leading petition site.24 If you have
Internet access, you can express easily your opinion on an issue. Go to the
website and click the Start a Petition button. The script will ask you a set
of questions: “Who do you want to petition?” “What do you want them to
do?” “Why is this important?” Then you write your petition and submit it.
The site alerts people who might be interested in your cause, who may then
alert their friends, and . . . pow! the petition may go viral. Change.org makes
money by selling its email database to charitable and other organizations
that want to connect with people who have particular interests.
In the fall of 2011, two petitions begun by Molly Katchpole, a twenty-
two-year-old college graduate working as a nanny, demonstrated the
power of Internet petitioning. In October, the Bank of America (BOFA)
began charging low-income customers monthly fees for using their debit
cards.25 Customer Katchpole placed a petition on Change.org, asking
BOFA to rescind the policy (Colgrass 2011). It reads:

Brian T. Moynihan, President and CEO, Bank of America

I’m writing to express my deep concern over Bank of America’s deci-

sion to charge customers $5 a month to use their debit cards when making
purchases.
The American people bailed out Bank of America during a financial
crisis the banks helped create. You paid zero dollars in federal income tax
last year. And now your bank is profiting, raking in $2 billion in profits
last quarter alone. How can you justify squeezing another $60 a year from
your debit card customers? This is despicable.
American consumers can’t afford these additional fees. We reject any
claims by BofA that this latest fee is somehow necessary.
Please, do the right thing. Reverse your decision to charge customers
$5 each month for using their debit cards to make purchases.

Sincerely,
[your name]26

The petition was signed by 300,000 people, including President Barack -1

Obama. U.S. Senator Richard Durbin of Illinois responded to the petition 0
+1

13502-03_CH02-2ndPgs.indd 61 12/10/13 8:33 AM

 62    What Works for Workers?

on Twitter. Congress decided to “look at legislation for out-of-control

banking fees.”27 Most important, the media gave the petition national
exposure, and people responded. Some customers left the Bank of Amer-
ica. Others threatened to leave. Faced with furious customers, the Bank of
America dropped its banking fee.
Two months later, Verizon announced that customers paying telephone
bills online had to pay a $2 fee. Customer Katchpole wrote a petition pro-
testing the Verizon fee. Within hours, her petition gathered over 130,000
signatures. The Federal Communications Commission (FCC), which regu-
lates telecommunications, announced that it would investigate. But there
was no need for regulators. As Katchpole’s petition gained signatures,
Verizon withdrew the fee (Frellick 2012).
Change.org petitions rarely gain as much attention as Molly Katchpole’s
petitions and do not always end so successfully. In 2012, Rachel Voorhies
at Dosha Salon Spa in Oregon petitioned her employer to bargain with the
union the workers had chosen in an NLRB election the previous year. This
petition had 595 signatories as of February 22, 2012, but signatures increased
so rapidly in the ensuing months that in May 2012 change.org made the fol-
lowing announcement: “After over 17,000 signed Rachel Voorhies’ petition
. . . the owners have agreed to sit down with Rachel and her coworkers. In
June 2012, Dosha and representatives of the union representing Rachel and
her co-workers will begin mediation to settle their disputes and agree on
ways to address workers’ concerns like wages, health and safety, vacation
time and benefits.”28 But the petitions did not in fact pressure management
to compromise with the workers. Two months later, faced with a decertifi-
cation election by workers who recognized that the union lacked the power
to improve their situation, the union disclaimed interest, effectively dissolv-
ing itself.29 Petitions can move firms to change their behavior, but seemingly
only if they carry with them a viable threat of imposing economic costs on
the firm, such as loss of customers, which the Dosha petition did not do.
The Occupy demonstrations and change.org and other Internet petition
drives arise from grassroots individual behavior, using modern Internet-
based technology and social media communication. Viewed through the
lens of economics, these movements either create new markets or modern-
ize older ways for people to come together and press society on issues that
matter to them. Demonstrations and petitions succeed if the issues they
target meet the market test of getting enough individuals involved and if
they put significant pressure on the “powers that be” to rethink decisions.

-1 Political Influence: Working America Created by the AFL-CIO, Work-

0 ing America (WA) is a non–collective bargaining “community affiliate” that
+1

13502-03_CH02-2ndPgs.indd 62 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    63

connects the federation to non-union workers, largely for the purpose of

extending union political influence beyond its declining membership (for
a detailed description, see Freeman and Rehavi 2009). Canvassing people
in their homes to join, WA recruited about 2 million members in 2007 in
states that it viewed as politically important in the 2008 national election,
such as Ohio, Pennsylvania, and Virginia. It also obtained a national mem-
bership by gaining 135,000 members online, and by 2012 WA reported
having about 3 million members. The organization offers involvement in
a social movement focused on “the priorities that matter most to work-
ing people . . . [that can] . . . make a difference for your community, for
America and for your working family,” but its primary goal is to encour-
age members to become politically active and to vote for union-endorsed
candidates. Until the Supreme Court’s Citizens United decision in 2010,
unions could not use their resources to proselytize nonmembers in politi-
cal campaigns and thus needed an organization like WA to be able to tar-
get nonmember voters.30 By allowing all organizations to use their funds
for political purposes, Citizens United has eliminated this rationale for
unions funding WA.
With local offices in many areas and a large membership, Working
America could evolve into much more than a Washington-run organiza-
tion seeking to influence citizens to vote in favor of unions, but without
collective bargaining. WA could decentralize its structure, develop pro-
cedures for members to elect leaders in local chapters, and encourage
chapters to experiment with their own ways of engaging the public and
targeting workplace issues. Harold Meyerson (2012) reports that Working
America “began some small-scale efforts in 2012 to have its members raise
issues in their workplaces,” but WA has a long way to go to become a free-
wheeling, member-driven, emerging labor institution.

Organizations Based on Occupation, Industry,

or Community
Community-Based Advocacy: Worker Centers Worker centers are
community-based organizations that support low-wage workers, mostly
from immigrant communities, outside of collective bargaining (for the most
detailed analysis; see Fine 2006). The centers give legal assistance to indi-
vidual workers facing wage arrears (delayed or unpaid wages) and other
problems and educate workers and their communities about ways to cam-
paign and lobby for improved work conditions. The number of worker
centers increased rapidly from a handful in the 1990s to perhaps 150 by -1
the late 2000s (Marculewicz and Thomas (2012). The centers have coalesced 0
+1

13502-03_CH02-2ndPgs.indd 63 12/10/13 8:33 AM

 64    What Works for Workers?

into two national networks, the National Day Laborer Organizing Network
(NDLON), which had forty-three member organizations in 2012, and the
Interfaith Worker Justice (IWJ), which listed twenty-six worker centers that
reached seventeen thousand workers in 2012 (Enriquez 2011). Impressed
by the worker centers movement, the AFL-CIO entered into partnership
with NDLON in 2006 to “work together for state and local enforcement
of rights as well as the development of new protections in areas includ-
ing wage and hour laws, health and safety regulations, immigrants’ rights
and employee misclassification . . . [and] . . . for comprehensive immigra-
tion reform that supports workplace rights . . . and against punitive, anti-
immigrant, anti-worker legislation” (AFL-CIO 2006).31 The AFL-CIO also
formed a partnership with the IWJ and entered similar agreements with
two related immigrant-based organizations, the National Domestic Work-
ers Alliance (NDWA) and the National Guestworker Alliance (NGA).
Since worker centers do not bargain collectively with single employ-
ers, they operate outside of the NLRA and seek to remain outside its juris-
diction, which would limit their ability to undertake secondary boycotts
to assist workers outside of collective bargaining and would require
them to file regular reports with the agency. Whether the centers can
remain outside the NLRA is an area of controversy among labor lawyers.
David Rosenfeld (2006, 469) argues that the definition of a labor orga-
nization is sufficiently broad that, “as they grow in number and scope,
worker centers will have their development and effectiveness arrested
by the very problem they were designed to avoid: the regulation of and
restrictions on labor organizations under the National Labor Relations
Act (NLRA).” Eli Naduris-Weissman (2009) argues the contrary—that as
long as the centers limit themselves to settling individual employment
claims, they will be exempt from the law.32 Stefan Marculewicz and Jenni-
fer Thomas (2012) claim that the worker centers are worker organizations
by another name and thus subject to NLRA regulations.33 That the centers
prefer operating outside of the NLRA is a sign of how dysfunctional the
U.S. labor code has become for workers seeking to better their economic
condition.

Extending Labor Law to Domestic Workers: National Domestic Work-

ers Alliance The National Domestic Workers Alliance (NDWA) is a
nongovernmental umbrella organization that provides information on
the conditions of domestic workers and advocates for legislation to
bring domestic workers under labor law.34 Based on thirty-five local,
-1 membership-based affiliate organizations of over ten thousand nannies,
0 housekeepers, and caregivers for the elderly located in nineteen cities
+1

13502-03_CH02-2ndPgs.indd 64 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    65

and eleven states, the NDWA operates further outside the NRLB labor
organizational form than worker centers. The NDWA’s main legislative
success was lobbying New York State to adopt the “Domestic Workers’
Bill of Rights” to ensure basic labor protections for domestic workers. A
similar bill that it pushed through the California legislature was vetoed
by Governor Jerry Brown. It has pressed Congress to end exclusions of
domestic workers from the nation’s labor laws and to cover them under
minimum wage and hours legislation. In 2011 the AFL-CIO endorsed
the NDWA and sent a joint “open letter” with the group to trade unions
and national centers around the world about the union movement’s
work with the NDWA (AFL-CIO/NDWA 2011).35 Time magazine viewed
the NDWA as sufficiently promising to name the group’s founder,
Ai-Jen Poo, one of the one hundred most influential people in the world
in 2012—the only person on the list whose occupation was labor activist
(Steinem 2012).

Advocacy for Taxi Drivers: New York Taxi Workers Alliance The New
York Taxi Workers Alliance (NYTWA) represents taxi drivers in the city as a
trade union but without bargaining collectively with any single employer.
Founded in 1998, the NYTWA reports having more than fifteen thousand
members, who pay $100 a year in dues. It lists its successes as: gaining
the first-ever living wage standard for U.S. taxi drivers; getting $15 million
in federal disaster assistance for taxi drivers after the terrorist attacks of
September 11, 2001; organizing short strikes of drivers in May 1998 and
September 2007; recovering lost income due to unlawful license suspen-
sions; defending drivers in civil court claims; lobbying for driver-friendly
taxi industry policies and regulations. All of these successes, it claims, have
raised drivers’ incomes by 35 to 45 percent.
The NYTWA provides discounted or pro bono legal advice, financial
management, and health services to its members. In September 2011, the
AFL-CIO chartered the NYTWA as a member of the federation, making it
the first nontraditional workers’ organization chartered in over six decades.
President Obama recognized the union for its success at a Washington, D.C.,
meeting hosted by the administration’s Office of Faith-Based and Neigh-
borhood Partnerships. The organization has inspired and assisted with the
development of similar taxi driver worker alliances in twenty other areas
of the United States and in several foreign countries. For creating a stable
labor organization in an industry with high turnover, and in the absence of
collective bargaining, the founder, Bhairavi Desai, has won various awards
and been lauded for her success by President Obama and AFL-CIO head -1
Richard Trumka.36 0
+1

13502-03_CH02-2ndPgs.indd 65 12/10/13 8:33 AM

 66    What Works for Workers?

Obtaining Health Insurance: Freelancers Union The Freelancers Union

is a federation of independent workers that advocates for freelancers in
the United States and operates a B-corporation insurance company to
provide insurance benefits for independent workers in New York State at
group health insurance rates. Initially, the Freelancers Union purchased
insurance for its members from commercial insurance companies, but
since 2008 it has done so through its wholly owned, for-profit subsidiary.
The organization grew from about 35,000 members in the 1990s to close
to 200,000 members as of January 2013. With support from New York City
and New York State, it launched a freelancer medical center in Brooklyn in
2013, and with $340 million in federal funding, it is scheduled to expand
its health coverage in New York, New Jersey, and Oregon in 2014. The
Freelancers Union does no collective bargaining over wages or working
conditions, but provides members with information about how to deal
with wage arrears, which is a major problem for its members (Rodgers
2010). It also provides members with online tools, business management
information, networking opportunities, group discount terms with vari-
ous vendors or partners, and other assistance in working successfully as
independents. It sponsored the Freelancer Payment Protection Act (S4129/
A6698) in New York to grant freelancers the same wage protection as tra-
ditional employees and require the state department of labor to pursue
freelancers’ unpaid wages and hold deadbeat executives liable for up to
$20,000 and jail time. The Freelancers Union receives considerable grant
support from foundations, New York City, and New York State. In 2011
both Forbes and Businessweek named its founder, Sara Horowitz, to their
lists of “top social entrepreneurs.”

Employer-Based Organizations
Union Locals: Alliance@IBM and WashTech Both Alliance@IBM and
the Washington Alliance of Technology Workers (WashTech) are char-
tered locals of the Communication Workers of America (CWA). Informa-
tion technology (IT) workers at IBM and Microsoft originally formed the
groups as independent worker organizations and later affiliated with the
CWA, which represents workers in telecommunications and related fields.
IT workers at IBM formed the Alliance@IBM in 1999 to protest the changes
that IBM made to its pension system that harmed some future retirees. The
protest succeeded in getting IBM to alter some parts of its planned changes.
Recognizing that IBM management and the media would listen only if IBM
employees had an organization of thousands, the Alliance@IBM initiated a
-1 membership drive for associate members, promising employees that their
0 names would be confidential. When, at the end of 2012, IBM management
+1

13502-03_CH02-2ndPgs.indd 66 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    67

changed the timing of the firm’s match contribution to workers’ 401(k) pen-
sion plans in ways that reduced the value of the plan to some employees,
the Alliance@IBM used the change.org petition site to petition “to tell IBM
to REVERSE their decision!”37
Microsoft contract employees in Redmond, Washington, formed the
Washington Alliance of Technology Workers in 1998 to organize protests
against the firm’s overtime pay for contract employees. Because contract
workers were hired by employment agencies rather than Microsoft and
workers shifted employers frequently, WashTech, finding it unfeasible to rep-
resent only Microsoft workers (Bishop 2009), widened its scope to include
high-tech industry workers in the Northwest more broadly. WashTech
signed a collective bargaining contract with a company in 2003 and has
negotiated and signed three more since with small employers. The orga-
nization tells workers, “Join WashTech today for as little as $11/month and
enjoy Union Plus benefits,” and it informs them that “you do not have to
live in Washington State to join.”
The CWA chartered both Alliance@IBM and WashTech as local unions
even though neither has any possibility of gaining majority support from
the IT giants. With minimal dues and modest membership, both organiza-
tions have remained alive and active for over a decade. Wayne Diamond
and Richard Freeman (2002, 581) note that “even if workers at IBM, Micro-
soft and most other high tech firms never win an NLRB election, these
sites make the union a part of the company in a way that was impossible
prior to the Internet.” But even with low-cost modern modes of communi-
cation, the organizations need more than a few activists to remain viable.
In March 2013, Alliance@IBM reported on its website that “we can not
continue to do our work if we don’t have dues paying members. At this
point we are on life support. Our membership has dropped and we are
not gaining new members. In order to keep the Alliance going we need
you to help out.”38

A Union-Supported NGO: OUR Walmart In the early 2010s, announc-

ing that “the best thing the UFCW can be is a catalyst to help associ-
ates build an organization,” the United Food and Commercial Workers
(UFCW) undertook a novel campaign to help the “associates” at Walmart
(also known as employees) develop a non–collective bargaining organiza-
tion to improve wages and working conditions.39 The design for Organiza-
tion United for Respect at Walmart (OUR Walmart) was based on research
by the public strategy group ASGK, which used Facebook to identify
Walmart employees and tested messages that would appeal to them. The -1
organization developed a twelve-point declaration that asked Walmart to 0
+1

13502-03_CH02-2ndPgs.indd 67 12/10/13 8:33 AM

 68    What Works for Workers?

improve conditions and to “provide wages and benefits that ensure that
no Associate has to rely on government assistance” and to share profits
and treat associates as partners.40
OUR Walmart burst to national attention in the fall of 2012, when mem-
bers struck for a day at a California warehouse and then undertook a one-
day protest/strike on “Black Friday,” the post-Thanksgiving sales day.
Though the number of workers who struck on Black Friday was minus-
cule compared to Walmart’s 1.4 million U.S. employees, the strike received
national attention.41 Some analysts derided the strike as a failure, since it
neither interfered with the operation of stores nor harmed company sales.
Other analysts claimed that the strike succeeded in that it gained the atten-
tion of Walmart management. The company sought an NLRB injunction
against the strike, held anti-union meetings in many stores to convince
workers it was not in their interests to join OUR Walmart, and offered
workers an extra discount on their Walmart purchases on Black Friday.
Some workers joined the organization or went out on strike in response to
management pressures.42 Walmart was sufficiently bothered by the various
protests that in March 2013 it sued the UFCW in a Florida court to “pro-
tect our customers and associates from further disruptive tactics associated
with their continued, illegal trespassing.”43
In 2012, OUR Walmart reported that it had about 4,000 members, who
paid dues of $5 per month, and it also reported 2,229 signatures to its dec-
laration. By raising issues and protesting conditions, OUR Walmart has
proven that it can force management to respond. If it grows its member-
ship, it is possible that Walmart will improve its human resource policies
and wages and benefits to choke off further growth of the organization
as well as to seek legal redress from protests. Whether OUR Walmart can
go beyond that and become an organization that the firm feels compelled
to “meet and confer” with over employee issues depends not only on
its ability to galvanize workers but also to gain support from the store’s
customers.

Public-Sector Unions in States That Ban Public-Sector Collective Bar-

gaining Five states—Georgia, North Carolina, South Carolina, Texas, and
Virginia—ban collective bargaining by state and local public employees.
Several other states, such as Mississippi and Arizona, allow public-sector
bargaining but have traditions that make it difficult for unions to obtain
contracts. In both settings, many state and local workers join unions and
gain some improvements in work conditions without collective bargain-
-1 ing contracts. For example, a majority of teachers in Georgia, Texas, and
0 Virginia are union members.
+1

13502-03_CH02-2ndPgs.indd 68 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    69

How do unions succeed in representing their members without collec-

tive bargaining? Non–collective bargaining unions sign meet-and-confer
agreements with local governments, lobby legislatures on laws regard-
ing employment and budgets, and campaign for candidates favorable to
their members—in short, in much the same way as some of the private-
sector non–collective bargaining groups. The effects of the public-sector
unions appear to be larger the higher their level of density (Freeman and
Han 2012).
In short, union activity does not cease in the absence of collective bar-
gaining, nor do work organizations become unable to affect the conditions
of labor.

Conclusion
Since the turn of the twenty-first century, a wide range of groups—from
freewheeling “occupiers,” petition sites, and worker centers to alliances
of freelancers or taxi drivers to the union-initiated, non-union worker
organization OUR Walmart—have experimented with non–collective bar-
gaining modes of representing workers’ interests inside and outside com-
panies. Some of these organizations fit the “open source union” model
that Joel Rogers and I proposed over a decade ago to engage workers out-
side of collective bargaining (Freeman and Rogers 2002, 2006). Some have
gone beyond what we envisaged as the ways in which groups can press
for change have multiplied with the expansion of the Internet and the
development of social media. Traditional unions have begun to move in
the same direction, either to support innovative non-union groups or to
learn from them how best to navigate an economic environment in which
collective bargaining is in abeyance. In 2013, for the first time, the top lead-
ership of the AFL-CIO went public in recognizing that the business model
of representing workers through collective bargaining has failed and it is
time to rebuild the labor movement around a different model. In a set of
media interviews, AFL-CIO president Richard Trumka admitted that the
basic system of workplace representation has failed “miserably to meet
the needs of America’s workers,” and he called on unions to embrace new
models of representation and to restructure their organizations to take as
members “people who want to join,” regardless of whether their employ-
ers accept collective bargaining.44 Whether or not the unions can take up
Trumka’s charge to reinvent themselves and rebuild the U.S. labor move-
ment, the “second chapter” in the story of labor organizations and activ-
ists seeking to help workers in nontraditional ways holds considerable
promise. The implosion of Wall Street, the Great Recession, and the slug- -1
gish job recovery have brought the weaknesses of the U.S. economy to the 0
+1

13502-03_CH02-2ndPgs.indd 69 12/10/13 8:33 AM

 70    What Works for Workers?

fore and produced widespread dissatisfaction with the U.S. brand of cap-
italism. It is difficult to imagine the country successfully addressing its
labor problems—income inequality, stagnant real wages, poverty-level
earnings for low-paid workers, continued high rates of joblessness—
without a strong labor movement of some kind. With a great social need
and a growing pool of committed activists developing innovative ways to
represent workers and fight for improvements in their living conditions,
it is also difficult to imagine the present situation continuing ad infinitum.
If the AFL-CIO or the Change to Win unions cannot do the job, I expect
that other groups will forge ahead. At the risk of tempting some future
scholar to cite my shortsightedness about where society may be head-
ing—as I have cited Barnett’s 1932 prediction—I see reason to believe that
the diverse forms of social experimentation described here will give labor
a more potent influence on society than it has today.

Notes
1. George Barnett, American Economic Association presidential address, Decem-
ber 1932. For the relevance of these remarks today, see Eduardo Porter, “Unions’
Past May Hold Key to Their Future,.” New York Times, July 18, 2012.
2. The situation facing unions is so dire that I expect that NLRB policy changes such
as the 2012 decision to speed up representation elections will have no noticeable
effect on union density. See Steven Greenhouse, “Labor Board Adopts Rules to
Speed Unionization Votes,” New York Times, December 22, 2011.
3. See “Times Topics: United Automobile Workers,” New York Times, available at:
http://topics.nytimes.com/top/reference/timestopics/organizations/u/united_
automobile_workers/index.html (accessed September 2013).
4. Bill Vlasik, “UAW Makes Concessions to Help Automakers,” New York Times,
December 3, 2008.
5. When GM earned its highest profits in history in 2011, its 47,000 blue-collar
UAW workers received about $7,000 each in bonuses. Chrysler paid about
$1,500 in bonuses to its 23,000 hourly workers. Ford paid $3,252 each to its
40,600 UAW workers based on half a year’s profits, which put it in line for
making annual bonus payments in 2011 of $6,000 to $7,000. For a discussion
of Ford sharing the wealth, see Alisa Priddle, “Ford Sharing Wealth of Recent
Gains,” Chicago Tribune, January 20, 2012; on GM’s 2011 profit-sharing, see
United Automobile Workers (2012).
6. Motor vehicles and motor vehicles manufacturing data are for census code
industry 3570, which covers many more firms than the Big Three.
7. Steven Greenhouse, “More Lockouts as Companies Battle Unions,” New York
-1 Times, January 23, 2012; Wojcik (2012).
0 8. In 2011, the NFL and NBA locked out players to force them to accept lower
+1 shares of industry receipts. In August 2011, American Crystal Sugar locked

13502-03_CH02-2ndPgs.indd 70 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    71

out its Minnesota employees, whom it replaced with temporary workers. This
dispute was sixteen months long without resolution as of December 2012; see
Mike Hughlett, “Crystal Sugar Workers Reject Contract Again,” Star Tribune,
December 2, 2012. In January 2011, the financially troubled New York City
Opera locked out its orchestra and singers and won deep cuts in labor com-
pensation; see Daniel J. Wakin, “New York City Opera Ratifies Agreement,”
New York Times, January 19, 2012. In 2012, the NFL locked out referees, and
the NHL locked out its players.
9. See “The Union Membership and Coverage Database from the Current Pop-
ulation Survey: Union Membership, Coverage, Density, and Employment
Among Public-Sector Workers, 1973–2011,” constructed by Barry Hirsch and
David Macpherson, available in the Index of Tables at: www.unionstats.com
(accessed November 21, 2013).
10. In March 2009, John Kasich of Ohio, who would be elected governor in 2010,
talked about the need to “break the back of organized labor in the schools”
(ModernEsquire 2010). Many conservatives had long believed that it was ille-
gitimate for government to bargain with unions in a democracy on the grounds
that voters rather than bargaining should set the terms of work (McHugh 2011).
11. Earlier, Republican governors in Indiana, Kentucky, and Missouri had revoked
executive orders that allowed state employees to bargain (Malin 2009). To
make sure future governors did not restore the right to bargain, the Indiana
legislature required legislative approval of any future executive decision.
12. Michael A. Fletcher and Sean Sullivan, “Michigan Enacts Right-to-Work Law,
Dealing Blow to Unions,” Washington Post, December 11, 2012.
13. Adam Berinsky and his colleagues (2011) have developed weights to turn
the quota-sampling procedures used in the early public opinion surveys into
population-weighted estimates. These show huge approval for unions from
the 1930s through 1942.
14. In 2009, 51 percent believed that unions harm nonmembers, compared to 36 per-
cent in 2006; for all of the Gallup poll results, see http://www.gallup.com/poll/
12751/labor-unions.aspx (accessed September 2013).
15. The proportion who see the country as going in the wrong direction varies with
economic and political developments, but it has been high since the implo-
sion of the finance industry and the ensuing recession. See Real Clear Politics,
“Direction of Country,” based on 707 polls, available at: http://www.realclear
politics.com/epolls/other/direction_of_country-902.html (updated December 5,
2012; accessed February 18, 2012).
16. The difference in the proportion of Republicans and Democrats who view
unions as having too much power was a huge forty-nine points. This con-
trasts with modest partisan differences for other entities, save for the federal
government (a forty-one-point difference); see Saad (2011). -1
17. “OWS’s main issues are social and economic inequality, greed, corruption and 0
the perceived undue influence of corporations on government” (Dilek 2013). +1

13502-03_CH02-2ndPgs.indd 71 12/10/13 8:33 AM

 72    What Works for Workers?

18. In September 1981, unions organized a mass solidarity march on Washing-

ton to protest the emerging recession spurred by the economic policies of the
Federal Reserve and by the Reagan administration’s effort to curb inflation.
19. For a link to the Google spreadsheet showing 747 activities in the fall of
2011 under the Occupy banner, see Simon Rogers, “Occupy Protests Around
the World: Full List Visualised.” The Guardian, DataBlog: Facts Are Sacred,
November 14, 2011, available at: http://www.guardian.co.uk/news/datablog/
2011/oct/17/occupy-protests-world-list-map#data (accessed September 2013).
20. For an analysis of the Occupy movement at Harvard University, see Mercer
R. Cook and Hana N. Rouse, “Did Occupy Matter?” Harvard Crimson, May
24, 2012; for a more critical view, see Wyatt N. Troia, “Why Occupy Harvard
Failed,” Harvard Crimson, February 21, 2012. Examples of these different kinds of
Occupy groups can be found at the following websites: for a critique of financial
regulations, see www.occupythesec.org (accessed September 2013); for a city-
based group focused on local issues, see www.occupyoakland.org (accessed
September 2013); and for a university-based group targeting Goldman Sachs
recruiting at Harvard, see www.occupyboston.org (accessed September 2013).
21. See Occupy Wall Street, “About,” available at: http://occupywallst.org/about/
(accessed September 2013); see also Take the Square (2011).
22. In imperial China, petitions were an accepted way for people to inform the gov-
ernment of problems and seek changes. The Petition Clause of the First Amend-
ment to the U.S. Constitution guarantees the right of the people “to petition the
Government for a redress of grievances”; see Wikipedia, “Petition,” last revised
March 13, 2013 (accessed March 29, 2013), available at: http://en.wikipedia.org/
wiki/Petition (accessed September 2013).
23. In 2010, U.S. states beginning with Maryland instituted a charter for a benefit-
or B-corporation, which commits itself to do more than seek profit maximiza-
tion for shareholders.
24. The same technology has spawned many other sites, such as labourstart.org
(accessed September 2013), a pioneer in gathering and publishing labor news
from around the world that regularly asks users to sign petitions when union
leaders or members are arrested or endangered. Facebook has pages that orga-
nize petitions as well.
25. The Federal Reserve had capped the amount that banks can charge merchants
for processing debit card purchases, so BOFA and other large banks decided
to make up the money by charging low-income consumers.
26. Change.org, “Tell Bank of America: No $5 Debit Card Fees,” petition by Molly
Katchpole, available at: http://www.change.org/petitions/tell-bank-of-america-
no-5-debit-card-fees?utm_source=share_petition&utm_medium=url_
share&utm_campaign=url_share_before_sign (accessed September 2013).
27. Wikipedia, “Change.org,” last revised January 14, 2013 (accessed January
-1 21, 2013), available at: http://en.wikipedia.org/wiki/Change.org (accessed
0 September 2013).
+1

13502-03_CH02-2ndPgs.indd 72 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    73

28. Change.org, “Economic Justice: Start a Petition,” available at: http://www.

change.org/topics/economicjustice (accessed September 2013); see also Change.
org, “Dosha Salon Spa: Respect Salon Workers,” petition by Rachel Voorhies,
available at: http://www.change.org/petitions/dosha-salon-spa-respect-salon-
workers (accessed September 2013).
29. “Dosha Union Effort Comes to an End,” nwLaborPress.org, August 21, 2012,
available at: http://nwlaborpress.org/2012/08/dosha-9/ (accessed September
2013). The Dosha case is representative of some of the problems facing work-
ers who seek to unionize in the United States. Dosha brought in an anti-union
consultant, a former chairman of the Oregon Republican Party, who rejected
union proposals to change the way the spa operated. Dosha violated the
NLRA, including firing union activists, and paid fines for violations.
30. Wikipedia, “Citizens United v. Federal Election Commission,” last revised
January 14, 2013 (accessed January 16, 2013), available at: http://en.wikipedia.
org/w/index.php?title=Citizens_United_v._Federal_Election_Commission&
oldid=532943287 (accessed September 2013).
31. AFL-CIO, “AFL-CIO and NDLON, Largest Organization of Worker Centers,
Enter Watershed Agreement to Improve Conditions for Working Families”
(press release), August 6, 2006, available at: http://www.aflcio.org/Press-Room/
Press-Releases/AFL-CIO-and-NDLON-Largest-Organization-of-Worker
(accessed September 2013).
32. Naduris-Weissman (2009) believes, however, that if a worker center seeks to
resolve a workplace dispute in sustained back-and-forth dealings with an
employer, the NLRB and the courts are more likely to view it as being gov-
erned by the NLRA.
33. Marculewicz and Thomas (2012, 1) note that the head of the Restaurant
Opportunities Center was opposed to NLRB coverage because it would have
required spending time and money arbitrating worker grievances under the
duty of fair representation to workers and would have restricted secondary
picketing and protracted recognitional picketing.
34. In 2012 the NDWA published Home Economics: The Invisible and Unregulated
World of Domestic Work by Linda Burnham and Nik Theodore; based on a survey
of some two thousand nannies, caregivers, and housecleaners in fourteen met-
ropolitan areas, Home Economics attained some media attention. The NDWA has
also posted forty-two videos on YouTube telling the stories of domestic workers.
35. AFL-CIO and NDWA, “Open Letter from the AFL-CIO and National Domes-
tic Workers Alliance (USA) to Trade Unions and National Centers Around
the World,” May 18, 2011.
36. Lizzie Widdicombe, “Our Local Correspondents: Thin Yellow Line: The Taxi-
Driver’s Advocate,” The New Yorker, April 18, 2011; “President Obama
at the White House Diwali Event,” October 29, 2011, available at: http:// -1
www.youtube.com/watch?feature=player_embedded&v=O7paNg2PP3M#! 0
+1

13502-03_CH02-2ndPgs.indd 73 12/10/13 8:33 AM

 74    What Works for Workers?

(accessed September 2013); “Richard Trumka (AFL-CIO) Thanks Bhairavi

Desai,” published August 29, 2012, available at: http://www.youtube.com/
watch?v=op7IauPe_WI (accessed September 2013).
37. The petition gained 1,030 supporters before it closed in 2013. See http://
www.change.org/petitions/international-business-machines-ibm-usa-ibm-
must-reverse-the-decision-changing-the-ibm-match-401-k-contribution
(accessed March 29, 2013).
38. Alliance@IBM, available at: http://www.endicottalliance.org/newsupdate.
htm (accessed March 29, 2013).
39. Dan Schlademan, UFCW official, quoted in Steven Greenhouse, “Wal-Mart
Workers Try the Nonunion Route,” New York Times, June 15, 2011.
40. OUR Walmart, “Declaration for Respect,” available at: http://forrespect.
nationbuilder.com/sign_the_declaration (accessed September 2013).
41. Walmart reports 2.2 million employees worldwide and 1.4 million in the
United States “alone.” See http://corporate.walmart.com/our-story/locations
(accessed January 7, 2013).
42. Joel Griffith (2012) gives the case for the protests as failure, while Josh Eidelson
(2012a, 2012b, 2012c), who live-blogged the Black Friday strike, gives the case
for its success.
43. “Walmart Sues Grocery Workers Union, Others Who Have Protested at Flor-
ida Stores,” Reuters, March 25, 2013, available at: http://www.huffingtonpost.
com/2013/03/25/walmart-sues-protesters-florida-stores_n_2950992.html
(accessed September 2013).
44. Peter Wallsten, “AFL-CIO’s Trumka Looks to Remake U.S. Labor Movement,”
Washington Post, March 27, 2013. For other reports on the AFL-CIO’s search
for new initiatives in unionization, see Michael Bologna, “AFL-CIO’s Trumka
Calls for Change in the Labor Movement,” BNA Daily Labor Report, March
11, 2013; “Richard Trumka, AFL-CIO Chief, Reflects on Unions’ Thinning
Ranks, Calls for New Strategies,” Huffington Post: Politics, March 30, 2013;
“AFL-CIO’s Richard Trumka Admits Union in ‘Crisis,’ ” Washington Times,
February 28, 2013.

References
AFL-CIO. 2006. “AFL-CIO and NDLON, Largest Organization of Work Centers,
Enter Watershed Agreement to Improve Conditions for Working Families.”
August 9. Available at: http://www.aflcio.org/Press-Room/Press-Releases/AFL-
CIO-and-NDLON-Largest-Organization-of-Worker (accessed September 2013).
Berinsky, Adam J., Eleanor Neff Powell, Eric Schickler, and Ian Brett Yohai. 2011.
-1 “Revisiting Public Opinion in the 1930s and 1940s.” Political Science and Politics
0 44(3, July): 515–20.
+1

13502-03_CH02-2ndPgs.indd 74 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    75

Bishop, Todd. 2009. “Why WashTech Isn’t Trying to Organize Microsoft Con-
tractors.” Puget Sound Business Journal, March 3 (updated September 5, 2009).
Available at: http://www.bizjournals.com/seattle/blog/techflash/2009/03/Why_
WashTech_isnt_trying_to_organize_Microsoft_contractors_40682137.html?s=
print (accessed September 2013).
Burnham, Linda, and Nik Theodore. 2012. Home Economics: The Invisible and Unreg-
ulated World of Domestic Work. New York: National Domestic Workers Alliance.
Colgrass, Neal. 2011. “How a College Grad Helped Sink BofA’s Debit Card Fee.”
Newser, November 7. Available at: http://www.newser.com/story/132782/how-
molly-katchpole-sunk-bank-of-americas-debit-card-fee.html (accessed Septem-
ber 2013).
Combs, Robert. 2012a. “Labor Stats and Facts: Lockout Rates Continue to Surge.”
Bloomberg BNA, Labor and Employment Blog, October 17. Available at: http://
www.bna.com/labor-stats-facts-b17179870280/ (accessed September 2013).
———. 2012b. “Labor Stats and Facts: Lockouts Last Longer Than Strikes.” Bloom-
berg BNA, Labor and Employment Blog, November 8. Available at: http://www.
bna.com/labor-stats-facts-b17179870766/ (accessed September 2013).
Diamond, Wayne J., and Richard B. Freeman. 2002. “Will Unionism Prosper in Cyber-
space? The Promise of the Internet for Employee Organization.” British Journal of
Industrial Relations 40(3): 569–96.
Dilek, Emine. 2013. “Occupy Movement: What? Who? Why?” The Progressive Press,
January 12. Available at: http://www.progressivepress.net/occupy-movement-
what-who-why/ (accessed September 2013).
Eidelson, Josh. 2012a. “With Biggest Strike Against Biggest Employer, Walmart
Workers Make History Again.” The Nation, November 23. Available at: http://
www.thenation.com/blog/171435/biggest-strike-against-biggest-employer-
walmart-workers-make-history-again (accessed September 2013).
———. 2012b. “Why Walmart Failed to Suppress Black Friday Strikes.” The Nation,
November 26. Available at: http://www.thenation.com/blog/171447/josh-eidelson-
walmarts-failing-strike-suppression# (accessed September 2013).
———. 2012c. “OUR Walmart Organizers Promise Multi-Pronged December.” The
Nation, November 29. Available at: http://www.thenation.com/blog/171528/
walmart-organizers-promise-multi-pronged-december (accessed September
2013).
Eisenhower, Dwight D. 1955. “Telephone Broadcast to the AFL-CIO Merger Meet-
ing in New York City.” December 5. Available at the American Presidency
Project, http://www.presidency.ucsb.edu/ws/index.php?pid=10394 (accessed
September 2013).
Enriquez, Dianne. 2011. “IWJ Worker Center Network Census 2011.” Workers’
Center Network: Interfaith Worker Justice. Available at: http://files.www.iwj.
org/worker-center-network/labor-law/2011_WCN_Census.pdf (accessed Sep- -1
tember 2013). 0
+1

13502-03_CH02-2ndPgs.indd 75 12/10/13 8:33 AM

 76    What Works for Workers?

Fine, Janice. 2006. Worker Centers: Organizing Communities at the Edge of the Dream.
Ithaca, N.Y.: EPI/Cornell University Press.
Freeman, Richard B. 1998. “Spurts in Union Growth: Defining Moments and Social
Processes.” In The Defining Moment: The Great Depression and the American Econ-
omy in the Twentieth Century, ed. Michael D. Bordo, Claudia Goldin, and Eugene
N. White. Chicago: University of Chicago Press for the National Bureau of Eco-
nomic Research.
Freeman, Richard B., and Eunice Han. 2012. “The War Against Public-Sector Bar-
gaining in the U.S.” Journal of Industrial Relations: Annual Review of Industrial
Relations 54(3, June): 386–407.
———. 2013. “Public-Sector Unionism Without Collective Bargaining.” Unpub-
lished paper. Cambridge, Mass. (January 6).
Freeman, Richard B., and Joni Hersch. 2004. “Introduction.” In Emerging Labor Mar-
ket Institutions for the Twenty-First Century, ed. Richard B. Freeman, Joni Hersch,
and Lawrence Mishel. Chicago: University of Chicago Press for National Bureau
of Economic Research.
Freeman, Richard B., Joni Hersch, and Lawrence Mishel, eds. 2004. Emerging Labor
Market Institutions for the Twenty-First Century. Chicago: University of Chicago
Press for Nationa1 Bureau of Economic Research.
Freeman, Richard B., and Marit Rehavi. 2009. “Helping Workers Online and
Offline: Innovations in Union and Worker Organization Using the Internet.” In
Studies of Labor Market Intermediation, ed. David H. Autor. Chicago: University of
Chicago Press for National Bureau of Economic Research.
Freeman, Richard B., and Joel Rogers. 2002. “Open Source Unionism: Beyond
Exclusive Collective Bargaining.” WorkingUSA 5(4, March): 8–40.
———. 2006. What Workers Want. Ithaca, N.Y.: ILR Press for Russell Sage Foundation.
Frellick, Marcia. 2012. “Verizon Drops Fees Amid Consumer Protest.” CreditCard-
Guide, January 4. Available at: http://www.creditcardguide.com/credit-cards/
verizon-drops-fees-amid-consumer-protest.html#ixzz1n9xLs3Nn (accessed Sep-
tember 2013).
Godard, John, and Carola Frege. 2010. “Union Decline, Alternative Forms of
Representation, and Workplace Authority Relations in the United States.”
November 10. Available at: http://ssrn.com/abstract=1729768 (accessed Sep-
tember 2013).
Griffith, Joel. 2012. “Walmart Strike: Why the Black Friday Labor Protests Were
an Epic Failure.” Policymic. Available at: http://www.policymic.com/articles/
19550/walmart-strike-why-the-black-friday-labor-protests-were-an-epic-failure
(accessed September 2013).
Hersch, Joni. 2004. “A Workers’ Lobby to Provide Portable Benefits.” In Emerging
Labor Market Institutions for the Twenty-First Century, ed. Richard B. Freeman,
-1 Joni Hersch, and Lawrence Mishel. Chicago: University of Chicago Press for
0 National Bureau of Economic Research.
+1

13502-03_CH02-2ndPgs.indd 76 12/10/13 8:33 AM

 What Can Labor Organizations Do for U.S. Workers?    77

Jones, Jeffrey N. 2011. “Approval of Labor Unions Holds Near Its Low, at 52%:
Republican, Democratic Approval Ratings Diverge.” Gallup.com, August 31.
Available at: http://www.gallup.com/poll/149279/approval-labor-unions-holds-
near-low.aspx (accessed September 2013).
———. 2012. “In U.S., Labor Union Approval Steady at 52%,” Gallup Politics,
August 31. Available at: http://www.gallup.com/poll/157025/labor-union-
approval-steady.aspx (accessed September 2013).
Madland, David, and Karla Walter. 2010. “Why Is the Public Suddenly Down on
Unions?” Washington, D.C.: Center for American Progress Action Fund, Amer-
ican Worker Project (July). Available at: http://www.americanprogressaction.
org/wp-content/uploads/issues/2010/07/pdf/union_opinion.pdf (accessed Sep-
tember 2013).
Malin, Martin H. 2009. “The Paradox of Public-Sector Labor Law.” Indiana Law
Journal 84(4, article 10): 1369–99.
Marculewicz, Stefan J., and Jennifer Thomas. 2012. “Labor Organizations by Another
Name: The Worker Center Movement and Its Evolution into Coverage Under the
NLRA and LMRDA.” Engage 13(3, October): 64–83. Available at: http://www.fed-
soc.org/doclib/20121119_WorkerCenterEngage13.pdf (accessed September 2013).
McHugh, Jack. 2011. “Commentary: Government Collective Bargaining Inherently
Corrupting, Should Be Outlawed.” CapCon: Michigan Capitol Confidential,
Mackinac Center for Public Policy, June 10. Available at: http://www.mackinac.
org/article.aspx?ID=15197&print=yes (accessed September 2013).
Meyerson, Harold. 2012. “For Unions, It Was a Very Bad Year.” The American Pros-
pect, December 24. Available at: http://prospect.org/article/unions-it-was-very-
bad-year (accessed September 2013).
ModernEsquire. 2010. “John Kasich on Public Unions: ‘I Want to Break the Back
of Teachers Unions.’” Plunderbund, September 27. Available at: http://www.
plunderbund.com/2010/09/27/john-kasich-on-public-unions-i-want-to-break-
the-back-of-teachers-unions/ (accessed September 2013).
Naduris-Weissman, Eli. 2009. “The Worker Center Movement and Traditional
Labor Law: A Contextual Analysis.” Berkeley Journal of Employment and Labor
Law 30(1): 232–38.
Rodgers, William M., III. 2010. “The Threat of Nonpayment: Unpaid Wages and New
York’s Self-Employed.” Report for the Heldrich Center for Workforce Develop-
ment. New Brunswick, N.J.: Rutgers University, Bloustein School of Planning and
Public Policy (June). Available at: https://fu-res.org/pdfs/advocacy/2010-unpaid-
wages-report.pdf (accessed September 2013).
Rosenfeld, David. 2006. “Worker Centers: Emerging Labor Organizations—Until
They Confront the National Labor Relations Act” (review essay). Berkeley Jour-
nal of Employment and Labor Law 27(2): 469.
Saad, Lydia. 2011. “Americans Decry Power of Lobbyists, Corporations, Banks, -1
Feds.” Gallup Politics, April 11. Available at: http://www.gallup.com/poll/147026/ 0
+1

13502-03_CH02-2ndPgs.indd 77 12/10/13 8:33 AM

 78    What Works for Workers?

americans-decry-power-lobbyists-corporations-banks-feds.aspx (accessed Sep-

tember 2013).
Schneider, Christian. 2011. “How the Wisconsin Senate Passed Walker’s Bill.”
National Review Online, March 9. Available at: http://www.nationalreview.
com/corner/261804/how-wisconsin-senate-passed-walkers-bill-christian-
schneider (accessed September 2013).
Silver, Nate. 2009. “As Unemployment Rises, Support for Organized Labor Falls.”
FiveThirtyEight: Politics Done Right, September 7. Available at: http://www.
fivethirtyeight.com/2009/09/as-unemployment-rises-support-for.html (accessed
September 2013).
Steinem, Gloria. 2012. “The World’s 100 Most Influential People, 2012: Ai-jen Poo:
Labor Organizer.” Time, April 18. Available at: http://www.time.com/time/
specials/packages/article/0,28804,2111975_2111976_2112169,00.html (accessed
September 2013).
Take the Square. 2011. “Quick Guide on Group Dynamics in People’s Assemblies.”
July 31. Available at: http://takethesquare.net/2011/07/31/quick-guide-on-
group-dynamics-in-peoples-assemblies/ (accessed September 2013).
United Automobile Workers. 2012. “Statement from UAW Vice President Joe Ash-
ton on GM 2011 Profit Sharing.” February 16. Available at: http://uaw.org/articles/
statement-uaw-vice-president-joe-ashton-gm-2011-profit-sharing (accessed Sep-
tember 2013).
U.S. Department of Labor. Bureau of Labor Statistics. 2013. “Economic News
Release: Union Members Summary: Union Members—2012.” January 23. Avail-
able at: http://www.bls.gov/news.release/union2.nr0.htm (accessed September
2013).
Wojcik, John. 2012. “In Their War Against Workers, Corporations Increasingly
Choose Lockouts.” People’s World, January 25. Available at: http://peoples
world.org/in-their-war-against-workers-corporations-increasingly-choose-
lockouts/ (accessed September 2013).

-1
0
+1

13502-03_CH02-2ndPgs.indd 78 12/10/13 8:33 AM

 Part II  orkers on the Edge: Marginalized
W
and Disadvantaged

-1
0
+1

13502-04_CH03-2ndPgs.indd 79 12/10/13 8:33 AM

-1
0
+1

13502-04_CH03-2ndPgs.indd 80 12/10/13 8:33 AM

 Chapter 3  onnecting the Disconnected:
C
Improving Education and
Employment Outcomes Among
Disadvantaged Youth

Peter B. Edelman and Harry J. Holzer

Even before the Great Recession began at the end of 2007, employment out-
comes among disadvantaged and less-educated youth, and especially among
young men, had been deteriorating over time. Both their levels of earnings
and their employment and labor force participation rates had decreased for
a few decades. Among young black men, the declines in employment and
labor force activity have been particularly pronounced, while their rates of
incarceration have risen dramatically. As a result, the percentage of these
young men who are “disconnected” from school and work has risen.
Unfortunately, the Great Recession appears to have worsened these out-
comes. Since 2007, employment rates have declined the most among young,
less-educated, and/or minority men—in other words, mostly the same
groups whose employment and earnings had already been worsening ear-
lier. The recession has been not only severe but also very persistent; nearly
five years after it began, relatively little labor market recovery has been
observed. Therefore, the worsened employment outcomes we see for dis-
advantaged youth will last for many years and for many young people may
lead to “scarring”—that is, their future earnings may be permanently lower.
In this chapter, we briefly review recent trends in employment out-
comes for disadvantaged youth, focusing specifically on those who have
become “disconnected” from school and the labor market, and discuss
the reasons for these trends. We then review a range of policy prescrip-
-1
tions that might improve those outcomes, including: efforts to enhance
0
+1
81

13502-04_CH03-2ndPgs.indd 81 12/10/13 8:33 AM

 82    What Works for Workers?

e­ ducation and employment outcomes among both in-school youth who

are at risk of dropping out and becoming disconnected and out-of-
school youth who have already done so; policies to increase earnings and
increase motivation among youth to participate in the labor force, such as
expanding the eligibility of childless adults (and especially noncustodial
parents, or NCPs) for the Earned Income Tax Credit (EITC); and specific
policies to reduce the barriers to employment faced by ex-offenders and
non­custodial parents.
Since these policy prescriptions tend to focus on either labor supply
forces or the skills and behavior of the youth themselves, we also consider
policies that target the demand side of the labor market. Looking at efforts
to spur the willingness of employers to hire these young people and per-
haps improve the quality of jobs available to them, we specifically suggest
an initiative—almost surely impracticable under current fiscal and politi-
cal realities—to create transitional employment in national and commu-
nity service targeted mostly at those young people who have the greatest
difficulty finding stable employment.
For both supply-side and demand-side policy prescriptions, we review
the evaluation evidence and identify programs and policies that have had
significant impacts on the employment outcomes of disadvantaged youth.
If done together and at sufficient scale, we believe that a combination of
supply- and demand-side policies could have a substantial positive impact
on employment among our disconnected youth. At the same time, we are
well aware of the deeper problems in our society that must be addressed if
we are to create truly equal opportunities for all of our young people. The
intersection of race (and ethnicity) and poverty features disproportionately
in low-quality schools, in disproportionate incarceration, and in continuing
discrimination based on race and ethnicity.
Finally, we discuss the implications of recent developments in educa-
tion and labor market policy for this population. Although there has been
some significant innovation in K-12 education (spurred by the Race to the
Top funds and other initiatives) and some temporary funding under the
American Recovery and Reinvestment Act (ARRA) of 2009 for training
and public employment, there has been no broader effort to improve edu-
cation or employment outcomes for at-risk or disconnected youth. The
American Graduation Initiative proposed by the Obama administration
in 2009, which would have funded a range of efforts at community col-
leges, might have provided a vehicle for such efforts, but funding for the
proposal has been extremely limited. And proposed innovation funds for
youth in the Workforce Investment Act (WIA) of 1998 remain limited as
-1 well. With its dismal fiscal situation, the nation’s resources for any such
0 efforts in the future are likely to be very limited and perhaps reduced. We
+1

13502-04_CH03-2ndPgs.indd 82 12/10/13 8:33 AM

 Connecting the Disconnected   83

discuss these developments in the recent past and their implications for
disconnected youth over the next several years.

Recent Trends in Outcomes and Their Causes

We begin by reviewing trends in employment among less-educated youth
over the past three decades and recent changes in these trends during the
Great Recession. In table 3.1, we present full-time school enrollment and
employment rates, as well as hourly wages, among less-educated youth
(defined as those with only a high school diploma or less but including
those currently enrolled in higher education), age sixteen to twenty-
four, at three points in time: 1979, 2007, and 2010. Employment rates are
­calculated for all young people in the sample, as well as only for those
not enrolled in school full-time. Since 1979 and 2007 were both peak years
for the U.S. economic business cycle, comparing outcomes between those
years enables us to infer secular trends in these outcomes over the past three
decades, and since 2010 represented the trough of the recession (in terms of
unemployment and other labor market effects), comparing outcomes for
2007 and 2010 allows us to gauge the effects of the Great Recession. All
results appear separately by gender and race.1
Several notable findings are reported in table 3.1 including some that
are already known while others are not. The most striking finding is the
dramatic rise between 1979 and 2007 in full-time school enrollment rates
among youth, which nearly doubled for this group. Enrollment gener-
ally rose more among females than males and more among whites than
minorities. Although the rise in enrollment rates is encouraging, other
evidence indicates that rates of college attainment—the fraction of Ameri-
cans who complete their courses of study and earn postsecondary degrees
and credentials—have risen much less rapidly than enrollment (see, for
example, Goldin and Katz 2008), especially among young people from
lower-income backgrounds.
But, quite importantly, we also note that much of the increase in enroll-
ment comes at the expense of employment—and much more so among
less-educated young men than women. In other words, employment rates
for young men who are not enrolled full-time in school—whom we might
consider part of the potential youth labor force among the less-educated—
have fallen quite sharply over time.2 These employment declines among
potential workers are quite pronounced among both young white men
and young black men, though the declines for black men are larger in per-
centage terms (in other words, as a proportion of their employment rates
in 1979, which started off much lower than those of whites). And if we -1
adjust these numbers to include those who are or have been ­incarcerated, 0
+1

13502-04_CH03-2ndPgs.indd 83 12/10/13 8:33 AM

 84    What Works for Workers?

Table 3.1  Employment and Education Outcomes, by Race and Gender,

Among Less-Educated Youth, 1979, 2007, and 2010
1979 2007 2010
Enrolled full-time
All 25.0% 48.0% 50.5%
White male 24.2 48.8 50.1
Black male 30.8 49.9 49.5
Hispanic male 21.7 34.9 40.7
White female 24.7 53.3 55.7
Black female 28.2 49.3 52.1
Hispanic female 19.9 39.9 45.4

Employed but not enrolled full-time

All 47.3 30.6 24.0
White male 55.8 33.9 26.7
Black male 38.5 26.1 18.8
Hispanic male 54.9 43.7 32.0
White female 45.3 26.8 22.7
Black female 27.5 24.0 19.6
Hispanic female 37.4 29.2 21.2

Neither employed nor enrolled full-time

All 22.7 18.9 23.0
White male 12.1 13.7 19.3
Black male 23.7 22.8 30.8
Hispanic male 14.2 15.7 20.8
White female 27.9 18.6 20.5
Black female 42.2 26.5 27.9
Hispanic female 39.8 29.7 32.4

Employed (of potential youth labor force)

All 67.6 61.8 51.0
White male 82.1 71.2 58.0
Black male 61.9 53.3 37.9
Hispanic male 79.5 73.5 60.6
White female 61.9 59.1 52.5
Black female 39.4 47.5 41.2
Hispanic female 48.5 49.6 39.6
(Table continues on p. 85.)
-1
0
+1

13502-04_CH03-2ndPgs.indd 84 12/10/13 8:33 AM

 Connecting the Disconnected   85

Table 3.1  (Continued)
1979 2007 2010
Mean hourly wage
All $10.80 $10.50 $10.30
White male 12.30 11.30 11.20
Black male 10.90 10.30 10.20
Hispanic male 11.40 11.70 10.70
White female 9.40 9.50 9.50
Black female 9.20 9.40 9.60
Hispanic female 9.20 9.30 9.50
Source: Authors’ calculations based on Current Population Survey, Outgoing Rotation Groups
(U.S. Census Bureau, 1979–2010).
Notes: The sample is restricted to ages sixteen to twenty-four. It excludes anyone who has
earned a postsecondary educational degree. It also excludes those employed in agriculture
or the military and those who are self-employed. Individuals with real hourly wages below
$2 or above $5,000 are not included.

the downward trend for young black men would look considerably
worse.3 We also note that trends in average hourly wages roughly par-
allel those of employment: real wages for young less-educated women
have grown slightly over three decades, while real wages have fallen for
young men, many of whom may have dropped out of the labor market
as a result (Juhn 1992).
Finally, we note the apparent effects of the Great Recession, which
seems to have led to modest rises in school enrollment for this population
and very steep declines in employment, which, again, have been greatest
among less-educated men. This recession has been not only severe but very
persistent: as of early 2013, over five years after the recession began, the
recovery observed so far in the labor market has been very modest, and
virtually all economists expect that the recovery will proceed quite slowly
over the next several years. This implies that young people are likely to
be “scarred” by a loss of work experience over several years and a lack of
upward mobility through different jobs (von Wachter 2010; Kahn 2010).4
What other outcomes for young people vary by race and gender in ways
that might reflect differences in the opportunities they face? In table 3.2,
we present tabulations of a range of outcomes by race and gender for a
national sample of young people in their early twenties.5 We include mea-
sures of academic achievement (for example, grade point average and test -1
scores) and amount of schooling attained (dropping out of high school or 0
+1

13502-04_CH03-2ndPgs.indd 85 12/10/13 8:33 AM

 0
-1

+1

13502-04_CH03-2ndPgs.indd 86
Table 3.2  Educational and Behavioral Outcomes of Youth, 2004 to 2005
Males Females
White Black Hispanic White Black Hispanic
Not enrolled in school
High school dropout/GED 13.4% 27.6% 20.8% 12.0% 19.0% 20.6%
Bachelor’s degree 12.8 5.6 3.6 18.2 6.9 5.5
Enrolled in school
Four-year college 17.2 9.7 10.1 19.0 14.4 13.2
Unmarried, has children 9.9 30.8 17.9 17.3 47.5 29.6
Ever incarcerated 7.6 14.8 9.6 2.7 3.1 2.4
High school grade point average 2.5 1.9 2.1 2.7 2.2 2.3
ASVAB 57.3 28.1 39.4 58.2 32.0 38.8
Source: National Longitudinal Survey of Youth (NLSY97), round 8, October 2004 to July 2005.
Notes: Samples include respondents age twenty-two to twenty-four at the time of the interview. Enrollment is measured in the month of ­November.
The Armed Services Vocational Aptitude test (ASVAB) score is measured as a percentile of the overall distribution of scores.

12/10/13 8:33 AM
 Connecting the Disconnected   87

finishing a bachelor’s degree), as well as having children outside marriage

and having ever been incarcerated.6
The results show continuing large gaps by race, and some by gender,
along all of these dimensions. In general, women outperform men in
academic achievement and attainment, while minorities continue to lag
behind whites. Black women report the most children outside of marriage,
while black men are most frequently incarcerated, as is widely known.7
Disturbingly, young black men do worse on virtually every outcome mea-
sure than any other race or gender group.
What might account for these ongoing gaps in employment and educa-
tional outcomes as well as other personal measures, and for the differential
rates of progress that we see? Why have young women gained relative to
men on most outcomes, even surpassing them in education, while less-
educated young men, and especially black men, lag so far behind?
A full treatment of these issues clearly lies beyond the scope of this
chapter. Gaps in educational achievement and attainment by gender and
race (as well as family income) have been much discussed elsewhere
(see, for example, Cornwell, Mustard, and Van Parys 2011; Jacob 2002;
Magnuson and Waldfogel 2008), as have been the labor market gains of
women relative to men in recent years (Blau and Kahn 1997) and racial
patterns in unwed childbearing and incarceration (Western 2006; Wolfe
and Wu 2001).
For our purposes, we limit ourselves to the following observations.
First, there is little doubt that less-educated young men, and black men in
particular, have been very negatively affected by changes in the economy
that limit the demand for their labor. The structural changes that have
reduced relative demand for less-skilled labor have mostly been induced
by two forces: globalization, including rising imports of goods and services,
offshoring of production activities, and immigration; and technological
change, which is “skill-biased” (since it reduces employment more for less-
educated than for more-educated workers). Together, these forces have
almost certainly hurt less-educated men more than women, who seem to
adapt better to many service-sector jobs, and they have hurt black men
most of all, especially in the industrial Midwest as good-paying manu-
facturing jobs have disappeared (Bound and Freeman 1992; Bound and
Holzer 1993).8 Institutional changes that reduce compensation for lower-
wage jobs—such as declining rates of unionization and lower real levels
of the minimum wage—have probably contributed to these problems,
though economists continue to debate the extent to which market or insti-
tutional forces account for these trends (Autor, Katz, and Kearney 2008;
Card and Dinardo 2007). And the recent recession has clearly hurt less- -1
educated young men more than any other group, because it has reduced 0
+1

13502-04_CH03-2ndPgs.indd 87 12/10/13 8:33 AM

 88    What Works for Workers?

Figure 3.1  Effects of Adverse Labor Demand Shifts and Labor Supply

Response Among Less-Educated Young Men

LS

LD2 LD1

L2 L1 L

Source: Authors’ figure based on Holzer (2009).

the demand for their labor (especially in cyclical industries like construc-
tion and manufacturing) more than the demand for the labor of others.
Second, we believe that some youth—especially black youth—who are
now “disconnected” from both school and the labor market have responded
to what appears to them to be a decline in long-run employment opportuni-
ties by giving up on mainstream possibilities and institutions. This is espe-
cially true not only for those who have dropped out of school and the labor
market but also for the very large numbers of those who have become incar-
cerated or noncustodial parents: one-third of all young black men become
incarcerated by age thirty-five, and up to one-half father children outside
marriage. We have described this process more fully in our earlier book
(Edelman, Holzer, and Offner 2006).
Figure 3.1 depicts these changes in employment and education out-
comes. The figure shows an adverse (or inward) shift in labor demand,
-1 of the type that has probably affected less-educated men because of the
0 economic forces just described. This demand shift leads to a withdrawal
+1

13502-04_CH03-2ndPgs.indd 88 12/10/13 8:33 AM

 Connecting the Disconnected   89

of labor force activity along a supply curve that is quite “elastic,” or

responsive to perceived (negative) changes in rewards. In other words, as
young men perceive diminishing rewards to their labor in the market, they
have less incentive to participate in that market, and so they withdraw
from it. To the extent that some less-educated young men also remain in
the labor market but have trouble finding jobs at market wages (especially
during recession periods), the result is high unemployment and low labor
force participation.9
Along with this withdrawal from the legal or formal labor market, we
also have seen the growing participation of young men in illegal activi-
ties. Almost certainly this withdrawal began for young black men during
the 1970s and 1980s, when the relative rewards they faced for legal work
were declining and the perceived rewards for illegal work were growing
(Freeman 1992). Since that time, crime has fallen markedly but incarcera-
tion has risen very dramatically, especially among less-educated African
American men. Besides the many pernicious effects of incarceration on
low-income individuals, their families, and their communities (see, for
example, Alexander 2010; Western 2006), very large numbers of young
men are now “marked” with criminal records that further reduce the will-
ingness of employers to hire them (Holzer 2009; Pager 2007). In addition,
some aspects of the child support system (such as the large fractions who
are in arrears on payments and therefore face very stiff penalties on legal
earnings) further discourage the legal or reported work effort of these
young men (Holzer, Offner, and Sorensen 2005).
Of course, some have argued that it is not so much economic realities
as behavioral or cultural factors that explain these shifts.10 In our view,
these explanations are not mutually exclusive; if anything, we believe that
broader behavioral or cultural patterns are largely responses to declines
in perceived opportunities (see Wilson 2009). Others might object that
the labor market imperatives to improve one’s educational attainment
are clearly stronger now than before and should therefore have led to
improved outcomes; these incentives alone are not enough, however, to
lead to major improvements in educational outcomes among disadvan-
taged youth absent a broader set of changes to help them overcome the
barriers to success that develop early in life and last throughout their
childhood and teen years (Duncan and Murnane 2011).
To address these issues we lay out a set of policy alternatives in the
next section. The first set focuses on the labor supply of disadvantaged
young people and attempts to encourage better educational and employ-
ment outcomes for them through improvements in their skills and work
experiences so that they can more effectively respond to long-term -1
changes on the demand side of the labor market. In this category, we 0
+1

13502-04_CH03-2ndPgs.indd 89 12/10/13 8:33 AM

 90    What Works for Workers?

also advocate for improving the pecuniary incentives for youth to take
low-wage jobs and reducing the barriers and disincentives that tend to
discourage work among ex-offenders and noncustodial parents. But given
the major changes that have occurred in labor demand—especially during
the recent downturn—we explore a set of demand-side policies as well.

Policy Proposals for Disadvantaged Youth

Improving the Skills and Work Incentives of Youth
There seems to be little doubt that disadvantaged and disconnected young
people need higher levels of education and skills to better meet the demand
for labor in jobs that still pay well in the United States.
We remain concerned about the decline of good-paying jobs in the
U.S. economy. But contrary to recent claims that the middle of the labor
market is collapsing, we believe that the longer-term demand for labor
will remain fairly substantial in the United States at the “middle-skill”
level, which we define as the set of jobs requiring more than a high school
diploma but less than a full BA degree (Holzer 2010; Holzer and Lerman
2007).11 The retirements of baby boomers over the next few decades and
the need for replacements will enhance such demand. More broadly, Harry
Holzer and his colleagues (2011) show that the labor market has continued
to produce good-paying jobs over time, but that the nature of those jobs is
changing rapidly—with many fewer in manufacturing and more in a range
of sectors (including construction, health care, professional or management
services, and even retail trade) that require a broader skill set than before.12
Moreover, the labor market returns to a range of certificates and asso-
ciate’s degrees are quite strong, especially in particular fields (Carnevale,
Smith, and Strohl 2010; Jacobson and Mokher 2009). The secular employ-
ment prospects of poor and minority youth will brighten if more of them
graduate from high school and can complete at least some kind of post-
secondary certification, however remote this possibility seems while the
recent downturn keeps labor markets depressed. Even for young minor-
ity men with weak academic outcomes (relative to whites and females in
their own racial or ethnic group), middle-skill jobs in certain sectors or
occupations—like construction, health technician work, or installation and
repair of mechanical systems—hold particular promise.
A great deal has been written elsewhere on the “achievement gaps”
that develop early in childhood between poor youth and others and on
the need for reforms in the K-8 years. Here we focus instead on the years
during which youth become disconnected from school and fail to connect
-1 to the labor market: the high school years and beyond. We therefore con-
0 sider a set of policies designed to: (1) prevent disconnection and dropout
+1

13502-04_CH03-2ndPgs.indd 90 12/10/13 8:33 AM

 Connecting the Disconnected   91

among at-risk youth who are still in school and improve their pathways
to postsecondary education and work; and (2) encourage those who have
already dropped out to reconnect to school or the labor market.
What works to achieve these goals for young people most cost-effectively?
While the overall evaluation evidence on employment and training pro-
grams has been mixed at best, we also believe that programs and curricula
that offer a combination of skill development and paid work experience
have often shown the strongest results at improving employment out-
comes for these youth (Heinrich and Holzer 2011). If the best of these
approaches could be replicated and brought to sufficient scale, in com-
bination with other policies identified later in this chapter, we think that
the impacts on disadvantaged youth in America could be positive and
sizable. For in-school youth, perhaps the strongest evidence on effective
combinations of education and work experience for youth appears in the
recent random assignment evaluation of career academies (Kemple 2008).
These programs often enroll a few hundred students within larger and
more comprehensive high schools; they take general academic courses but
also receive occupational training specific to a sector of the economy (such
as health care, information technology, or financial services) along with
work experience in the summer or during the school year.
The evaluation evidence on career academies shows that the subse-
quent earnings of at-risk young men were nearly 20 percent higher than
earnings for those in the control group as many as eight years after enter-
ing the program. Indeed, impacts for at-risk young men were significantly
larger than those for young women. More broadly, high-quality career
and technical education (CTE) offers the promise of higher graduation
rates and better labor market performance among youth (Hoffman 2011;
Symonds et al. 2011), especially if we can build a range of “pathways” to
good careers that combine strong academic preparation, applied technical
instruction, and work experience for all students in secondary and post-
secondary schools around the country.
For these programs to achieve their goals, they must not be perceived as
“tracking” low-income or minority youth away from postsecondary edu-
cation. The career academies succeeded in avoiding such tracking: those
who attended the academies later enrolled in postsecondary education at
the same rates as those in the control group. The goal is thus for high-
quality CTE to expand career possibilities, not to deter young people from
higher education. And career academies fit the model of “small schools
of choice,” which have generated much improved high school graduation
rates recently in New York City (Bloom, Thompson, and Unterman 2010).13
For youth who are out of school, the sectoral training program Year Up -1
offers similar evidence that skill development and paid work experience 0
+1

13502-04_CH03-2ndPgs.indd 91 12/10/13 8:33 AM

 92    What Works for Workers?

can improve youth outcomes (Roder and Elliott 2011).14 Geared for recent
high school graduates who have not yet gone on to postsecondary educa-
tion, Year Up provides several months of training for work, mostly in the
information technology and business management fields. It requires its
enrollees to have a high school diploma or General Educational Devel-
opment (GED) degree before joining the program, so those who have
dropped out would have to at least clear that hurdle.
Among programs that seek to help young dropouts attain a high school
diploma, the National Guard ChalleNGe program, a residential program
based on a strict military model, stands out. In an evaluation using random-
ized controlled trials (RCTs), about 72 percent of participants earned a high
school diploma or GED within three years of program entry, compared to
56 percent among controls (Millenky et al. 2011). The various programs
in New York’s Office of Multiple Pathways to Graduation (OMPG) offer
longer-term and quite intensive remediation for youth with more serious
skill deficiencies in a variety of nontraditional settings, while the Gateway
to College program, which is now in thirty colleges in sixteen states, offers
a quicker route to community college for those who have dropped out but
have decent basic skills. The OMPG programs and Gateway to College
remain to be evaluated, but look promising to date.
Out-of-school youth can also benefit from training and paid work
experience in a residential setting. For instance, the latest evaluation of the
Job Corps (Schochet, Burghardt, and McConnell 2008) shows some evi-
dence of fadeout of early gains, but the program remains cost-effective for
older youth (those age twenty to twenty-four).15 Among nonresidential
programs, YouthBuild provides training and construction experience for
youth who work at rehabilitating low-income housing projects; it has not
yet generated rigorous evaluation evidence (though an RCT evaluation is
under way), but it has led to substantially higher earnings for thousands
of out-of-school youth nationwide relative to the earnings of young peo-
ple from similar backgrounds and demographics who were not enrolled.
These programs are based on the view, widely held among practitioners,
that paid work motivates young people to remain in programs and also
generates opportunities for “contextual learning” that are not often avail-
able in the classroom.
For those who enter postsecondary education, our primary challenge
is to reduce the enormous rates of noncompletion that prevail today, espe-
cially among the disadvantaged (Haskins, Holzer, and Lerman 2009).
Many initiatives have been funded by the Gates Foundation and others—
such as Achieving the Dream and Breaking Through—at community col-
-1 leges around the country; these initiatives fund the provision of a range of
0 supportive services and new curricula design, as well as efforts to improve
+1

13502-04_CH03-2ndPgs.indd 92 12/10/13 8:33 AM

 Connecting the Disconnected   93

links to the workforce by making courses of study more responsive to local

labor market trends. Evidence of gains from these efforts is modest to
date, though much more evaluation work remains to be done.
Still, some evidence exists that the kinds of supports provided in the
Opening Doors demonstration can improve community college perfor-
mance and persistence (Richburg-Hayes 2009); these supports include the
formation of small “learning communities” among student peer groups,
additional financial aid (above and beyond Pell grants) tied to academic
performance (such as maintaining a minimum grade point average), and
certain kinds of mandatory counseling for students with weak perfor-
mance. In addition, some recent evidence suggests that remedial education
at community colleges can be improved by integrating the remediation
into substantive education or training classes rather than keeping it on a
separate track, from which so many students drop out before they even
enter their primary course of study. Specifically, the Integrating Basic
Education and Skill Training (I-BEST) program in Washington State has
generated some evidence of higher rates of credit attainment and course
completion in a recent non-experimental study (Jenkins, Zeidenberg, and
Kienzl 2009).
Finally, we believe it is important to develop more systematic and com-
prehensive approaches for youth, rather than rely on a series of isolated
and fragmented programs, so that fewer of them fail. Some evidence that
such approaches raise the enrollment and employment rates of disadvan-
taged youth can be found in an evaluation of the Youth Opportunities
program, which funded thirty-six comprehensive youth systems in low-
income neighborhoods at the end of the Clinton administration (Decision
Information Resources 2008). Among the most promising examples of a
similar effort at the level of a large city is the Philadelphia Youth Network,
which brings programs for in-school and out-of-school youth together into
a single system.16 It is critical that we make such systemic efforts, rather
than continue with “siloed” programs, if we want to achieve widespread
impacts at scale for disconnected young people.

Improving Work Incentives: Expanding the

Earned Income Tax Credit for Childless Adults
For those young people whose skills will remain limited and who will
therefore face only the prospect of fairly low-wage employment, it would
be helpful to supplement their meager wages with tax credits—in the
hope of improving their earnings and also giving them incentives to work
more. Indeed, as long as their labor supply is elastic, higher net wages -1
should generate higher work effort.17 The national experience with the 0
+1

13502-04_CH03-2ndPgs.indd 93 12/10/13 8:33 AM

 94    What Works for Workers?

EITC over the past few decades has demonstrated the potential of “make
work pay” programs to raise employment levels while improving earnings
and income among the poor (Meyer and Rosenbaum 2001; Scholz 2007).
The EITC provides a refundable tax credit for workers with low family
incomes—in other words, even those with little or no federal tax liability
receive a tax credit anyway. It is most generous for low-income single
mothers with two or more children, providing a credit of roughly 40 per-
cent for each dollar of earned income up to a maximum of about $13,000.18
The credit is constant over the next $4,000 of income and then is gradually
phased out at a rate of about 20 percent per dollar of income over $17,000.
But while the EITC currently is very generous to custodial parents of chil-
dren, who are usually single mothers, it provides only very meager ben-
efits to childless adults and especially noncustodial parents, who are often
fathers. For this group, maximum benefits are only $475 per year.19
Accordingly, we have developed proposals to expand the EITC for
childless adults (Edelman et al. 2006; Edelman et al. 2009). Subsidy rates,
at 15 or 20 percent, would be well below the roughly 40 percent now avail-
able to low-income parents with custody of their children, but much more
generous than they are today for childless adults. Special provisions would
be needed to avoid large “marriage penalties” among pairs of workers
who are individually eligible for the EITC but whose combined incomes
would reduce or eliminate such eligibility; efforts would also need to be
made for noncustodial fathers to receive payments, even those in arrears
on their current support orders.20
More broadly, efforts to “make work pay” could have substantial positive
effects not only on parents but on poor children as well. The best evidence of
these potential positive effects can be found in the New Hope pilot program
in Milwaukee, which provided a set of wage supplements and guaranteed
benefits for those who accepted low-wage jobs, as well as public-service jobs
for those who could not find a job in the private sector. The program signifi-
cantly improved employment outcomes among adult participants during
the period of the program and even for a few years afterwards, while also
generating improved schooling and behavior outcomes among their chil-
dren (Duncan, Huston, and Weisner 2007). Efforts to scale up this program
and to test the replicability of its positive effects deserve support.

Improving Incentives and Reducing Barriers

for Ex-Offenders and Noncustodial Parents
Given the very large numbers of disconnected young (and especially
-1 African American) men who have criminal records and/or child support
0 orders, it is also critical that efforts be made to reduce their barriers to
+1

13502-04_CH03-2ndPgs.indd 94 12/10/13 8:33 AM

 Connecting the Disconnected   95

employment and improve their incentives to accept and remain at low-

wage jobs.
The best thing we can do in this regard would be to incarcerate fewer
young men to start with, especially for nonviolent drug offenses. Recent
efforts to incarcerate fewer young people have been centered on various
alternatives to prison, such as drug courts, “smart” probation, commu-
nity corrections, and a range of efforts commonly referred to as “justice
reinvestment” and “restorative justice” (Office of National Drug Control
Policy 2013). Reducing the number of parolees who recidivate owing to
technical parole violations would help as well (Western 2008).
We should also limit the barriers to legitimate work associated with
having a criminal record. States could be encouraged to review their laws
that limit job opportunities for felons, to make efforts to define and limit
employer discrimination against felons, and to expunge records after sev-
eral years in which no re-offense has been committed. Several states, includ-
ing New York, have made substantial progress to date in adopting such
low-cost policies that can do much to raise employment for this population
(Legal Action Center 2009).
Programmatic efforts to raise employment among ex-offenders have a
mixed record to date. Early evidence on “transitional jobs” programs from
the Center for Employment Opportunity (CEO) in New York was quite
positive in terms of reducing recidivism, but little impact on post-program
employment was observed (Redcross et al. 2009).21 And more recent evi-
dence on the impacts of a range of other transitional jobs programs has
been even weaker (Bloom et al. 2010). Still, efforts to provide paid work
experience to those behind bars before their release and/or to provide
them with education and job training might still have some payoff and
need more exploration (Holzer 2009; Mead 2011). Also showing promise
are efforts to manage or even forgive portions of arrears for those keeping
up with their current payments and to provide a range of employment
services for those who need them plus EITC eligibility (Sorensen 2011).22

But What About Labor Demand?

All of these proposals focus almost exclusively on the supply side of
the labor market—that is, on the youth themselves—while paying scant
attention to developments on the demand side of the market. Given the
severity of labor demand constraints on youth in the wake of the Great
Recession, policies to generate more demand for their labor must be part
of any youth policy agenda.
What kinds of demand-side policies make the most sense? We can dis- -1
tinguish between two categories of policy: efforts to stimulate job creation 0
+1

13502-04_CH03-2ndPgs.indd 95 12/10/13 8:33 AM

 96    What Works for Workers?

for youth in the short term, while the effects of the Great Recession remain
pronounced; and efforts to improve the quantity or quality of the jobs
available to disadvantaged youth in the longer term.
Efforts to stimulate demand in the short term could include various
kinds of subsidized private or public employment and grants for building
schools and infrastructure and preserving state and local public jobs, as
well as tax credits for private-sector employers who hire more workers.
Indeed, the American Jobs Act proposed by the Obama administration in
2011contained most of these ideas in various forms, but given the political
polarization and deadlock that have characterized the federal government
in the past few years, virtually none have been implemented as of mid-
2013, and it seems unlikely that they will be implemented anytime soon.
The recent success of the Emergency Contingency Fund under the
­Temporary Assistance for Needy Families (TANF) program, which created
about 250,000 jobs in the public and private sectors for the disadvantaged
within a short time frame (Lower-Basch 2011), illustrates the potential of
subsidized employment. More generally, public-service employment pro-
grams that are carefully designed and well targeted toward those in need
can not only raise employment rates in the short term but generate valued
services for communities as well (Ellwood and Welty 2000; Johnson 2010).
Ideal, but hardly practicable in the current fiscal and political climate,
would be a large-scale initiative (building on Americorps and other efforts
ranging back to the New Deal) to engage young people in transitional
employment in community and national service, with particular empha-
sis on youth who are disconnected or at risk of becoming disconnected.
They could be engaged in work on infrastructure, caregiving, conservation
projects, and numerous other possibilities. The work could be combined
with education and training so that participants would emerge far more
prepared for successful transitions to either work or additional education.
The case for building schools and infrastructure in particular is strong;
such work would contribute to a quicker recovery of employment in the
construction sector while making much-needed improvements to capital
that has been deteriorating. Although of the many trained construction
workers who are now unemployed would be the most obvious workers
to benefit, opportunities to develop apprenticeships for disadvantaged
youth would also be available. More broadly, publicly funded apprentice-
ships, work-study programs, and other forms of on-the-job training are
good ways to combine short-term work experience with longer-term skill
and credential improvements that increase the earnings capacities of the
disadvantaged over time.
-1 Tax credits to private employers who create more jobs could also ben-
0 efit youth to a large extent. The best design for such credits would be a
+1

13502-04_CH03-2ndPgs.indd 96 12/10/13 8:33 AM

 Connecting the Disconnected   97

temporary and generous “marginal” credit for employers whose payrolls

rise by more than some base rate (Bartik 2010). More targeted credits for
the hiring of youth or other disadvantaged groups would be aimed not at
expanding overall employment but at shifting it toward these disadvan-
taged groups; recent evidence on the effectiveness of the Work Opportunity
Tax Credit (WOTC) for several disadvantaged groups has been less promis-
ing (Hamersma 2011).23
And how might we encourage the private sector to improve the quality
of jobs available to disadvantaged youth over the longer term? Histori-
cally, federal and state minimum wage statutes have been the most obvi-
ous tool for doing so. We continue to support periodic increases in the
federal statutory minimum over time, though not so much and so quickly
as to deter job creation by employers (especially in our currently weak
labor markets).24
Similarly, collective bargaining has been an important tool for raising
job quality over time, but it has generally been less prevalent in the service
sector, where most disadvantaged youth ultimately gain employment,
than in more traditional industrial sectors. Some recent successes of the
Service Employees International Union (SEIU) at unionizing hotel work-
ers and others in the low-wage sector are a hopeful sign, but private-sector
unionization rates more broadly continue to decline and are now very low
(about 6 percent nationally). Organizing sectors that are youth-intensive
would be particularly challenging, given their very high turnover rates
and lower commitments to the labor force. And the need for unionized
jobs to survive in more competitive product and labor markets remains a
challenge for them as well (Hirsch 2008).25
But better jobs for young people may result from encouraging employers—
through technical assistance and tax credits—to build high-performance
work systems with greater promotion possibilities for their workers.
Some promising recent examples of employers being assisted in upgrad-
ing the quality and content of their jobs while remaining, or even becom-
ing, more competitive appear in Osterman and Shulman (2011).26 These
approaches certainly merit further exploration and experimentation,
along with greater public support.

Youth Policy Since 2008

Our focus in this chapter has been on improving education and employ-
ment outcomes among disadvantaged youth. Youth policy also includes
areas like Americorps and other community service opportunities, juvenile
and criminal justice, aging out of foster care, teen pregnancy, runaway and -1
homeless youth, sexual trafficking, and more. So our subject is less than 0
+1

13502-04_CH03-2ndPgs.indd 97 12/10/13 8:33 AM

 98    What Works for Workers?

the totality of youth policy, but education and employment outcomes are
significantly related to everything else.
The story of youth policy since President Obama took office is mixed—
in part because the new administration has offered fewer proposals than
expected, and in part because of the remarkable partisan hostility that has
been even more pronounced than anticipated.
In 2008–2009, we developed some policy proposals that included
many of the ideas described in this chapter (Edelman et al. 2009). In the
broadest sense, our hope was that there would be a new partnership for
dis­advantaged youth that cut across all relevant federal agencies, but
especially the U.S. Department of Education and the U.S. Department of
Labor. The salient characteristic of this partnership, as we have argued
here, would have been bringing the worlds of education and employment
closer together for those young people who would benefit from such a
connection. The continuum would begin in high school and continue
through adolescence into young adulthood and stable attachment to the
labor market.
For the school- and community college–based portion of the contin-
uum, our idea was that the Department of Education would play the lead
role, in part because its fiscal capacity dwarfs the resources commanded
by the Department of Labor, which we envisioned as using its funds to
play a role in organizing and promoting the employer side of the partner-
ship. And we saw the Labor Department playing the larger role in serving
those young people who were both out of school and not employed, to
get them back into some kind of setting with educational content as well
as preparation for work. Overall, our proposals would have provided sig-
nificant new resources to this issue, with an emphasis on replicating and
scaling the best recent models of both programs and systems for youth
and with the full set of complementary policies described here.
The partnership and policy as we envisioned it did not develop. Bits and
pieces of the needed policies happened in the Department of Education—
through Race to the Top, the community college initiative that fell short of
full fruition, and, very modestly, through the Promise Neighborhoods pro-
gram. And some of these policies were put in place at the Department of
Labor through its innovation funds and other competitive grants, though
changes in youth policy more broadly have been caught up in the snail’s
pace of reauthorization of the Workforce Investment Act.
Finally, we note again that a range of efforts could have been under-
taken to raise job creation rates in the aftermath of the Great Recession
and to target them toward disadvantaged youth. But political polarization
-1 and paralysis at the federal level, as well as the dismal fiscal situations
0 in which states and localities have found themselves, have prevented the
+1

13502-04_CH03-2ndPgs.indd 98 12/10/13 8:33 AM

 Connecting the Disconnected   99

implementation of these kinds of proposals, thus prolonging the effects

of the recession and worsening the “scarring” encountered by some dis-
advantaged young people (and others more broadly). While the federal
paralysis continues, perhaps such policies could be implemented in the
more pragmatic political atmospheres of some states. If state fiscal envi-
ronments continue to improve as the economic recovery proceeds, there is
a greater likelihood that some states will make this effort. This would give
us the opportunity to learn more about what works and what does not, so
that any ultimate action by the federal government would be even better
informed by recent experience.
Beyond steps that can practicably be taken at all levels of government
and in the private sector, we need as a nation and in communities across
the country to tackle the structural and other problems that block full
inclusion in our economy and our society for far too many young peo-
ple. Issues of race and poverty still matter in fundamental ways. Making
our public schools perform at a level of excellence for every child is a
challenge that underlies everything we have discussed. Ending the dis-
proportionate and destructive impact of our law enforcement system on
young people of color is vital. Ensuring truly equal opportunity in the
labor market is an objective still to be fulfilled. Communities across the
country need to harness all of the relevant actors to create school-to-work
pathways and systems that deliver in the inner city as well as they do in
the wealthiest suburb.
As we continue to lose too large a portion of each cohort of young peo-
ple as they come along, especially young people of color, we know more
about what to do than about how to put our knowledge to work. We have
to do more.

Notes
1. These computations are drawn from the outgoing rotation groups of the
Current Population Survey (CPS-ORG). We thank Marek Hlavac for generat-
ing this table for us.
2. Though part of this decline might represent the fact that the average skill lev-
els of those who remain non-enrolled are likely to fall as enrollment rates rise,
this does not appear to explain the overall trend (Holzer and Offner 2006).
3. Employment rates for less-educated young men calculated using the stan-
dard definitions of labor force participation and overall enrollment show
greater declines since 1979 among blacks than whites (Holzer and Offner
2006). Furthermore, the incarcerated are generally not included in measures
of the “non-institutional population” that are calculated from CPS data, and -1
low-income men tend to be undercounted more generally even when not 0
+1

13502-04_CH03-2ndPgs.indd 99 12/10/13 8:33 AM

 100    What Works for Workers?

incarcerated. If the incarcerated were added to our population measures but

not to employment counts, our estimated employment rates for the popula-
tion would be lower for all groups of men, but especially for less-educated
black men, who have the highest incarceration rates in the United States (as
well as the worst population undercounts); their employment declines over
time would also be more severe than what we observe. Unfortunately, we do
not have access to group-specific incarceration rates (or undercount rates)
that would enable us to correct these measures.
4. While the nation’s unemployment rate dropped by about two percentage
points (from just over 10 percent to below 8 percent) between 2010 and 2012,
most of this drop was caused by falling labor force participation rather than
rising employment rates. Employment rates among youth have only barely
improved in this time period. We have also seen a dramatic reduction in vol-
untary employment changes (quits) in this recession, which usually enable
young workers to increase their wages and salaries by moving into better jobs
early in their careers.
5. These tabulations are based on young people age twenty-two to twenty-four
in the 1997 cohort of the National Longitudinal Survey of Youth (NLSY97).
See Hill, Holzer, and Chen (2009) for a fuller description and analysis.
6. Most of these results are based on self-reports of respondents except for
incarceration, which is often determined from whether or not the individ-
ual was incarcerated at the time of the interview. Self-reports on incarcera-
tion between interviews or having children outside marriage might still be
downward-biased.
7. Since many fewer men than women report having children outside marriage,
the differences might reflect the effects of custody on these self-reports or
indicate that fathers tend to be older and outside the relevant age group.
8. Before the current decade, most economists believed that technological change
was a more powerful force than globalization in raising inequality. This view
has changed somewhat since 2000, given the rising imports of manufactured
goods from China as well as the growth of offshoring of production jobs more
broadly (Hanson 2012; Haskel et al. 2012). Economists have also debated the
extent to which immigration reduces the employment or earnings of native-
born workers (Borjas 2003; Card 2005). The general consensus is that these
impacts are mostly quite modest, but somewhat more negative for high school
dropouts and for the least-skilled workers more generally (Holzer 2011).
9. If wages were downwardly “rigid” when labor demand shifts in figure 3.1, then
we could observe involuntary unemployment. As drawn, the figure merely
shows lower employment and labor force activity at the second “equilibrium”
point in the labor market after demand has shifted away from these workers.
-1 10. See, for example, Mead (2011): see also Orland Patterson, “A Poverty of the
0 Mind,” New York Times, March 26, 2006.
+1

13502-04_CH03-2ndPgs.indd 100 12/10/13 8:33 AM

 Connecting the Disconnected   101

11. For instance, David Autor (2010) usually defines middle-skill jobs—many of
them good-paying production and clerical jobs for high school graduates—as
those whose average occupational wages as of 1980 were in the middle of the
wage spectrum. Though jobs in these particular categories have shrunken
dramatically in number, other categories of jobs for technicians and moder-
ately skilled employees in many sectors have grown over time in ways that
are not well captured by these data. Although these middle-skill job catego-
ries shrank significantly during the Great Recession, especially in construc-
tion and manufacturing, we believe that at least a significant portion of these
jobs will return when the labor market recovers.
12. Using longitudinal micro data on both employers and workers from the Lon-
gitudinal Employer Household Dynamics (LEHD) data at the Census Bureau,
Holzer and his colleagues (2011) were able to measure both worker and firm
quality over time and how workers of different skills are matched to jobs of
different quality in various years.
13. For a review of efforts to reduce high school dropout rates or to recover drop-
outs, see Tyler and Lofstrom (2010).
14. Sheila Maguire and her colleagues (2010) report very strong evidence on the
success of sectoral training programs for working poor adults, though youth
participated in these programs to some extent as well. These researchers
found that earnings were about $4,000 higher for a randomly assigned par-
ticipant group than for controls, up to twenty-four months after the training
began. Ann Roder and Mark Elliott’s (2011) estimated impacts for Year Up,
based on randomized control trials, were similar in magnitude.
15. Unfortunately, the residential component of the program also makes it quite
expensive, with annual costs of approximately $20,000 per participant.
16. For descriptions of citywide efforts to help youth in several major cities in the
United States, see Martin and Halperin (2006).
17. Evidence on the positive labor supply elasticities of the disadvantaged is
summarized in Katz (1998).
18. Maximum dollar amounts of the credit were just over $5,200 for families with
two children and just over $5,800 for those with three or more in 2012.
19. This maximum represents a tax credit of 7.6 percent on earned income up to
$6,250 per year.
20. See Edelman et al. (2009) for discussions of both sets of issues. The marriage
penalty could be lessened by counting only half of the lower earner’s income
when calculating total income for purposes of eligibility. NCPs who are cur-
rently paying support and whose previous child support debts (or “arrears”)
are being “managed” (as discussed later in the chapter) would be eligible to
keep their EITC payments.
21. For instance, arrest rates among CEO participants in the second year fol- -1
lowing program entry were about five percentage points lower (23 versus 0
+1

13502-04_CH03-2ndPgs.indd 101 12/10/13 8:33 AM

 102    What Works for Workers?

28 percent) than among control group members. The fact that employment
effects faded more quickly than recidivism effects suggests that the transi-
tional jobs and other services did not transmit lasting improvements in work-
place skills that were valued by the labor market, but these jobs and services
may have influenced personal motivation or social networks in ways that
improved behavioral outcomes.
22. The state of New York was one of the first to make noncustodial fathers pay-
ing child support eligible for the EITC. But take-up rates have been very low,
owing to the fact that those in arrears will have any such additional payments
garnished. The need to combine EITC eligibility with arrears management and
default orders adjustment is clearly illustrated in the New York experience.
23. The WOTC, which replaced the earlier Targeted Jobs Tax Credit (TJTC), pro-
vides tax credits for up to a year for the hiring of workers from a range of spe-
cific disadvantaged populations, such as ex-offenders and long-term welfare
recipients. But take-up rates are generally low, as employers seem to be either
unaware or uninterested in the credits, apparently preferring to pay more for
employees whom they expect to perform well on their jobs. These credits can
also create windfalls for employers who simply hire the same workers with
or without the credits. Hamersma (2011) shows that impacts on the employ-
ment of current and former welfare recipients while the credit is in effect
are very modest and that they disappear once individual eligibility for the
credits expire.
24. For some recent evidence on the extent to which minimum wage increases
might reduce employment among the young, see Neumark and Wascher
(2009). A more sanguine view, arguing that the evidence of falling employ-
ment in response to minimum wage increases is quite thin, appears in earlier
work by Card and Krueger (1997).
25. If anything, even the modest reductions in employment that might be gener-
ated if union wage increases were not offset by productivity increases might
hurt youth the most, as they are the most marginal workers in any setting.
26. These include many sectoral training programs, such as those run by Local
1199c in health care and Project Quest in San Antonio, where intermediaries
help employers build career ladders and pathways and invest more in train-
ing frontline workers for better jobs on these pathways.

References
Alexander, Michelle. 2010. The New Jim Crow: Mass Incarceration in the Age of Color-
blindness. New York: New Press.
Autor, David. 2010. “The Polarization of Job Opportunities in the U.S. Labor
-1 Market.” Washington, D.C.: Center for American Progress.
0
+1

13502-04_CH03-2ndPgs.indd 102 12/10/13 8:33 AM

 Connecting the Disconnected   103

Autor, David, Lawrence F. Katz, and Melissa S. Kearney. 2008. “Trends in U.S.
Wage Inequality: Revising the Revisionists.” Review of Economics and Statistics
90(2): 300–323.
Bartik, Timothy. 2010. “Not All Job Creation Tax Credits Are Created Equal.”
Washington, D.C.: Economic Policy Institute.
Blau, Francine, and Lawrence Kahn. 1997. “Swimming Upstream: Trends in the
Gender Wage Differential in the 1980s.” Journal of Labor Economics 15(1): 1–42.
Bloom, Howard, Saskia Levy Thompson, and Rebecca Unterman. 2010. “Transform-
ing the High School Experience: How New York City’s New Small Schools Are
Boosting Student Achievement and Graduation Rates.” New York: MDRC.
Borjas, George. 2003. “The Labor Demand Curve Is Downward Sloping: Reexam-
ining the Impacts of Immigration on the Labor Market.” Quarterly Journal of
Economics 118(4): 1335–74.
Bound, John, and Richard Freeman. 1992. “What Went Wrong? The Erosion of
Relative Earnings and Employment Among Young Black Men in the 1980s.”
Quarterly Journal of Economics 107(1): 201–32.
Bound, John, and Harry J. Holzer. 1993. “Industrial Structure, Skill Levels, and the
Employment Rates of White and Black Males.” Review of Economics and Statistics
75(3): 387–94.
Card, David. 2005. “Is the New Immigration Really So Bad?” Economic Journal
115(506): 300–323.
Card, David, and Jonathan Dinardo. 2007. “The Impact of Technological Change
on Low-Wage Workers: A Review.” In Working and Poor: How Economic and
Policy Changes Are Affecting Low-Wage Workers, ed. Rebecca M. Blank, Sheldon
H. Danziger, and Robert F. Schoeni. New York: Russell Sage Foundation.
Card, David, and Alan Krueger. 1997. Myth and Measurement: The New Economics of
the Minimum Wage. Princeton, N.J.: Princeton University Press.
Carnevale, Anthony, Nicole Smith, and Jeffrey Strohl. 2010. “‘Help Wanted’:
Projections of Jobs and Education Requirements Through 2018.” Washington,
D.C.: Georgetown University, Center for Education and the Workforce.
Cornwell, Christopher, David Mustard, and Jessica Van Parys. 2011. “Non-Cognitive
Skills and Gender Disparities in Test Scores and Teacher Assessments: Evidence
from Primary School.” Working Paper 5973. Bonn, Germany: Institute for the
Study of Labor (IZA).
Decision Information Resources, Inc. 2008. “Evaluation of Youth Opportunities Pro-
gram.” Report to the Employment and Training Administration. Washington:
U.S. Department of Labor.
Duncan, Greg J., Aletha C. Huston, and Thomas S. Weisner. 2007. Higher Ground: New
Hope for the Working Poor and Their Children. New York: Russell Sage Foundation.
Duncan, Greg, and Richard Murnane, eds. 2011. Whither Opportunity? Rising Inequal-
ity, Schools, and Children’s Life Chances. New York: Russell Sage Foundation. -1
0
+1

13502-04_CH03-2ndPgs.indd 103 12/10/13 8:33 AM

 104    What Works for Workers?

Edelman, Peter, Mark Greenberg, Steve Holt, and Harry Holzer. 2009. “Expanding
the EITC to Help More Low-Wage Workers.” Washington, D.C.: Georgetown
University, Center on Poverty, Inequality, and Public Policy.
Edelman, Peter, Harry J. Holzer, and Paul Offner. 2006. Reconnecting Disadvantaged
Young Men. Washington, D.C.: Urban Institute Press.
Ellwood, David, and Elisabeth Welty. 2000. “Public Service Employment and
Mandatory Work.” In Finding Jobs: Work and Welfare Reform, ed. David Card
and Rebecca Blank. New York: Russell Sage Foundation.
Freeman, Richard. 1992. “Crime and the Employment of Disadvantaged Youth.”
In Urban Labor Markets and Job Opportunity, ed. George E. Peterson and Wayne
Vroman. Washington, D.C.: Urban Institute Press.
Goldin, Claudia, and Lawrence Katz. 2008. The Race Between Education and Technol-
ogy. Cambridge, Mass.: Harvard University Press.
Hamersma, Sarah. 2011. “Why Don’t Eligible Firms Claim Hiring Subsidies? The
Role of Job Duration.” Economic Inquiry 49(3): 916–34.
Hanson, Gordon. 2012. “The Rise of Middle Kingdoms: Emerging Economies in
Global Trade.” Journal of Economic Perspectives 26(2): 41–64.
Haskel, Jonathan, Robert Lawrence, Edward Leamer, and Matthew Slaughter. 2012.
“Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent
Facts.” Journal of Economic Perspectives 26(2): 65–90.
Haskins, Ron, Harry Holzer, and Robert Lerman. 2009. “Promoting Economic
Mobility by Increasing Postsecondary Educational Attainment Among the
Disadvantaged.” Washington, D.C.: Pew Trusts, Economic Mobility Project.
Heinrich, Carolyn, and Harry Holzer. 2011. “Improving Education and Employ-
ment Among Disadvantaged Young Men: Proven and Promising Strategies.”
Annals of the American Academy of Political and Social Science 635: 163–91.
Hill, Carolyn, Harry Holzer, and Henry Chen. 2009. Against the Tide: Household
Structure, Opportunities, and Outcomes Among White and Black Youth. Kalamazoo,
Mich.: W. E. Upjohn Institute for Employment Research.
Hirsch, Barry. 2008. “Sluggish Institutions in a Dynamic World: Can Unions and
Industrial Competition Coexist?” Journal of Economic Perspectives 22(1): 153–76.
Hoffman, Nancy. 2011. “A Fresh Look at Career and Technical Education.” Paper
presented to the conference on “Preparing Youth for the Jobs of Tomorrow.”
University of Pennsylvania Graduate School of Education, Philadelphia, May 25.
Holzer, Harry. 2009. “Collateral Costs: Effects of Incarceration on Employment
and Earnings of Young Workers.” In Do Prisons Make Us Safer? The Benefits and
Costs of the Prison Boom, ed. Steven Raphael and Michael A. Stoll. New York:
Russell Sage Foundation.
———. 2010. “Is the Middle of the Job Market Really Disappearing? Comments
-1 on the Polarization Hypothesis.” Washington, D.C.: Center for American
0 Progress.
+1

13502-04_CH03-2ndPgs.indd 104 12/10/13 8:33 AM

 Connecting the Disconnected   105

———. 2011. “Immigration Policy and Less-Skilled Workers in the United States:
Reflections on Future Directions for Reform.” Washington, D.C.: Migration
Policy Institute (January).
Holzer, Harry, Julia Lane, David Rosenblum, and Fredrik Andersson. 2011. Where
Are All the Good Jobs Going? New York: Russell Sage Foundation.
Holzer, Harry, and Robert Lerman. 2007. “America’s Forgotten Middle-Skill Jobs:
Education and Training Requirements for the Next Decade and Beyond.”
Washington, D.C.: Workforce Alliance.
Holzer, Harry, and Paul Offner. 2006. “Trends in the Employment of Less-Educated
Young Men.” In Black Males Left Behind, ed. Ronald Mincy. Washington, D.C.:
Urban Institute Press.
Holzer, Harry, Paul Offner, and Elaine Sorensen. 2005. “Declining Employment
Among Less-Educated Young Black Men: The Role of Incarceration and Child
Support.” Journal of Policy Analysis and Management 24(2): 329–50.
Jacob, Brian. 2002. “Where the Boys Aren’t: Non-Cognitive Skills, Returns to School,
and the Gender Gap in Higher Education.” Working Paper 8964. Cambridge,
Mass.: National Bureau of Economic Research (May).
Jacobson, Louis, and Christine Mokher. 2009. “Pathways to Boosting the Earnings of
Low-Income Students by Increasing Their Educational Attainment.” Arlington,
Va.: Hudson Institute Center for Employment Policy/CNA Analysis & Solutions
(January).
Jenkins, Davis, Matthew Zeidenberg, and Gregory Kienzl. 2009. “Building Bridges
to Postsecondary Training for Low-Skill Adults: Outcomes of Washington
State’s I-BEST Program.” Working paper. New York: Columbia University,
Center for Research on Community Colleges (May).
Johnson, Cliff. 2010. “Publicly Funded Jobs: An Essential Strategy for Reducing
Poverty and Economic Distress Throughout the Business Cycle.” Washington,
D.C.: Urban Institute.
Juhn, Chinhui. 1992. “Declining Labor Force Participation Among Young Men:
The Role of Declining Market Opportunities.” Quarterly Journal of Economics
107(1): 79–121.
Kahn, Lisa. 2010. “The Long-Term Labour Market Consequences of Graduating
from College in a Bad Economy.” Labour Economics 17(2): 303–16.
Katz, Lawrence. 1998. “Wage Subsidies for the Disadvantaged.” In Generating Jobs,
ed. Richard Freeman and Peter Gottschalk. New York: Russell Sage Foundation.
Kemple, James. 2008. Career Academies: Long-Term Impacts on Earnings, Educational
Attainment, and the Transition to Adulthood. New York: MDRC.
Legal Action Center. 2009. After Prison: Roadblocks to Reentry, 2009 Update. New
York: Legal Action Center.
Lower-Basch, Elizabeth. 2011. “Rethinking Work Opportunity: From Tax Cred-
its to Subsidized Job Placements.” Washington, D.C.: Spotlight on Poverty and -1
Opportunity (November 8). 0
+1

13502-04_CH03-2ndPgs.indd 105 12/10/13 8:33 AM

 106    What Works for Workers?

Magnuson, Katherine, and Jane Waldfogel, eds. 2008. Steady Gains and Stalled Prog-
ress. New York: Russell Sage Foundation.
Maguire, Sheila, Joshua Freely, Carol Clymer, Maureen Conway, and Deena
Schwartz. 2010. “Tuning in to Local Labor Markets: Findings from the Sectoral
Employment Impact Study.” Philadelphia: Public/Private Ventures.
Martin, Nancy, and Samuel Halperin. 2006. “Whatever It Takes: How Twelve Com-
munities Are Reconnecting Out-of-School Youth.” Washington, D.C.: American
Youth Policy Forum.
Mead, Lawrence. 2011. Expanding Work Programs for Poor Men. Washington, D.C.:
American Enterprise Institute.
Meyer, Bruce, and Daniel Rosenbaum. 2001. “Welfare, the EITC, and the Labor
Supply of Single Mothers.” Quarterly Journal of Economics 116(3): 1063–1114.
Millenky, Megan, Dan Bloom, Sara Muller-Ravett, and Joseph Broadus. 2011.
“Staying on Course: Three-Year Results of the National Guard Youth Chal-
leNGe Evaluation.” New York: MDRC.
Neumark, David, and William Wascher. 2009. Minimum Wages. Cambridge, Mass.:
MIT Press.
Office of National Drug Control Policy. 2013. “Alternatives to Incarceration.” Wash-
ington: Executive Office of the President. Available at: http://www.whitehouse.
gov/ondcp/alternatives-to-incarceration (accessed December 2011).
Osterman, Paul, and Beth Shulman. 2011. Good Jobs America. New York: Russell
Sage Foundation.
Pager, Devah. 2007. Marked: Race, Crime, and Finding Work in an Era of Mass Incar-
ceration. Chicago: University of Chicago Press.
Redcross, Cynthia, Dan Bloom, Gilda Azurdia, Janine Zweig, and Nancy Pindus.
2009. “Transitional Jobs for Ex-Prisoners: Implementation, Two-Year Impacts,
and Costs of the Center for Employment Opportunities (CEO) Prisoner Reentry
Program.” New York: MDRC.
Richburg-Hayes, LaShawn. 2009. “Rewarding Persistence: Impacts of a Performance-
Based Scholarship Program on Low-Income Parents.” New York: MDRC.
Roder, Ann, and Mark Elliott. 2011. “A Promising Start: Year Up’s Initial Impacts on
Low-Income Young Adults’ Careers.” New York: Economic Mobility Corporation.
Schochet, Peter, John Burghardt, and Sheena McConnell. 2008. “Does Job Corps
Work? Impact Findings from the National Job Corps Study.” American Economic
Review 98(5): 1864–86.
Scholz, J. Karl. 2007. “Employment-Based Tax Credits for Low-Wage Workers.”
Washington, D.C.: Brookings Institution, Hamilton Project.
Sorensen, Elaine. 2011. “New York Initiative Helps Fathers Increase Earnings and
Child Support.” Policy Brief. Washington, D.C.: Urban Institute.
Symonds, William, et al. 2011. “Pathways to Prosperity: Meeting the Challenge of
-1 Preparing Young Americans for the 21st Century.” Cambridge, Mass.: Harvard
0 University, Graduate School of Education (February).
+1

13502-04_CH03-2ndPgs.indd 106 12/10/13 8:33 AM

 Connecting the Disconnected   107

Tyler, John, and Magnus Lofstrom. 2010. “Finishing High School: Alternative
Pathways and Dropout Recovery.” The Future of Children 19(1): 77–103.
U.S. Census Bureau. 1979–2010. Current Population Surveys, Outgoing Rotation
Groups. Washington: U.S. Census Bureau.
Von Wachter, Till. 2010. “Responding to Long-Term Unemployment.” Testimony
before the Joint Economic Committee of the U.S. Congress. May 25.
Western, Bruce. 2006. Punishment and Inequality in America. New York: Russell Sage
Foundation.
———. 2008. “From Prison to Work: A Proposal for a National Prisoner Reentry
Program.” Washington, D.C.: Brookings Institution, Hamilton Project.
Wilson, William J. 2009. More Than Just Race: Being Black and Poor in the Inner City.
New York: W. W. Norton.
Wolfe, Barbara, and Lawrence Wu, eds. 2001. Out of Wedlock: Causes and Conse-
quences of Nonmarital Fertility. New York: Russell Sage Foundation.

-1
0
+1

13502-04_CH03-2ndPgs.indd 107 12/10/13 8:33 AM

 Chapter 4 Mending the Fissured Workplace

David Weil

During much of the twentieth century, the critical employment relation-

ship was between large businesses and workers, but that is no longer the
case. Large businesses with national and international reputations operat-
ing at the top of their industries continue to focus on delivering value to
their customers and investors. However, they no longer directly employ
legions of workers to make products or deliver service. Like a rock that
has developed a fissure that deepens and spreads with time, the work-
place over the last three decades has broken apart as employment has
been shed by lead businesses and transferred to a complicated network of
smaller business units.
In the fissured workplace, employment is no longer a clear relationship
between a well-defined employer and its employees. The basic terms of
employment—hiring, evaluation, pay, supervision, training, c­ oordination—
are now distributed across multiple organizations, and responsibility for
working conditions has become blurred. Fissuring has also had serious
impacts on the bedrocks that workers depend on from employment: the
share of the economic pie available to them and their families; their expo-
sure to health and safety and other risks each day at work; and employer
compliance with the most basic labor standards set out by law.
The fissured workplace has spread across sectors and organizational
forms. Several examples are indicative of the scope of change. In 1960 most
hotel employees worked for the brand whose name appeared over the
hotel entrance. Today more than 80 percent of hotel staff are employed by
owners and supervised by separate management companies that bear no
relation to the hotel brand name of the property where they work. Twenty
-1 years ago, workers in the distribution center of a major manufacturer like
0 Hershey’s or a retailer like Walmart would be hired, supervised, evaluated,
+1
108

13502-05_CH04-3rdPgs.indd 108 12/10/13 8:33 AM

 Mending the Fissured Workplace    109

and paid by that company. Today many workers receive a paycheck from
a labor supplier and are managed by the personnel of a large logistics com-
pany, but follow the detailed operating standards of the nationally known
retailer or consumer brand serviced by the facility. And whereas IBM in
its ascendency directly employed workers to produce its computers, from
designers and engineers to the people on the factory floor, Apple, now our
economy’s most highly valued company, directly employs only 63,000 of
the more than 750,000 workers globally responsible for designing, selling,
manufacturing, and assembling its products.
Many of the industries we associate with low wages, precarious employ-
ment, high rates of violation of basic labor standards, and dangerous work-
ing conditions are also the industries in which fissuring is most advanced.1
These include eating and drinking businesses, janitorial services, many
sectors of manufacturing, residential construction, and services. But fissur-
ing also has spread to industries in retailing, the telecommunications and
IT sectors, hospitals, and business services. In fact, employment fissuring
represents an organizational format that has spread across many sectors of
the economy and assumes many different forms.
Fissured employment has three fundamental impacts on society. First,
moving employment from lead employers to other businesses providing
services for them has repercussions for how wages are set and economic
surplus is shared. Gains once shared between lead businesses and their
workforce have shifted increasingly to investors and in some cases con-
sumers. Wage stagnation and the worsening nature of work for many can
be seen as a consequence of this change.
Second, shifting employment outward necessitates changes in how work
is coordinated. Problems arise when there are many hands in a kitchen and
inadequate oversight. So too in the workplace. As fissured employment
blurs lines of responsibility and liability (intentionally so in some cases),
oversight of important activities like health and safety may fall through
the cracks. In the worst cases, breakdowns in lines of responsibility lead
to workplace fatalities, as seen in petrochemicals, coal mining, cell towers,
and manufacturing.
Finally, fissuring’s third impact on society has been to undermine com-
pliance with labor standards. Fissuring creates “orbits” of subsidiary busi-
nesses revolving around a central lead company. Competition is intense
in each orbit—and often becomes more so the further out the orbit is from
the lead business. Since competition is often price-based, the pressure to
reduce costs becomes intense, leading these subsidiary businesses to lower
wages, allow more precarious employment conditions, and, in many cases, -1
subvert or even violate workplace laws and labor standards. 0
+1

13502-05_CH04-3rdPgs.indd 109 12/10/13 8:33 AM

 110    What Works for Workers?

The fissured workplace compels us to rethink our basic definitions of

employment. An economy in which much employment has been shifted
outside of the boundaries poses grave questions about the efficacy of the
traditional approach to workplace regulation. The problems are magni-
fied for low-wage and vulnerable workers working at the “outer orbits”
of fissured employment structures.
This chapter begins with a discussion of the elements of employment
fissuring and the “recipe” that underlies it. It then examines the limitations
of current law with respect to fissured employment, as well as the inherent
problems of traditional approaches to enforcement. The central part of the
chapter discusses a number of initiatives undertaken by the Obama admin-
istration that suggest ways in which new enforcement methods might per-
suade lead business organizations to rethink their decisions that lead to the
fissured workplace, including a focus on the top of a fissured structure and
an end to forms of the fissured workplace that are expressly designed to
avoid basic employer obligations.

The Fissured “Recipe”

Fissured employment represents the intersection of three business
strategies—a focus on revenues, a focus on costs, and the “glue” that makes
the overall strategy operate effectively.2 These areas of focus arise not from
employment per se, but from the demands by capital markets that leading
companies focus on the “core competencies” that produce value to inves-
tors and consumers by building brands, creating innovative products and
services, capitalizing on true economies of scale and scope, or coordinat-
ing complex supply chains. But focusing on core competencies has also
led to shifting out activities once considered central to operations to other
organizations in order to convert employer-employee relationships into
arm’s-length market transactions. Fissuring weds these potentially con-
tradictory activities together through the “glue” of creating, monitoring,
and enforcing standards on product and service delivery made available
through new information and communication technologies and enabled
by organizational models like franchising, labor brokers, and third-party
management.
The first element of fissuring, the broad movement urging companies to
focus on core competencies, began in the late 1970s, when investors, lend-
ers, and general capital market pressures increasingly compelled the senior
management of leading companies to focus attention on those activities that
added the greatest value (such as product design, product innovation, cost
-1 or quality efficiencies, and other unique strengths) while farming out work
0 to other organizations not central to their core mission. This strategy led
+1

13502-05_CH04-3rdPgs.indd 110 12/10/13 8:33 AM

 Mending the Fissured Workplace    111

companies to focus their key strategies and their workforces on develop-

ing brands and strong customer identification with their goods or services,
building the capacity to introduce new products or designs, and creating
true economies of scale or scope in production and operation. Activities
outside of this core were shifted away.3
The second element of fissuring, the focus on costs, leads companies to
respond to the drive to develop core competencies by breaking apart the
elements of producing a good or providing a service and shifting to other
parties those elements that are not central to its profit model. Even in the
1930s, the Ford Motor Company, a pioneer in the vertical integration of
production, realized the limits of integration: the automaker discovered,
for instance, that it did not benefit from trying to supply its own steel or
leather (Chandler 1977; Williamson 1985). It could shift that work to oth-
ers and use the market to acquire those inputs. The evolving auto indus-
try has pushed that concept further and further as major producers have
shifted off more and more production to other suppliers. But assessments
of the proper boundaries of a firm have not been limited to manufacturing.
For a variety of reasons, the large employers that dominated the econ-
omy and labor market of the last century required unified personnel and
pay policies and internal labor markets: to take advantage of administra-
tive efficiencies; to create consistency in corporate policies; and to reduce
exposure to violations of laws. In large firms employing everyone from
engineers and clerical employees to line workers and janitors, unified
human resource policies reduced potential friction among the diverse
workforce by creating standard wages and benefits within jobs as well as
across different jobs. This had the effect of raising wages at the lower end
of the wage distribution (such as for janitors in an automobile factory)
and, as a result, the average wages of large employers relative to smaller
employers. Fissuring the provision of service to other firms has had the
impact of allowing lead companies to lower their costs, since externalizing
activities to other firms (particularly those operating in more competitive
markets) eliminates the need to pay the higher wages and benefits typi-
cally provided by large enterprises, as well as the need to establish consis-
tency in human resource policies, which are no longer uniformly relevant
inside the firm.4
Clearly, there is a tension between the first two elements of fissured
strategies: by shifting the provision of services to other businesses, com-
panies that have created brands may jeopardize them if quality standards
are not adhered to closely. Similarly, coordination economies do not per-
sist if the suppliers that a firm depends on fail to live up to them or to
provide the services required in a timely manner. The third element -1
of a fissured strategy is therefore developing clear, explicit, and detailed 0
+1

13502-05_CH04-3rdPgs.indd 111 12/10/13 8:33 AM

 112    What Works for Workers?

standards that provide the blueprint for the enterprises at lower levels to
follow. But detailed standards are not enough: the lead organization must
also create contracts or develop organizational structures that allow it to
monitor the affiliated companies and impose real costs if they fail to abide
by them.
It is not coincidental, then, that the growth of fissuring has been accom-
panied by the creation of many different forms of standard setting and
monitoring, from the promulgation of bar codes, electronic standards, GPS,
and other methods of tracking products through supply chains and the
monitoring of the provision of services to customers (Baker and Hubbard
2003). At the same time, organizational forms that were once restricted to
a few industries like fast food, such as franchising, have become omni-
present, spanning sectors from janitorial and landscaping services to home
health care (see generally Blair and Lafontaine 2005).
Taken together, these elements of fissuring have created a model for
industries—and for an overall economy—that is wired differently from the
model it has gradually replaced. Large corporations, where value creation,
market power, and notably employment were concentrated, dominated
the economic system for much of the twentieth century. The fissured econ-
omy still is powerfully affected by the large corporation, with this concen-
tration of value creation and economic power. But employment now has
been split off; shifted to a range of secondary players that function in more
competitive markets, and separated from the locus of value creation.

Workplace Laws and Definitions

of Employment
Although the modern employment relationship bears little resemblance
to the relationship assumed in the core U.S. workplace regulations, there
are some desirable aspects of the fissured world—consumers benefit, for
instance, when companies try to market goods and services that conform
to their tastes—as well as productivity gains when firms focus on core
competencies.5
Franchise manuals, performance contracts, delivery standards and sys-
tems, and monitoring arrangements directly affect the day-to-day and often
hour-by-hour operation of lower-level businesses, thereby influencing the
tasks, pacing, and outcomes of work. The prices paid by lead companies to
lower-level businesses, whether in the form of service contracts, franchise
agreements, or pay packages for subcontractors, correspondingly deter-
mine the operating margins of those entities providing services. Yet despite
-1 the resulting influence wielded by lead companies, they regularly profess
0 a lack of knowledge about the work conditions that result and often absent
+1

13502-05_CH04-3rdPgs.indd 112 12/10/13 8:33 AM

 Mending the Fissured Workplace    113

themselves from some coordination functions that might compromise their

arm’s-length status.
Thus arises a fundamental question framing workplace policies. Cur-
rent public policies, premised on simple employer-employee models,
implicitly bundle operational control with responsibility, but fissuring
splits that bundle apart, allowing lead companies to set the terms of a
wide range of workplace practices yet eschew responsibility for their con-
sequences, which are left on the shoulders of the lower-level businesses
operating under more demanding conditions. Given the social conse-
quences of these arrangements, should lead companies be allowed to have it
both ways?
Turning back the clock to an earlier time, in the hope that lead employ-
ers will reemploy the large and varied workforce of previous times, is
not only unlikely to happen but in some respects would be undesirable.
Instead, public policies should attempt to influence the internal balanc-
ing carried on by lead companies when they create fissured relation-
ships in their organizations. To see how this could be done, we start by
briefly reviewing how workplace laws currently treat employment. This
review will bring into sharper relief the outlines of a more fruitful policy
to change the dynamics that bring on many of the problems of the low-
wage workplace.

Who’s in Charge? Defining Employers in the

Fissured Workplace
Workplace laws and the court opinions interpreting them generally start
with the definitions of employers and employees arising from the com-
mon law.6 The common law bases its views of employment relationships
on whether there is a master-servant relationship between the parties,
where the master (or principal) employs the servant (acting as the mas-
ter’s agent) to undertake some action for its benefit. The master in the
relationship directs and controls the servant in his or her activities. Under
tort law regarding the liability of the master for the actions of the ser-
vant, courts apply a “direct and control” test to ascertain whether those
tasks have been sufficiently defined, monitored, and rewarded to establish
employment. The question of whether a party oversees the means (that is
the way that work is actually done) or only the outcomes has important
implications as to whether the party undertaking the work activity is an
employee or an independent contractor. But the important point is that
the test itself can impose a fairly high standard in showing that the prin-
cipal has a significant role in setting out the tasks and activities it expects -1
of its agent.7 0
+1

13502-05_CH04-3rdPgs.indd 113 12/10/13 8:33 AM

 114    What Works for Workers?

The Fair Labor Standards Act (FLSA) defines an employee as “any indi-
vidual who is employed by an employer” and as someone whose “employ
includes to suffer or permit to work.” This obscure phrase offers perhaps
the broadest definition of employee of any federal statute. It goes beyond
the definition offered by the common law focus on the degree of actual
control of the employee. Instead, courts have noted that the phrase “to suf-
fer or permit” implies that even an employer’s broad knowledge of the
working being done on its behalf is sufficient to establish a relationship.
Given the wide latitude implied by this definition, courts have applied
an economic reality test to evaluate the particular economic situation sur-
rounding a worker and employer or employers. Although the language
makes possible interpretations that capture the complexities of the mod-
ern workplace, courts have historically tended to hew to relatively narrow
definitions of employment.8
At the other end of the spectrum, the National Labor Relations Act
(NLRA), the federal statute governing union organizing and collective bar-
gaining, uses a restrictive definition and a narrow economic reality test for
defining employment that adheres more closely to common law notions.
Originally, the Supreme Court, in ruling on the NLRA’s employer-employee
definitions, deferred to the National Labor Relations Board (NLRB). In NLRB
v. Hearst Publications Inc., the Court explicitly stated that the employment
definition was not confined to common law definitions but could legiti-
mately look to whether “as a matter of economic fact, to the evils the Act
was designed to eradicate.” In this particular case, the Court upheld an
NLRB ruling that “newsies” (boys who sold newspapers in the street on
commission) were in fact employees of the Hearst publishing empire,
despite Hearst’s contention that they were formally independent contrac-
tors who purchased papers from Hearst but sold them on their own as
“entrepreneurs.” The NLRB decision and Supreme Court affirmation of
it led enraged conservatives in Congress to amend the NLRA in 1947 to
specifically exempt independent contractors.9 This moved the NLRB and
the courts to apply the tests for employment created by common law in
deciding on issues of coverage under the act.10
The Occupational Safety and Health Act (OSHA) of 1970 defines an
“employer” as “a person engaged in a business affecting commerce who
has employees.” The act requires that an employer “shall furnish to each
of his employees employment and a place of employment which are free
from recognized hazards that are causing or are likely to cause death or
serious physical harm to his employees.”11 Although this definition of
employer reflects the act’s focus on ensuring that safe conditions prevail
-1 in the workplace, it creates obvious problems in that, with the many forms
0 of fissuring, the party that creates the conditions of work might not actu-
+1

13502-05_CH04-3rdPgs.indd 114 12/10/13 8:33 AM

 Mending the Fissured Workplace    115

ally have “employees.” For example, AT&T does not directly employ cell
tower maintenance workers (although it once did, before the demand for
iPhones exponentially expanded the need for cell tower capacity), but
uses multiple layers of subcontractors to undertake this work. As a result,
fatality rates on AT&T cell towers and those of other carriers are ten times
the level of those for construction in general.12
Other federal and state statutes offer their own definitions of employment
that are similarly rooted in common law definitions of agency, but tailored
to the particular aims of the statutes. For a large swath of employment in
the economy, subtle definitions did not matter much for many decades: it
was relatively clear who the employer was and who the employee was, and
the boundaries of the firm were equally clear. The more the workplace has
fissured, however, the more the subtleties presented by the common law
and the specific definitions embodied in statutes have come to matter. In
effect, what was at one time located at the edges of legal disputes regarding
either idiosyncratic occupations (newsies) or historically fissured industries
(construction and garments) has become a mainstream problem of employ-
ment; as a result, the subtleties of these statutes are more central to achiev-
ing the objectives of workplace laws.13

Rethinking Employment Boundaries

The balancing that is a basic part of the fissured recipe creates incentives for
the employer to further distance itself from the employment relationship.14
To bring existing workplace statutes into closer alignment with the arrange-
ments in many fissured workplaces, legislation would need to broaden the
responsibility of lead organizations in the realm of employment to make it
consistent with the roles they play in their other relationships with subor-
dinate businesses. The principle here would be one of parallelism: if a com-
pany exerts minute control over aspects of quality, production, and delivery
of services, that control should extend more fully to the domain of employ-
ment as well—all these being aspects of the business that are directly valu-
able to the company.
Similarly, if a firm sits at the top of a complicated process of production
in which its pricing, technical standards, and quality requirements funda-
mentally affect the returns available to the network of businesses operat-
ing within that firm, public policies should increase this firm’s incentives
to oversee coordination of the system it has created by virtue of its posi-
tion (particularly with respect to health and safety issues). In effect, such
public policies would recognize that if lead businesses can create effective -1
systems to achieve quality, price, and scheduling objectives, they should 0
+1

13502-05_CH04-3rdPgs.indd 115 12/10/13 8:33 AM

 116    What Works for Workers?

be required to bring that expertise to the employment realm and ensure

workplace and public safety as well.
A number of legal scholars have put forward proposals with respect
to rethinking employment boundaries. One set of proposals focuses on
broadening employer responsibility for violations of workplace standards
and increasing liability for those companies that benefit from various fis-
sured forms. Several proposals build on the model created under a current
provision of the Fair Labor Standards Act, referred to as the “hot cargo”
provision. The hot cargo provision allows the U.S. Department of Labor’s
Wage and Hour Division to embargo goods in transit if investigations
find that the law has been violated at any earlier point of production. This
provision allows the department, for example, to hold the delivery of a
manufacturer’s clothing shipment if it finds that a subcontractor violated
minimum wage standards.
Brishen Rogers (2010) proposes a broad expansion of the hot cargo provi-
sion to workplace legislation generally through the creation of a duty-based
test that would expand employer responsibility to end-user firms that fail to
exercise due care in ensuring that suppliers have complied with labor stan-
dards. Timothy Glynn (2011) goes a step further, arguing that the nature
of “disaggregated” employment requires abandoning fine-grained argu-
ments over immediate or extended employer liability. He argues instead
that “commercial actors would be held strictly liable for wage and hour vio-
lations in the production of any goods and services they purchase, sell, or
distribute, whether directly or through intermediaries” (Glynn 2011, 105).
Expanding liability to include upstream producers would certainly affect
important elements of fissured employment decisions, as the prior discus-
sion of the factors underlying vicarious liability indicates.
Successful legislation to address the problems arising from fissured
employment would require lead businesses to include social as well as
private benefits and costs in making their balancing decisions on employ-
ment. With laws changed so that lead businesses cannot “have it both
ways,” some companies might choose to keep employment “inside” the
organization. But that is not the only outcome that legislation should seek.
Lead businesses might still choose to shift employment outward through
contracting, franchising, third-party management, or other organizational
forms. But they might do so with greater scrutiny in the selection, moni-
toring, and coordination of those subordinate organizations, given their
heightened responsibility.
There are compelling reasons for making substantial changes to indi-
vidual federal workplace statutes as well as state laws that are similarly
-1 out of synch with workplace realities. It is equally important to rethink the
0 assignment of liability in the workplace, as well as other public outcomes
+1

13502-05_CH04-3rdPgs.indd 116 12/10/13 8:33 AM

 Mending the Fissured Workplace    117

(environment, consumer safety, public health) affected by the changed

relationships of fissured employment. However, the battlefield of work-
place legislation in the last two decades is littered with failure. Given the
political climate in Washington, sweeping changes to the definitions of
employer liability or even more modest changes to definitions of joint
employment seem unlikely for the foreseeable future.15
A more promising approach to mending the fissured workplace focuses
on using existing laws to create the incentives for lead businesses to rethink
decisions that lead to fissured workplaces. Focusing on enforcement and
implementation of minimum wage, overtime, health and safety, and anti-
discrimination laws affords opportunities to address workplace problems
immediately. Using scarce political resources to create innovative tools
and approaches for enforcement can produce more significant results in a
shorter amount of time than focusing solely on new legislation. We turn to
the possibilities in this regard in the next section, drawing on the experi-
ences of enforcement initiatives that are already under way.

Strategic Enforcement for

the Fissured Workplace
Traditional enforcement strategies assume that enforcement should be
focused at the level where workplace violations occur. Yet the forces
driving noncompliance in many industries with large concentrations of
low-wage workers arise from the organizations located at higher levels
of industry structures. Enforcement policies seeking to improve compli-
ance and conditions among low-wage workers need to be informed by an
understanding of the fissured workplace and should focus more strategi-
cally on the higher-level business organizations that affect compliance
behavior “on the ground,” where vulnerable workers are actually found.
Agencies responsible for enforcing the law where fissured workplaces
are common should begin by “mapping” the business relationships under-
lying a sector, carefully tracking all of the different players that have an
impact on workplace conditions. Improving conditions in the eating and
drinking industry, for example, could include investigations not only of
outlets with violations (such as those arising from worker complaints)
but also of other units owned by the particular franchisee. Such a strate-
gic enforcement strategy would require a systematic analysis of all other
investigations of the franchisor (brand) in question to detect the presence
of multiple instances of violations at other franchisees. Finally, the strategy
could entail contacting the brand itself about the results of these investiga-
tions if it is clear that significant violations extend beyond the boundaries -1
of any one franchisee or owner group.16 0
+1

13502-05_CH04-3rdPgs.indd 117 12/10/13 8:33 AM

 118    What Works for Workers?

This approach implies a very different orientation: the government

would focus its efforts, not necessarily on the employer of record, but on
the portion of the industry that is driving the conditions that have resulted
in compliance problems. Reorienting enforcement attention in this way
would alter the behavior of the various parties up and down industry
structures to become more compatible with better workplace conditions.
A top-focused enforcement strategy would target lead organizations that
have a documented history of systemic violations among their subordinate
units (such as franchisees, subcontracted entities, or workplaces monitored
through third-party arrangements). These lead players could be identified
through evaluation of past investigation records.17 Once identified, work-
place agencies could undertake broad and coordinated investigations in
different locations and across multiple franchisees in order to establish the
extent of systemwide violations and pursue statutory penalties for those
violations. As part of its process of resolving the violations, agencies could
negotiate a comprehensive agreement that would cover all outlets and
properties and include provisions for outreach, education, and monitoring.
Beyond direct enforcement, outreach could also be geared toward lead
firms in their role—whether as a brand, a major logistics coordinator, or a
third-party manager—as a promulgator of standards and practices among
subsidiary units. Cooperative approaches could entail reaching out to
lead companies with positive employment reputations and favorable
records of systemwide compliance and working with them to help ensure
compliance with workplace policies across their systems of franchisees
or subordinate organizations. Cooperative agreements could include a
commitment by the lead organization to cascade information through the
units that operate under its umbrella (for example, both company-owned
and franchised properties and outlets in branded systems, or supplier net-
works in distribution and logistic coordinators). These agreements could
also integrate workplace practices and expectations into the basic fabric of
the standards used by the lead organization.
Several recent examples illustrate these approaches in practice.

Mending a Fissured Construction Company

Construction has always drawn on a contractor-subcontractor model of
organization. In many respects, this is a natural method of production
given that different skills (business and worker) are required for differ-
ent durations in the process of building. Some of these skills are needed
throughout the course of building (carpentry and basic laborers), while
-1 others are needed for relatively short durations (for example, roofing or
0 sheet metal contracting).
+1

13502-05_CH04-3rdPgs.indd 118 12/10/13 8:33 AM

 Mending the Fissured Workplace    119

In sectors of construction like major commercial and public construc-

tion, a lead contractor takes on the responsibility of coordinating construc-
tion activities and is typically responsible for ensuring that the project is
completed on time and within budget. In prior decades, the lead “gen-
eral” contractor played this role and also directly employed the workers
who would be present throughout the project, while subcontracting spe-
cialty trades to others. In more recent times, the lead player strictly plays
a coordinating role (“project manager”); as a result, even the basic trades
functions are undertaken by subcontractors.
Residential construction has historically been more decentralized than
other sectors of the industry, owing in large part to the smaller size of the
end users (homeowners). In recent years, however, the industry has expe-
rienced significant consolidation because of the scale advantages arising
from access to capital and land development. In addition, the “brand-
ing” of home-builder companies became an important tool for improv-
ing profitability. Just prior to the home-building bust in 2007, the top ten
builders accounted for close to 25 percent of new single-family homes
constructed.18 Despite their scale and important role in the industry, even
the largest home-builders eschew the role of direct employer of workers,
relying instead on contractors and subcontractors. Thus, growth in the
size of national home-builders has been accompanied by more fissuring
rather than less.
One impact of this industry restructuring is that some large-scale con-
tractors have arisen in various trades to provide construction services to
home-builders. An OSHA settlement with one of these national players—
Nations Roof LLC—provides an example of an enforcement agreement
focused on the top. The case involved a group of roofing contractors, all
under the general umbrella of Nations Roof LLC, but operating as seven-
teen affiliated companies.
In the past, OSHA enforcement procedures would have led it to deal
with the various companies affiliated with Nations Roof as essentially
independent and separate entities, each with responsibility for its own
construction decisions. As part of a wider “enterprise-level” effort, how-
ever, OSHA treated violations documented at different affiliated com-
panies as if they were all part of one common enterprise. As part of the
complaint associated with the inspection, OSHA cited Nations Roof’s own
website as evidence of the coordinating role it exercised and proof of the
operational control it exercised over its affiliates:

This is a company that owns all its locations, not an affiliation of inde- -1
pendents; it is one company that can deliver consistently and on time. . . . 0
+1

13502-05_CH04-3rdPgs.indd 119 12/10/13 8:33 AM

 120    What Works for Workers?

Nations Roof does not support separate and redundant overhead in multiple
locations and business unit presidents are highly motivated owner-partners
in the company.

A direct implication of treating the affiliated companies as part of a com-

mon business was that violations found in multiple places could be treated
as “repeat” violations and therefore subjected to higher penalties. For
example, by considering the various affiliates part of the national company,
OSHA could reclassify citations for inadequate protections against roof falls
(employees exposed with no protection to falls between twenty and twenty-
six feet) from “serious” violations to “repeat” violations, thereby increasing
the associated penalty from $2,100 to $35,000.19
A settlement agreement between OSHA and Nations Roof contains a
number of novel features that require the parent organization, Nations Roof
LLC, to take on the role of the party responsible for overall safety and health
across the sixteen affiliated businesses.20 First, in exchange for a reduction in
penalties, the agreement requires that the management development pro-
gram for the business managers of all sixteen affiliates be amended to include
training on safety and health policies, practices, and standards. Second, it
requires that each affiliate appoint a manager to be the health and safety
director with specific responsibilities and accountability for the creation and
administration of a health and safety policy, and that each affiliate engage
in specific activities such as weekly inspections of construction sites.21 Third,
the settlement requires Nations Roof, LLC, to review “on a regular basis (for
example, annually, semi-annually, etc.) . . . the performance of each Busi-
ness Unit Owner/Manager with respect to matters affecting occupational
safety and health.” Performance criteria include the number and severity of
occupational injuries and illnesses at the company’s construction sites; the
quantity and quality of inspections conducted by the company; and other
factors related to the adequacy of the company’s safety and health programs.
Fourth, the agreement lays out very specific and stringent requirements for
general health and safety procedures, job site inspections, trainings, daily
“tool box talks” about safety issues, and the development of site-specific
safety plans on an ongoing basis.
Finally, the settlement agreement requires Nations Roof, LLC, to “per-
form random, unannounced inspections of the active jobsites of every
Nations Roof Affiliate. . . . Except as otherwise provided in this Section 4(I)
(iii), Respondent Nations Roof, LLC shall conduct four Parent Inspections
of each Nations Roof Affiliate every calendar year.” The oversight activi-
-1 ties required of Nations Roof make clear the responsibility of the parent
0 organization in overseeing the health and safety activities of affiliates (just
+1

13502-05_CH04-3rdPgs.indd 120 12/10/13 8:33 AM

 Mending the Fissured Workplace    121

as its website describes its role as ensuring the delivery of services “consis-
tently and on time”). The agreement therefore rebalances the relationship
of lead and affiliate organizations in a way that favors greater scrutiny of
activities at the construction work site so as to promote better health and
safety outcomes.22

Mending a Fissured Company in the Cable Industry

If organized like many twentieth-century businesses, large telecommuni-
cation companies in the cable industry acting as service providers would
be responsible for the provision and installation of cable services for their
customers. By 2011, however, companies like TimeWarner had fissured
much of the process of installing cable hardware in customers’ homes to
other providers.
Typical is the case of Cascom Inc., a company that contracted with Time-
Warner Cable to install cable for residential customers in the Dayton, Ohio,
area. Cascom completed thousands of cable installations for TimeWarner
for residential customers. It employed virtually no workers. Instead, it
hired cable installers as independent contractors, who were paid on the
basis of each installation performed (rather than an hourly rate).23
The problem with this arrangement was that the workers were employ-
ees in almost every other sense: they received their work orders from
Cascom; they could be removed for failing to meet production targets or
for quality complaints by customers; they purchased (leased) their equip-
ment from Cascom; they were not allowed to set the rates for installation;
and they could not hire employees to work with them (which of course
would be permissible if they were truly independent contractors). In
essence, by fissuring employment, TimeWarner paid Cascom, which, in
turn, could pay workers (as independent contractors) according to their
individual productivity rather than having to set a single common wage
for all installers.24
In fact, this practice is common to many cable installers working for Time-
Warner. Two recent cases brought by the Labor Department’s Wage and
Hour Division (WHD) involving the cable installation companies Cascom
in Ohio and Integral Development Solutions LLC in Texas are particularly
important. Cable installers working for Cascom and Integral Development
Solutions were paid on a piece-rate system for hours worked as contrac-
tors and were therefore not compensated for overtime. The ­Cascom case
resulted in a U.S. District Court ruling that the installers were covered by
the FLSA and entitled to back wages. In the Integral Development Solu-
tions case, the WHD assessed the company for more than $270,000 in over- -1
time back wages as well as for failing to maintain accurate records of hours 0
+1

13502-05_CH04-3rdPgs.indd 121 12/10/13 8:33 AM

 122    What Works for Workers?

and wages. In settling the case, the company agreed to pay all back wages
due and committed to future FLSA compliance.25
More importantly, in both cases TimeWarner Cable instructed its con-
tracted units to reclassify cable installers as FLSA-covered employees and
to comply with the act. Although TimeWarner did not bring this work
back within the walls of the company, it did exert its powerful role at the
head of this telecommunication system to alter the behavior of key players
at the secondary levels of the industry.

Transparency, Reputation, and Striking a New Balance

A complementary strategy to top-focused policies like the examples dis-
cussed here is to act on one of the key components underlying fissuring:
brand reputation. Business strategies based on reputation and the main-
tenance of quality standards are pervasive for a reason: they make good
business sense. By creating strong consumer allegiances or by ensuring
tight quality standards (or the combination of the two), businesses can
create margins through higher pricing. As I have stated throughout, this
is a legitimate business aim that is often beneficial to consumers and the
public.
However, these business strategies based on maintaining brand reputa-
tion lead to great sensitivity to any form of threat to image or disruption of
carefully crafted standards. These threats—private, public, or otherwise—
lead businesses to put in place private systems to preempt any loss of rep-
utation among consumers or, more ominously for them, onerous public
interventions. Whether one looks at Nike’s response to accusations that its
shoes were made in sweatshops or Walmart’s responses to any number of
labor, environment, or consumer campaigns, it is obvious that lead busi-
nesses are sensitive to reputational attacks (Locke 2013).
Targeted transparency—organizations’ disclosure of standardized infor-
mation regarding their performance to serve a regulatory purpose—has
become widespread (Fung, Graham, and Weil 2007). Efforts focused on the
disclosure of information regarding workplace practices in fissured indus-
tries could use the power of transparency to create incentives for the cre-
ation of alternative methods to address problems arising in those industries.
Although disclosed information may lead some consumers with a particular
interest in working conditions to avoid companies with poor records, this
need not be the only response to such disclosures. If violations are perceived
as indicators—or reasons—for compromised food or service quality, dis­
closure creates incentives for lead firms to change practices in order to pro-
-1 tect the brand. This includes preemptive responses, which are frequently the
0 result of mandatory disclosure policies.
+1

13502-05_CH04-3rdPgs.indd 122 12/10/13 8:33 AM

 Mending the Fissured Workplace    123

An interesting example of a public policy revealing variations in the

performance of franchisees is the impact of transparency on restaurant
hygiene in Los Angeles County. Ginger Jin and Philip Leslie (2009) show
that, prior to the imposition of mandated restaurant disclosure, franchisees
within a brand had worse hygiene performance than company-owned
outlets in the same brands. In 1998, L.A. County required restaurants to
publicly post grades, based on restaurant hygiene inspections, on their
front window. This public disclosure gradually led to the elimination of
these discrepancies in intrabrand hygiene performance. In this case, free-
riding was eliminated as a consequence of consumer behavior. But it was
also a result of an overall threat to reputation that caused brands to put
greater internal pressure on their franchisees.
One initiative of the Obama administration picks up on the opportuni-
ties to use transparency as a regulatory instrument. As part of its larger
effort to promote transparency across executive agencies, the Department
of Labor has promoted the development of new apps, such as the “DOL-
Timesheet” app, to assist workers in assessing whether they have been
paid according to FLSA standards.26 The department has also sponsored
development contests to create apps that use WHD and OSHA data to
provide end users with information on past compliance behavior. The
winner of the first app contest, “Eat/Shop/Sleep,” provides this informa-
tion in a format similar to consumer search apps like Yelp. Such initiatives
could increase the salience and impact of enforcement data generally, but
especially enforcement data connected with regulatory efforts in fissured
industries.27

Stopping Egregious Fissuring

Some forms of fissuring are clearly end-run attempts to evade basic employ-
ment responsibilities, such as deliberately classifying workers as indepen-
dent contractors who by all recognizable standards are employees. Many
states became aware of this problem in the last decade, and multiple state-
level statutes were passed that expressly address misclassification. In 2011
the U.S. Department of Labor also announced a major enforcement ini-
tiative focused on misclassification, in concert with the Internal Revenue
Service (IRS) and a number of state labor agencies.
These efforts are aimed at stopping forms of fissuring that not only are
illegal but have the secondary effect of creating competitive conditions that
undercut legitimate service providers in an industry. The case of the jani-
torial service industry is indicative. Franchising has become a dominant
form of fissuring in the janitorial sector in recent years. This particular fran- -1
chise structure inherently places franchisees in a position that undermines 0
+1

13502-05_CH04-3rdPgs.indd 123 12/10/13 8:33 AM

 124    What Works for Workers?

their ability to obey workplace laws and requirements. An analysis of the

underlying costs of a typical franchise structure, comparing those costs to
prevailing prices for janitorial services in those markets, reveals that a fran-
chisee faces one of two options: either underpay the workforce or fail to
receive returns high enough to sustain the franchise (Weil forthcoming).
The presence of a tier of franchised janitorial service providers that in
many markets cannot be financially viable without cutting corners has
repercussions on the equilibrium prices in the market as a whole. The
large demand for services and the elastic supply of janitorial service pro-
viders create market conditions that push prices for services down toward
the lowest costs of the existing supply base for a given quality tier. The
ready supply of would-be franchisees therefore drives prevailing market
prices down toward a level below that necessary to meet minimum labor
standards for their workforce.
In effect, by being the lowest-cost suppliers in many commercial mar-
kets, franchisees set a baseline price for services that, in turn, makes them
unable to sustain their businesses within state or federal wage and hour
requirements (and undoubtedly other requirements such as workers’
compensation, unemployment insurance, and even the payment of pay-
roll taxes to state and federal governments). The high rates of noncom-
pliance in janitorial services arise from the interaction of the competitive
conditions driving the market and the impact of a pervasive form of busi-
ness organization on the behavior of individual players and, in turn, the
market price on the margin.
Any effort to improve compliance in this industry must begin with the
market dynamics clearly in mind. Traditional approaches to enforcement—
focusing on the individual enterprise—will certainly bring to light case after
case of violations of the laws governing minimum wages, overtime pay,
and off-the-clock work and other statutes. But if not wedded to a larger
strategy that attempts to change the market forces driving this behavior,
enforcement will not make the problem less prevalent. Enforcement efforts
and other public policies (including those protecting potential investors in
franchises) must evaluate whether these forms of business organization not
only create conditions inherently disadvantageous to franchisees but under-
mine broader public policy objectives by driving down prevailing price lev-
els and, in turn, the ability of employers to meet workplace obligations.

Mending the Fissured Workplace

Accounts of low-wage work often emphasize workplace restructurings—
-1 outsourcing, temporary agencies, contingent work, misclassification—
0 explanations that are rooted almost exclusively on the cost side of the
+1

13502-05_CH04-3rdPgs.indd 124 12/10/13 8:33 AM

 Mending the Fissured Workplace    125

business income statement. Fissured employment arises from a coordinated

strategy that businesses have increasingly chosen to take. Its motivation
arises from both revenue and cost considerations. In particular, lead com-
panies use branding and other strategies to secure customer allegiance to
their products or services in order to generate for themselves more inelastic
demand and capture price premiums in addition to the devoted custom-
ers. These companies then focus only on activities related to core functions,
while allocating to other entities the production of products or provision of
services. Lead firms thereby become the coordinator of other organizations
rather than the vertically integrated company that most employment laws
assume.
The coherent strategy underlying fissured employment makes it clearer
why it is often difficult to alter the decisions made by companies in this
regard. Since fissured employment is a reflection of larger integrated strat-
egies, enforcement that responds to their effects as if they were only an
expression of labor cost avoidance will be unsuccessful. Unwinding the
labor cost strategy is difficult if it does not address the revenue side strategy.
A path forward can be found in understanding the boundaries of lead
businesses in the economy and the ways in which modern employment
has changed and crafting public and private policies based on that under-
standing. Fissuring strategies are based in decisions that balance the need
to protect and expand core competencies against the benefits of shifting
out the employment problem to others. Businesses weigh that balance
carefully and fashion sophisticated systems to establish standards, moni-
tor performance, and reward or punish compliance.
Some companies, having experienced the private benefits and costs of
overseeing subordinate businesses, are already following this alternative
pathway; others are doing so because collective agreements with unions
require it, or because their leaders have made commitments to socially
responsible behavior. But many companies do not and will not abandon
fissuring strategies until public policies that change the private calculus
underlying fissured employment decisions are put in place.
Requiring lead businesses to more fully incorporate the social costs of
shedding employment into the standards and systems they use to monitor
the network of businesses they rely on or the prices they pay to subsid-
iary organizations working on their behalf would have ripple effects on
the wider network of workplaces. Whether measured in terms of wages,
access to benefits, or daily treatment at work, conditions in many low-
wage workplaces have been worsening over the last few decades. Realign-
ing the incentives that drive the lead businesses in our economy could
move the standards upward once again, making the underlying network -1
of workplaces better places for workers at all levels of skill and education, 0
+1

13502-05_CH04-3rdPgs.indd 125 12/10/13 8:33 AM

 126    What Works for Workers?

even as companies enjoy the advantages of harnessing new ways of orga-

nizing production.
Lead organizations lack neither the capacity to monitor and oversee
behavior nor the technologies and systems to do so. They simply lack suf-
ficient regulatory and legal pressure to include the social consequences
of fissuring when they weigh these decisions. Public policies that require
lead businesses to factor in the social costs borne by low-wage workers
can rebalance those choices and begin to mend the fissured workplace.

Notes
1. See, for example, Osterman and Shulman (2011), Kalleberg (2011), Bernhardt
et al. (2009), and Milkman (2008). More popular accounts can be found in
Bobo (2011), Greenhouse (2008), and Ehrenreich (2001).
2. This section summarizes a much larger analysis of the roots, mechanisms,
and consequences of fissuring by the author. The complete discussion is con-
tained in Weil (forthcoming).
3. For early academic discussion of core competency, see Prahalad and Hamel
(1990), who discussed the idea with respect to the changing fortune of com-
panies in the high-tech sector of the 1980s.
4. As the social scientists Sidney Webb and Beatrice Webb (1897, 281) pointed out
at the turn of the last century, “The most autocratic and unfettered employer
spontaneously adopts Standard Rates for classes of workmen, just as the large
shopkeeper fixes his prices, not according to the haggling capacity of particu-
lar customers, but by a definite percentage on cost.” Ernst Fehr and Klaus
Schmidt (2007) argue that this is fundamentally related to fairness consider-
ations in wage-setting. The impact of fairness concerns on wage determina-
tion in large firms from the 1960s to the late 1980s is documented by Fred
Foulkes (1980) and Truman Bewley (1999). Empirical evidence is also consis-
tent with findings about this impact. The well-established premium paid by
larger employers that is not explained by skills, education, or productivity dif-
ferences between workers is consistent with the impact of wage-setting done
“inside” versus “outside” firm boundaries (see Brown, Hamilton, and Medoff
1989), as well as with the diminishing size of the premium over time in recent
years (Hollister 2004). Recent studies also show that wages for particular jani-
torial and security jobs are higher when set inside firms than when set by
contractors to those firms (see Abraham and Taylor 1996; Berlinski 2008; Dube
and Kaplan 2010). I develop this argument in detail in Weil (forthcoming).
5. The tension between fair pay and conditions for workers and low prices for
consumers is certainly not a new issue. At the turn of the last century, B. L.
-1 Hutchins and Amy Harrison (1926, xii) described this tension as it played
0 out in the passage of early factory legislation in England: “Unfortunately, in
+1

13502-05_CH04-3rdPgs.indd 126 12/10/13 8:33 AM

 Mending the Fissured Workplace    127

the absence of regulation, the evil tends to increase and the sweated trades to
spread. In the all-pervading competition of the modern world market, each
industry is perpetually struggling against every other industry to maintain
and to improve its position . . . tempting the consumer by cheapness continu-
ally to increase his demand for its commodities, inducing the investor by swol-
len profits to divert more and more of the nation’s capital in its direction, and
attracting, by large salaries, more and more the nation’s brains to its service.”
6. This section does not attempt to provide a detailed analysis of the statutory,
judicial, or academic writing in this area, nor even to provide a basic over-
view. Instead, it simply seeks to paint an overall picture that the definitions of
employment relationships are grounded. Excellent discussions can be found
in Davidov (2006) and in other essays from the same edited volume (Davidov
and Langille 2006), as well as in the legal writing cited later in this section.
7. The multi-factor test of whether an individual is an employee or an indepen-
dent contractor examines attributes of the relationship, including the extent
of control exercised by the principal; whether the agent is in a distinct occupa-
tion or business; whether the type of work involved is generally done under
the direction of employers elsewhere; the degree of skill required for the
work; whether the agent supplies his or her own tools; the length of employ-
ment; the method of payment (by time or by job); and whether the work is
part of the regular business of the employer. As Micah Jost (2011) and others
have pointed out, the seeming precision of the multi-factor test evaporates in
practice where the different factors must be weighed against one another in
deciding on the presence of a legitimate employment relationship.
8. See Fair Labor Standards Act, 29 U.S.C. §§ 201–19 (1994). The Supreme Court in
its Rutherford Food Corp. v. McComb decision (331 U.S. 722 [1947] at 728–29)
affirmed the idea of a broad definition given that the FLSA “contains its own
definitions comprehensive enough to require its application to many persons
and working relationships which, prior to this Act, were not deemed to fall
within an employer-employee category.” This still leaves a great deal of room
for applying the economic reality test. For example, the Sixth Circuit Court
applied such a test to conclude that migrant pickle workers were excluded from
FLSA coverage because of the temporary nature of their employment relation-
ship, farmers’ “lack of control” over migrant workers given that they were paid
on a piece-rate basis, and the skill of those workers (Donovan v. Brandel, 736
F.2d 1114 [6th Cir. 1984]). In 1987, however, the Sixth Circuit Court reached an
opposite result with similar case facts in Secretary of Labor v. Lauritzen, 835
F.2d 1529 (6th Cir. 1987). See Goldstein et al. (1999) and Ruckelshaus (2008)
for detailed discussions of the employer-employee definition under the FLSA.
9. NLRB v. Hearst Publications, Inc., 322 U.S. 111 (1944). The case was the basis
of Newsies, a Disney movie, play, and, most recently, Broadway musical. -1
Undoubtedly, more high school students have been exposed to a memorable 0
+1

13502-05_CH04-3rdPgs.indd 127 12/10/13 8:33 AM

 128    What Works for Workers?

moment in U.S. labor history through local performances of Newsies than in

the scant treatment of the topic in most history curricula. See Zatz (2008) for a
discussion of this case and an overview of the debate on employer-employee
definitions under the NLRA.
10. For example, in NLRB v. United Insurance (390 U.S. 254 [1968] at 256), the
Supreme Court held that “there is no doubt we should apply the common-
law agency test here in distinguishing an employee from an independent
contractor.” A recent opinion of the D.C. Circuit Court in FedEx Home Deliv-
ery Inc. v. NLRB (563 F.3d 492 [D.C. Cir. 2009]), however, seems to apply a
new test for independent contracting that is quite different from the one used
under the common law: does the contractor have significant “entrepreneurial
opportunity for gain or loss”? For a discussion of this new line of reasoning
and its potential to further expand the legal underpinning for the use of inde-
pendent contractors, see Jost (2011).
11. Employers are defined in the OSHA at 29 U.S.C. 652; employer and employee
duties are specified at 29 U.S.C. 654.
12. The investigative reporters Ryan Knutson and Liz Day (2012), of Frontline and
ProPublica, respectively, have documented the AT&T and cell tower story
extensively, showing the lethal impact of subcontracting the service and main-
tenance of the towers.
13. For related discussions, see Estlund (2010), Jost (2011), Stone (2006), and
­Rogers (2010).
14. The common law further reinforces the incentives to shift out work via fissured
employment. “Vicarious liability” refers to liability imposed on one party
because of the actions of another. Under tort law, an organization is not liable
for the torts of an independent contractor hired by it. Central to the determina-
tion of liability is whether the principal party had the ability to directly control
the action of the subordinate organization. This creates incentives for a busi-
ness contracting with another to avoid practices that might be construed by
courts as exerting control (thereby making it vicariously liable for the other’s
actions), such as training of subcontractors, direct operational monitoring or
supervision, or explicit direction of the work of subcontractors. Vicarious liabil-
ity therefore may lead an organization to underinvest in activities that would
otherwise be socially efficient for them (Arlen and MacLeod 2005).
15. Over the past quarter-century, significant federal workplace legislation has
been passed. Although support for workplace legislation among business
groups is rare, segments of the business community have had reason to move
from a position of strict opposition to one of negotiation. In these cases, and in
the presence of a broad coalition of legislative advocates, Congress has been
able to pass legislation such as the Worker Adjustment and Retraining Noti-
-1 fication (WARN) Act of 1988 (which cushions workers during plant closings),
0 the Family and Medical Leave Act of 1993, and the Lilly Ledbetter Fair Pay Act
+1

13502-05_CH04-3rdPgs.indd 128 12/10/13 8:33 AM

 Mending the Fissured Workplace    129

of 2009. The history of the political coalitions necessary to pass these laws
provides insight into how to pass legislation in the future. On the passage of
social legislation generally, see Skocpol (1992), and on workplace policies in
particular, see Fishback and Kantor (2000), Fishback (2007), Bernhardt et al.
(2008), and Weil (2008).
16. Alternatively, in an industry like residential construction, greater attention
should be paid to systemic violations among contractors working under
the umbrella of a national home-builder, which typically employs a minimal
number of construction workers directly but rather contracts and subcontracts
work. The enforcement strategy could focus investigations on contractors to
look for patterns of violations; if violations are present, investigations could
widen to include the home-builder’s division or, if more wide-scale viola-
tions are uncovered, multiple divisions of projects undertaken by the home-­
builder’s national office.
17. For example, MinWoong Ji and David Weil (2012) find significantly higher
back wage violations among particular brands in the fast-food sector, even
after statistically holding constant other factors that might also explain non-
compliance. In particular, compared to typical McDonald’s outlets (which
had the best overall compliance record among the top twenty branded com-
panies studied), Subway, Domino’s Pizza, and Popeye’s Chicken were all
found to owe back wages that were substantially higher.
18. Even more, the top five home-builders accounted for much more than one-
third of single-family homes built in major metropolitan markets like Las
Vegas, Houston, and Dallas at the peak of the building boom in 2005 and
2006. See Abernathy et al. (2012) for a discussion of the emergence of national
home-builders in the years leading up to the housing bust.
19. See Secretary of Labor v. Nations Roof of New England, LLC, and Nations Roof
LLC, Occupational Safety and Health Review Commission, docket 10-1674,
region 1, inspection 311593180, December 3, 2010.
20. The following terms are taken from the settlement agreement reached between
representatives of Nations Roof of New England, LLC, and Nations Roof
LLC and the U.S. Solicitor of Labor. See Secretary of Labor v. Nations Roof of
New England, LLC, and Nations Roof LLC, docket 10-1674, region 1, inspec-
tion 311593180, Settlement Agreement, July 28, 2011. The full settlement is
available at http://op.bna.com/env.nsf/id/jstn-8lbru3/$File/NationsRoof.pdf
(accessed September 2013).
21. The agreement also stipulates that the designated safety and health director at
each affiliate spend at minimum one-third of his or her time on safety and
health activities.
22. OSHA, in conjunction with the Solicitor’s Office of the U.S. Department of
Labor, has signed a series of corporate-wide agreements since 2010. A com­ -1
pendium of them can be found at: http://www.osha.gov/pls/oshaweb/owasrch. 0
+1

13502-05_CH04-3rdPgs.indd 129 12/10/13 8:33 AM

 130    What Works for Workers?

search_form?p_doc_type=CWSA&p_toc_level=0&p_keyvalue=&p_status=
CURRENT (accessed February 16, 2013).
23. See U.S. Department of Labor, Wage and Hour Division, “News Release: Judge
Rules Ohio-Based Cascom Employees Misclassified as Independent Contractors,
Denied Overtime Pay in Suit Brought by U.S. Labor Department,” ­October 4,
2011, available at: www.dol.gov/opa/media/press/whd/WHD20111425.htm
(accessed November 15, 2011); and Bill Pokorny, “Cable Installers Employ-
ees, Not ­Independent Contractors,” Wage & Hour Insights, October 10, 2011,
­available at: http://www.wagehourinsights.com/independent-contractors/court-
cable-installers-employees-not-independent-contractors/ (ac­ces­­sed November
15, 2011).
24. The U.S. District Court held in favor of the Department of Labor’s position that
the 250 installers were in fact employees and not independent contractors. As
a result, they were entitled to overtime pay for their work, amounting to over
$800,000 and an equal amount of liquidated damages (also paid to the affected
workers). See Solis v. Cascom Inc. et al., Civil Action No. 3:09-CV-00257, U.S.
District Court, Southern District of Ohio, Western Division at Dayton. See gen-
erally General Accountability Office (2009).
25. See U.S. Department of Labor, Wage and Hour Division, “Cable Installers
in Plano, Texas, to Receive More Than $270,000 in Overtime Back Wage Fol-
lowing U.S. Labor Department Investigation,” press release 11-484-DAL,
May 16, 2011.
26. The DOL-Timesheet app is available via Apple iTunes; see: http://itunes.
apple.com/us/app/ dol-timesheet/id433638193?mt=8.
27. For more on the Labor Department’s development contest, and on the “Eat/
Shop/Sleep” app, see: http://informaction.challenge.gov/ submissions/4585-eat-
shop-sleep (accessed February 16, 2013).

References
Abernathy, Frederick, Kermit Baker, Kent Colton, and David Weil. 2012. Bigger
Isn’t Necessarily Better: Lessons from the Harvard Home Builder Study. Lanham,
Md.: Lexington Books.
Abraham, Katherine, and Susan Taylor. 1996. “Firms’ Use of Outside Contractors:
Theory and Evidence.” Journal of Labor Economics 14(3): 394–424.
Arlen, Jennifer, and W. Bentley MacLeod. 2005. “Beyond Master-Servant: A Cri-
tique of Vicarious Liability.” In Exploring Tort Law, ed. Stuart Madden. New
York: Cambridge University Press.
Baker, George, and Thomas Hubbard. 2003. “Make Versus Buy in Trucking: Asset
Ownership, Job Design, and Information.” American Economic Review (Septem-
ber): 1328–53.
-1 Berlinski, Samuel. 2008. “Wages and Contracting Out: Does the Law of One Price
0 Hold?” British Journal of Industrial Relations 46(1): 59–75.
+1

13502-05_CH04-3rdPgs.indd 130 12/10/13 8:33 AM

 Mending the Fissured Workplace    131

Bernhardt, Annette, Heather Boushey, Laura Dresser, and Chris Tilly. 2008. The
Gloves-Off Economy: Workplace Standards at the Bottom of America’s Labor Market.
Champaign, Ill.: University of Illinois for the Labor and Employment Relations
Association.
Bernhardt, Annette, Ruth Milkman, Nik Theodore, Douglas Heckathorn, Mirabei
Auer, James DeFillipis, Ana Luz Gonzalez, Victor Narro, Jason Perelshteyn, ­Diana
Polson, and Michael Spiller. 2009. Broken Laws, Unprotected Workers: Violations
of Employment in Labor Laws in America’s Cities. Chicago and Los ­Angeles: Uni-
versity of Illinois–Chicago, Center for Urban Economic Development, ­National
Employment Law Project and the UCLA Institute for Research on ­Labor and
Employment.
Bewley, Truman. 1999. Why Wages Don’t Fall During a Recession. Cambridge, Mass.:
Harvard University Press.
Blair, Roger D., and Francine Lafontaine. 2005. The Economics of Franchising. New
York: Cambridge University Press.
Bobo, Kim. 2011. Wage Theft in America: Why Millions of Americans Are Not Getting
Paid and What We Can Do About It, rev. ed. New York: New Press.
Brown, Charles, James Hamilton, and James Medoff. 1990. Employers Large and
Small. Cambridge, Mass.: Harvard University Press.
Chandler, Alfred D. 1977. The Visible Hand: The Managerial Revolution in American
Business. Cambridge, Mass.: Harvard University Press.
Davidov, Guy. 2006. “The Reports of My Death Are Greatly Exaggerated:
­‘Employee’ as a Viable (Though Overly Used) Legal Concept.” In Boundaries
and Frontiers of Labour Law: Goals and Means in the Regulation of Work, ed. Guy
Davidov and Brian Langille. Oxford: Hart Publishing.
Davidov, Guy, and Brian Langille, eds. 2006. Boundaries and Frontiers of Labour Law:
Goals and Means in the Regulation of Work. Oxford: Hart Publishing.
Dube, Arandajit, and Ethan Kaplan. 2010. “Does Outsourcing Reduce Wages in
the Low-Wage Service Occupations? Evidence from Janitors and Guards.”
Industrial and Labor Relations Review 63(2): 287–306.
Ehrenreich, Barbara. 2001. Nickel and Dimed: On (Not) Getting by in America. New
York: Holt.
Estlund, Cynthia. 2010. Regoverning the Workplace: From Self-regulation to Co-regulation.
New Haven, Conn.: Yale University Press.
Fehr, Ernst, and Klaus Schmidt. 2007. “A Theory of Fairness, Competition, and
Cooperation.” Quarterly Journal of Economics 97(2): 817–68.
Fishback, Price. 2007. “Seeking Security in the Postwar Era.” In Government and
the American Economy: A New History, ed. Price Fishback. Chicago: University
of Chicago Press.
Fishback, Price, and Shawn Kantor. 2000. Prelude to the Welfare State: The Origins of -1
Workers’ Compensation. Chicago: University of Chicago Press. 0
+1

13502-05_CH04-3rdPgs.indd 131 12/10/13 8:33 AM

 132    What Works for Workers?

Foulkes, Fred. 1980. Personnel Policies in Large Non-Union Workplaces. Englewood

Cliff, N.J.: Prentice-Hall.
Fung, Archon, Mary Graham, and David Weil. 2007. Full Disclosure: Perils and
Promise of Transparency. New York: Cambridge University Press.
General Accountability Office. 2009. Employee Misclassification: Improved Coordina-
tion, Outreach, and Targeting Could Better Ensure Detection and Prevention. GAO-
09-717. Washington, DC.: GAO.
Glynn, Timothy. 2011. “Taking the Employer Out of Employment Law? Account-
ability for Wage and Hour Violations in an Age of Enterprise Disaggregation.”
Employee Rights and Employment Policy Journal 15(1): 101–35.
Goldstein, Bruce, Marc Linder, Laurence Norton, and Catherine Ruckelshaus.
1999. “Enforcing Fair Labor Standards in the Modern American Sweatshop:
Rediscovering the Statutory Definition of Employment.” UCLA Law Review
46(4): 983–1106.
Greenhouse, Steven. 2008. The Big Squeeze: Tough Times for the American Worker. New
York: Knopf.
Hollister, Matissa. 2004. “Does Firm Size Matter Anymore? The New Economy
and Firm Size Wage Effect.” American Sociological Review 69(5): 659–76.
Hutchins, B. L., and Amy Harrison. 1926. A History of Factory Legislation, 3rd ed.
London: Frank Cass & Co.
Ji, MinWoong, and David Weil. 2012. “Does Ownership Structure Influence Reg-
ulatory Behavior? The Impact of Franchisee Free-Riding on Labor Standards
Compliance.” Working paper. Boston: Boston University.
Jin, Ginger, and Philip Leslie. 2009. “Reputational Incentives for Restaurant
Hygiene.” American Economic Journal: Microeconomics 1(1): 237–67.
Jost, Micah Prieb Stoltzfus. 2011. “Independent Contractors, Employees, and Entre-
preneurialism under the National Labor Relations Act: A Worker-by-Worker
Approach.” Washington and Lee Law Review 68(1): 313–73.
Kalleberg, Arne. 2011. Good Jobs/Bad Jobs: The Rise of Polarized and Precarious
Employment Systems in the United States, 1970s to 2000s. New York: Russell Sage
Foundation.
Knutson, Ryan, and Liz Day. 2012. “Anatomy of a Cell Tower Death.” Frontline,
June 6, 2012. Available at: http://www.pbs.org/wgbh/pages/frontline/social-
issues/cell-tower-deaths/anatomy-of-a-cell-tower-death/ (accessed October 10,
2012).
Locke, Richard. 2013. Improving Labor Rights in a Global Economy. New York: Cam-
bridge University Press.
Milkman, Ruth. 2008. “Putting Wages Back into Competition: Deunionization and
Degradation in Place-Bound Industries.” In The Gloves-Off Economy: Workplace
Standards at the Bottom of America’s Labor Market, ed. Annette Bernhardt, Heather
-1 Boushey, Laura Dresser, and Chris Tilly. Champaign, Ill.: University of Illinois
0 for the Labor and Employment Relations Association.
+1

13502-05_CH04-3rdPgs.indd 132 12/10/13 8:33 AM

 Mending the Fissured Workplace    133

Osterman, Paul, and Beth Shulman. 2011. Good Jobs America: Making Work Better for
Everyone. New York: Russell Sage Foundation.
Prahalad, C. K., and Gary Hamel. 1990. “The Core Competence of the Corpora-
tion.” Harvard Business Review (May–June): 79–91.
Rogers, Brishen. 2010. “Toward Third-Party Liability for Wage Theft.” Berkeley
Journal of Employment and Labor Law 30(1): 1–64.
Ruckelshaus, Catherine K. 2008. “Labor’s Wage War.” Fordham Urban Law Journal
35(2): 373–404.
Skocpol, Theda. 1992. Protecting Soldiers and Mothers: The Political Origins of Social
Policy in the United States. Cambridge, Mass.: Harvard University Press.
Stone, Katherine. 2006. “Legal Protections for Atypical Employees: Employment
Law for Workers Without Workplaces and Employees Without Employers.”
Berkeley Journal of Employment and Labor Law 27(2): 251–81.
Webb, Sidney, and Beatrice Webb. 1897. Industrial Democracy. London: Macmillan.
Weil, David. 2008. “Mighty Monolith or Fractured Federation? Business Opposi-
tion and the Enactment of Workplace Legislation.” In The Gloves-Off Economy:
Workplace Standards at the Bottom of America’s Labor Market, ed. Annette Bern-
hardt, Heather Boushey, Laura Dresser, and Chris Tilly. Champaign, Ill.: Uni-
versity of Illinois for the Labor and Employment Relations Association.
———. Forthcoming. The Fissured Workplace: Why Work Became So Bad for So Many
and What Can Be Done to Improve It. Cambridge, Mass.: Harvard University
Press.
Williamson, Oliver. 1985. The Economic Institutions of Capitalism. New York: Free
Press.
Zatz, Noah. 2008. “Working Beyond the Reach or Grasp of Employment Law.” In
The Gloves-Off Economy: Workplace Standards at the Bottom of America’s Labor Mar-
ket, ed. Annette Bernhardt, Heather Boushey, Laura Dresser, and Chris Tilly.
Champaign, Ill.: University of Illinois for the Labor and Employment Relations
Association.

-1
0
+1

13502-05_CH04-3rdPgs.indd 133 12/10/13 8:33 AM

 Chapter 5  olding the Line on Workplace
H
Standards: What Works
for Immigrant Workers
(and What Doesn’t)?

Jennifer Gordon

Immigration policy is a peripheral subject for most scholars of labor and

employment in the United States. Yet any coherent discussion of how to
improve low-wage work in this country, where over 1 million new legal
immigrants arrive each year and the population of undocumented immi-
grants surpasses 11 million, requires an understanding of the impact of
immigration regulations and enforcement on low-wage workers’ ability
to claim their rights. Likewise, few immigration scholars have in-depth
knowledge of the law and policy of the workplace. Yet work remains
the principal force drawing newcomers to the United States. How immi-
grants do once they reach this country is intimately related to the floor
for treatment on the job set by workplace protections. Whether and how
that floor can be enforced vis-à-vis undocumented or guest workers—
the most vulnerable newcomers—are critical questions. In this chapter,
I explore the U.S. immigration policies that have impeded workers’ abil-
ity to defend their rights over the past twenty-five years—roughly the
period between the 1986 Immigration Reform and Control Act (IRCA)
and Congress’s 2013 comprehensive immigration reform endeavor—and
the sources of support in institutional structures and workplace law and
policy that have been important in overcoming those impediments dur-
ing the same period.
The U.S. employment law regime assigns most of the same workplace
-1 protections to undocumented workers as to citizens. Nonetheless, as I argue
0 in the first part of this chapter, government enforcement of immigration
+1
134

13502-06_CH05-2ndPgs.indd 134 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    135

regulation (and employer manipulation of that regulation) became a cen-

tral factor impeding undocumented workers’ capacity to enforce the law
and raise working standards during the decades following IRCA’s cre-
ation of employer sanctions. Because the treatment of the most vulnerable
workers in a job category sets the standard for all workers in that segment
of the industry, this is a serious concern for all those employed in labor
markets where undocumented workers and other recent immigrants are
concentrated, including the service, agriculture, food processing, and con-
struction sectors in most of the country.
Advocates seeking to improve conditions at the bottom of the labor mar-
ket rightly demand an end to immigration restrictions on worker mobil-
ity and to immigration enforcement in the workplace, calling instead for
freer movement in a context of equal workplace rights. To see what a free
movement regime might look like in practice from an immigrant workers’
rights perspective, I turn in the second part of the chapter to the United
Kingdom, where new European Union (EU) citizens from much lower-
wage countries in Eastern and Central Europe have been permitted since
2004 to enter at will and do any job they can find. Although the situation is
too new, and my research too preliminary, to draw definitive conclusions,
the available data and anecdotal reports indicate that during the first six
years following accession “free movers” continued to face more abuse than
their native counterparts in the same low-wage jobs in the United King-
dom, and that there was less worker activism among these newcomers in
the United Kingdom than among new immigrants in the United States.
More than mobility appears to be required to ensure that immigrants are
in a position to access their rights and to join with other low-wage workers
to demand better wages and working conditions.
What that something more might be is suggested by a return look at
the United States in the last part of the chapter. Although immigration
regulation in this country has impeded immigrant workers’ access to their
rights, it has not always derailed their willingness to act to improve their
wages and working conditions, nor determined their ultimate ability to
prevail. Despite the punitive regime in place during this period, many
undocumented immigrants and their coworkers have exercised agency
and courage in demanding respect for baseline workers’ rights and in
organizing through unions and worker centers. Together with those orga-
nizations, they have drawn on workplace rights as resources and have
sought and often received the support of workplace regulators. These new
institutional forms, strategies, and alliances have emerged in the United
States in the past twenty-five years, roughly parallel to the implementa-
tion of employer sanctions but with opposite effect. Their development -1
offers valuable lessons moving forward. 0
+1

13502-06_CH05-2ndPgs.indd 135 12/10/13 8:33 AM

 136    What Works for Workers?

Immigration Law in the Workplace

U.S. Labor Immigration Policy as of 2012
The permanent immigration scheme in the United States is heavily
weighted toward family reunification rather than employment needs. Of
the 1,062,000 immigrants admitted to the United States as new green-card
holders in fiscal year 2011, 688,000 were sponsored by family members.
Only 139,000 were admitted through the employment-based immigra-
tion program. Of these, the vast majority were highly skilled immigrants.
Just 10,000 immigrants per year are granted permanent residence through
the one category that does not require a bachelor’s degree or skill train-
ing.1 The waiting list for this category is currently between five and ten
years long, and the list for workers with a bachelor’s degree is close to
four years, both longer than most employers are willing to hold a job open
(Monger and Yankay 2012, 3, table 2; U.S. Department of State 2012).
The preferential treatment of highly skilled immigrants is in accord with
a consensus among economists that immigrant professionals are a nearly
unmitigated asset for the United States (Holzer 2011, 1, 3; Somerville and
Sumption 2009, 23, 29, 32). But that consensus does not address the large
supply of less-skilled workers seeking to immigrate to the United States
for work, nor the large demand among U.S. employers for their labor.
A small amount of the overflow is managed through the approximately
200,000 to 300,000 temporary low-skilled work visas that the United States
issues per year (Monger 2012, 4, table 2).2 Although such visas are sup-
posed to be limited to agricultural and seasonal jobs (the H-2A and H-2B
visa programs, respectively), there is evidence that employers have also
begun to import labor using temporary visas never intended as guest
worker programs (Costa 2011).
Temporary visas address only a minor part of the demand for low-wage
immigrant workers. The bulk is met by undocumented immigrants, approx-
imately 11.2 million of whom now reside in the United States and 8 million
of whom are working (Passel and Cohn 2011, 1). The undocumented make
up 5 percent of the U.S. labor force (Passel and Cohn 2010, iv).3

The Enforcement of Immigration Law in the Workplace

Economists have long disagreed about whether these newcomers compete
with legal residents for jobs. Although a full exploration of this question
is beyond the scope of this chapter, at the current stage of the economic
debate it appears that most negative effects of such competition—largely
-1 invisible in national-level studies of the economy as a whole—are felt by ear-
0 lier immigrants rather than by natives (Catanzarite 2003, 77, 88; Manacorda,
+1

13502-06_CH05-2ndPgs.indd 136 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    137

Manning, and Wadsworth 2006, 17–18, 27–28; Shierholz, 2010 3). With
regard to natives, a negative impact on wages appears more likely in local-
ized areas that are newly experiencing immigration and in occupations
where native workers tend to have less than a high school education and
the immigrants in question are guest workers or undocumented workers
(Gentsch and Massey 2011, 891; Shierholz 2010, 19). In these contexts, it is
urgent to understand the impact of immigration status and other immi-
gration laws on immigrant workers’ rights and their ability to access the
workplace protections available to them.
The interaction between immigration law and access to workplace rights
is complex. Both temporary legal migrants and the undocumented share
many rights with U.S. workers—on paper. Indeed, most temporary labor
migration programs require that employers pay a higher rate than the
applicable minimum wage, and they offer migrants benefits and guaran-
tees not provided to workers hired through the local labor market.4 For
their part, the undocumented are technically covered by the minimum
wage and overtime protections of the Fair Labor Standards Act (FLSA),5
the safe and healthy workplace provisions of the Occupational Safety and
Health Act (OSHA) (Smith et al. 2007, 12), in most federal courts by antidis-
crimination laws,6 and in most states by workers’ compensation programs
for on-the-job injury.7 Although in the 2002 Hoffman Plastics Compounds
case the Supreme Court denied undocumented immigrants back pay or
reinstatement if they are fired for supporting a union in violation of the
National Labor Relations Act (NLRA), it explicitly reiterated that undocu-
mented individuals are “employees” covered by that act and are permit-
ted to form and join unions.8
Nonetheless, both legal temporary labor migrants and undocumented
immigrants face numerous practical impediments to exercising these rights.

Temporary Visa-Holders and the Employer as Sponsor The core problem

for holders of the H-2A and H-2B temporary visas is that their permit to
remain in the United States is tied to continuing employment by the employer
that sponsored them. If a worker is fired because she complains about the
treatment she receives on the job or attempts to enforce her rights, her visa
immediately terminates and she must return home. She also risks being
put on a blacklist that would bar her future return through the program.
Workers in these programs frequently see their rights violated. A report
by the U.S. Government Accountability Office (GAO) (2010) notes multiple
examples of employers flouting H-2B protections, including payment of
wages of $3.00 per hour and cases of servitude and bondage, reinforced by -1
fraud, conspiracy, and threats of violence to keep workers compliant. The 0
+1

13502-06_CH05-2ndPgs.indd 137 12/10/13 8:33 AM

 138    What Works for Workers?

Southern Poverty Law Center (2007, 15–16 passim) reports numerous cases
of serious abuse in both H-2A and H-2B programs, including employers
that explicitly seek to deter workers by threatening to report to immigra-
tion authorities those who stand up for their rights. Lawsuits over the past
few years on behalf of tree planters, traveling fair workers, welders, and
others have alleged that guest workers suffered grave abuses, including
economic deprivation, serious injuries, threats of retaliation, and in some
cases trafficking, captivity, and forced labor.9 In all cases, workers faced
the loss of their visa if they were fired after coming forward to complain.

Undocumented Workers and Employer Sanctions Undocumented work-

ers also face a different, but equally debilitating, dynamic. Since their pres-
ence in the country is illegal, many fear that any effort they make to defend
their rights will result not only in getting fired but in being reported to
Immigration and Customs Enforcement (ICE, the immigration agency that
replaced the Immigration and Naturalization Service, or INS, in 2003 as the
enforcer of immigration laws inside the United States) and subsequently
deported. This has long been a concern for those working without legal
papers, but the picture became more complicated—and ironically, employ-
ers gained another tool for the intimidation of undocumented workers—
with Congress’s passage of employer sanctions in 1986, and then again
with administrative efforts to beef up the enforcement of those sanctions
beginning in 2006.
Prior to 1986, there was no federal scheme to penalize employers who
hired the undocumented. In that year, in passing the Immigration Reform
and Control Act (IRCA), Congress enacted employer sanctions as part of a
carrot-and-stick package that also included a large-scale legalization pro-
gram. The law requires employers to verify both the identity and the work
authorization of all new hires. Penalties for violations range from small fines
for paperwork offenses to felony charges for intentional flouting of the law.10
Other than a brief burst of enforcement in the few years after employer
sanctions passed, the law was barely used by the federal government for
nearly twenty years. During that time, few employers were penalized
for noncompliance (U.S. Government Accountability Office 2005, 12–16;
Wishnie 2007, 209). Indeed, in testimony to Congress in 2005, the then-
director of Homeland Security and Justice within the GAO reported that
the Department of Homeland Security had issued only three employers a
“notice of intent to fine” under the employer sanctions law in the previous
year (U.S. Government Accountability Office 2005, 15).
-1 While employers were largely unscathed during this time, workers suf-
0 fered greatly under the first twenty years of the sanctions regime. To the
+1

13502-06_CH05-2ndPgs.indd 138 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    139

extent that inspections related to sanctions did take place, government

enforcement actions penalized far more workers, who were often arrested
and deported, than employers, who were rarely fined (U.S. Government
Accountability Office 2005, 15; Wishnie 2007, 209; Smith, Avendaño, and
Ortega 2009, 10). Discrimination has also been an ongoing side effect of
employer sanctions (U.S. General Accounting Office 1990, 37–79; Bacon
and Hing 2010, 87). Most detrimentally, during this period employers
found that the law put a useful tool in their hands for controlling immi-
grant workforces seeking to organize unions or assert their workplace
rights (Smith, Avendaño, and Ortega 2009; Bacon and Hing 2010; Gordon
2005, 41–43, 68; Lee 2009, 1119–23; Wishnie 2007). Unscrupulous employ-
ers would either ignore employer sanctions at the time of hire or fill out
forms perfunctorily. If workers sought to organize a union or raise a com-
plaint about a violation of their rights, the employer would suddenly
become concerned about sanctions, firing workers who could not produce
a work authorization (Wishnie 2007, 215–16). This cloaked retaliation in the
shroud of compliance with employer sanctions. In some cases, employers
themselves called INS (or later ICE) to raid the workplace to derail orga-
nizing campaigns that appeared likely to succeed (Smith, Avendaño, and
Ortega 2009, 15–29).
By late 2006, Congress had concluded several fruitless years of debate over
comprehensive immigration reform without passing legislation. The ques-
tion of immigration enforcement remained in the spotlight, and the govern-
ment’s inattention to employer sanctions drew public attention. Faced with
the political fallout from these revelations, and seeking to quell the firestorm
on undocumented immigration, the Bush administration began an initiative
to increase enforcement of immigration law within the borders of the United
States, with a focus on aggressively enforcing sanctions through inspections
of employers combined with immigration raids on workplaces (Migration
Policy Institute 2009, 9–10).
Images of flashing sirens, workers fleeing in panic and chaos, and fami-
lies torn apart by the abrupt deportations that accompanied a raid became
commonplace in the media (Smith, Avendaño, and Ortega 2009, 23–29).
The terror that these raids induced in immigrant workers increased the
pressure to keep their heads low and ignore abuses at work, in order to
avoid drawing the attention of their employer or the authorities. While a
long-standing memorandum of understanding between ICE and the U.S.
Department of Labor seeks to discourage ICE intervention at a company
with an ongoing workplace dispute or allegations of violations of the law
under investigation (U.S. Immigration and Naturalization Service, U.S.
Department of Justice, and U.S. Department of Labor 1998; U.S. Depart- -1
ment of Homeland Security, Immigration and Customs Enforcement 1996; 0
+1

13502-06_CH05-2ndPgs.indd 139 12/10/13 8:33 AM

 140    What Works for Workers?

U.S. Department of Homeland Security and U.S. Department of Labor

2011; National Immigration Law Center 2009), this agreement has been
ignored in a number of cases (Wishnie 2003, 390–92; Smith, Avendaño,
and Ortega 2009, 23–29).11
Examples abound. In 2007, on the eve of an election in which two unions
sought to represent the same group of workers, the New York City gro-
cery delivery company Fresh Direct notified employees that it was under-
going an ICE audit; it required that workers prove their employment
eligibility to remain in their jobs. Over one hundred of the company’s
nine hundred workers, many of them union supporters, left. When the
election was held less than two weeks later, the unions lost.12 In 2008, in a
case that received considerable publicity, ICE raided the Agriprocessors
slaughterhouse in Postville, Iowa, arresting over six hundred workers. At
the time, the United Food and Commercial Workers Union had an orga-
nizing campaign under way, and state and federal agencies were actively
investigating allegations of workplace violations at the plant.13
We are now in a transitional moment with regard to immigration enforce-
ment in the workplace. The Obama administration vigorously enforces
employer sanctions.14 In fiscal year 2011, ICE inspectors began investiga-
tions at over three thousand employers and issued 331 final administrative
fine orders, compared to 18 in fiscal year 2008, the last under the Bush
administration. In fiscal year 2010, ICE worksite investigations levied over
$40 million in a range of penalties against employers related to worksite
enforcement (U.S. Department of Homeland Security, Immigration and
Customs Enforcement 2011).
Under President Obama, however, ICE has made numerous changes
in its enforcement approach, many of which appear to respond directly
to advocates’ critiques of the Bush administration’s policies. In response
to concerns about the terrorizing effect of raids, it has sharply decreased
conventional raids on workplaces and instead has initiated thousands of
employer audits (sometimes called silent raids) and investigations (U.S.
Department of Homeland Security, Immigration and Customs Enforce-
ment 2011; Preston, “A Crackdown on Employing Illegal Workers”; Bacon
and Hing 2010, 79–84).15 If the government finds missing I-9 forms or
forms with expired or missing documents, the firm is given a period of
time for the workers to rectify the situation; if that is not possible, the firm
is told to fire the workers or face penalties. This shift away from a focus
on targeting workers for deportation and toward holding the employer
liable is evident in the fact that arrests of workers in relation to workplace
enforcement of immigration law have dropped precipitously. So have
-1 criminal convictions against workers on charges related to work. Mean-
0 while, recently released data demonstrate much higher fines against firms,
+1

13502-06_CH05-2ndPgs.indd 140 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    141

as well as criminal indictments, convictions, and jail time for employers,

under the Obama administration (Preston, “A Crackdown on Employing
Illegal Workers”; U.S. Department of Homeland Security, Immigration
and Customs Enforcement 2011).
Despite these reforms, there remains cause for concern. The Obama
administration has stated that it intends to focus on firms that are “egre-
gious” offenders in both the labor and immigration arenas. Nonetheless,
high-profile targets in the first few years of its policy included compa-
nies with reputations as decent employers, including American Apparel,
Chipotle, and unionized building service company ABM (Bacon and
Hing 2010, 82–84; Jamieson 2011, 3–4; Kaye 2011, 9).16 And what the
Obama approach has illustrated most of all is that without legalizing the
undocumented immigrants already present in the country, enforcing
employer sanctions only makes the goals of improving pay and work-
ing conditions in low-wage industries and increasing the jobs available
to legally authorized workers harder to attain. Although far fewer work-
ers are being deported, many thousands have been fired (Bacon and
Hing 2010, 81). The undocumented workers fired as a result of worksite
enforcement do not appear to be leaving the country in large numbers,
as some had hoped; rather, most remain and seek other work, eventu-
ally taking jobs at even lower pay, with a greater sense of vulnerability
and increased reluctance to speak up against abuses and risk attracting
government attention (Bacon and Hing 2010, 81; Jamieson 2011, 3; Kaye
2011, 7).
Although an underlying principle of sanctions is that in the face of
a strict enforcement of the regime employers will hire legal workers
at higher wages than they paid the undocumented, whether this is actu-
ally happening in practice is unclear (Flora, Prado-Meza, and Lewis 2011,
14; Jamieson 2011, 3). Some employers may be turning to guest worker
programs in response to increased enforcement of sanctions, rather than
seeking out native workers (or because they have been unable to recruit
or retain them at the wages they are willing to offer).17 Hiring guest work-
ers under the current regime represents a shift to an equally problematic
situation in terms of workers’ rights, for all of the reasons outlined earlier.
Far from having been effective in addressing undocumented migra-
tion, sanctions have coincided with a time of tremendous growth in the
undocumented population, from 3.2 million in 1986, when IRCA was
passed (Wasem 2012), to an estimated 11.2 million in 2010 (Passel and
Cohn 2011, 1). In response to this fact, and to the harm that sanctions
have done to workers’ ability to enforce their basic rights, advocates have
argued vociferously for the repeal of sanctions. The major success of this -1
advocacy project came over a decade ago, when the AFL-CIO, a supporter 0
+1

13502-06_CH05-2ndPgs.indd 141 12/10/13 8:33 AM

 142    What Works for Workers?

of sanctions at the time of their passage, shifted to a position advocat-

ing their repeal in 2000.18 Otherwise, the calls have fallen on deaf ears.
Reformed, enhanced, and better-enforced sanctions have been a feature—
indeed, a centerpiece—of all of the comprehensive immigration reform
proposals given serious consideration by Congress in the past decade. In
addition, following the Supreme Court’s 2011 ruling in Chamber of Com-
merce v. Whiting upholding Arizona’s law mandating that employers in
the state participate in E-Verify, increasing numbers of states are adopting
similar provisions.19

Migrant Workers Without Immigration

Restrictions: Reflections on the U.K.
Experience in the Wake of Accession
In the United States, the repeal of employer sanctions is currently politi-
cally inconceivable, and as this book goes to press, a limited version of the
“full mobility, fully equal rights” model of temporary labor migration is
contemplated for only a very small number of guest workers in the reform
proposals on the table.20 Meanwhile, however, the European Union has a
policy of free movement for work among EU nations, although through
the framework of EU citizenship rather than a work visa. In this section,
using the United Kingdom as an example, I will set out what is known
about the working conditions of Eastern and Central European nation-
als in the United Kingdom in the first six years following the EU’s 2004
enlargement to include those countries. Although these workers are bet-
ter off than migrants to the United Kingdom from outside the EU who
are undocumented or who hold restrictive temporary work visas, they
still appear to suffer high rates of workplace abuse relative to their native
counterparts, and they have been slow to bring complaints against their
employers for violations of the law and resistant to invitations to join
trade unions. The experience of these “free movers” supports the idea that
more than the immigration regime must change for migrants to be able
and willing to access their rights.
In 2004 the European Union incorporated eight new Eastern and Cen-
tral European (ECE) countries, including Poland, Lithuania, and Latvia
(the group was collectively referred to as the “A8”). In 2007 it grew to
include Bulgaria and Romania (the “A2”). At the time of the 2007 acces-
sion, the wage disparity between the highest- and lowest-wage countries
in the EU was about sixteen-to-one (European Commission 2012), com-
pared to roughly seven-to-one between the United States and Mexico
-1 (Jus Semper Global Alliance 2011, 8). The guarantee of free movement
0 between EU member states permits a citizen of any EU country to move
+1

13502-06_CH05-2ndPgs.indd 142 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    143

between EU countries and to work freely in any other EU country, with-

out limitations on length of stay or on mobility between jobs, regions, or
nations. Although at the time of enlargement existing member states were
permitted to limit labor market access to citizens of new member states to
seven years, as of May 2011 all restrictions on A8 nationals’ labor mobility
has been lifted.
Breaking with the rest of Europe, the United Kingdom and Ireland
(together with Sweden) chose to grant full labor market access to A8
nationals immediately in 2004. Because the United Kingdom opened its
labor market to A8s earlier than most EU countries, and because there are
many similarities between the U.K. approach to labor regulation and that
of the United States, it is a useful place to look for insights about the
implications of a more open labor migration regime in this country.21 A
few key observations follow. Over the first five and a half years after acces-
sion, an estimated 1.5 million ECE nationals arrived in the United King-
dom (Sumption and Somerville 2010, 9). Flows slowed considerably in
2008 and remained low during the recession, but appeared to be increasing
in 2010 and 2011 (McCollum and Findlay 2011, 11; Vargas-Silva 2012, 5).
Many of these newcomers have seen their stay in the United Kingdom
as temporary and have returned home after working for a period of time
(Sumption and Somerville 2010, 18–20; Vargas Silva 2012, 4). Most have
relatively high levels of education and training—for example, Polish A8
migrants to the United Kingdom have an average of over thirteen years
of education (Drinkwater, Eade, and Garapich 2006, 24). Nonetheless, they
overwhelmingly work in low-wage “undesirable” jobs such as food pro-
cessing, patient and elderly care, hospitality, and construction. As with
immigration to the United States, economists have found little negative
effect on the labor market for native workers from this influx of newcomers.
Highly skilled, English-speaking A8 migrants have been particularly
successful in reaping the benefits of access to the U.K. labor market. Full
mobility—between employers, industries, regions, and indeed the United
Kingdom and A8 migrants’ home countries—appears to have been key.
For a significant subset of non-English-speaking A8 workers, however,
genuine mobility and decent treatment on the job have remained out of
reach. The problems they have faced include illegal deductions, unsafe
working conditions, and long hours for low pay (Gordon 2011, 7–8).
It is important to recognize that most workers suffer high rates of work-
place violations in the low-wage labor markets that these migrants are
entering. In other words, the mistreatment of migrants is not anomalous
exploitation, but the product of a business model that relies on the subcon-
tracting of labor as a profit-generating mechanism (Trades Union Congress -1
Commission on Vulnerable Employment 2008, 39). (As an aspect of this 0
+1

13502-06_CH05-2ndPgs.indd 143 12/10/13 8:33 AM

 144    What Works for Workers?

model, some employers seek to subcontract only the most recent group of
migrants, favoring them over newcomers with a few years of experience;
see MacKenzie and Forde [2009, 142].) In the United Kingdom, where the
government’s approach to the enforcement of basic workplace protections
is frequently characterized as balkanized, underfunded, and ineffective,
violations of basic laws are commonplace and frequently go undetected by
regulators (Pollert 2008, 225; Holgate et al. 2010; Trades Union Congress
Commission on Vulnerable Employment 2008, 40; Poinasamy 2011, 22).
While one antidote might be an effective complaint-based system or pri-
vate enforcement of the law, non-union workers in the United Kingdom
(a group in which immigrants, including A8s, are overrepresented) have
few sources of support in bringing workplace claims to the government’s
attention—and little hope of prevailing without that assistance (Anderson,
Clark, and Parutis 2007, 3; Markova and Black 2008, 29; Tailby et al. 2009).
Nonetheless, low-wage A8 migrants in the United Kingdom appear to
have faced obstacles to enforcing their rights even beyond those encoun-
tered by native workers. Obvious impediments include their lack of lan-
guage skills and their unfamiliarity with U.K. law, labor markets, and
institutions (Gordon 2011, 8). The negative role played by private recruit-
ment agencies, which employ up to 50 percent of A8 migrants in the
United Kingdom (Blanchflower and Lawton 2008, 5), also appears to be
an important contributing factor. Agency practices encourage—indeed, in
many cases require—applicants to work below their level of training and
education. Common agency abuses include overcharging, dubious lend-
ing practices, and inaccurate promises about placements. Agencies limit
migrant mobility by making placements in isolated areas and by foment-
ing the fear among agency workers that if they pursue their rights they
will be fired or denied future placements (Gordon 2011, 8–9).
Also notable is the fact that despite the full EU citizenship of A8 migrants
and their ostensible mobility and equal access to workplace rights, there
appear to have been fewer organizing successes to date among this popula-
tion in the United Kingdom than among guest workers and undocumented
immigrants in the United States, despite the much less favorable legal envi-
ronment that the latter face. Although unions in the United Kingdom have
sought to reach out to A8 and other migrant workers and have experi-
mented with approaches ranging from creating a migrant workers branch
to hiring organizers from Polish unions to creating a short-term internal
“migrant worker support unit,” migrants do not appear to have joined
U.K. unions in significant numbers (Fitzgerald and Hardy 2010, 139, 145;
Gumbrell-McCormick 2011). Several union staff and leaders whom I inter-
-1 viewed in 2010 attribute this to the fact that U.K. union membership rules
0 and structures do not correspond to the reality of A8 migrant life, in that
+1

13502-06_CH05-2ndPgs.indd 144 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    145

they require year-round membership in a single-industry union branch

that corresponds to one location, while migrants are likely to move fre-
quently between jobs, regions, and their home countries and the United
Kingdom.22 Although there is interest in the United Kingdom in the worker
center model, it has not yet taken hold.
There are unquestionably lessons in this account of the U.K. experience
for advocates in the United States. One is the need to begin to think seri-
ously about the regulation of recruitment. Although the United States has
some experience with the phenomenon of foreign labor recruiters in low-
wage work in the context of guest work visas and in a few other indus-
tries, the undocumented status of so many low-wage migrants has bred
more illegal than legal intermediaries. Should we move toward expanding
opportunities to enter the United States for temporary work, we should
expect that intermediaries will grow exponentially. This will require new
kinds of regulation and demand a deeper understanding of the function-
ing of agencies in this market. In this regard, the United Kingdom’s inno-
vative Gangmasters Licensing Authority, an agency that since 2006 has
held both recruiters and ultimate employers responsible for violations of
a range of workplace laws, is a model worthy of further consideration
(Gordon 2011, 10–11, 13).
Beyond this, the experiences of EU migrants in the United Kingdom
suggest that even were the United States to implement the most positive
of changes to the structure of labor immigration policy—say, a worker
visa program that permits people from lower-wage countries entirely free
movement between employers and regions and grants these migrants full
and equal labor rights—this alone would be insufficient to deter employ-
ers whose business model relies on the exploitation of the newest arriv-
als, nor would it provide adequate support to low-wage immigrant and
migrant workers in coming forward to defend their rights.

What Works for Immigrant Workers?

Despite the frequency with which immigration enforcement in the United
States has derailed workers’ efforts to stand up for their rights, there are
powerful examples in very recent times of undocumented immigrants and
guest workers organizing to demand better wages and working conditions,
sue their employers, and join unions despite the forces arrayed against
them. Union organizing campaigns involving undocumented workers are
now under way throughout much of the country. Indeed, both activists
and scholars have argued that immigrants, including the undocumented,
are often more receptive to the idea of organizing than their native coun- -1
terparts (Delgado 1993, 10–11; Milkman 2006, 126–40). 0
+1

13502-06_CH05-2ndPgs.indd 145 12/10/13 8:33 AM

 146    What Works for Workers?

Receptivity on its own, however, is clearly not enough. In this section,

I briefly highlight two developments in the United States over the past
two decades that have enabled immigrant workers to defend their rights
despite the restrictions created by their immigration status.23 One is insti-
tutional: the emergence of worker centers and their networks, as well as
unions’ experimentation with new organizing approaches uniquely tailored
to the needs and perspectives of undocumented and temporary workers.
These new or reshaped institutions have provided immigrants with
sustained support and a home base that remains constant whatever
industry—indeed, in some cases, whatever country—they are working in.
The other development is, in a broad sense, legal, in that it embraces the
idea of workers’ rights as a central framework for the discussion of immi-
grants in the workplace (rather than the delegitimizing frame of immigra-
tion status), relies on creative litigation and legislative initiatives in the
arena of workers’ rights, and engages directly with government actors to
advance the enforcement of those rights.

New Institutions and Strategies

Some part of the labor movement has always sought to organize
immigrants—just as there has always been another segment that has
rejected them (Burgoon et al. 2011). In the past twenty years, however,
unions in industries such as hospitality, building services, health care, and
food processing have come to recognize that if they do not make a prior-
ity of organizing the immigrants who now dominate those workplaces,
they will quite simply cease to exist. An early and iconic effort was the
Service Employees International Union (SEIU) “Justice for Janitors” cam-
paign, which has brought tens of thousands of immigrant cleaning work-
ers into unions all over the country over the two decades since its inception
(Milkman 2006, 155–62; Meyerson 2001). Today the United Food and Com-
mercial Workers Union, the Hotel Employees and Restaurant Employees
Union, and numerous other service industry unions are equally involved
in immigrant-organizing campaigns.
Many of the innovations of these campaigns and the lessons they offer
have been comprehensively addressed elsewhere, and I list but a few
here.24 Successful immigrant-organizing unions have developed the capac-
ity to reach workers in their own languages, and with reference to their
own cultures, via organizers who share their ethnicities. They have built
alliances with community organizations, religious groups, and worker
centers (addressed later in the chapter). They have piloted associate mem-
-1 bership programs to reach immigrants before there is an organizing cam-
0 paign under way in their workplace. And perhaps most importantly, they
+1

13502-06_CH05-2ndPgs.indd 146 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    147

have been attentive to and willing to spend political capital on the defense
of undocumented workers in the face of employers’ efforts to use their
lack of status as a pretext for firing them.25
Meanwhile, worker centers have grown in number, from five in 1992
to an estimate of over two hundred nationwide in 2011 (Fine 2011, 607,
615). Such centers have been key actors in many of the victories involving
undocumented workers over the past two decades. They deploy a range
of strategies, from education and outreach to legal and policy advocacy to
membership-based organizing, to support low-wage, largely immigrant
workers. The greatest successes of worker centers have been in the policy
arena. For example, the New York City–based Domestic Workers United
succeeded in passing the historic New York “Domestic Workers’ Bill of
Rights” in 2010, and it and fellow member organizations of the National
Domestic Workers Alliance (NDWA) played a critical role in the 2011
adoption by the International Labor Organization (ILO) of the “Conven-
tion Concerning Decent Work for Domestic Workers.” Worker centers
have also had successes in raising wages and improving working condi-
tions in specific workplaces. One illustration here is the work of the Res-
taurant Opportunities Center (ROC-NY), founded in New York and now
part of a national network of such centers. ROC-NY has targeted high-
end restaurants in Manhattan for protest and litigation regarding wage
theft, and has succeeded in winning settlement agreements that include
paid breaks, access to training and promotions, and grievance resolution
mechanisms (Fine 2006, 16–18; Fine 2011, 609, 613–14, 616; Ashar 2007,
1881; Jayaraman 2005).
In recent years, a number of worker centers have moved from a purely
local focus to a regional or national outlook. Several centers have opened
branches in new cities, and national networks have emerged. The National
Day Labor Organizing Network, the National Domestic Worker Alliance,
the Restaurant Opportunity Center-United, and the International Taxi
Workers Alliance are prominent examples. Most recently, the United Work-
ers Congress was founded by a coalition of those networks and additional
unions and organizations to put forward an affirmative agenda to demand
the right for all workers to organize (Fine 2011; Goldberg and Jackson 2011,
54–59).26 These networks, as well as a few individual centers, have also
formed alliances with the AFL-CIO, SEIU, LIUNA (Laborers International
Union of North America), and other unions.27
Beyond undocumented workers, guest workers—long thought to
be unorganizable because of their temporariness and the vulnerability
induced by the tie between their visas and particular employers—have also
been successful in organizing for better conditions, despite the restrictions -1
attached to their visas. With the support of a few unions and worker centers— 0
+1

13502-06_CH05-2ndPgs.indd 147 12/10/13 8:33 AM

 148    What Works for Workers?

including most recently the National Guestworker Alliance (NGA), a

project of the New Orleans Workers’ Center for Racial Justice—they have
walked off the job and led campaigns to reform the programs in which
they work.
Because far less attention has been paid to guest-worker organizing
than to that of the undocumented, I offer several examples here. The
National Guestworker Alliance (NGA) first came into the limelight for the
campaign it initiated in 2008 with one hundred welders working on H-2B
visas for Signal Shipbuilding. The guest workers left the camps where
they were being held captive and began a sustained public protest, includ-
ing a march to Washington, a twenty-nine-day hunger strike, a lawsuit,
and a trafficking investigation by the Department of Justice, among other
strategies. They eventually won the right to remain in the United States
and succeeded in publicizing the conditions facing guest workers across
the country.28 More recently, in 2011, NGA supported an organizing cam-
paign involving three hundred workers on J visas (a visitor exchange pro-
gram being used as a low-wage guest-worker visa) who held a walkout at
the Hershey distribution plant where they had been made to work for a
net wage of less than $3.00 per hour.29 In 2012 crab pickers who worked for
a Walmart supplier on H-2B visas won concessions from Walmart, again
with NGA’s support.30
NGA is not a traditional union. It is a membership organization that
joins with guest workers to expose the conditions under which they labor,
through a series of campaigns. To date, the campaigns have resulted in
discrete benefits for the guest workers involved, including legal immigra-
tion status and the payment of money owed; changes in U.S. government
policy affecting all workers in a particular visa category; and perhaps
most importantly, a vast increase in public awareness of the existence of
guest workers and their use and abuse in a wide range of industries.
In another remarkable development in the past decade, the Farm Labor
Organizing Committee (FLOC) has unionized H-2A temporary agricul-
tural workers and negotiated contracts with their employers, a previously
unheard-of achievement. FLOC’s collective bargaining agreement with
the North Carolina Growers Association, which since 2004 has covered
over six thousand H-2A agricultural guest workers in North Carolina, is
the most sustained and successful example of guest-worker unionization
in this country’s history.31 In the absence of a stable workforce that could
itself make demands, FLOC relied on consumer pressure to bring the North
Carolina Growers Association to the table and to agree to bargain. Its ongo-
ing organizing strategy has been successful in part because of the union’s
-1 capacity to adapt its structures to the realities of guest work. For example,
0 FLOC opened an office in Monterrey, Mexico, to remain in contact with its
+1

13502-06_CH05-2ndPgs.indd 148 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    149

members while they are at home, and it has also functionally taken on
some of the roles played by labor contractors under the terms of the agree-
ment (Gordon 2007, 574–76; Hill 2008).
FLOC and NGA offer two models for raising workplace standards for
the most vulnerable immigrant workers.

Workers’ Rights as a Central Feature

The second factor I highlight is the importance of the legal framework of
workers’ rights. In the United States, where many workplace protections
have been extended to both undocumented and temporary workers, advo-
cates have used these laws in many ways to support immigrants who seek
better working conditions. Workers’ rights provide an alternative frame-
work for the rhetoric about immigration (“respect for all workers’ rights”
as a counter to “get illegals out of the workplace”) and an alternative solu-
tion for poor working conditions (“enforce basic workplace rights” as an
alternative to “enforce immigration laws in the workplace”) (Gordon 2012,
134–35). Workers’ rights have also offered advocates tools to be deployed
creatively through litigation and expanded through legislation (often on a
state or local level). Worker advocates’ emphasis on workplace rights has
grown alongside, and more recently interacted with, an increased interest
on the part of the U.S. Department of Labor and some state attorney gen-
eral’s offices and labor departments in the strategic enforcement of work-
place laws in a way that is crafted to mirror the reality of the industry in
question and is sensitive to the concerns of immigrant workers.
This confluence of interests has led some worker organizations and
some agencies to explore public-private collaborations to further enforce-
ment goals. In an earlier article, Janice Fine and I called for robust partner-
ships between workers’ organizations and state and federal departments
of labor, which would share responsibility for outreach, the investigation
of complaints, and the design of proactive, industry-specific enforcement
strategies (Fine and Gordon 2010, 561–62). Although such collaborations
have struggled at times to resolve conflicts between the law enforce-
ment perspective of government agencies and the organizing perspec-
tive of unions and worker centers, they also draw on the complementary
strengths of both parties. In particular, we note that workers’ organiza-
tions “have access to information about sectors that are otherwise hard for
the government to penetrate, knowledge about industry structures, and
the capacity to reach workers and document complicated cases” (575–76).
We highlight three partnerships that have been sustained over time: two
involve the building trades in Los Angeles, and one links SEIU and the -1
California Department of Labor Standards Enforcement. 0
+1

13502-06_CH05-2ndPgs.indd 149 12/10/13 8:33 AM

 150    What Works for Workers?

The Obama administration has also explored options for strategic

enforcement of workplace laws, drawing in part on the work of labor stan-
dards enforcement expert David Weil (2010) and the work of a coalition of
advocacy groups led by the National Employment Law Project (2010). The
administration’s efforts have included substantially increasing the num-
ber of labor inspectors; targeting industries with high concentrations of
immigrants; establishing relationships with the consulates of immigrants’
countries of origin; creating and distributing engaging multilingual out-
reach materials on workers’ rights through the Web and other media;
initiating a system to refer people with wage and hour claims to private
attorneys in the plaintiffs’ bar; and taking small—albeit politically con-
troversial—steps to initiate partnerships with community organizations
(Bobo 2011; Weil 2012, 12).
An ongoing campaign among car-wash workers in Los Angeles, many
of whom are undocumented, illustrates the interaction of many of the
innovations highlighted in this chapter, including the insistence on base-
line workers’ rights (usually seen as the purview of worker centers) as
the framework for a union organizing campaign (Hill 2010). The Los
Angeles “CLEAN Car Wash Campaign” has been the product of coor-
dination among legal advocates, a union, community allies, and govern-
ment agencies. In its early stages, legal cases and a successful campaign
for a California car-wash workers’ law exposed the abuses endemic to
the industry. In 2008 the United Steel Workers (USW) union formed its
Carwash Workers Organizing Committee, and the CLEAN Car Wash
Campaign was formally launched.32 With the new law in place and an
organizing campaign under way, the California Department of Labor
Standards Enforcement became involved, initiating a spate of targeted
and well-publicized enforcement actions that made clear the conse-
quences of a low-road business model. In late 2011 and early 2012, fol-
lowing years of organizing by the USW and collaborations with groups
as diverse as the Sierra Club and the religious group Clergy and Laity
United for Economic Justice, workers voted for union representation at
three car washes around L.A., among the first examples of unionization
in the industry. All three businesses are now governed by collective
bargaining agreements.33
The victories by undocumented immigrant and guest workers noted
in this chapter were hard-fought, and most at some point encountered
employers seeking to use immigration law to derail the campaigns. That
they could eventually be won illustrates that even in an atmosphere of
fear generated by immigration enforcement targeting the workplace, and
-1 even after adverse legal rulings such as Hoffman Plastics Compounds, there
0 are times when the impediments of immigration law and status can be
+1

13502-06_CH05-2ndPgs.indd 150 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    151

overcome by worker bravery, solidarity, institutional support from work-

ers’ organizations, and an insistence on the enforcement of baseline work-
place rights.

Conclusion: Looking to the Future

The presence of immigration law in the workplace, whether in the form of
mobility restrictions incorporated in temporary worker visas or employer
sanctions and immigration raids in the context of undocumented work-
ers, has proven to be a serious obstacle to the enforcement of basic
workers’ rights. In practice, employer sanctions offer employers a ready
cover for retaliatory firing, guest workers are effectively bonded to their
employers, immigration priorities often eclipse employment protections
when it comes to government strategies, and migrant and immigrant
workers fear coming forward to report abuse because of the immigration
consequences that may ensue. For these reasons, advocates have long
called for the elimination of the requirement that a guest worker remain
with her sponsoring employer, the repeal of employer sanctions, and a
government emphasis on compliance with worksite protections rather
than on the enforcement of immigration law in the workplace. These
demands are right on target, in great part because they understand that it
is not enough to remove immigration law from the workplace if it is not
replaced with a determination to make workplace protections real for all
workers.
As important as this prescription is, it would be wrong to conclude
that changes in legal policy are adequate to ensure that immigrant work-
ers who want to advocate for their rights are able to do so. As in the post-
enlargement United Kingdom, where a legal regime permitting EU citizens
free movement and equal rights has not resulted in a noticeable surge of
organizing among such workers, all low-wage labor migrants—even those
who travel with unprecedented freedom for transnational migrants—are
likely to face higher levels of rights violations and less organizing success
than their native counterparts. One key force that appears to be depressing
their working standards is the intervention of labor recruiters, who have
re-created through private means many of the concerns that arise in the
United States as a result of the immigration laws. Another is the weakness
in the U.K. regime of basic workplace protections and its enforcement,
including a failure to collaborate between government actors and worker
advocates. A final factor is a gap between migrants’ needs and perspectives
and the institutional support available to them in the United Kingdom,
whether because trade union structures and strategies have not adapted -1
to migrant realities in the way they have begun to in the United States or 0
+1

13502-06_CH05-2ndPgs.indd 151 12/10/13 8:33 AM

 152    What Works for Workers?

because of the lack of alternative structures, such as worker centers, in all

but the most embryonic form.
This contrast graphically illustrates that for low-wage migrants, greater
mobility and equal rights on paper are important elements in the fight for
decent work, but do not alone guarantee a positive outcome. Past propos-
als for comprehensive immigration reform did not address many of the
elements I have argued are important for success. To be sure, such bills
included legalization, which would have brought many undocumented
workers out of the shadows. But they also included “future flow” pro-
grams that would have re-created the flaws in our current guest-worker
scheme and mandated increased reliance on employer sanctions and
E-Verify. As this book goes to press, the outcome of the 2013 immigration
reform debate in Congress remains to be seen.
What would be the features of an immigration policy reflecting the
insights I highlight in this chapter? Legalization is an essential background
condition. If a guest-worker program is part of the policy, it must also
allow the migrants to whom it grants visas the freedom to move between
employers. In the realm of temporary work visas, however, we must think
beyond mobility and consider how to create the incentives and support
necessary for migrants to stand in defense of their rights. I have suggested
elsewhere that this might be done through a regime I call “transnational
labor citizenship” (Gordon 2007).
Under transnational labor citizenship, visas would be allocated to low-
wage migrant workers not through the traditional route of employer
sponsorship, but on the basis of the would-be visa holders’ promise to
refuse employment from any firm that does not comply with workplace
standards and to report any employer that seeks to hire them on ille-
gal terms. The migrants would enter the program through membership
organizations in their home countries with a commitment to advocacy
for workers’ and immigrants’ rights. On arrival, they would also become
members in worker centers, unions, or other workers’ organizations in
the industry or geographical area where they found work. This trans­
national network would be supported by advocates and labor enforce-
ment specialists in both countries. In this way, migrants would be labor
citizens at home and abroad, with the institutional support and incen-
tives they need to make sure that they are paid and treated in accordance
with the law.
Transnational labor citizenship remains more of a thought experiment
than a concrete proposal in the current political context. But whether
immigration reform is eventually done piecemeal or Congress passes a
-1 comprehensive proposal, it is crucial that the goal of achieving decent
0 work for immigrant and native workers alike be at its center.
+1

13502-06_CH05-2ndPgs.indd 152 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    153

Notes
1. Immigration and Nationality Act § 203(b)(3) (2006).
2. The figure varies by year; the 200,000 to 300,000 annual number reflects
admissions under H-2A and H-2B visas for the past three fiscal years.
3. Foreign-born workers as a whole make up 15.9 percent of the U.S. labor force
(U.S. Department of Labor, Bureau of Labor Statistics 2012). In other words, the
undocumented make up about one-third of the immigrant workforce. This is in
slightly greater proportion to their representation in the immigrant population
as a whole, a number recently estimated at 28 percent (Passel and Cohn 2011, 9).
4. For example, the H-2A program requires that employers pay whatever is
higher: the adverse effect wage rate (AEWR), the applicable prevailing wage,
or the federal minimum wage; see 8 U.S.C. § 1188(a)(1)(A), (B) (2000); 20 C.F.R.
§ 655.107(b) (2002). In 2012 the AEWR ranged from $9.30 to $12.26 per hour,
depending on the state (U.S. Department of Labor, Employment and Training
Administration 2011). In all cases the AEWR is higher than the federal mini-
mum wage. The employer must also provide H-2A workers with meals and
housing and must pay the worker for at least three-fourths of the time prom-
ised in the contract, even if there is not enough work to keep the worker busy
during that time (U.S. Department of Labor, Wage and Hour Division 2010).
5. See Patel v. Quality Inn South, 846 F.2d 700, 706 (11th Cir. 1988).
6. See Rivera v. NIBCO, Inc., 364 F.3d 1057 (9th Cir. 2004); Iweala v. Operational
Techs. Servs., 634 F. Supp. 2d 73, 80 (D.D.C. 2009); and Escobar v. Spartan Sec.
Serv., 281 F. Supp. 2d 895, 897 (S.D. Tex. 2003); but see Egbuna v. Time-Life
Libraries, Inc., 153 F.3d 184, 187–88 (4th Cir. 1998).
7. Workers’ compensation for on-the-job injuries suffered by undocumented
immigrants is limited in a few states and under dispute in others, although
most states and the District of Columbia still guarantee coverage to the undocu-
mented. See Visoso v. Cargill Meat Solutions, 778 N.W.2d 504, 511 (Neb. Ct. App.
2009); and Asylum Co. v. Dep’t of Emp’t Servs., 10 A.3d 619, 626 (D.C. 2010);
but see Sanchez v. Eagle Alloy Inc., 658 N.W.2d 510, 519 (Mich. Ct. App. 2003).
8. Hoffman Plastics Compounds v. NLRB, 535 U.S. 137, 152 (2002).
9. Chuck Bartels, “Migrant Forest Workers Get $2.75M Wage Settlement,” Seattle
Times, February 12, 2010; see also U.S. Equal Employment Opportunity Com-
mission, “EEOC Files Its Largest Farm Worker Human Trafficking Suit Against
Global Horizons, Farms” (press release), April 20, 2011, available at: http://www.
eeoc.gov/eeoc/newsroom/release/4-20-11b.cfm (accessed September 2013); and
Southern Poverty Law Center (2007).
10. INA § 274(b).
11. In June 2012, ICE for the first time stayed an enforcement action it had initiated
at a workplace with a unionization campaign and a strike under way, consistent
with the revised memorandum of understanding; see Steven Greenhouse and -1
Steven Yaccino, “Fight over Immigrant Firings,” New York Times, July 28, 2012. 0
+1

13502-06_CH05-2ndPgs.indd 153 12/10/13 8:33 AM

 154    What Works for Workers?

12. Nina Bernstein, “Warehouse Workers Quit in Immigration Inquiry,” New

York Times, December 13, 2007, and “Groceries on the Computer, and Immi-
grants in the Cold,” New York Times, December 22, 2007; Sewell Chan, “Pres-
sure Mounts as FreshDirect Turmoil Rises; Union Vote Fails,” New York Times,
City Room (blog), December 21, 2007 (updated December 23), available at:
http://cityroom.blogs.nytimes.com/2007/12/21/pressure-mounts-as-freshdirect-
turmoil-rises/?scp=25&sq=Fresh%20Direct&st=cse (accessed September 2013).
13. Julia Preston, “After Iowa Raid, Immigrants Fuel Labor Inquiries,” New York
Times, July 27, 2008; see also Smith, Avendaño, and Ortega (2009), 23–24.
14. Julia Preston, “A Crackdown on Employing Illegal Workers,” New York Times,
May 30, 2011; see also Kaye (2011).
15. The administration has not, however, eliminated workplace raids; see Greg
Hardesty and Cindy Carcamo, “ICE Agents Raid Manufacturer in Fuller-
ton,” Orange County Register, June 30, 2010; see also American Civil Liberties
Union (2011, 4–5). Some workers continue to be arrested and deported under
the new approach. In one recent restaurant “sweep,” for example, forty-two
undocumented immigrants were arrested and thirteen were detained or
deported; see Preston, “A Crackdown on Employing Illegal Workers.”
16. See also Julia Preston, “U.S. Shifts Strategy on Illicit Work by Immigrants,”
New York Times, July 3, 2009.
17. Most evidence that employers are responding to sanctions is circumstantial
or anecdotal. For example, journalists Edgar Sandoval and John Marzulli
report an increase in H-2B applications for racetrack workers, long a job
held by undocumented laborers; Edgar Sandoval and John Marzulli,
“Belmont Stable Owners Insist Foreign Workers Are Needed for Dirty Jobs
That NYers Refuse to Do,” New York Daily News. October 18, 2011. Kerstin
Gentsch and Douglas Massey (2011, 891), noting that the use of guest
worker programs in 2008 was ten times higher than in 1996, argue that this
was at least in part the result of increased enforcement of immigration law
inside the United States.
18. Today there are signs that some unions in the AFL-CIO are reconsidering this
change in position (AFL-CIO Building and Construction Trades Department
2009, 1–2).
19. 131 S. Ct. 1968 (2011).
20. This section is adapted and updated from Gordon (2011).
21. It is important to recognize a number of divergences between the U.S. and
U.K. contexts as well (Gordon 2011, 11–12).
22. Donna Reeve (organizing department campaign support and secretary,
UNITE), interview with the author, London, February 16, 2010; Sean Bam-
ford (policy officer, European Union and Trades Union Congress Interna-
-1 tional Relations Department), telephone interview with the author, February
0 11, 2010; see also Gumbrell-McCormick (2011).
+1

13502-06_CH05-2ndPgs.indd 154 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    155

23. It is important to remember, however, that until undocumented immigrants

gain legal status, they remain vulnerable to retaliatory firings even once union-
ized, and there is little they or their unions and worker centers can do to get their
jobs back, however courageous the workers and creative the organizations.
24. Readers interested in in-depth case studies should see Organizing Immigrants
(Milkman 2000), Working for Justice (Milkman, Bloom, and Narro 2010), and
Immigrants, Unions, and the New U.S. Labor Market (Ness 2005).
25. Greenhouse and Yaccino, “Fight over Immigrant Firings”; Albor Ruiz, “Con-
tract Protects Immigrant Hotel Workers,” New York Daily News, March 4,
2012; see also Sherman and Voss (2000, 90–92).
26. For more on the United Workers Congress, see the website at: http://www.
excludedworkerscongress.org (accessed September 2013).
27. AFL-CIO, “Worker Center Partnerships,” available at: http://www.aflcio.org/
About/Worker-Center-Partnerships (accessed September 2013); see also Fine
(2011, 615).
28. Julia Preston, “Workers on Hunger Strike Say They Were Misled on Visas,”
New York Times, June 7, 2008; see also Ness (2011, 102–9).
29. Julia Preston, “Pleas Unheeded as Students’ U.S. Jobs Soured,” New York
Times, October 17, 2011; see also Human Rights Delegation 2011).
30. Steven Greenhouse, “Wal-Mart Suspends Supplier of Seafood,” New York
Times, June 30, 2012.
31. For a copy of the collective bargaining agreement between FLOC and the
North Carolina Growers Association, go to: http://ncgrowers.org/ncgas-
union-agreement/ (accessed September 2013), and click on the link to the
agreement.
32. See the website for the CLEAN Carwash Campaign at: http://www.cleancar
washla.org/ (accessed September 2013); the campaign launch was announced
in a March 27, 2008, press release (“Coalition Launches Campaign to Clean
Up LA Carwash Industry”), http://laborweb.aflcio.org/sites/Open5/carwash/
index.cfm?action=article&articleID=d60266f6-9338-4560-949d-959bdad14be7
(accessed September 2013). See also Sam Quinones, “Carwash Workers Cel-
ebrate Union Contract,” Los Angeles Times, October 26, 2011; Alana Semuels,
“Union Forges a New Alliance with Carwash Workers,” Los Angeles Times,
February 22, 2012; and Garea and Stern 2010.
33. Quinones, “Carwash Workers Celebrate Union Contract”; Semuels, “Union
Forges a New Alliance with Carwash Workers.”

References
AFL-CIO Building and Construction Trades Department. 2009. “The Building and
Construction Trades Department’s Statement of Principles on Comprehen- -1
sive Immigration Reform.” May 13. Available at: http://www.bctd.org/BCTD/ 0
+1

13502-06_CH05-2ndPgs.indd 155 12/10/13 8:33 AM

 156    What Works for Workers?

media/Documents/Newsroom/Policy%20Statements/BCTDStatement.pdf
(accessed September 2013).
American Civil Liberties Union. 2011. “ICE Worksite Enforcement: Up to the Job?”
Statement submitted to House Committee on the Judiciary, Subcommittee on
Immigration Policy and Enforcement, 112th Congress, January 26.
Anderson, Bridget, Nick Clark, and Violetta Parutis. 2007. “New EU Members?
Migrant Workers’ Challenges and Opportunities to U.K. Trade Unions: A
Polish and Lithuanian Case Study.” London: Trades Union Congress. Avail-
able at: http://www.tuc.org.uk/extras/migrantchallenges.pdf (accessed Sep-
tember 2013).
Ashar, Sameer M. 2007. “Public Interest Lawyers and Resistance Movements.”
California Law Review 95(5): 1879–1925.
Bacon, David, and Bill Ong Hing. 2010. “The Rise and Fall of Employer Sanctions.”
Fordham Urban Law Journal 38(1): 77–105.
Blanchflower, David G., and Helen Lawton. 2008. “The Impact of the Recent
Expansion of the EU on the U.K. Labour Market.” Discussion Paper 3695. Bonn,
Germany: Institute for the Study of Labor (IZA) (September). Available at:
http://ftp.iza.org/dp3695.pdf (accessed September 2013).
Bobo, Kim. 2011. “Examining Regulatory and Enforcement Actions Under the
Fair Labor Standards Act.” Testimony before House Committee on Education
and the Workforce, Subcommittee on Workforce Protections, 112th Congress,
November 3.
Burgoon, Brian, Wade Jacoby, Janice Fine, and Daniel Tichenor. 2011. “Immigra-
tion and the Transformation of American Unionism.” International Migration
Review 44(4): 933–73.
Catanzarite, Lisa. 2003. “Occupational Context and Wage Competition of New
Immigrant Latinos with Minorities and Whites.” Review of Black Political Econ-
omy 31(1): 77–94.
Costa, Daniel. 2011. “Guest Worker Diplomacy: J Visas Receive Minimal Oversight
Despite Significant Implications for the U.S. Labor Market.” Briefing Paper
317. Washington, D.C.: Economic Policy Institute (July 14). Available at: http://
www.epi.org/files/2011/BriefingPaper317.pdf (accessed September 2013).
Delgado, Héctor L. 1993. New Immigrants, Old Unions: Organizing Undocumented
Workers in Los Angeles. Philadelphia: Temple University Press.
Drinkwater, Stephen, John Eade, and Michal Garapich. 2006. “Poles Apart? EU
Enlargement and the Labour Market Outcomes of Immigrants in the U.K.”
Discussion Paper 2410. Bonn, Germany: Institute for the Study of Labor (IZA)
(October). Available at: http://ftp.iza.org/dp2410.pdf (accessed September 2013).
European Commission. 2012. “Eurostat Table.” Available at: http://epp.eurostat.
ec.europa.eu/tgm/refreshTableAction.do;jsessionid=9ea7d07e30dbe4df21cadb
-1 5543078b41b9ebffeee3f3.e34MbxeSahmMa40LbNiMbxaMbhyTe0?tab=table&p
0 lugin=1&pcode=tps00173&language=en (accessed September 2013).
+1

13502-06_CH05-2ndPgs.indd 156 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    157

Fine, Janice. 2006. Worker Centers: Organizing Communities at the Edge of the Dream.
Ithaca, N.Y.: Cornell University Press.
———. 2011. “New Forms to Settle Old Scores: Updating the Worker Centre Story
in the United States.” Industrial Relations 66(4): 604–30.
Fine, Janice, and Jennifer Gordon. 2010. “Strengthening Labor Standards Enforce-
ment Through Partnerships with Workers’ Organizations.” Politics and Society
38(4): 552–85.
Fitzgerald, Ian, and Jane Hardy. 2010. “‘Thinking Outside the Box’? Trade Union
Organizing Strategies and Polish Migrant Workers in the United Kingdom.”
British Journal of Industrial Relations 48(1): 131–50.
Flora, Jan L., Claudia M. Prado-Meza, and Hannah Lewis. 2011. “After the Raid
Is Over: Marshalltown, Iowa, and the Consequences of Worksite Enforcement
Raids.” Special report. Washington, D.C.: Immigration Policy Center (January).
Available at: http://www.ilw.com/articles/2011,0310-ipc.pdf (accessed Septem-
ber 2013).
Garea, Susan, and Sasha Alexandra Stern. 2010. “From Legal Advocacy to Orga-
nizing: Progressive Lawyering and the Los Angeles Car Wash Campaign.” In
Working for Justice: The L.A. Model of Organizing and Advocacy, ed. Ruth Milk-
man, Joshua Bloom, and Victor Narro. Ithaca, N.Y.: Cornell University Press.
Gentsch, Kerstin, and Douglas S. Massey. 2011. “Labor Market Outcomes for
Legal Mexican Immigrants Under the New Regime of Immigration Enforce-
ment.” Social Science Quarterly 92(3): 875–93.
Goldberg, Harmony, and Randy Jackson. 2011. “The Excluded Workers’ Congress:
Reimagining the Right to Organize.” New Labor Forum 20(3): 54–59.
Gordon, Jennifer. 2005. “Lack of Worksite Enforcement and Employer Sanctions.”
Testimony before House Committee on the Judiciary. Subcommittee on Immi-
gration, Border Security, and Claims, 109th Congress, June 21.
———. 2007. “Transnational Labor Citizenship.” Southern California Law Review
80(3): 503–88.
———. 2011. “Free Movement and Equal Rights for Low-Wage Workers? What the
United States Can Learn from the New EU Migration to Britain.” Issue brief.
Berkeley: University of California–Berkeley Law School, Chief Justice Earl Warren
Institute on Law and Social Policy (May). Available at: http://www.law.berkeley.
edu/img/Gordon_Issue_Brief_May_2011_FINAL.pdf (accessed September 2013).
———. 2012. “Tensions in Rhetoric and Reality at the Intersection of Labor and
Immigration.” University of California Irvine Law Review 2(1): 125–46.
Gumbrell-McCormick, Rebecca. 2011. “European Trade Unions and ‘Atypical’
Workers.” Industrial Relations Journal 42(3): 293–310.
Hill, Jennifer. 2008. “Binational Guestworker Unions: Moving Guestworkers into
the House of Labor.” Fordham Urban Law Journal 35(2): 307–38.
———. 2010. “Can Unions Use Worker Center Strategies? In an Age of Doing More
with Less, Unions Should Consider Thinking Locally but Acting Globally.” FIU -1
Law Review 5(2): 551–92. 0
+1

13502-06_CH05-2ndPgs.indd 157 12/10/13 8:33 AM

 158    What Works for Workers?

Holgate, Jane, Janroj Keles, Leena Kumarappan, and Anna Pollert. 2010. “Help and
Representation for Problems at Work: What Has Happened to Support Networks
and Advice Centres?” London: Working Lives Research Institute. Available at:
http://www.workinglives.org/londonmet/fms/MRSite/Research/wlri/Photo%20
gallery/Project%20final%20report.pdf (accessed September 2013).
Holzer, Harry J. 2011. “Immigration Policy and Less-Skilled Workers in the
United States: Reflections on Future Directions for Reform.” Washington,
D.C.: Migration Policy Institute (January). Available at: http://www.urban.org/
uploadedpdf/1001488-immigration-policy.pdf (accessed September 2013).
Human Rights Delegation. 2011. “Report of the August 2011 Human Rights Del-
egation to Hershey, Pennsylvania.” September 8. Available at: http://www.guest
workeralliance.org/wp-content/uploads/2011/09/Human-Rights-Delegation-
Report-Hershey-Reissue-September-8.pdf (accessed September 2013).
Jamieson, Dave. 2011. “Chipotle, Undocumented Workers, and the Trouble with
‘Enforcement-Only’ Immigration.” Huffington Post, May 11 (updated July
11, 2011). Available at: http://www.huffingtonpost.com/2011/05/11/chipotle-
immigration-reform_n_860565.html (accessed September 2013).
Jayaraman, Sarumathi. 2005. “ ‘ROCing’ the Industry: Organizing Restaurant
Workers in New York.” In The New Urban Immigrant Workforce: Innovative Mod-
els for Labor Organizing, ed. Sarumathi Jayaraman and Immanuel Ness. Armonk,
N.Y.: M. E. Sharpe.
Jus Semper Global Alliance. 2011. “Mexico’s Wage Gap Charts.” December.
Available at: http://www.jussemper.org/Resources/Labour%20Resources/WGC/
Resources/WagegapsMex2006.pdf (accessed September 2013).
Kaye, Jeffrey. 2011. “Deeper into the Shadows: The Unintended Consequences
of Immigration Worksite Enforcement.” Special report. Washington, D.C.:
Immigration Policy Center (February). Available at: http://www.ilw.com/articles/
2011,0324-kaye.pdf (accessed September 2013).
Lee, Stephen. 2009. “Private Immigration Screening in the Workplace.” Stanford
Law Review 61(5): 1103–46.
MacKenzie, Robert, and Chris Forde. 2009. “The Rhetoric of the ‘Good Worker’
Versus the Realities of Employers’ Use and the Experiences of Migrant Work-
ers.” Work, Employment, and Society 23(1): 142–59.
Manacorda, Marco, Alan Manning, and Jonathan Wadsworth. 2006. “The Impact
of Immigration on the Structure of Male Wages: Theory and Evidence from
Britain.” Discussion Paper 2352. Bonn, Germany: Institute for the Study of
Labor (IZA) (October). Available at: ftp://repec.iza.org/RePEc/Discussion
paper/dp2352.pdf (accessed September 2013).
Markova, Eugenia, and Richard Black. 2008. “The Experiences of ‘New’ East
European Immigrants in the U.K. Labour Market.” Journal of Poverty and Social
Justice 16(1): 19–31.
-1 McCollum, David, and Allan Findlay. 2011. “Trends in A8 Migration to the U.K.
0 During the Recession.” Population Trends 145(1, Autumn): 1–13. Available at:
+1

13502-06_CH05-2ndPgs.indd 158 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    159

http://www.cpc.ac.uk/resources/downloads/2011%20poptrends145%20A8%20
migration.pdf (accessed September 2013).
Meyerson, Harold. 2001. “A Clean Sweep.” The American Prospect, December 19.
Available at: http://prospect.org/article/clean-sweep (accessed September 2013).
Migration Policy Institute. 2009. “DHS and Immigration: Taking Stock and Correct-
ing Course.” Presentation, February 11. Available at: https://secure.migration
policy.org/images/2009.2.11_Presentation-1.pdf (accessed September 2013).
Milkman, Ruth, ed. 2000. Organizing Immigrants: The Challenge for Unions in Con-
temporary California. Ithaca, N.Y.: Cornell University Press.
———. 2006. L.A. Story: Immigrant Workers and the Future of the U.S. Labor Movement.
New York: Russell Sage Foundation.
Milkman, Ruth, Joshua Bloom, and Victor Narro, eds. 2010. Working for Justice: The
L.A. Model of Organizing and Advocacy. Ithaca, N.Y.: Cornell University Press.
Monger, Randall. 2012. “Nonimmigrant Admissions to the United States: 2011.”
Annual Flow Report (July). Washington: U.S. Department of Homeland Secu-
rity. Available at: http://www.dhs.gov/xlibrary/assets/statistics/publications/ni_
fr_2011.pdf (accessed September 2013).
Monger, Randall, and James Yankay. 2012. “U.S. Legal Permanent Residents: 2011.”
Annual Flow Report (April). Washington: U.S. Department of Homeland Secu-
rity. Available at: http://www.dhs.gov/xlibrary/assets/statistics/publications/
lpr_fr_2011.pdf (accessed September 2013).
National Employment Law Project. 2010. “Just Pay: Improving Wage and Hour
Enforcement at the United States Department of Labor.” Available at: http://
www.nelp.org/page/-/Justice/2010/JustPayReport2010.pdf?nocdn=1 (accessed
September 2013).
National Immigration Law Center. 2009. “Issue Brief: Immigration Enforcement
During Labor Disputes.” Available at: http://www.nilc.org/genworkenf.html
(accessed September 2013).
Ness, Immanuel. 2005. Immigrants, Unions, and the New U.S. Labor Market. Phila-
delphia: Temple University Press.
———. 2011. Guest Workers and Resistance to U.S. Corporate Despotism. Urbana: Uni-
versity of Illinois Press.
Passel, Jeffrey S., and D’Vera Cohn. 2010. “U.S. Unauthorized Immigration Flows
Are Down Sharply Since Mid-Decade.” Washington, D.C.: Pew Hispanic Cen-
ter (September 1). Available at: http://www.pewhispanic.org/files/reports/126.
pdf (accessed September 2013).
———. 2011. “Unauthorized Immigrant Population: National and State Trends,
2010.” Washington, D.C.: Pew Hispanic Center (February 1). Available at: http://
pewhispanic.org/files/reports/133.pdf (accessed September 2013).
Poinasamy, Krisnah. 2011. “When Work Won’t Pay: In-Work Poverty in the U.K.”
Discussion paper. Oxford: Oxfam (November). Available at: http://policy-
practice.oxfam.org.uk/publications/when-work-wont-pay-in-work-poverty- -1
in-the-uk-197010 (accessed September 2013). 0
+1

13502-06_CH05-2ndPgs.indd 159 12/10/13 8:33 AM

 160    What Works for Workers?

Pollert, Anna. 2008. “Injustice at Work: How Britain’s Low-Paid Non-Unionised

Employees Experience Workplace Problems.” Journal of Workplace Rights 13(3):
223–44.
Sherman, Rachel, and Kim Voss. 2000. “Organize or Die: Labor’s New Tactics
and Immigrant Workers.” In Organizing Immigrants, ed. Ruth Milkman. Ithaca,
N.Y.: Cornell University Press.
Shierholz, Heidi. 2010. “Immigration and Wages: Methodological Advancements
Confirm Modest Gains for Native Workers.” Briefing Paper 255. Washington,
D.C.: Economic Policy Institute (February 4). Available at: http://www.epi.org/
page/-/bp255/bp255.pdf (accessed September 2013).
Smith, Rebecca, Ana Avendaño, and Julie Martínez Ortega. 2009. “ICED OUT: How
Immigration Enforcement Has Interfered with Workers’ Rights.” New York:
National Employment Law Project (October 27). Available at: http://nelp.3cdn.
net/75a43e6ae48f67216a_w2m6bp1ak.pdf (accessed September 2013).
Smith, Rebecca, Amy Sugimori, Ana Avendaño, and Marielena Hincapie. 2007.
“Undocumented Workers: Preserving Rights and Remedies After Hoffman Plas-
tic Compounds v. NLRB.” New York: National Employment Law Project (Feb-
ruary 23). Available at: http://nelp.3cdn.net/b378145245dde2e58d_0qm6i6i6g.
pdf (accessed September 2013).
Somerville, Will, and Madeleine Sumption. 2009. “Immigration and the Labor Mar-
ket: Theory, Evidence, and Policy.” Washington, D.C.: Migration Policy Institute
(March). Available at: http://www.migrationpolicy.org/pubs/Immigration-and-
the-Labour-Market.pdf (accessed September 2013).
Southern Poverty Law Center. 2007. “Closer to Slavery: Guestworker Programs in
the United States.” Montgomery, Ala.: Southern Poverty Law Center (March).
Available at: http://www.splcenter.org/sites/default/files/downloads/Close_to_
Slavery.pdf (accessed September 2013).
Sumption, Madeleine, and Will Somerville. 2010. “The U.K.’s New Europeans:
Progress and Challenges Five Years After Accession.” Washington, D.C.:
Migration Policy Institute. Available at: http://www.equalityhumanrights.com/
uploaded_files/new_europeans.pdf (accessed September 2013).
Tailby, Stephanie, Anna Pollert, Stella Warren, Andy Danford, and Nick Wilton.
2009. “Under-funded and Overwhelmed: The Voluntary Sector as Worker Rep-
resentation in Britain’s Individualised Industrial Relations System.” Industrial
Relations Journal 42(3): 273–92.
Trades Union Congress Commission on Vulnerable Employment. 2008. “Hard Work,
Hidden Lives: The Short Report of the Commission on Vulnerable Employment.”
London: Trades Union Congress (May 7). Available at: http://www.vulnerable
workers.org.uk/files/CoVE_short_report.pdf (accessed September 2013).
U.S. Department of Homeland Security. Immigration and Customs Enforcement. 1996.
“Questioning Persons During Labor Disputes.” Operating Instructions 287.3a,
-1 December 4. Available at: http://www.uscis.gov/ilink/docView/SLB/HTML/SLB/
0 0-0-0-1/0-0-0-53690/0-0-0-61072/0-0-0-61097.html (accessed September 2013).
+1

13502-06_CH05-2ndPgs.indd 160 12/10/13 8:33 AM

 Holding the Line on Workplace Standards    161

———. 2011. “Oversight Hearing on U.S. Immigration and Customs Enforcement:

Priorities and the Rule of Law.” Statement of John Morton, Director, before House
Committee on the Judiciary, Subcommittee on Immigration Policy and Enforce-
ment, 112th Congress, October 12. Available at: http://www.dhs.gov/ynews/
testimony/20111012-morton-ice-oversight.shtm (accessed September 2013).
U.S. Department of Homeland Security and U.S. Department of Labor. 2011.
“Revised Memorandum of Understanding Between the Departments of Home-
land Security and Labor Concerning Enforcement Activities at Worksites.”
December 7. Available at: http://www.dol.gov/asp/media/reports/DHS-DOL-
MOU.pdf (accessed September 2013).
U.S. Department of Labor. Bureau of Labor Statistics. 2012. “Foreign-Born Work-
ers: Labor Force Characteristics—2011.” Available at: http://www.bls.gov/
news.release/archives/forbrn_05242012.htm (accessed September 2013).
———. Employment and Training Administration. 2011. “2012 Adverse Effect
Wage Rates” (map). Available at: http://www.foreignlaborcert.doleta.gov/pdf/
aewr_map_2012.pdf (accessed September 2013).
———. Wage and Hour Division. 2010. “Fact Sheet 26: Section H-2A of the Immigra-
tion and Nationality Act (INA).” Available at: http://www.dol.gov/whd/regs/
compliance/whdfs26.htm (accessed September 2013).
U.S. Department of State. Bureau of Consular Affairs. 2012. “Visa Bulletin for
August 2012.” Travel.State.Gov. Available at: http://www.travel.state.gov/visa/
bulletin/bulletin_5749.html (accessed September 2013).
U.S. General Accounting Office. 1990. Immigration Reform: Employer Sanctions and
the Question of Discrimination. Report to Congress, March 29. GAO/GGD-90-62.
Available at: http://archive.gao.gov/d24t8/140974.pdf (accessed September 2013).
U.S. Government Accountability Office. 2005. “Immigration Enforcement: Pre-
liminary Observations on Employment Verification and Worksite Enforcement
Efforts.” Statement of Richard M. Stana, Director of Homeland Security and
Justice of GAO, submitted to House Committee on the Judiciary, Subcommittee
on Immigration, Border Security, and Claims, 109th Congress, June 21, GAO-
05-822T. Available at: http://www.gao.gov/new.items/d05822t.pdf (accessed
September 2013).
———. 2010. “H-2B Visa Program: Closed Civil and Criminal Cases Illustrate Instances
of H-2B Workers Being Targets of Fraud and Abuse.” Report to House Committee
on Education and Labor, 111th Congress, September 30, GAO-10-1053. Available
at: http://www.gao.gov/assets/320/310640.pdf (accessed September 2013).
U.S. Immigration and Naturalization Service, U.S. Department of Justice, and U.S.
Department of Labor. 1998. “Memorandum of Understanding Between the Im-
migration and Naturalization Service, Department of Justice, and the Employ-
ment Standards Administration, Department of Labor.” November 23. Available
at: http://bender.lexisnexis.com/us/lpgateway.dll?f=templates$fn=tools-contents.
htm$cp=325j%2F8%2F9%2F322$tt=document-frame.htm$tf=main$3.0 (accessed -1
September 2013). 0
+1

13502-06_CH05-2ndPgs.indd 161 12/10/13 8:33 AM

 162    What Works for Workers?

Vargas-Silva, Carlos. 2012. “Migration Flows of A8 and Other EU Migrants to and

from the U.K.” Migration Observatory Briefing. Oxford: Oxford University,
Centre on Migration, Policy, and Society (January). Available at: http://www.
migrationobservatory.ox.ac.uk/sites/files/migobs/Migration%20Flows%20
of%20A8%20and%20other%20EU%20Migrants%20to%20and%20from%20
the%20UK.pdf (accessed September 2013).
Wasem, Ruth Ellen. 2012. “Unauthorized Aliens Residing in the United States:
Estimates Since 1986.” Washington, D.C.: Congressional Research Service
(December 13). Available at: http://www.fas.org/sgp/crs/misc/RL33874.pdf
(accessed September 2013).
Weil, David. 2010. “Improving Workplace Conditions Through Strategic Enforce-
ment: A Report to the Wage and Hour Division.” May. Available at: http://www.
dol.gov/whd/resources/strategicEnforcement.pdf (accessed September 2013).
———. 2012. “ ‘Broken Windows,’ Vulnerable Workers, and the Future of Worker
Representation.” The Forum 10(1): 9.
Wishnie, Michael J. 2003. “The Border Crossed Us: Current Issues in Immigrant
Labor.” New York University Review of Law and Social Change 28(3): 389–96 (accessed
September 2013).
———. 2007. “Prohibiting the Employment of Unauthorized Immigrants: The
Experiment Fails.” University of Chicago Legal Forum 2007: 193–218.

Cases
Asylum Co. v. Dep’t of Emp’t Servs., 10 A.3d 619 (D.C. 2010)
Chamber of Commerce v. Whiting, 131 S. Ct. 1968 (2011)
Egbuna v. Time-Life Libraries, Inc., 153 F.3d 184 (4th Cir. 1998)
Escobar v. Spartan Sec. Serv., 281 F. Supp. 2d, 895 (S.D. Tex. 2003)
Hoffman Plastics Compounds v. NLRB, 535 U.S. 137 (2002)
Iweala v. Operational Techs. Servs., 634 F. Supp. 2d 73 (D.D.C. 2009)
Patel v. Quality Inn South, 846 F.2d 700 (11th Cir. 1988)
Rivera v. NIBCO, Inc., 364 F.3d 1057 (9th Cir. 2004)
Sanchez v. Eagle Alloy Inc., 658 N.W.2d 510 (Mich. Ct. App. 2003)
Visoso v. Cargill Meat Solutions, 778 N.W.2d 504 (Neb. Ct. App. 2009)

Statutes
8 U.S.C. § 1188(a)(1)(A), (B) (2000)
Immigration and Nationality Act § 203(b)(3) (2006)
Immigration and Nationality Act § 274(b) (2006)
20 C.F.R. § 655.107(b) (2002)
-1
0
+1

13502-06_CH05-2ndPgs.indd 162 12/10/13 8:33 AM

 Part III Innovative Labor
Market Interventions

-1
0
+1

13502-07_CH06-2ndPgs.indd 163 12/10/13 8:33 AM

-1
0
+1

13502-07_CH06-2ndPgs.indd 164 12/10/13 8:33 AM

 Chapter 6  areer Ladders in the Low-Wage
C
Labor Market

Paul Osterman

Far too many jobs in the United States fall below the standard that most
people would consider decent work. If we ask only about wages (hence
being conservative by ignoring health insurance, pensions, and other attri-
butes of decent work) and focus only on adults age twenty-five to sixty-
four, then in 2011, 19 percent of adult workers earned an hourly wage
below that necessary (working full-time/full-year) to raise a family of
four above the poverty line of $10.96 an hour.1 This is a very conservative
estimate because it is widely accepted that the poverty line is flawed and
underestimates what it takes to maintain a basic living standard. Indeed, a
recent study that estimated a basic needs budget for a family of four found
that 44 percent of adults fall below the standard (Wider Opportunities for
Women 2011).
One might argue that even for adults, low-wage work is transitory and
a great many will find ways to climb up the ladder into better jobs. How-
ever, the unfortunate fact is that this is not true: most low-wage workers
remain trapped.2 There is also extensive evidence that low incomes have
negative effects on families in terms of the health of the adults and the
educational achievement of the children (Wilkinson and Pickett 2009). In
a deeper sense, people who are scrambling to hold themselves and their
families together economically cannot be fully functioning citizens or par-
ticipants in society.
The extent of bad jobs touches directly on broader challenges. There
is widespread dismay at growing inequality, and while some of this can
be attributed to excesses at the very top, it is clear that any real solution
must address the labor market circumstances of millions of Americans in -1
low-paying work. In addition, middle-class Americans in good jobs are 0
+1
165

13502-07_CH06-2ndPgs.indd 165 12/10/13 8:33 AM

 166    What Works for Workers?

confronting the reality of losing work and being forced, if they are lucky,
to take employment in the low-wage labor market. Improving these jobs
is in their interest too.

A Framework for Thinking About Policy

The goal of this chapter is to discuss the potential and the challenges of
a specific policy to address low-wage jobs: training programs and, more
specifically, labor market intermediaries. Before turning to these policies,
however, it is useful to think about the larger policy universe. A wide vari-
ety of tools are available for influencing how firms organize their employ-
ment systems, and a framework or classification system is helpful for
understanding them. One important distinction is between what might be
termed “standard-setting” policies, on the one hand, and “programmatic
interventions,” on the other. Examples of the former include unioniza-
tion, minimum and living wage legislation, and community benefit agree-
ments. Examples of the latter are sectoral training programs, labor market
intermediaries, and variants of manufacturing extension services.
A second useful distinction is between interventions aimed at improv-
ing the quality of existing jobs (“making bad jobs good”) and inter­ventions
aimed at creating, or retaining, more good jobs. Examples of the first set
of policies are efforts to raise wages or create job ladders in the exist-
ing job base—for example, in the retail, health, or hospitality industries.
Examples of the second category are economic development programs
that utilize labor market tools to attract good jobs or to help existing firms
compete more effectively and hence maintain the base of good jobs that
already exists. Figure 6.1 organizes possible policy levers in terms of these
distinctions.
The distinctions in this chart are to some extent arbitrary (for example,
some unions run substantial training career ladder programs, as noted
later), but they do represent a useful way of thinking about the universe
of policy interventions on the demand side. This chapter focuses on pro-
grams in the upper right quadrant: programmatic interventions that work
with firms to improve careers within the organization.

Training and Career Ladders

Before turning to training programs, we must ask the following question:
will there be good jobs that low-wage workers can aspire to, or is the tra-
jectory of technological change creating a situation in which the only jobs
-1 available will be either very low-skill or very high-skill, with few oppor-
0 tunities in the middle? This is an important question, and a recent line
+1

13502-07_CH06-2ndPgs.indd 166 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   167

Figure 6.1   A Typology of Intervention Strategies

Standard-setting Programmatic
Make bad Minimum wage Career ladders
jobs good Living wages Intermediaries
Unionization Sectoral programs

Create more Community benefit Extension services

good jobs agreements Sectoral programs
Managed tax incentives

Source: Author’s figure.

of research has claimed that the latter situation, dubbed “polarization,”

characterizes our future.
The polarization story emerged as an explanation for the apparent
failure of earlier models linking education to inequality. These models
worked well in explaining the patterns in the 1980s, but significant prob-
lems began to emerge in the 1990s. People with a high school degree or
less have held their own relative to the median wage, a reversal of the pat-
tern in the 1980s, when the bottom fell out of the high school labor market.
In addition, however, and very problematic for the education story, is that
the wages of those with just a college degree (as opposed to an advanced
degree) have stagnated.3
The explanation that emerged was grounded in ideas about the impact
of computer technologies.4 The argument was that computers eliminate
routine work that can be adequately captured by algorithms and that these
tend to be middle-skilled jobs (for example, clerical work or assembly-
line work). What is left is a growing demand for service work at the bot-
tom, which cannot be computerized (think washing floors or caring for
the elderly) and highly skilled work at the top (think senior managers
or investment bankers). Hence, jobs grow at the bottom and the top of
the skill distribution, wages at the bottom hold their own relative to the
middle, and wages at the top pull away from the middle.
There is certainly some truth to this story. In particular, service-sector -1
jobs are growing as a proportion of the economy, although it should also 0
+1

13502-07_CH06-2ndPgs.indd 167 12/10/13 8:33 AM

 168    What Works for Workers?

Table 6.1  Replacement Hiring, 2010 to 2020

Net Change in Openings Due
Employment, to Replacement,
Occupation 2010 to 2020 2010 to 2020
Installation, maintenance, repair +800,200 +1,225,600
Production +356,800 +1,874,400
Entire economy +20,468,900 +34,318,500
Source: Author’s adaptation of U.S. Department of Labor, Bureau of Labor Statistics (2012).

be noted that this growth does not prove the argument about comput-
ers. The demand for service occupations could be growing for numerous
reasons, such as the aging of the population and the changing demand for
services. It also seems a bit awkward to argue that people with a college
degree—who reaped huge wage gains in the 1980s and early 1990s—are
suddenly doing routine work and hence experiencing stagnant earnings.
Nonetheless, whatever one thinks of the technological version of the
polarization idea, it is simply not the case that there will be few new job
openings for middle-skill work (Holzer and Lerman 2009). According to
projections by the U.S. Bureau of Labor Statistics (BLS), only 23 percent of all
job openings projected between 2008 and 2018 will require a college degree
or more (Lacey and Wright 2009). Examples of good jobs that are attainable
with less than a four-year degree include numerous health care technician
jobs, skilled blue-collar work, computer support jobs, truck drivers, bio-
technology technicians, and so on. Other projections suggest that there will
be a substantial number of new jobs available for skilled blue-collar work
(machine maintenance, technicians, repair jobs, and the like) and that these
too require education in the “some college” or associate’s degree range.
The continued importance of middle-skill jobs is also based on projected
hiring to replace the retiring generation of baby boomers. The importance
of this is apparent in table 6.1: even in blue-collar jobs, which in net terms
will grow very slowly or actually decline, there will be considerable hiring
going forward. These projections may be delayed by deferred retirements
caused by the Great Recession, but they cannot be avoided. The bottom line
is that middle-skill openings will be accessible to career ladder initiatives.

The Substance of Programs

Career ladder programs, and the training that accompanies these efforts,
-1 are important in large measure because low-wage workers typically receive
0 very little training from their employers. Good data on training inside
+1

13502-07_CH06-2ndPgs.indd 168 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   169

Table 6.2  Employees Receiving Employer-Provided Training,

1995 and 2001
1995 2001
High school degree or less 22.2% 19.8%
Some college 44.1 44.5
BA degree or higher 50.0 54.1
Lowest earnings quintile 27.1 22.0
Next earnings quintile 31.3 33.7
Next highest earnings quintile 42.1 46.7
Highest earnings quintile 49.3 48.8
Source: Author’s adaptation of Mikelson and Nightingale (2004).

firms are hard to find, but table 6.2 tells the basic story. Employees with
low levels of education receive far less training than do their better-
educated colleagues, and in the same vein, low-paid employees receive
much less training than do better-paid workers. These practices represent
savings for employers and to some extent may be reasonable in that work-
ers with low-skill jobs presumably need less training to do their work than
do employees with more complex tasks. However, the paucity of training
also reflects a state of mind—that some workers simply cannot learn and
that improvements in the quality of their work or in their career trajec-
tories are not feasible. Typical is the observation of an evaluation team
that interviewed firms participating in a set of activities organized by the
National Association of Manufacturers (NAM) and aimed at helping them
upgrade their production practices: “Employers knew they had problems
of absenteeism, turnover, skill deficiencies, and low productivity but
accepted them fatalistically as ‘facts of life,’ feeling that not much could be
done about them” (Whiting 2005, 19).
Program models, termed “intermediaries” or “sectoral programs,” vary
along a number of dimensions: target groups, the auspices under which
the programs are managed, and the nature of the services that are pro-
vided. What is striking, however, is that they have also coalesced around a
common set of what might be termed “best practices” elements. It is these
elements that move these innovations beyond the traditional approach
of job training programs and make these new programs distinctive and
important.
The most important of these elements is an understanding that employ-
ment and training efforts work best if they connect effectively to both sides
of the labor market—that is, to employers as well as to clients. To accom- -1
plish this, the programs work hard to become knowledgeable about the 0
+1

13502-07_CH06-2ndPgs.indd 169 12/10/13 8:33 AM

 170    What Works for Workers?

human resource needs of their target group of firms and, in some cases,
also seek to understand how they can contribute to the competitive suc-
cess of the firms. In short, these programs attempt to appeal to firms as a
business proposition, not as a charity, public relations, or welfare effort.
The second feature is that best practice programs make substantial
investments in their clients. They reject the quick and dirty training, short-
term investments, and simple job search assistance models that character-
ize much of the traditional employment and training system. The new
programs’ investments take a variety of forms: long training periods,
more sustained involvement with firms, and higher levels of support to
clients in terms of financial assistance and counseling.
There are, however, important differences across the programs. Many
programs rely on community colleges for training and focus their own
efforts on supporting the trainees and working with employers. Other
programs, albeit a minority, have invested in their own training capac-
ity. Program auspices vary and include community groups, unions,
community colleges, employer organizations, and state governments. The
programs also vary in the extent to which they work with incumbent
workers versus job-seekers.
Programs that work with firms to improve the quality of the jobs focus
on two main strategies. The first is redesigning jobs to create career ladders
or to enlarge the content of existing jobs. These strategies imply working
with management to restructure work and provide training and support to
employees so that they can meet the additional responsibilities and move
up in the workplace. The second, simpler approach is to encourage firms
to increase the quantity of training that they make available to lower-paid
employees in the hope that this will lead to career advancement.

Programs in Action
An anchor of the Boston economy is the presence of world-class hospitals
that, taken together, are the largest source of jobs in the region. Add to
these hospitals the numerous nursing homes and other health facilities
and the importance of this sector to the region is obvious. Researchers,
doctors, and highly skilled nurses are central to delivering quality health
care and world-class innovation, but they are not alone. Just as is true
throughout the country, a large low-paid workforce labors at the core of
this industry. These are the kitchen staff, the orderlies, the cleaners, the
certified nursing assistants (CNAs) and patient care technicians (PCTs),
the laundry workers, and many others without whom the system would
-1 break down. These people come from all parts of the world and speak
0 different languages, but they do have some things in common. They work
+1

13502-07_CH06-2ndPgs.indd 170 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   171

very hard, and they are poorly paid. Some of the very best examples of
what can be done in cooperation with employers to improve the quality of
jobs can be found in health care.
In the spring of 2010, a graduation was held in the auditorium of Chil-
dren’s Hospital for employees from several hospitals who had just finished
a program supported by the employers and by several foundations and
managed by Jewish Vocational Services (JVS). Some had completed the
final step in their English for speakers of other languages (ESOL) program,
and others had completed a college bridge program aimed at getting
them ready to enter a community college. Attending were the employees,
their families, the program staff, and hospital managers. It was a happy
and proud event, and the most moving talks were given by employees,
who spoke about how hard they had worked, how they could not have
achieved what they had without the program’s support, and the kinds of
jobs or education to which they now aspired. For these people, it was clear
that bad jobs were being transformed into better ones.
Jewish Vocational Services is a large agency that operates a wide range
of education and training programs in the Boston area. It works with the
Russian Jewish immigrant community to facilitate their settling in the area.
It has a program with CVS Pharmacy to help people from the community
obtain entry-level sales jobs and, for the lucky and ambitious, move into
positions like pharmacy technicians. JVS is also beginning to work with
a local community organization with roots in the Haitian community to
establish a college preparatory program for adults. But its largest effort is
aimed at health care employers. The graduation described here was for
employees in multiple hospitals in the area, but JVS also works with nurs-
ing homes, which have an even higher proportion of low-wage workers
because of the nature of the business (largely daily care and maintenance
of elderly residents).
All of the organizations with which JVS collaborates speak highly of
the quality of the agency’s instruction, but our point goes beyond this.
In a variety of ways, JVS has enhanced what might be termed the “edu-
cation and training” culture within the employer workplaces. In part it
accomplishes this by encouraging small but significant changes in poli-
cies, such as when it worked with Children’s Hospital to enable prepay-
ment of tuition assistance, a change that opened up opportunities for
people whose family budgets could not accommodate tuition bills. JVS
also hosts monthly meetings of the human resources staff of all its client
employers in which it diffuses best practices. In some organizations, JVS
has innovated in pedagogy—for example, by shifting its ESOL teaching
away from chalk-and-talk and toward experiential activities. This innova- -1
tion has led to greater success rates, which in turn have encouraged the 0
+1

13502-07_CH06-2ndPgs.indd 171 12/10/13 8:33 AM

 172    What Works for Workers?

organizations to expand the amount of training they give their employees.

In addition, because JVS is an important actor that operates at some scale,
it can effectively link employers to other actors, such as community col-
leges or state funding agencies. In short, our interviews with these health
care providers provided convincing testimony that the amount of training
they provide to their employees has increased owing to their relationships
with JVS.
JVS is not alone in working to improve job quality in the health care
industry. Several hospitals and nursing homes in Philadelphia are part
of a very large career ladder and training program rooted in a collective
bargaining agreement with Local 1199C. The program is funded by a
contribution from the employers set at 1.5 percent of the wage bill and is
organized and managed by the union in cooperation with the employers.
Unlike many career ladder efforts, this one is large enough to merit its
own facility and is housed in a cheerful building in the city’s downtown.
More than eleven thousand employees pass annually through this pro-
gram seeking services that range from the simple processing of tuition
assistance payments to assessment—such as General Educational Devel-
opment (GED) testing—and taking a broad range of classes. Over three
thousand employees are in education or training programs. Employees in
low-level positions—cleaners, orderlies, licensed practical nurses (LPNs)
who wish to become registered nurses (RNs), and so on—are given some
released time and tuition assistance by their employer, and the counselors
and faculty at the program assist them in meeting the education require-
ments they need to move up.
One woman told us that she had wanted to be a nurse but was discour-
aged by a college counselor. She dropped out of school, passed through a
series of casual jobs, and then landed employment as a nurse’s aide. She
connected with the program and entered LPN training, achieved that, and
is now in an RN program part-time while working. We also met a young
man who was, in his words, “educated on the street.” He heard about the
assessment center, came in, did the foundation courses, became a CNA,
and is now in an LPN program. His friends told us that during a major
snowstorm he had walked three miles to get to work because he felt he
had a commitment to his job. Another woman we met was a ninth-grade
dropout and entered via the GED program.
Health care providers are an attractive venue for training and career
ladder programs because they provide many middle-level job opportuni-
ties that low-wage workers can aspire to and because they are more vul-
nerable than many other employers to public pressure to play ball. That
-1 said, there have been significant initiatives in other industries, including
0 several in hotels and in manufacturing.
+1

13502-07_CH06-2ndPgs.indd 172 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   173

Hotels represent a greater challenge than health care because of the

nature of the jobs. There is a large low-wage base of room cleaners as
well as laundry and kitchen workers. The problem is that there are pro-
portionally fewer jobs in the middle level of the organization to which
these workers can aspire. Nonetheless, because there are so many low-
wage workers employed in hotels, a number of efforts have been made
to provide training opportunities for incumbent workers and open career
pathways for them.
One flagship hotel program in Las Vegas is the product of a collective
bargaining agreement between the “Strip” hotels and the Culinary Work-
ers Union, local 226 of UNITE HERE. The contract with the Strip hotels
funds a large union-run training center that commits the hotels to using it
as a hiring source for good middle-level jobs in kitchens and in customer-
facing functions. We interviewed employers, trainers, and workers at this
center just as the recession was beginning to bite hard and hiring had
slowed down considerably. Nonetheless, it was clear that the center was
successful in opening mobility pathways for employees. At the time of
our visit, the center trained about three thousand employees per year in a
wide range of skills. Our interviews with employees provided numerous
examples of upward mobility.
Is this effort unique, however, in that its existence rests on the special
circumstances of Las Vegas and the relationship of the union to large
employers in that city? Another union-based program, this one in Boston,
provides some reassurance on this score.
The Boston hotels program was organized by the local union UNITE
HERE Local 26, which represents over half of the eleven thousand hotel
workers in Boston (Mikelson and Nightingale 2004).5 In 2004 the union
created an on-call banquet server training program in which longtime
servers trained other union members so that they could pick up extra
shifts during busy periods. The union negotiated with the hotels to ensure
that the spots would first be offered to members who had gone through
the training. Once the banquet training was established, the union worked
with hotel managers to determine whether there were other needs that
a union-run training program could fill. A training program opened to
union members in 2006 and again in 2008 with additional funds from
the state Workforce Competitiveness Trust Fund led to the formation of
the Hotel Training Workforce Partnership, which has provided training
to people seeking entry into jobs at union hotels as well as to incumbent
workers seeking training in general skills such as computer and English
language skills. The union worked with the hotels to develop a profes-
sional busser/food server certificate. Additionally, the program offers -1
certification courses in food safety and the handling of alcohol. Across 0
+1

13502-07_CH06-2ndPgs.indd 173 12/10/13 8:33 AM

 174    What Works for Workers?

all of its components, the program served 267 union members in 2007
and 416 in 2008.
The trainings and certificates combined with guidance from a career
coach are intended to create several career tracks within union hotels.
Career pathways were developed by program managers working jointly
with the union and hotel managers to identify competencies and evalu-
ation criteria for different positions within three departments: food and
beverage, guest services, and culinary.
These career pathways are relatively new, and it is too soon to tell
whether they have made an impact on the hotels’ promotion practices. That
said, the program’s atmospherics were good. All of the human resources
managers we spoke with felt that the program has been responsive to
the needs of the hotels. One manager reported that it had “been a win all
around,” with no unforeseen costs. No one felt that it was time-consuming
to work with the program. “The relationship has been far better than any
of us could have imagined,” said one manager.
Programs for incumbent workers in manufacturing have a different feel
than those in hotels or in health care. The focus is less on upward mobility
and more on upgrading the skills of incumbent workers and providing
technical assistance to firms so that they can operate more efficiently. This
latter emphasis is driven by the difficult economic circumstances of manu-
facturing enterprises, which are much more at risk than health care pro-
viders or hotels. Another key difference is that manufacturing programs
focus much more on small and medium-size firms that lack the internal
capacity to think systematically about their human resource needs.
An example of a sustained effort to work with small manufacturers to
improve the training and advancement opportunities of low-wage employ-
ees was the Retention and Advancement Demonstration Program, which
was managed nationally between 2001 and 2004 by the National Associa-
tion of Manufacturers and locally in three states by state-level employers’
associations in Connecticut, Michigan, and Pennsylvania (Whiting 2005).
The associations that worked with the employers were consistently
struck by the poor quality and stressed-out nature of the human resources
(HR) systems they encountered and by the limited expectations that HR
staff and supervisors held out for their entry-level or low-wage workers.
An important part of the effort was an attempt to change both these expec-
tations and these conditions. With respect to the HR systems, a staff person
in one of the business associations commented, “Even though company
managers usually expressed their top priority as skills upgrading, we usu-
ally had to work our way toward the frontline workforce, fixing up various
-1 HR systems along the way. It would do little good, and probably be impos-
0 sible anyway, to mount effective training initiatives if the underlying HR
+1

13502-07_CH06-2ndPgs.indd 174 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   175

systems and supervisory practices wouldn’t support or take advantage of

such efforts.” This observation speaks directly to the suboptimal nature
of the operation of many firms and the scope for improvement. This is a
central point because it shows that there is room for productivity gains that
benefit low-wage employees as well as employers.
Once the HR systems were in place, the local associations either pro-
vided or brokered training. The topics included business writing, blue-
print reading, quality control, customer relations and customer service,
basic plant metrics, statistical process control, laser technology, plastics
molding, machinist skills, lean manufacturing, continuous improvement,
Adobe Photoshop and Illustrator, process certification, basic computer
skills, and English as a second language (ESL).

Performance and Challenges

What is the evidence that intermediaries are successful? Observers tend
to be positive, but the number of careful evaluations is limited. For the
JVS health care program, internal data through December 2011 show that
384 incumbent workers received services, of whom 124 enrolled in post-
secondary education and 43 completed a postsecondary degree. Of these
employees, 220 received pay increases and 61 received promotions.
Two major national random assignment evaluations are currently under
way (one funded by the Mott Foundation and the other by the U.S. Depart-
ment of Health and Human Services), but for now we have to be content
with a few careful studies of specific programs. That said, the evidence
is positive. One example is the random assignment evaluation of three
sectoral programs that provided entry-level training in specific industries
(in this case, health care, manufacturing, and information technology) for
people who experienced multiple barriers to employment and who aver-
aged less than $10,000 annual earnings prior to the program (Maguire
et al. 2010). After completion of the program, the treatment group earned
over $4,000 more than the control group.
Another powerful example is Project QUEST in San Antonio, Texas.
This program has several features that are consistent with what has come
to be seen as best practice. It works with employers to identify future job
needs and often involves them in designing training; it provides a good
deal of support to trainees in the form of counseling and small amounts
of financial assistance; and it is relatively long-term and hence makes real
investments in people. One participant whom we interviewed said that
“they believed in me and made me feel ten feet tall,” while another said
that “there was opportunity at a time when I needed a lifeline.” Formal -1
evaluation results support these observations: participants gained nearly 0
+1

13502-07_CH06-2ndPgs.indd 175 12/10/13 8:33 AM

 176    What Works for Workers?

$5,000 in annual income relative to a comparison group (Osterman and

Lautsch 1998). Similar outcomes were found for a sister program in Austin
called Capital Idea (King, Carter Smith, and Schroeder 2009).
Several efforts in manufacturing programs were evaluated, at least
through careful narratives if not formal random assignment. The National
Association of Manufacturers program described earlier involved one
thousand employees, and according to the evaluation report, a total of
twenty-eight salary increases and fourteen promotions were attributed to
the program. These low outcomes numbers were somewhat offset by the
evaluator’s opinion that the program improved the overall operation of the
firms and hence held out the prospect of more employee gains going for-
ward. This view was supported by numerous comments by the employ-
ers, who praised the effort and pointed to the gains that they experienced.
Although these observations are optimistic, it is also important to acknowl-
edge that measureable gains to employees after an intervention that lasted
three full years were very limited.
A second manufacturing assessment comes from a program that began
in 2002 in Massachusetts and was aimed at working with firms to increase
training and develop career paths for low-skill and low-wage incumbent
workers in three industries: health care, financial services, and manufac-
turing (FutureWorks 2004). Over two thousand employees were involved,
with a bit over 40 percent in manufacturing. The program devoted sub-
stantial resources to working with employers to design career pathways
and provide training to employees. As the evaluation noted, “With
its emphasis on incumbent workers, career pathways, integrated curri-
cula and employer involvement, [the initiative] incorporated new ‘best
practices’ of workforce development into program design.” Employers
displayed very little interest in developing career ladders and, when the
program staff laid out possible pathways, very little interest in implement-
ing them. The evaluators commented that

it remains unclear whether limited demand for career path models across
industry sectors is due to lack of information (i.e. employers are simply unfa-
miliar with the concept and need better/more information about career path
models), lack of time and resources (i.e. employers don’t have the internal
resources to develop and implement the approach) or . . . employer percep-
tions regarding entry-level workers (i.e. employers have difficulty viewing
entry-level workers as future skilled labor). (FutureWorks 2004, 28)

-1 The experience was more positive with respect to training. Both employ-
0 ers and employees were happy to receive additional training resources and
+1

13502-07_CH06-2ndPgs.indd 176 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   177

to participate in the programs. It turned out that the level of basic skills
needs was considerably larger than expected, and in the end over half of all
training resources went into ESL and other basic skills subjects (as opposed
to training more directly aimed at job-related skills). The implication was
that even if career paths were created, there was going to be a long haul
involved in moving people up through them. In addition, interviews with
employees showed that many of them were interested in the ESOL and
other basic skills training as a pathway to improving the quality of their
lives and their self-confidence rather than as a way to advance their career.
Taken as a whole, these evaluations should be seen as “existence proofs”
that well-designed programs that work with employers can be effective,
although it is also clear that not all efforts succeed. But it should be remem-
bered that there is a distribution of outcomes for training programs, as
with other policies, and too often the discussion ignores evidence that
success is possible. Rather than giving up, we should learn lessons from
best practices and aspire toward these. This is what has happened in the
charter school debate—a broad range of advocates focus on best practice
cases rather than on the outcomes in the average program—and there is
no reason why the same attitude should not prevail for training low-wage
employees.

Challenges
A core challenge facing intermediary programs is obtaining employer
buy-in. Why should firms want to participate in these programs? The
health care sector provides the clearest case for participation, and hence it
is not surprising that most programs are found in this sector. Health care
providers suffer from high turnover and labor shortages in some of the
technician positions that are often targets of these programs. So employers
should benefit from a higher level of commitment and effort on the part
of their employees, as well as from a lower turnover rate and the associ-
ated reduced costs of recruitment. At the same time, health care providers
are vulnerable to pressure to improve jobs. This is obvious in the case of
employers with union contracts but is also true more generally. Hospitals
and other providers are quasi-public in the sense that even private ones
rely very heavily on public funding and hence are sensitive to pressure.
Their reliance on numerous regulatory decisions also helps make them
responsive to these programs. In addition, the shape of the job structure
means that there are multiple levels of employment—for example, numer-
ous technician jobs—that represent reasonable targets for the upward
advancement of low-wage workers. For these reasons, more career ladder -1
programs can be found in health care than in any other industry. 0
+1

13502-07_CH06-2ndPgs.indd 177 12/10/13 8:33 AM

 178    What Works for Workers?

All this said, there has been resistance, arising from broad-based mana-
gerial attitudes. The twin problems are skepticism about training and the
players in the organization—senior management, the human resources
department, program operators, and line supervisors—often not being on
the same page.
An example of managerial skepticism emerged in a conversation with
the head of a nursing home that was part of a chain. This leader worked
with the Philadelphia 1199C program (even though he was non-union);
by creating some career paths, he had reduced turnover of CNAs from
60 percent to 10 percent. Yet despite this success, he was unable to con-
vince his colleagues, the leaders of other nursing homes in the organiza-
tion, to participate. He attributed this failure to inertia and to a lack of
belief in training for this population of employees.
Within the larger non-union hospitals, the sources of resistance tend to
be found in the HR departments and among some line supervisors. The
advocates are senior management, who have a strong interest in com-
munity relations, and the program staff. The HR staff, on the other hand,
are often committed to their own routines of recruitment and assessment,
and supervisors are focused on what is easiest in terms of staffing (which
is often hiring from the outside) as opposed to creating opportunities for
lower-level employees to move up. The puzzle is why senior manage-
ment does not simply insist on cooperation and execution, but the answer
lies in the multiple pressures and interests of top management. While
these leaders appear to have a genuine interest in the programs, they also
confront a myriad of other problems, and forcing their middle manag-
ers out of their routines in order to create career ladders or to expand
training opportunities is often seen as relatively low-priority and disrup-
tive, no matter how much the top management likes the idea in principle.
Hence, the programs remain relatively small-scale in the larger organiza-
tional context.
An additional challenge facing these programs stems from a hard fact
of life: it is difficult for many employees to obtain the education and skills
it takes to move up job ladders in hospitals. Virtually all of the target jobs
require at least a community college–level certificate, and many require a
two-year degree. Set against this is the unfortunate reality that many, if not
most, of the employees with aspirations to move out of low-wage jobs have
something like an eighth-grade educational attainment, and many also face
challenges with English. In addition, employees’ family circumstances can
pose significant obstacles. Put in terms of our earlier discussion, there are
clear human capital challenges as well as organizational and structural bar-
-1 riers, and it is naive to deny or ignore this. As a consequence of these barri-
0 ers, the path from, say, working as a Certified Nursing Assistant to an LPN
+1

13502-07_CH06-2ndPgs.indd 178 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   179

or a technician job can take five or more years. This is a long haul, and many
do not make it.
In the study of the Massachusetts manufacturing program mentioned
earlier, a final, and somewhat discouraging, finding was that although
employers expressed satisfaction with the training, they also explicitly
stated that they were satisfied in large part because it was costless. The
firms did not continue making the training available when the subsidy
ended. The more positive side was that as long as the training was subsi-
dized, employers were willing to let public programs through their doors,
something that is not always easy to accomplish. Similar efforts in other
parts of the country have also demonstrated that involving employers in
subsidized training interventions is quite feasible (Pindus et al. 2004).
One interpretation of the foregoing is that the career ladder idea is flawed.
The basis for this view is that there is very little evidence in any of the cases
that new job paths have been created that operate at any scale. That is, firms
have not fundamentally reorganized their promotion ladders in order to
create new rungs (that is, new jobs or reconfigured tasks) that enable low-
wage workers to more easily move up. This would be a possible reading,
but it is too pessimistic: even though ladders have not been reshaped, the
programs do indeed demonstrate that employers can be encouraged, incen-
tivized, and supported to increase the amount of training they provide to
their incumbent workforce. This is clear from the work of JVS in Boston,
1199C in Philadelphia, and the several hotel projects we reviewed, and to
a lesser extent it can be seen in the manufacturing examples as well. This is
important for two reasons. First, as we have seen, one of the markers of bad
jobs is that they provide little training. We saw this in the data that dem-
onstrated that low-wage workers receive far less firm-based training than
do their more advantaged colleagues. Increasing training is also important
because it enables employees to move up existing job paths. Even if the job
paths remain the same, more training can improve the prospects of those at
the bottom, and in this sense the nature of low-level jobs changes. Instead of
being dead-end, they now lead somewhere.
The path to progress is not easy. The internal politics of organizations can
be problematic. Multiple organizational actors—top executives, HR staff,
line supervisors, and staff charged with running the actual programs—
have different priorities, and these are not always congruent. We also saw
that small employers often lack the managerial or human resources staff
capacity to take full advantage of the programs. On top of all this, these
efforts take a long time. With the difficulties faced by low-wage workers,
in terms of both skills and family issues, it is a long haul to get the training
needed and to move up the job ladder. It is naive to expect easy and rapid -1
improvements. 0
+1

13502-07_CH06-2ndPgs.indd 179 12/10/13 8:33 AM

 180    What Works for Workers?

All this said, there are more positive lessons. In virtually all cases, employ-
ees are eager participants. Their level of motivation and desire to improve
themselves is very strong and provides a strong basis for moving forward.
Finally, it does seem clear that well-designed programs can help change the
culture of an organization and move it toward one in which the training and
education of low-wage workers is seen as a good way of doing business. This
is an important step forward in improving the quality of these jobs.

An Aside on Community Colleges

Many of the career ladder programs use community colleges for skill
training. Beyond this, it is important to recognize that community colleges
are the most important source of skill acquisition for low-wage adults.
There are roughly 1,200 community colleges that enroll over 7 million stu-
dents in credit-bearing courses.6 We are not sure how many students are
enrolled in noncredit community college courses—studying topics that
range from the directly vocational to the recreational—because not all
states keep data on these enrollments, but experts agree that the numbers
are very close to those in credit courses. Hence, in the range of 12 million
Americans are enrolled in community colleges. Among students who are
enrolled for credit, most are in degree programs, but a substantial minor-
ity seek certificates.
Public community college students do not resemble the traditional
image of a college student. Nearly 40 percent are over age twenty-four,
and 60 percent attend part-time. Indeed, the rhetoric regarding the dimin-
ishing importance of the traditional college student is really about com-
munity college students. By contrast, among undergraduates in four-year
institutions, 79.5 percent attend full-time, and about 70 percent are under
age twenty-four (National Center for Education Statistics 2009, table 1).
Community college students are more likely to be minority, are more likely
to be self-supporting, and are more likely to be first-generation college
students (Kazis 2002).
For students who obtain a credential, either a certificate or an associate’s
degree, community colleges perform well and are an excellent investment.
The first widely noted research on rates of return to community college cre-
dentials reported positive results (Kain and Rouse 1995), and more recent
research has updated these findings while managing to control for a large
range of personal and family variables (Marcotte et al. 2005).7 The rates
of return range from 13 percent for men who obtain an associate’s degree
to a remarkable 38.9 percent for women. In general the results are more
-1 robust for women across all specifications, but for both genders the overall
0 positive message is clear for those who manage to obtain a credential.
+1

13502-07_CH06-2ndPgs.indd 180 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   181

Thus far the news has been good. However, when we ask what pro-
portion of students who enroll in community college obtain a degree or
certificate, or even accomplish a full year of attendance, the picture dark-
ens considerably. Although there is controversy about the precise failure
rates, all agree that they are much too high.8 This failure rate is without
question the greatest challenge confronting community colleges.
It is clear from this discussion that community colleges by dint of their
scale and the nature of the students who enroll are central training institu-
tions for the people who are at the core of this chapter’s interest. It is also
clear that, as shown by the gains achieved by people who obtain com-
munity college credentials, these institutions hold considerable promise.
All this said, the high rates of failure point to the need to take significant
steps to improve these institutions, and the question of how to do so is
addressed in the final section.

Conclusion
As noted at the beginning of this chapter, it is important to understand
that a serious effort to reduce the prevalence of low-wage work will
require a range of initiatives of which career ladders and training are only
one component. Nevertheless, career ladders are certainly worth pursu-
ing. But how do we make them more effective? And what more do we
need to know about them?
Improving community college performance is obviously one crucial
step. Important experiments are under way to simplify the choices fac-
ing students and restructure remedial education so that those choices are
both faster and better integrated into the credit curriculum. In addition,
despite their importance, community colleges receive far less funding
than do four-year schools, and the gap cannot be fully explained by the
broader mission of the better-funded institutions. This low level of fund-
ing for community colleges has consequences in terms of the prevalence
of part-time faculty and the absence of significant counseling and support
functions.
Resources are in fact a more general concern. To date, a great deal of
intermediary and career ladder funding as well as programmatic ini-
tiatives for career ladder programs have come from foundations. The
federal government has played a role—for example, resources in the
American Recovery and Reinvestment Act (ARRA) of 2009 were set
aside for programs aimed at careers in green jobs—but in general federal
funding has been inadequate and declining. U.S. Department of Labor
Workforce Investment Act (WIA) funding has declined since 2004 and is -1
at major risk, owing to the current budgetary and political difficulties. It 0
+1

13502-07_CH06-2ndPgs.indd 181 12/10/13 8:33 AM

 182    What Works for Workers?

is unreasonable to assume that foundations can continue to be a major

source of support, and in any case, they will never be able to provide
resources at scale. The uneven and declining federal commitment is a
source of real concern.
There are also important issues regarding how best to structure support
for career ladder programs. As described earlier, in some firms the notion
of creating new pathways for upward mobility makes sense, while in
other situations the more realistic objective would be to increase employer
investment in training for existing career ladders. Indeed, inadequate lev-
els of employer training for low-wage workers is a major challenge. This
points in the direction of designing matching programs, and perhaps tax
incentives, to stimulate additional training by firms.
We have in hand a set of tools, described earlier in figure 6.1, that we
know are effective in reducing the extent of low-wage employment. This
is encouraging because it means that the problem is not intractable, that
we can make considerable progress should we wish. What is worrying, of
course, is that so little has happened. The political challenges are clearly
more daunting than are the programmatic ones.

Notes
1. This calculation is based on the Current Population Survey Outgoing Rotation
Group (CPS-ORG). The data are for people age twenty-five to sixty-four in
civilian employment. For more information on how the data are analyzed, see
Osterman and Shulman (2011).
2. One study found that among low-earners over six years, starting in the early
1990s—a period of remarkable economic strength—only 27 percent raised
their income enough to rise consistently above the poverty line for a family of
four (Holzer 2004). A more recent study looked at low-earners in the years 1995
to 2001 and found that 6 percent of those working full-time and 18 percent of
those working part-time in any year had dropped out of the labor force by the
next year. Among those who did stay in the workforce, 40 percent experienced
either a decrease or no change in their earnings (Theodos and Bednarzik 2006.)
Using yet a third data source, this time tracking mobility from 2001 to 2003,
researchers found that 44 percent of the employees at poverty wages in 2001
had no better wages in 2003; moreover, an additional 22 percent were not even
employed (Lopreste et al. 2009).
3. Among working adults in the census ORG data between 2000 and 2009, the
hourly wage of those with a college degree increased by a total of 0.3 per-
cent, while the hourly wage of those with only a high school degree grew
-1 by 1.9 percent and the hourly wage of those with a graduate degree grew
0 by 2.7 percent.
+1

13502-07_CH06-2ndPgs.indd 182 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   183

4. For a discussion of the technology story, see Autor, Levy, and Murnane (2003).
For the application of this story to explain recent trends in wages, see Autor,
Katz, and Kearney (2008); see also Autor (2010).
5. The account in this session is based on fieldwork by Elizabeth Chimienti.
6. For the number of community colleges, see American Association of Community
Colleges, “Fast Facts from Our Fact Sheet,” available at: http://www.aacc.nche.
edu/AboutCC/Pages/fastfactsfactsheet.aspx (accessed April 2013). Among com-
munity colleges, 17 percent have enrollment of at least ten thousand, and 12 per-
cent have enrollment of five hundred or less. Twenty-three percent of community
colleges are in California (National Center for Education Statistics 2008, 3).
7. The estimates were for year 2000 wages for students who were in the eighth grade
in 1988 and no longer in school when the earnings data were collected. Because
the data source—the National Educational Longitudinal Survey (NELS)—is
quite rich, the authors were able to control for high school performance as well
as a wide range of parental characteristics. These controls substantially reduce
concerns regarding selection bias in driving the results.
8. The federal government collects data on graduation rates through its Inte-
grated Post-Secondary Data System (IPEDS); according to the most recent fig-
ures, only 22 percent of public community college students who entered in
2005 had obtained a degree or certificate within 150 percent of the expected
time, that is, by 2008. However, the problem with these data is that they refer
only to full-time students, whereas we saw that a strong majority attend
part-time. Another federal source, the Post-Secondary Longitudinal Students
Survey, includes both full- and part-time students. In these data, among stu-
dents who enrolled in the fall of 2003, by June 2006 5.5 percent had obtained
a certificate, 10.0 percent had earned an associate’s degree, 39.8 percent were
still enrolled, and 44.6 percent were no longer enrolled. In other words,
the three-year success rate, as measured by a credential, was an even lower
15.5 percent, presumably reflecting worse outcomes for part-time students.
These outcomes are more than a little discouraging. However, many
observers would point out that they are also somewhat unfair. Given the
substantial fraction of part-time students, focusing on a three-year completion
rate may be too stringent. The U.S. Department of Education does not collect
outcomes for a longer enrollment period; however, a recent effort, executed
by Jobs for the Future as part of the Lumina Foundation Achieving the Dream
initiative, did collect detailed outcome data from six states for a six-year period
since enrollment. These data paint a brighter picture than do the three-year
federal figures, but the assessment is still grim. Even assuming that the story
for transfer students has a uniformly happy ending, at best only four out
of ten students reach their goals within six years of enrolling, and in most
states the results are even worse; see National Center for Education Statistics -1
(2010, table 5) and National Center for Education Statistics (2003–2004). 0
+1

13502-07_CH06-2ndPgs.indd 183 12/10/13 8:33 AM

 184    What Works for Workers?

References
Autor, David. 2010. “The Polarization of Job Opportunities in the U.S. Labor
Market: Implications for Employment and Earnings.” Washington, D.C.: Cen-
ter for America Progress (April).
Autor, David, Lawrence F. Katz, and Melissa S. Kearney. 2008. “Trends in U.S.
Wage Inequality: Revising the Revisionists.” Review of Economics and Statistics
90(2, May): 300–323.
Autor, David, Frank Levy, and Richard Murnane. 2003. “The Skill Content of
Recent Technological Change: An Empirical Investigation.” Quarterly Journal of
Economics 118(November): 1279–1333.
FutureWorks. 2004. “Building Essential Skills Through Training (BEST): Final
Evaluation Report.” Boston: The Commonwealth Corporation (September).
Holzer, Harry. 2004. “Encouraging Job Advancement Among Low-Wage Workers:
A New Approach.” Policy Brief 30. Washington, D.C.: Brookings Institution
(May).
Holzer, Harry, and Robert Lerman. 2009. “America’s Forgotten Middle-Skill Jobs.”
Washington, D.C.: Workforce Alliance.
Kain, Thomas, and Cecelia Rouse. 1995. “Labor Market Returns to Two- and Four-
Year Colleges.” American Economic Review 85(3): 600–614.
Kazis, Richard. 2002. “Community Colleges and Low-Income Populations.”
Boston: Jobs for the Future (March).
King, Christopher T., Tara Carter Smith, and Daniel G. Schroeder. 2009. “Evalu-
ating Local Workforce Investments: Results for Short- and Long-Term Train-
ing in Austin (TX).” Austin: University of Texas, LBJ School of Public Affairs,
Ray Marshall Center for the Study of Human Resources. Presented to the 31st
annual research conference of the Association for Public Policy Analysis and
Management (APPAM). Washington, D.C. (November 2009).
Lacey, T. Alan, and Benjamin Wright. 2009. “Occupational Employment Projec-
tions to 2018.” Monthly Labor Review 132(11, November): 82–123.
Lopreste, Pamela, Gregory Acs, Caroline Ratcliffe, and Katie Vinopal. 2009. “Who
Are Low-Wage Workers?” ASPE Research Brief. Washington: U.S. Department
of Health and Human Services, Office of the Assistant Secretary for Planning
and Evaluation (February).
Maguire, Shelia, Joshua Freely, Carol Clymer, Maureen Conway, and Deena
Schwartz. 2010. “Tuning In to Local Labor Markets: Findings from the Sectoral
Employment Study.” Philadelphia: Public/Private Ventures.
Marcotte, David E., Thomas Bailey, Carey Borkoski, and Greg S. Kienzl. 2005. “The
Returns of a Community College Education: Evidence from the National Edu-
cation Longitudinal Survey.” Educational Evaluation and Policy Analysis 27(Sum-
mer): 157–75.
-1 Mikelson, Kelley, and Demetra Nightingale. 2004. “Estimating Public and Private
0 Expenditures on Occupational Training in the United States.” Washington,
+1

13502-07_CH06-2ndPgs.indd 184 12/10/13 8:33 AM

 Career Ladders in the Low-Wage Labor Market   185

D.C.: Urban Institute, for U.S. Department of Labor Employment and Training
Administration (December).
National Center for Education Statistics. 2003–2004. “Beginning Postsecondary
Students Longitudinal Study: First Follow-up.” BPS:04/06.Available at: http://nces.
ed.gov/das/library/tables_listings/showTable2005.asp?popup=true&tableID=
3786&rt= (accessed September 2013).
———. 2008. “Community Colleges: Special Supplement to the Condition of Educa-
tion.” NCES 2008-033. Washington, D.C.: NCES.
———. 2009. Enrollment in Postsecondary Institutions, Fall 2007—First Look. NECS
2009-155. Washington, D.C.: NCES.
———. 2010. Enrollment in Postsecondary Institutions, 2008: First Look. NECS 2010-152.
Washington, D.C.: NCES.
Osterman, Paul, and Brenda Lautsch. 1998. “Changing the Constraints: A Success-
ful Employment and Training Strategy.” In Jobs and Economic Development, ed.
Robert Giloth. Thousand Oaks, Calif.: Sage Publications.
Osterman, Paul, and Beth Shulman. 2011. Good Jobs America: Making Work Better for
Everyone. New York: Russell Sage Foundation.
Pindus, Nancy M., Carolyn O’Brien, Maureen Conway, Conaway Haskins, and
Ida Rademacher. 2004. “Evaluation of the Sectoral Employment Demonstration
Program.” Washington, D.C.: Urban Institute (June).
Theodos, Brett, and Robert Bednarzik. 2006. “Earnings Mobility and Low-Wage
Workers in the United States.” Monthly Labor Review (July): 34–47.
U.S. Department of Labor, Bureau of Labor Statistics. 2012. “Table 1.2, Employ-
ment by Detailed Occupation, 2010 and Projected 2020.” Available at: http://
www.bls.gov/emp/ep_table_102.htm (accessed September 2013).
Whiting, Basil. 2005. “The Retention and Advancement Demonstration Project
(RAD): A ‘Win-Win’ for Manufacturers and Their Workers at Entry and Near-
Entry Levels.” Washington, D.C.: National Association of Manufacturers (NAM),
Manufacturing Institute, Center for Workforce Success (August).
Wider Opportunities for Women. 2011. The Basic Economic Security Tables For the
United States, 2010. Washington, D.C.: Wider Opportunities for Women.
Wilkinson, Richard G., and Kate E. Pickett. 2009. “Income Inequality and Social
Dysfunction.” Annual Review of Sociology 35: 493–511.

-1
0
+1

13502-07_CH06-2ndPgs.indd 185 12/10/13 8:33 AM

 Chapter 7  mployment Subsidies to Firms
E
and Workers: Key Distinctions
Between the Effects of the Work
Opportunity Tax Credit and the
Earned Income Tax Credit

Sarah Hamersma

Classic economic theory suggests that an employment subsidy will

increase the number of jobs and the take-home pay of workers regard-
less of whether it is received by firms or workers, but the targeting and
implementation of each type of subsidy program can differ substantially,
resulting in widely varying outcomes. In this chapter, I examine the key
distinctions between these two styles of subsidies as they have been imple-
mented in the United States, most recently via the Work Opportunity
Tax Credit (WOTC), a firm subsidy, and the Earned Income Tax Credit
(EITC) a worker subsidy. Both programs boast low federal administra-
tive costs relative to typical transfer programs, and both offer the promise
of increased work and income for disadvantaged individuals. However,
despite many shared goals, these two programs have different eligibil-
ity requirements, firm and worker administrative burdens, and payment
schemes. As a result, participation rates in the programs differ, as does
their measured effectiveness in improving outcomes. This chapter synthe-
sizes the existing literature on these findings, suggests possible explana-
tions for the differences in effectiveness, and provides new estimates of
recent participation rates in the expanding Work Opportunity Tax Credit
program.
-1
0
+1
186

13502-08_CH07-2ndPgs.indd 186 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   187

Figure 7.1  Labor Market Effects of a Subsidy

Labor Supply
t
B Labor Supply with
Earned Income Tax Credit
A
Wages

C Labor Demand with Work

Opportunity Tax Credit

Labor Demand

Employment

Source: Author’s illustration.

A Theory of Tax Credit Incidence

Economists model tax credits as negative taxes, allowing the use of general
tax incidence theory to evaluate their predicted effects. Figure 7.1 illustrates
the framework for this theory, with the market equilibrium in the absence
of a tax credit program labeled as point A. An employer tax credit of size t
is expressed as a rightward shift of the labor demand curve, such that at a
given wage a firm is willing to hire additional workers. The resulting equi-
librium, labeled B, indicates an increase in employment and an increase in
wages paid to workers (but a decrease in wages paid by firms, with the dif-
ference reflecting the value of the credit). A worker tax credit is expressed
as a rightward shift of the labor supply curve, such that at a given wage
there are more people willing to work. The resulting equilibrium, labeled
C, indicates an increase in employment and a decrease in wages paid by
firms (but an increase in wages received by workers when the tax credit
value is included in the wage). For a given size of tax credit, the effect on
employment, take-home wage, and firm-paid wage is the same regardless
of whether the tax credit is given to the worker or the firm.
-1
0
+1

13502-08_CH07-2ndPgs.indd 187 12/10/13 8:34 AM

 188    What Works for Workers?

Of course, this model is simplified relative to reality. First, it assumes

that the tax credit applies to all workers in the market. Under the current
worker subsidy program (the Earned Income Tax Credit), the tax credit
applies only to workers with positive but low family earned income, and
it applies to different degrees depending on the level of that income and
the size of the family. The current employer subsidy program (the Work
Opportunity Tax Credit) applies to firms hiring workers who have (typ-
ically) been connected with public assistance programs. Although these
populations surely overlap, neither of them necessarily represents the
whole relevant labor market.
The theory of tax incidence also assumes that the financial aspects of the
programs are the only ones relevant for understanding their likely effects.
It assumes that any party that would financially benefit from a subsidy will
claim it. However, participation in both types of programs is not univer-
sal; employer subsidies in particular have had historically low participa-
tion rates among eligible firms (Hamersma 2003). With the exception of a
model by Stacy Dickert-Conlin and Douglas Holtz-Eakin (2000) that incor-
porates worker stigma, there has been little attempt to model this incomplete
participation.
Finally, this model makes predictions for the consequences of subsi-
dies when markets are in equilibrium. In a time of recession, with sub-
stantial unemployment, it is hard to imagine a worker-side subsidy
promoting much job growth, since it depends on the idea of increasing
the labor supply (which is not helpful if there is already a surplus of
workers). Similarly, if unemployment is very low, we may not find firms
increasing employment in response to a subsidy since there is likely to
be a labor shortage already. Thus, the larger economic climate—and the
political response to that climate—are important for understanding these
programs in context.
This chapter continues with an overview of the existing relevant pro-
grams and then considers how they have played out in the past and may
play out in the future in our broader policy context.

Existing Employment Tax Credits

The Earned Income Tax Credit
The Earned Income Tax Credit (EITC) was signed into law in 1975 under the
Ford administration (in the spirit of earlier proposals developed by the
Nixon administration) and has since grown to be the largest cash assis-
tance program in the country. The credit is applied based on family earned
-1 income and the number of qualified children.1 The credit provides an
0 earnings supplement and an incentive for nonworkers to begin working.
+1

13502-08_CH07-2ndPgs.indd 188 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   189

Figure 7.2  Federal Earned Income Tax Credit Benefits

$5,891 Parent with Three Children

$5,236
Parent with Two Children
Credit

$3,169
Parent with One Child

Nonparent
$475

$0 $13,090 $17,090 $36,920 $45,060

Earnings

Source: Author’s illustration based on Tax Policy Center (2013).

Notes: The numbers labeled on the y-axis represent the maximum credit for each group.
These rates apply to single individuals, with or without children. Taxpayers who are
married filing jointly have higher beginning and ending points of the phaseout range (that
is, the range over which they receive maximum benefits is larger). In 2012 these points were
$5,210 higher (on the x-axis) than those shown in the figure. For details of the parameters
graphed here, see Urban Institute and Brookings Institution, Tax Policy Center, “Tax Facts:
Earned Income Tax Credit Parameters, 1975–2013,” available at: http://www.taxpolicy
center.org/taxfacts/displayafact.cfm?Docid=36 (accessed September 2013).

It does this by subsidizing wages by a large percentage when earnings are

low and then capping and gradually phasing out the subsidy. The top line
on figure 7.2 shows the pattern of the tax credit for a single-mother family
with three children in 2012. Earnings in this case are increased by 45 per-
cent for the first $13,090 of earnings until the maximum credit of $5,891 is
reached. At this point, the mother can still earn more money without los-
ing any benefits. Only when earnings exceed $17,090 does the credit begin
to phase out, at a rate of 21 percent. Those with earnings above $45,060 do
not qualify for the credit. Benefit amounts are smaller for those with fewer
or no children, as shown on the lower lines in figure 7.2.
The EITC is administered by the Internal Revenue Service (IRS). While
the credit could technically (until recently) be claimed smoothly over a
year, most recipients have received it as a lump sum upon filing annual
federal income taxes. The EITC is a refundable credit, so it is possible for -1
filing units to get refund checks that exceed the amount they have paid in 0
+1

13502-08_CH07-2ndPgs.indd 189 12/10/13 8:34 AM

 190    What Works for Workers?

federal income tax. Because of this feature of the program, there are some
individuals who would not otherwise be obligated to file who can benefit
from filing because of the EITC.
Issues of EITC compliance have been a major concern in recent years
(U.S. Treasury Inspector General for Tax Administration 2011). Recent
estimates suggest that about one-fourth of EITC claims are made inap-
propriately. The primary confusion for recipients (and their tax prepar-
ers) seems to be the issue of the appropriate number of children to claim
(Hotz and Scholz 2003). The definition of a “qualifying child” under EITC
includes an age, relationship, and residency test and has not always been
the same as that used for other tax credits (Hamel 2009). The IRS has
engaged in a number of outreach strategies to claimants and tax preparers
to help improve rates of compliance (U.S. Treasury Inspector General for
Tax Administration 2011).
The overall cost of the EITC program has increased substantially over
the years due to both eligibility expansions and benefit increases. Table 7.1
provides the annual number of participants and total cost of the program.
In recent years, the annual cost has been over $55 billion. This far exceeds
the 2009 spending on cash assistance—Temporary Assistance for Needy
Families (TANF)—of about $6 billion and is on par with the 2009 cost of
the Supplemental Nutrition Assistance Program (SNAP), which grew by
42 percent relative to 2008.2 The cost of EITC benefits shown in table 7.1
does not include administrative costs, although these are relatively small
for tax credits relative to transfer programs, for which close to 20 percent
of costs can be administrative (Olson 2011).
The Earned Income Tax Credit has received fairly consistent political
support since its inception, with major expansions enacted in 1986, 1990,
and 1993. V. Joseph Hotz and John Karl Scholz (2003) provide a detailed
discussion of the nature of each of the early expansions. The most recent
changes in the EITC have been a higher subsidy rate for those with three or
more children as well as an increase in the beginning of the phaseout range
for couples filing joint returns (introduced via the American Recovery and
Reinvestment Act of 2009 and extended through 2017 via the American
Taxpayer Relief Act of 2013).3 In addition, the IRS continues to develop out-
reach methods to improve compliance, since consistently poor compliance
(whether real or perceived) could make the EITC less politically palatable
than it has historically been.

The Work Opportunity Tax Credit

-1 The Work Opportunity Tax Credit (WOTC) was introduced in 1996 as
0 part of the Small Business Job Protection Act. The WOTC was designed
+1

13502-08_CH07-2ndPgs.indd 190 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   191

Table 7.1  Earned Income Tax Credit: Number of Recipients and

Amount of Credit, 1975 to 2009
Refunded Average
Number of Total Amount Portions Credit per
Recipient of Credit of Credit Family
Families (in Millions of (in Millions of (in 2009
Year (in Thousands) 2009 Dollars) 2009 Dollars) Dollars)
1975 6,215 $4,984 $3,588 $801
1976 6,473 4,882 3,355 754
1977 5,627 3,989 3,115 708
1978 5,192 3,448 2,635 665
1979 7,135 6,063 4,122 851
1980 6,954 5,170 3,566 745
1981 6,717 4,512 3,016 673
1982 6,395 3,945 2,716 618
1983 7,368 3,866 2,776 482
1984 6,376 3,382 2,399 531
1985 7,432 4,162 2,988 560
1986 7,156 3,932 2,895 550
1987 8,738 6,403 5,532 850
1988 11,148 10,691 7,719 959
1989 11,696 11,408 8,020 976
1990 12,542 12,378 8,642 986
1991 13,665 17,489 12,887 1,280
1992 14,097 19,918 15,226 1,413
1993 15,117 23,064 17,855 1,526
1994 19,017 30,547 24,023 1,607
1995 19,334 36,533 29,316 1,889
1996 19,464 39,407 31,658 2,025
1997 19,391 40,613 32,604 2,094
1998 20,273 42,558 35,761 2,099
1999 19,259 41,073 35,541 2,132
2000 19,277 40,229 34,633 2,086
2001 19,593 40,424 35,176 2,064
2002 21,703 45,546 40,226 2,098
2003 22,024 45,065 39,650 2,046
2004 22,270 45,448 40,084 2,041
2005 22,752 46,579 41,148 2,047
(Table continues on p. 192.) -1
0
+1

13502-08_CH07-2ndPgs.indd 191 12/10/13 8:34 AM

 192    What Works for Workers?

Table 7.1   (Continued)

Refunded Average
Number of Total Amount Portions Credit per
Recipient of Credit of Credit Family
Families (in Millions of (in Millions of (in 2009
Year (in Thousands) 2009 Dollars) 2009 Dollars) Dollars)
2006 23,042 47,228 41,572 2,049
2007 24,584 50,226 43,984 2,043
2008 24,757 50,481 44,096 2,039
2009 27,041 60,932 55,524 2,194
Source: Author’s compilation based on Tax Policy Center (2012).
Note: The nominal version of this table was generated by the Tax Policy Center using Inter-
nal Revenue Service, Statistics of Income Division, “table 1, Individual Income Tax Returns:
Selected Income and Tax Items for Tax Years 1999–2009.” The 2009 estimates are prelim­inary.
I have adjusted by the CPI to convert to 2009 dollars. The nominal table is available at: http://
www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=37&Topic2id=30&Topic3id=39.

to increase access to the labor market for people facing barriers to

employment; in this sense, the legislation was complementary to the
major welfare reform passed in the same year, the Personal Responsibil-
ity and Work Opportunity Reconciliation Act, which was intended to
reduce dependence on cash welfare programs. The WOTC is a tax credit
claimed by firms, with the amount dependent on the number of work-
ers the firm has gotten “certified” as eligible (at the time of hire) and the
number of hours worked by those employees. A similar credit, called the
Welfare-to-Work Credit, was introduced in 1997 and recently rolled into
the WOTC.4
Although the program is not explicitly directed to poor families, most
eligible groups have low income. The two largest groups have histori-
cally been welfare recipients and young food stamp recipients, with other
eligible groups including disability income recipients, residents of disad-
vantaged neighborhoods, low-income ex-felons, vocational rehabilitation
participants, and others.5 Similar to the EITC, the credit increases with
hours worked up to a maximum credit; unlike the EITC, the WOTC is
time-limited to one year per worker. Figure 7.3 shows the pattern of ben-
efits for a firm with a certified worker earning $8 an hour. There is no
cap on the total number of workers a firm can claim each year, though
there is a per-worker dollar-value cap and the total credit cannot exceed
90 percent of a company’s annual income tax liability (Scott 2011). The
-1 largest participating firms claim a significant share of all credits; a study of
0
+1

13502-08_CH07-2ndPgs.indd 192 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   193

Figure 7.3  Work Opportunity Tax Credit Benefit Structure

$2,400
Subsidy Value to
Employer per Hour
(Assuming $8 per
Hour Wage)
40% Subsidy
Credit

$1,280
(Increase of 60%)
$800

$240 25% Subsidy

0 120 400 750

Hours Worked per Worker

Source: Author’s illustration using parameters from U.S. Department of Labor (n.d.).

California and Texas in 1997 and 1999 found that 3 percent of participating
firms accounted for 83 percent of WOTC certifications. This study found
that in 1997 the top 5 percent of firms in terms of size (gross receipts)
claimed two-thirds of all WOTC dollars (U.S. General Accounting Office
2001a). Another study found that temporary help services (THS) firms
make up a disproportionate share of participating firms; THS firms in
Wisconsin made up 26 percent of WOTC applications in 2002 (Hamersma
and Heinrich 2008). This brings up policy concerns about job quality for
WOTC recipients, given the limited legal obligations of THS firms to the
workers they place.6
An important difference between the EITC and WOTC is that the
WOTC is given only when a minimal hours-of-work requirement is
met: workers must remain with the employer for at least 120 hours,
and to reach the maximum subsidy rate the duration needs to exceed
400 hours. The credit is capped for most targeted groups at $2,400 per
worker. Though national data are not available, an analysis of the pop-
ulation of Wisconsin WOTC certifications over a period of two and a
half years indicated that about one-third of certified workers did not -1
0
+1

13502-08_CH07-2ndPgs.indd 193 12/10/13 8:34 AM

 194    What Works for Workers?

reach the 120-hour threshold, and that another one-third were between
120 and 400 hours. Elsewhere (Hamersma 2011) I have suggested that
there is evidence that the hours requirement is one explanation for low
participation in the credit.
Another important difference between the EITC and WOTC is the refund-
ability of the credits. The WOTC, like most tax credits but unlike the EITC,
is not refundable. Firms whose credit eligibility exceeds their tax liabil-
ity do have the option of carrying over the value of the subsidy to future
years, which makes the lack of refundability a bit less relevant, but it does
not overcome the exclusion of nonprofit firms from the program. Low-
income workers in, for instance, charity-funded hospitals would not qualify
the employer for a credit, even as their EITC eligibility is unaffected by the
nature of their employment.
Compliance issues in the WOTC program are very different from
those in the EITC, in large part because the WOTC system of admin-
istration is unique. The WOTC is jointly administered by the U.S.
Department of Labor (working through state-level offices) and the IRS.
Applications for the WOTC are submitted by firms at the time of hire to
the state office, and certifications are granted (or not) by that state office
based on documentation either submitted by the firm or gathered by the
office from government databases. There is a 10 percent required audit
rate of these certifications to assess the accuracy of eligibility determi-
nations (though I am unaware of any reports related to these audits).
The certification or denial, once sent to a firm, marks the completion
of the role of the Department of Labor and grants permission to the
firm to claim this worker on its IRS tax forms the following year. How-
ever, because the credit amount depends on work hours as well, it is
the responsibility of the IRS to assess whether a claim made—even on
behalf of a certified worker—is accurate. To my knowledge, there has
been no public information about IRS auditing related to this concern.
The IRS form submitted by firms, in fact, contains only the aggregate
WOTC claim of the firm, making it impossible for researchers (even if
we were armed with IRS WOTC data, which we are not) to understand
much about compliance.
The lack of compliance concerns with the WOTC seems incongruent
with the substantial attention paid to EITC compliance, but the reason may
be related to the much smaller size of the WOTC program relative to the
EITC. Table 7.2 provides the number of certifications for each year of the
program along with estimates of the tax cost of these certifications. For
most of its history, the WOTC has cost $300 million to $400 million per
-1 year; in very recent years, it has expanded dramatically to just over $1 bil-
0 lion. Much of the latest growth appears to be due to a recent expansion in
+1

13502-08_CH07-2ndPgs.indd 194 12/10/13 8:34 AM

 Table 7.2   Work Opportunity Tax Credit and Welfare-to-Work Certification Patterns, 1997 to 2008
Number of Number Number
Fiscal WOTC of WtW of Total Total FY Cost Distribution of Certifications Across

13502-08_CH07-2ndPgs.indd 195
Year Certifications Certifications Certifications (Million) Target Groups Within WOTC (Dollars)
1997 123,407 — 123,407 $110 60 percent AFDC/TANF, 21 percent food
stamp youth, 19 percent other (Levine
1998)
1998 285,322 46,580 331,902 $185
1999 335,707 104,998 440,705 $305 54 percent AFDC/TANF, 20 percent food
stamp youth, less than 8 percent each for
other groups (U.S. GAO 2001a)
2000 370,835 154,608 525,443 $440
2001 383,357 97,072 480,429 $390
2002 377,310 46,652 423,962 $460
2003 403,243 33,068 436,311 $490 40 percent AFDC/TANF, 27 percent food
stamp youth, 13 percent high-risk youth,
6 percent supplemental security income,
5 percent vocational rehab, 6 percent ex-
felons (Levine 2005)
2004 244,445 15,601 260,046 $340
2005 598,101 32,817 630,918 $230
2006 325,178 13,859 339,037 $290
2007 612,052 21,771 633,964 $450 45 percent food stampa, 28 percent TANF,
8 percent high-risk youth, 7 percent
ex-felons, 6 percent supplemental security
income (Levine 2008)
(Table continues on p. 196.)

12/10/13 8:34 AM
0
-1

+1
 0
-1

+1

13502-08_CH07-2ndPgs.indd 196
Table 7.2   (Continued)
Number of Number Number
Fiscal WOTC of WtW of Total Total FY Cost Distribution of Certifications Across
Year Certifications Certifications Certifications (Million) Target Groups Within WOTC (Dollars)
2008 668,214 24,207 692,421 $570 61 percent food stamp, 14 percent TANF,
11 percent designated community
residentsb, 7 percent ex-felons, 4 percent
supplemental security income, 3 percent
vocational rehab, less than 3 percent each
for other groups (Scott 2011)
2009 702,312 17,502 719,814 $870 74 percent food stamp, 10 percent TANF,
3 percent designated community residents,
6 percent ex-felons, less than 3 percent
each for other groups (Scott 2013)
2010 849,044 65,447 914,491 $1,110 59 percent food stamp, 6 percent TANF,
8 percent designated community residents,
4 percent ex-felons, 18 percent discon-
nected youthc, less than 3 percent each for
other groups (Scott 2013)

12/10/13 8:34 AM
 2011 1,081,158 79,365 1,160,523 $1,110 63 percent food stamp, 5 percent TANF,
6 percent designated community residents,
3 percent ex-felons, 19 percent discon-
nected youth, less than 3 percent each for

13502-08_CH07-2ndPgs.indd 197
other groups (Scott 2013)
2012 820,907 71,407 892,314 $1,130 73 percent food stamp, 6 percent TANF, 6
percent designated community residents,
3 percent ex-felons, 5 percent disconnected
youth, 4 percent veterans, less than 3 per-
cent each for other groups (Scott 2013)
Source: Author’s compilation certification totals for 1997–2007 are from Levine (2008); for 2008–2012, from Scott (2013). Dollar values are from
the U.S. Office of Management and Budget (various years) using the most recent available estimate for each year from 1999 to 2014. The target-
group distribution is reported only in some years, with the appropriate reports cited where relevant.
a
The “food stamp youth” category was expanded to include those up to age thirty-nine hired after January 1, 2007 and thus is renamed “food
stamp” for the remainder of the table.
b
The “high-risk youth” category of eighteen- to twenty-four-year-old enterprise zone, empowerment community, or rural renewal community
residents was renamed “designated community residents” and expanded through thirty-nine-year-olds as of May 25, 2007 (http://www.gpo.
gov/fdsys/pkg/PLAW-110publ28/html/PLAW-110publ28.htm).
c
The “disconnected youth” category was a new temporary target group created for hires during 2009 and 2010. This group included sixteen- to
twenty-four-year-olds who were neither working nor in school in the previous six months and who lacked job skills.

12/10/13 8:34 AM
0
-1

+1
 198    What Works for Workers?

eligibility that changed the “food stamp youth” target group (ages eighteen
to twenty-four) to the “food stamp” group (ages eighteen to thirty-nine),
combined with a recession that has resulted in unprecedented participa-
tion in food stamps. The program also expanded the age group for the
geographically defined “high-risk youth” (and renamed them “designated
community residents”) and added a “disconnected youth” category for
two years, resulting in a large new target group in those years.7 Even in
these recent years, however, the cost of the program is less than 2 percent
that of the EITC and might be considered of second-order importance
when it comes to auditing and compliance.
It could also be the case that less attention is dedicated to WOTC com-
pliance than EITC compliance because of potential backlash from the
large, influential firms that claim the vast majority of WOTC dollars.
The individuals whose EITC claims are challenged are often low-income
workers who are not equipped to appeal such challenges, while large
firms have resources at their disposal and a significant amount of money
at stake. Congressional testimony in favor of WOTC extension from
corporations such as Marriott suggests that concern about the mainte-
nance of WOTC benefits already has the attention of the large firms that
participate.
The political history of the WOTC actually began long before the
program itself. The first large programs for employer tax credits began
in the late 1970s. The New Jobs Tax Credit (NJTC) of 1977 and 1978
provided tax credits to firms for expanding employment by a substan-
tial amount without targeting particular workers. Upon expiration, the
NJTC was replaced by the Targeted Jobs Tax Credit (TJTC), a program
with target groups similar to those of the WOTC. Over the years, issues
of stigma (due to the program’s use of worker vouchers) and limited
evidence of a net employment effect ultimately caused Congress to
allow the credit to expire in 1994 (U.S. Department of Labor, Office of
the Inspector General 1994). Perhaps surprisingly, two years later the
WOTC, which differs only slightly from the TJTC, was introduced and
passed around the same time as welfare reform.8 Although the WOTC
has not faced major political challenges since then, the dynamics of leg-
islation have been more irregular than they have been for the more sol-
idly supported EITC. The WOTC was initially legislated as a temporary
program, and it is typically extended in one- to two-year increments,
sometimes retroactively.9 It has also developed a sort of “patchwork”
structure as Congress authorizes new, narrowly defined target groups
for specific time periods (for example, a Liberty Zone group related
-1 to the terrorist attacks of September 11, 2001, and later a Hurricane
0 Katrina group). Several provisions related to veterans were introduced
+1

13502-08_CH07-2ndPgs.indd 198 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   199

and expanded on November 21, 2011, in the Vow to Hire Heroes Act,
and recently the American Taxpayer Relief Act of 2012 extended the
WOTC through December 31, 2013.

Behavioral Incentives and Effects

of the EITC and the WOTC
Both the EITC and the WOTC generate complicated sets of incentives; some
are by design and some are side effects of other program features. At the
most basic level, each program provides incentives for employment among
disadvantaged workers, one by providing individuals with subsidies for
working and one by providing firms with subsidies for hiring. In theory, as
noted earlier, both programs could generate the same outcomes, but their
distinct structures make this unlikely.
The EITC provides unambiguous, positive work incentives only on
the margin of the decision to work or not; for those already working, the
incentives are less clear and even negative in some parts of the hours-
of-work distribution. In particular, in the phaseout range of the credit a
worker loses some EITC benefits for each additional hour worked, effec-
tively reducing the wage for that hour of work. This phaseout, however,
is a necessary component of a program that provides substantial help at
the bottom; because the EITC is fundamentally an antipoverty program
and not simply a work incentive program, some perverse incentives are
unavoidable.
The WOTC provides firms with an incentive to hire and retain workers,
but there are discontinuities in the benefit mechanism that make this incen-
tive more or less salient at different places in the hours-of-work distribu-
tion illustrated in figure 7.3. The minimum-hours threshold of 120 hours
means that there is no marginal gain per hour of retention if the worker
does not stay for at least 120 hours. If the first threshold is met, the firm
qualifies for a subsidy of 25 percent of wages and thus has an incentive to
keep a worker as long as his or her productivity covers at least 75 percent
of his or her wage.10 This retention incentive becomes much stronger, how-
ever, as a worker approaches 400 hours of work, as the firm’s total subsidy
increases to 40 percent of the worker’s wages if this threshold is met. To be
clear, this is a change not in the marginal subsidy rate but in the total sub-
sidy rate; with the large jump in the value of the subsidy at this point, even
a worker with very low productivity may generate positive returns if the
firm retains him or her until just past the 400-hour mark (for a numerical
example, see Hamersma 2011). Finally, the subsidy cap of $2,400 and the
one-year time limit (for most groups) curtail the subsidy’s incentives rather -1
abruptly, generating an incentive for the churning of qualified workers. 0
+1

13502-08_CH07-2ndPgs.indd 199 12/10/13 8:34 AM

 200    What Works for Workers?

Empirical research on both the EITC and the WOTC has been mixed in
terms of uncovering employment and earnings responses to the work
incentives created by each program.11 There is, however, a consistent find-
ing that the perverse incentives in each program have not caused serious
problems. In the case of the EITC, the research suggests that workers in
the phaseout range of the EITC do not appear to respond to the subsidy by
reducing earnings (Eissa and Hoynes 2006), and in general it appears that
the kink points in the policy are fairly unnoticed by claimants, with the
possible exception of the self-employed (Saez 2010). Even studies focus-
ing on secondary earners do not find large reductions in hours worked
(Eissa and Hoynes 2006; Heim 2007). Some new evidence from Raj Chetty
and Emmanuel Saez (2013) does indicate, however, that workers are more
likely to respond to the work incentives (including negative incentives) of
the EITC when they are given specific information about their place in the
EITC distribution by their tax preparer. Similarly, work on the WOTC has
found neither evidence of firms churning workers whose subsidies have
expired (U.S. General Accounting Office 2001a) nor any evidence that job
separations bunch near the program’s hours thresholds (Hamersma 2011).
A major difference appears in the evidence on positive effects for the
two tax credits. The evidence on the EITC is encouraging: the incentive to
join the workforce appears to have caused sizable increases in labor force
participation among single mothers (for a summary of several studies,
see Eissa and Hoynes 2006). For example, V. Joseph Hotz, Charles Mullin,
and John Karl Scholz (2006) use the growing difference in EITC benefits
to families with one child versus those with two children to identify the
employment effects of the EITC; they find that the EITC increased relative
employment of the latter group by as much as 3.4 percentage points. In
contrast, the WOTC incentive for firms to hire additional disadvantaged
workers does not appear to have taken hold, at least based on the limited
research available. Elsewhere (Hamersma 2008) I have found very little
evidence of an employment effect of the credit in Wisconsin. It appears
that most hires under the program would have been hired anyway and
merely created a financial benefit for firms that claimed the credit. Small
employment effects of the WOTC are consistent with past experience with
the TJTC (Katz 1998).
However, work on these programs has not exclusively examined employ-
ment. Economic theory predicts not just an employment effect but a wage
effect of each program. In the case of the EITC, tax incidence theory tells
us that we should expect to see a reduction in wages due to the new, lower
reservation wage of those who are now willing to enter the labor market
-1 because of the wage supplement; in other words, some of the value of
0 the subsidy passes through to the firm. Similarly, we would expect that
+1

13502-08_CH07-2ndPgs.indd 200 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   201

some of the WOTC subsidy passes through to workers in the form of

higher wages. There is indeed evidence that earnings at WOTC jobs are
higher than we would otherwise predict (Hamersma and Heinrich 2008;
Hamersma 2008), though these earnings benefits seems to be tied to the
particular job rather than following a worker into the future. In this sense,
the WOTC does not appear to provide a stepping-stone to better labor
market outcomes. Work on the wage effects of the EITC suggests that a
10 percent increase in EITC generosity is associated with a 2 percent fall in
wages for workers with only a high school diploma and a 5 percent fall in
wages for high school dropouts—values consistent with most estimates of
labor demand elasticity (Leigh 2010).

At the Foundation: Program Participation

For the EITC and the WOTC to have a meaningful impact on the labor mar-
ket for disadvantaged workers—in either their present form or a modified
form—there must be substantial participation by eligible workers (EITC)
and firms (WOTC). Measuring participation in each of these programs is
a nontrivial task, but even given some uncertainty about participation, it
is clear that the patterns of participation in the two programs are very dif-
ferent. In this section, I detail the measurement issues involved, provide
an overview of the historical patterns in participation, and look at the pro-
posed explanations for these patterns in both programs.

The Earned Income Tax Credit

The total number of EITC claims is publicly available; the numbers shown
in table 7.1 are reported by the Tax Policy Center based on IRS Statistics
of Income data. However, there are two major difficulties in measuring
participation in the EITC. The first is the challenge of identifying the full
set of eligible tax units (the denominator of the participation rate). A typi-
cal approach to estimating the eligible population for a program is the
use of national survey data, and for the EITC the best option seems to
be the March Current Population Survey (specifically, the Annual Social
and Economic Supplement [ASEC]).12 There are a number of difficulties in
identifying the EITC-eligible population in a survey that is not explicitly
designed for that purpose. First, the household and family data in the CPS
must be used to formulate tax units, a nontrivial process. Second, the rules
for qualifying children for the EITC involve a residency requirement, but
(within that) some flexibility in which taxpayers can claim the credit (for
instance, in multigenerational households). This makes it impossible to -1
definitively identify the number of eligible children in each tax unit. 0
+1

13502-08_CH07-2ndPgs.indd 201 12/10/13 8:34 AM

 202    What Works for Workers?

Table 7.3  Earned Income Tax Credit Participation Rate

Estimates, 1990, 1999, and 2005
Tax Year Estimated EITC Participation Rate
1990 80 to 86 percent
1999 75 percent overall;
86 percent with children
2005 75 percent overall;
81 percent with children
Sources: Author’s compilation. For 1990, Scholz (1994); for 1999, General Accounting Office
(2001b); for 2005, Plueger (2009).

Third, citizenship status is not always available or reliable. Finally, the

income variables in the survey must be used to estimate taxable income;
unfortunately, there is a substantial (and increasing) amount of income
imputation in the CPS that makes the income data less reliable (Hirsch
and Schumacher 2004).13
The second challenge of measuring EITC participation is related to proper
interpretation of the number of EITC claims. While one would be tempted
to simply divide the number of EITC claims by the number of eligible tax
units to estimate a participation rate, there is concern that some of the EITC
claims are not in fact made by eligible tax units. If we are interested in the
participation rate of eligible workers, the participants should in fact be eli-
gible. As noted earlier, there is a good deal of controversy about compliance
in the EITC program, with recent estimates suggesting that 23 to 28 per-
cent of fiscal year 2009 claims were made in error, at a cost of $11 billion to
$13 billion (U.S. Treasury Inspector General for Tax Administration 2011).
The IRS is conducting data collection under its National Research Program
that will provide new estimated compliance rates starting in 2012, to be
updated annually from that point.14
A recent study by Dean Plueger (2009) provides participation rate
estimates for the EITC using matched IRS and CPS data and handling as
many of the aforementioned issues as possible. Table 7.3 provides his most
recent estimates, as well as those from prior years from other researchers.
Although no particular set of estimates would claim to be definitive, the
pattern over time is roughly 80 to 85 percent participation among taxpay-
ers with children (with lower aggregate participation in recent years being
driven by low participation among nonparents).15
The explanations for incomplete participation in the EITC are fairly
-1 sensible, though not easily tested. Lower participation among childless
0 eligibles could reflect their lower benefit levels; it is much more costly for
+1

13502-08_CH07-2ndPgs.indd 202 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   203

a family with children to fail to claim the credit. Incomplete participation

among those with children is harder to explain, but is likely to be due at
least in part to nonfiling. Some families who are not required to file an
income tax return because of their income could benefit from the EITC but
may not be aware of the refundability of the credit (U.S. General Account-
ing Office 2001b).

The Work Opportunity Tax Credit

Measuring participation in the Work Opportunity Tax Credit has a distinct
set of challenges relative to the EITC. Absent investigations of compliance
(due in part to a lack of relevant data), estimates of participation rates
must ignore the complication of ineligible recipients. However, the iden-
tification of eligible workers in survey data is incomplete and complex.
It is incomplete in that neither of the data sets that have been used for
this purpose—the March CPS and the (preferred) Survey of Income and
Program Participation (SIPP)—contain the necessary information to iden-
tify more than a few target groups.16 For instance, because both ex-felon
status and detailed geographic location are missing, it is impossible to
consider the size of the ex-offender and designated-community-resident
target groups. Historically, the two groups obtaining the largest number
of certifications have been the welfare and food stamp (or SNAP) groups,
and fortunately, because program participation is available in these data
sets, it is possible to assess participation rates among these two groups.
There are, however, some limitations in identifying eligible workers
even in these groups. First, a fair amount of missing data on welfare and
food stamp participation results in a range of participation rate estimates
rather than point estimates (obtained by imputing either “receipt” or
“nonreceipt” to all missing values to get the widest range of possibilities).
Second, there is the potential for error in linking job-start dates to imputed
WOTC eligibility in that same month; if there is any issue with timing,
we may inaccurately assign eligibility (or ineligibility) of that job for the
WOTC. Third, we cannot observe the nonprofit status of firms, so some
workers who would appear to be eligible could not actually be claimed
by their firms.
It is important to note that there are no survey data in which infor-
mation on participation in the WOTC is collected. Therefore, existing
estimates simply use the total number of certifications reported by the
Department of Labor for the numerator and an estimate of the number
of eligible workers for the denominator. The rates reported in table 7.4
use the SIPP (1996, 2001, and 2004 panels) to identify participation rates -1
in selected years. The limited number of years for which estimates are 0
+1

13502-08_CH07-2ndPgs.indd 203 12/10/13 8:34 AM

 204    What Works for Workers?

Table 7.4  Work Opportunity Tax Credit Participation Rate Estimates,

1997, 1999, 2003, and 2007
Year Estimated WOTC Participation Rate
1997 Welfare: 1 to 7 percent
Food stamp youth: 0.3 to 6 percent
1999 Welfare: 6 to 32 percent
Food stamp youth: 0.7 to 17 percent
2003 Welfare: 6 to 49 percent
Food stamp youth: 1.0 to 29 percent
2007 Welfare: 6 to 47 percent
Food stamp: 0.8 to 31 percent
Source: Author’s compilation. For 1997 and 1999, Hamersma (2003); for 2003 and 2007, new
estimates by author.
Notes: The lower bounds listed here for the 1997 and 1999 welfare groups are slightly lower
than those in the published paper owing to an adjustment for a minor programming error
affecting only those two numbers. All estimates use SIPP data to estimate denominators and
the data in table 7.2 for numerators. Note that as of January 1, 2007, the food stamp group
began to include ages eighteen to thirty-nine instead of the previous eighteen to twenty-four;
estimates for fiscal year 2007 reflect that change.

available reflects the combination of limited information on target group–

specific certifications (see table 7.2) and the timing of SIPP surveys (as we
need to “look back” up to eighteen months to assess welfare-group eligi-
bility, so cannot use early months of the data in any panel). The 1997 and
1999 rates were previously published, while the 2003 and 2007 rates are
reported here for the first time, using the same methodology.
Although the rate of WOTC participation clearly grew between the
late 1990s and early 2000s, perhaps because of growing awareness of
the program, there seems to have been a fair amount of stabilization in
participation between 2003 and 2007. In both years, the upper bound on
participation remained below 50 percent for the welfare target group and
around 30 percent for the food stamp group. Moreover, the many missing
observations related to eligibility determination cause the range from the
lower bound to the upper bound to be wide; the more of these unknown-
status people are eligible, the closer the true participation rate is to the
lower bound. However, since it is more likely that most of the unknown-
status observations are ineligible (assuming there is not extreme selection
into having missing data), true participation rates are probably closer to
-1 the upper bound than the lower bound. Either way, participation is sim-
0 ply not high.
+1

13502-08_CH07-2ndPgs.indd 204 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   205

Although the number of certifications has risen substantially since 2007

(see table 7.2), particularly among the newly expanded food stamp group,
unfortunately there is no data available with which to assess the more
recent participation rates.17 Moreover, the large increase in certifications
among the food stamp group has happened alongside major increases in
food stamp participation, indicating that we cannot assume that participa-
tion among eligibles has increased; the increased certifications could just
reflect similar participation rates among the new, larger eligible population.
There has been substantial discussion in the WOTC literature (and the
preceding literature on targeted tax credits) on the reasons for low partici-
pation rates. One possible culprit is the complexity of administration, as
the program requires at least some small amount of administration from
both the employer (which needs to send forms to the state employment
agency) and the worker (who usually needs to provide basic documen-
tation). This is in contrast to the EITC, in which only the individual and
his or her tax preparer are likely to be aware of the claim.18 The WOTC
requires individuals to make known their eligibility, either voluntarily or
with the prompting of a worksheet provided with the job application or
new-hire packet. This requirement for the worker to interact with the firm
(or at least the firm’s tax consultant) regarding eligibility also raises the pos-
sibility of stigma that would make a worker unwilling to indicate eligibility,
effectively forcing the firm into nonparticipation for that worker. Results
reported in Burtless (1985) on the TJTC program suggested that stigma was
a major issue when workers were given “eligibility vouchers” to be brought
to their firm; this system, while still available under the WOTC, is seldom
used now.
Basic firm administrative costs, while they have been reduced since
the previous (TJTC) tax credit program, are also still potentially an issue,
because of their timing. These costs are paid up-front by firms claiming the
WOTC, as their application for a new worker must be submitted within
twenty-eight days of hire, even though the firm does not yet know if the
worker will meet minimum hours thresholds for subsidy qualification.
There are also some reasons for low WOTC participation that parallel
those for the EITC. For instance, there is always the concern that the rel-
evant parties do not have necessary information. In the case of the WOTC,
firms may not be aware of the program, and in the case of the EITC, indi-
viduals who are not tax filers may be unaware of their potential benefits.
There is also the very logical explanation that nonparticipants may be
those with the least to gain from the program (implying that the “money
left on the table” is not as much as the participation rate levels might sug-
gest). Formal work on both the EITC and the WOTC supports this view. -1
Plueger (2009) finds that EITC participation rates monotonically increase 0
+1

13502-08_CH07-2ndPgs.indd 205 12/10/13 8:34 AM

 206    What Works for Workers?

with the level of benefits available; participation is less than 50 percent for
those qualifying for less than $200 in benefits, while it is over 85 percent
for those qualifying for $2,000 or more.19 Similarly, I have used Wiscon-
sin administrative data to estimate WOTC participation rates by firms
hiring disadvantaged workers with varying rates of potential tax credits
(Hamersma 2011). For firms qualifying for less than $30,000 in credits,
participation rates tend to hover around 15 percent; for those qualifying
for $100,000 or more, the rate rises to nearly 60 percent.20

Assessing the Prospects for the Future

It is clear that while both the EITC and WOTC programs are designed to
improve employment outcomes, they operate with substantially different
scope and produce distinct effects in the labor market. Both eligibility for
and participation in the EITC are higher than is the case with the WOTC,
making the relative program costs substantial (more than $50 billion versus
$1 billion). However, the EITC has produced employment improvements
that have not been produced by the WOTC (which seems to primarily ben-
efit firms). Many researchers have argued on these grounds for the superi-
ority of the EITC for subsidizing employment.
Recent work by Eissa and Hoynes (2011) and Meyer (2010) uses policy
simulations to examine different ways in which the EITC might be modi-
fied to meet various distributional, budget, and welfare goals. Among
these modifications are the extension of a more generous credit to child-
less individuals, stronger targeting of low-income workers (by steepening
the phaseout range in exchange for a higher maximum credit), and more
universal eligibility (by flattening and extending the phaseout range in
exchange for a lower maximum credit).
However, there is some concern that in times of recession modifica-
tions of the EITC may not be adequate for meeting employment goals. For
instance, an extension of the EITC to childless individuals—many of whom
are men—would not be likely to generate a large labor supply response
because most men already work if they can find employment (Meyer 2010).
The employment effects of the EITC are predicated on the notion that finan-
cial incentives encourage people to join the labor force, and there is clear
evidence that this happened for single mothers in the boom of the late
1990s, but to the extent that the labor market is slack it is less clear that this
incentive translates into additional jobs. This has led even strong supporters
of the EITC to suggest an added role for employer-side subsidies in times of
high unemployment and low job growth (see, for instance, Neumark 2011).
-1 In light of concerns about labor demand, several researchers are revisiting
0 options related to employer tax credits like the WOTC or other subsidized-
+1

13502-08_CH07-2ndPgs.indd 206 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   207

job programs. A major concern with the WOTC is the low participation rate
and the narrow targeting of eligible individuals. During a recession, one
could argue that many unemployed workers who are not “disadvantaged”
by traditional definitions may need assistance. This line of reasoning has
brought David Neumark (2011) and John Bishop and Timothy Bartik (2009)
to argue for the introduction of a less-targeted employer tax credit program.
Such a program would be similar to the New Jobs Tax Credit of the late
1970s, providing tax credits to firms for marginal growth in the workforce,
regardless of who is hired. One might be concerned that many of these
workers would have been hired anyway, but net job creation at reasonably
low per-job cost might be possible.
Bishop and Bartik (2009) argue that a temporary, well-designed “Job
Creation Tax Credit” that refunds 10 to 15 percent of new wage costs could
create 5 million jobs over two years.21 Although this credit would be of sub-
stantial gross cost (estimated at nearly $150 billion over two years), their
analysis of the spillover effects in terms of GDP and ultimately net federal
revenue produces an estimated net cost of about $27 billion, or about $5,500
per job created.22 Neumark (2011) is much more cautious about the poten-
tial for such low costs of job creation and generally prefers the EITC as a
long-term strategy, but still argues that a temporary focus on this approach
is merited in the midst of recession. One reason for this focus, he argues,
is the potential benefits for men, who have been hit hard with unemploy-
ment but are less likely to benefit from the EITC due to its concentration
on poor and low-income families. Neumark’s second reason is his concern
that the current economy is not in equilibrium but instead has suffered
from a negative shift in labor demand in the presence of wage rigidities.
This, he argues, implies that increasing labor supply through modification
of the EITC would not influence total employment, as there are already
excess workers available to work (but no jobs for them). From this view,
labor demand must be directly influenced through a firm-side subsidy.
Thus far, there has been (to my knowledge) only a small move in the
direction of a federal job creation tax credit, through the Hiring Incentives
to Restore Employment (HIRE) Act of 2010. This legislation provided a
6.2 percent payroll tax incentive for firms (effectively exempting them
from their share of Social Security payroll taxes) for newly hired, recently
unemployed workers hired during 2010. It also provided a general tax
credit of up to $1,000 to firms for workers retained for at least a year. The
U.S. Treasury Department (2010) estimated that over 10 million work-
ers were eligible to be claimed for the payroll tax exemption during the
period February to October 2010, and the projected cost of the program
was $13 billion. This program was only enacted for 2010, so it has since -1
expired, though the retention credits continue to be claimed based on hires 0
+1

13502-08_CH07-2ndPgs.indd 207 12/10/13 8:34 AM

 208    What Works for Workers?

in 2010. There has not yet been a formal evaluation of this program’s
effectiveness.
Meanwhile, there has been substantial movement among states to imple-
ment state-level job creation tax credits or other programs. Robert Chirinko
and Daniel Wilson (2010) note that by August 2009 twenty-four states had
job creation tax credits in place. Their preliminary findings indicate very
little net job creation from the credits. An alternative approach that states
have used to generate jobs from the employer side utilizes government
funds to directly and fully subsidize jobs. Elizabeth Lower-Basch (2011)
describes subsidized job creation using funds made available through the
2009 American Recovery and Reinvestment Act’s $5 billion TANF Emer-
gency Fund. She reports that using this fund, thirty-nine states and the Dis-
trict of Columbia placed more than 260,000 individuals into jobs, mostly in
the private sector. Although there is not yet a formal program evaluation of
the employment effects of the program, Lower-Basch argues that the stron-
ger incentives created by a larger subsidy (up to 100 percent of wages), the
more intentional nature of the job matches, and the flexibility of states to
design customized programs provide some hope of effectiveness that the
WOTC has been shown to lack.

Conclusion
The important differences between worker-side and employer-side tax cred-
its have driven remarkably different participation patterns and employment
outcomes, despite many common goals and theoretical predictions. Based
on the research thus far, the employer-side WOTC might be summarized
as providing relatively few tax credits, at relatively low cost, with relatively
minimal employment effects (with the important caveat that certifications
have dramatically increased in the last few years but no new evaluations
are yet available). The majority of credits are obtained by firms in the top
5 percent by size, with a disproportionate share going to temporary help
agencies. The consequences to disadvantaged workers of taking jobs in tem-
porary agencies is widely debated, making this prominent role of the WOTC
in that sector potentially controversial as well. There may also be compliance
issues with the WOTC, especially given the incentive structure to keep work-
ers just past certain hours-of-work thresholds, but little attention has been
paid to the potential for fraud.
Conversely, the EITC provides many tax credits, at relatively high cost,
with relatively large employment effects. Researchers generally agree that
there are positive effects of the program. However, concerns about the
-1 high and increasing costs of the program, combined with compliance
0 issues, could bring new levels of scrutiny to the program despite its
+1

13502-08_CH07-2ndPgs.indd 208 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   209

benefits. This is particularly true in the current fiscal environment. More­

over, the EITC’s power to create jobs is weakest when the economy is
weak, and thus it would appear that new policy for job creation during
downturns may be warranted. Although most researchers see the WOTC
as an unattractive model for such an approach, there is ongoing discussion
as to whether broad-based temporary job creation tax credits might have
a role in alleviating recession-driven unemployment. These credits would
not be targeted only at specific groups of workers, but would be widely
available to firms willing to hire in difficult economic times. Alongside
these programs, there may also be a role for direct subsidized-job pro-
grams. Timely evaluation of existing state-level tax credit and subsidized-
job programs would be helpful for designing successful federal programs
along these lines.

Notes
1. Technically, the relevant income is that of the tax-filing unit.
2. TANF data are from U.S. Department of Health and Human Services (2009),
which shows the amount spent on assistance itself, apart from administra-
tion. SNAP data are from Oliveira (2010).
3. Interested readers can obtain up-to-date policy information on the website of
the Center for Budget and Policy Priorities (www.cbpp.org).
4. The Welfare-to-Work Credit was specifically for long-term welfare recipients
and has different hours thresholds and subsidy rates (even upon being rolled
into the WOTC as of January 1, 2007). Details are available from the U.S.
Department of Labor at: http://www.doleta.gov/business/incentives/opptax/
(accessed September 2013).
5. The fraction of the total certifications represented by each group is discussed
in detail later in the chapter. The full list with detailed definitions of current
eligible groups can be found at U.S. Department of Labor, Employment and
Training Administration, “Work Opportunity Tax Credit,” available at: http://
www.doleta.gov/business/incentives/opptax/ (accessed September 2013).
6. For detailed discussion of these concerns, see Hamersma and Heinrich (2008)
and Hamersma, Heinrich, and Mueser (forthcoming).
7. The designated community residents must reside in an Empowerment Zone,
Enterprise Community, or Rural Renewal Community.
8. One key improvement relative to the TJTC was a reduction in the need for
workers to initiate the credit; although vouchers are still available, they are
seldom used. Another important change was a reduction in the paperwork
burden for firms.
9. A detailed description of the legislative history of the program is in Scott (2013). -1
Note that even with retroactive legislation, there are large dips in certifications 0
+1

13502-08_CH07-2ndPgs.indd 209 12/10/13 8:34 AM

 210    What Works for Workers?

in years when the WOTC was (apparently) expired, such as in fiscal year 2004,
when there was a nine-month hiatus, and in the fiscal year 2006 period, when
there was a thirteen-month hiatus.
10. Making this assessment may be straightforward in settings with easily observ-
able measureable productivity (such as sales or direct production of physical
goods), but is more difficult in settings where this is not the case (such as
service professions).
11. A variety of other outcomes—not directly related to employment levels
or earnings—have also been examined by researchers of the EITC and the
WOTC. For example, Bruce Meyer (2010) and Nada Eissa and Hilary Hoynes
(2011) lay out the distributional effects of the EITC and address efficiency
concerns. Other work has examined interactions of the EITC with the mar-
riage penalties and bonuses in the tax code (Holtzblatt and Rebelein 2001).
Work on the WOTC has examined its effects on job tenure (Hamersma 2008)
and its distinct outcomes in the market for THS employment (Hamersma
and Heinrich 2008). In the interest of brevity, I review only the findings on
employment and earnings.
12. Dean Plueger (2009) provides a careful discussion of the most recent method-
ologies developed for estimating EITC participation using a combination of
the March CPS and IRS data.
13. A typical March CPS has imputed earnings for about 20 percent of respondents.
14. The fiscal year 2009 estimates rely heavily on data from 2001 so are not fully
reflective of current conditions. The new estimates will use fiscal year 2006
data, the latest iteration of the National Research Program data (U.S. Trea-
sury Inspector General for Tax Administration 2011).
15. Nonparents were not eligible for the EITC until 1994, and even though they
are now eligible, nonparents are still qualified for only a small maximum
credit of $475; see Urban Institute and Brookings Institution, Tax Policy Cen-
ter, “Tax Facts: Earned Income Tax Credit Parameters, 1975–2013,” available at:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=36 (accessed
September 2013).
16. The SIPP is preferred because its monthly panel structure allows more
accurate assessment of past program participation, a necessary element for
assessing WOTC eligibility. Details on CPS results are provided in a footnote
in Hamersma (2003).
17. After the conclusion of the 2004 SIPP, a new panel began with interviews in
September 2008. Because we require eighteen months of past information as
well as a full fiscal year of data, the next possible year for which estimates
could have been developed was fiscal year 2011. At the time this data work
was done, sufficient SIPP data had not yet been released.
-1 18. When an individual receives the EITC throughout the year as an addition
0 to his or her paycheck, the employer would also be aware of the claim. The
+1

13502-08_CH07-2ndPgs.indd 210 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   211

possibility of the employer’s knowledge leading to stigma may be one rea-

son that very few recipients ever chose this option (which was eliminated
as of tax year 2011).
19. These numbers were gleaned from combining categories reported in Plueger
(2009), table 11.
20. All firms in the sample had at least ten eligible workers during the period
July 1999 to December 2001. Firms that applied for the WOTC at some point,
but did so for fewer than 20 percent of their eligible workers, after that point
are excluded. See table 2 of Hamersma (2011) for further details.
21. Bishop and Bartik’s (2009) specific estimates simulate a 15 percent subsidy in
2010 and a 10 percent subsidy in 2011.
22. Bishop and Bartik (2009) assume that about 18 percent of jobs receiving the
credit would be newly created, while the other 82 percent would be subsidized
but would have existed even in the absence of a subsidy. Details about their
assumptions are provided in their paper.

References
Bishop, John H., and Timothy J. Bartik. 2009. “The Job Creation Tax Credit: Dismal
Projections for Employment Call for a Quick, Efficient, and Effective Response.”
Briefing Paper 248. Washington, D.C.: Economic Policy Institute.
Burtless, Gary. 1985. “Are Targeted Wage Subsidies Harmful? Evidence from a
Wage Voucher Experiment.” Industrial and Labor Relations Review 39(1): 105–14.
Chetty, Raj, and Emmanuel Saez. 2013. “Teaching the Tax Code: Earnings Responses
to an Experiment with EITC Recipients.” American Economic Journal: Applied Eco-
nomics 5(1): 1–31.
Chirinko, Robert S., and Daniel J. Wilson. 2010. “Job Creation Tax Credits and Job
Growth: Whether, When, and Where?” Working Paper 2010-25. San Francisco:
Federal Reserve Bank of San Francisco.
Dickert-Conlin, Stacy, and Douglas Holtz-Eakin. 2000. “Employee-Based Versus
Employer-Based Subsidies to Low-Wage Workers: A Public Finance Perspective.”
In Finding Jobs: Work and Welfare Reform, ed. David Card and Rebecca Blank. New
York: Russell Sage Foundation.
Eissa, Nada, and Hilary Hoynes. 2006. “Behavioral Responses to Taxes: Lessons
from the EITC and Labor Supply.” Working Paper 11729. Cambridge, Mass.:
National Bureau of Economic Research (November).
———. 2011. “Redistribution and Tax Expenditures: The Earned Income Tax
Credit.” National Tax Journal 64(2, pt. 2): 689–730.
Hamel, Jennifer S. 2009. “Is Anybody Home? The Relaxation of the Residency
Requirement for Claiming a Qualifying Child Under the Earned Income Tax -1
Credit After Rowe v. Commissioner.” Maine Law Review 61(1): 219–39. 0
+1

13502-08_CH07-2ndPgs.indd 211 12/10/13 8:34 AM

 212    What Works for Workers?

Hamersma, Sarah. 2003. “The Work Opportunity and Welfare-to-Work Tax Cred-
its: Participation Rates Among Eligible Workers.” National Tax Journal 56(4):
725–38.
———. 2008. “The Effects of an Employer Subsidy on Employment Outcomes: A
Study of the Work Opportunity and Welfare-to-Work Tax Credits.” Journal of
Policy Analysis and Management 27(3): 498–520.
———. 2011. “Why Don’t Eligible Firms Claim Hiring Subsidies? The Role of Job
Duration.” Economic Inquiry 49(3): 916–34.
Hamersma, Sarah, and Carolyn Heinrich. 2008. “Temporary Help Service Firms’
Use of Employer Tax Credits: Implications for Disadvantaged Workers’ Labor
Market Outcomes.” Southern Economic Journal 74(4): 1123–48.
Hamersma, Sarah, Carolyn J. Heinrich, and Peter Mueser. Forthcoming. “Tem-
porary Help Work: Earnings, Wages, and Multiple Job Holding” Industrial
Relations, forthcoming.
Heim, Bradley T. 2007. “The Incredible Shrinking Elasticities Married Female
Labor Supply, 1978–2002.” Journal of Human Resources 42(4): 881–918.
Hirsch, Barry T., and Edward J. Schumacher. 2004. “Match Bias in Wage
Gap Estimates Due to Earnings Imputation.” Journal of Labor Economics 22(3):
689–722.
Holtzblatt, Janet, and Robert Rebelein. 2001. “Measuring the Effect of the Earned
Income Tax Credit on Marriage Penalties and Bonuses.” In Making Work Pay: The
Earned Income Tax Credit and Its Impact on America’s Families, ed. Bruce D. Meyer
and Douglas Holtz-Eakin. New York: Russell Sage Foundation.
Hotz, V. Joseph, Charles H. Mullin, and John Karl Scholz. 2006. “Examining the
Effect of the Earned Income Tax Credit on the Labor Market Participation of
Families on Welfare.” Working paper 11968. Cambridge, Mass.: National Bureau
of Economic Research (January).
Hotz, V. Joseph, and John Karl Scholz. 2003. “The Earned Income Tax Credit.” In
Means-Tested Transfer Programs in the United States, ed. Robert Moffitt. Chicago:
University of Chicago Press.
Katz, Lawrence F. 1998. “Wage Subsidies for the Disadvantaged.” In Generating
Jobs: How to Increase Demand for Less-Skilled Workers, ed. Richard B. Freeman and
Peter Gottschalk. New York: Russell Sage Foundation.
Leigh, Andrew. 2010. “Who Benefits from the Earned Income Tax Credit? Incidence
among Recipients, Coworkers, and Firms.” The B.E. Journal of Economic Analy-
sis and Policy 10(1). Available at: http://www.bepress.com/bejeap/vol10/iss1/
art45 (accessed September 2013).
Levine, Linda. 1998. “The Work Opportunity Tax Credit: A Fact Sheet.” Report for
Congress 96-356E. Washington: Congressional Research Service (April 2).
———. 2005. “The Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work
-1 (WtW) Tax Credit.” Federal Publications 189 (April). Available at: http://digitalcom
0 mons.ilr.cornell.edu/key_workplace/189 (accessed September 2013).
+1

13502-08_CH07-2ndPgs.indd 212 12/10/13 8:34 AM

 Employment Subsidies to Firms and Workers   213

———. 2008. “The Work Opportunity Tax Credit.” Report RL30089. Washington:
Congressional Research Service.
Lower-Basch, Elizabeth. 2011. “Rethinking Work Opportunity: From Tax Credits
to Subsidized Job Placements.” CLASP: Big Ideas for Job Creation (November).
Available at: http://www.clasp.org/admin/site/publications/files/Big-Ideas-for-
Job-Creation-Rethinking-Work-Opportunity.pdf (accessed September 2013).
Meyer, Bruce D. 2010. “The Effects of the Earned Income Tax Credit and Recent
Reforms.” In Tax Policy and the Economy, vol. 24, edited by Jeffrey R. Brown.
Chicago: University of Chicago Press, for the National Bureau of Economic
Research.
Neumark, David. 2011. “How Can California Spur Job Creation?” San Francisco:
Public Policy Institute of California.
Oliveira, Victor. 2010. “The Food Assistance Landscape: FY2009 Annual Report.”
Economic Information Bulletin EIB-6-7. Washington: U.S. Department of Agri-
culture, Economic Research Service (March). Available at: http://www.ers.usda.
gov/Publications/EIB6-7/EIB6-7.pdf (accessed September 2013).
Olson, Nina E. (national taxpayer advocate). 2011. Statement before House Com-
mittee on Ways and Means, Subcommittee on Oversight, hearing on improper
payments in the administration of refundable tax credits. May 25.
Plueger, Dean. 2009. “Earned Income Tax Credit Participation Rate for Tax Year
2005.” IRS Research Bulletin: 151–15. Available at: http://www.irs.gov/pub/
irs-soi/09resconeitcpart.pdf (accessed September 2013).
Saez, Emmanuel. 2010. “Do Taxpayers Bunch at Kink Points?” American Economic
Journal: Economic Policy 2(3): 180–212.
Scholz, John Karl. 1994. “The Earned Income Tax Credit: Participation, Compli-
ance, and Antipoverty Effectiveness.” National Tax Journal 47(1): 63–87.
Scott, Christine. 2011. “The Work Opportunity Tax Credit (WOTC).” Report
RL30089. Washington: Congressional Research Service.
———. 2013. “The Work Opportunity Tax Credit (WOTC).” Report RL-30089.
Washington: Congressional Research Service.
Tax Policy Center. 2012. “Historical EITC Recipients.” Available at: http://www.
taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=37&TopicID=30&Topi
cID=39 (accessed September 2013).
———. 2013. “Earned Income Tax Credit Parameters, 1975–2013.” Available at:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=36 (accessed
September 2013).
U.S. Department of Health and Human Services. Administration for Children and
Families. 2009. Available at: http://archive.acf.hhs.gov/programs/ofs/data/2009/
table_al_2009.html (accessed September 2013).
U.S. Department of Labor. Office of the Inspector General. 1994. “Targeted Jobs
Tax Credit: Employment Inducement or Employer Windfall?” Washington: -1
U.S. Department of Labor. 0
+1

13502-08_CH07-2ndPgs.indd 213 12/10/13 8:34 AM

 214    What Works for Workers?

U.S. Department of Labor. n.d. “Work Opportunity Tax Credit.” Available at: http://
www.doleta.gov/business/incentives/opptax/ (accessed September 2013).
U.S. General Accounting Office. 2001a. “Work Opportunity Tax Credit: Employ-
ers Do Not Appear to Dismiss Employees to Increase Tax Credits.” Report to
the Chairman, House Committee on Ways and Means, Subcommittee on Over-
sight. GAO-01-329. Washington: GAO (March). Available at: http://www.gao.
gov/new.items/d01329.pdf (accessed September 2013).
———. 2001b. “Earned Income Tax Credit Participation.” GAO-02-290R. Washing-
ton: GAO (December 14). Available at: http://www.gao.gov/new.items/d02290r.
pdf (accessed September 2013).
U.S. Office of Management and Budget. Various years (1999–2014). Budget of the
United States. Washington: Executive Office of the President.
U.S. Treasury Department. 2010. “Updated Estimates of Newly Hired Employ-
ees Eligible for the HIRE Act Tax Exemption.” December 8. Available at: http://
www.treasury.gov/resource-center/economic-policy/Documents/12.8.10%20
HIRE%20Act%20Report%20FINAL.pdf (accessed September 2013).
U.S. Treasury Inspector General for Tax Administration. 2011. “Reduction Targets
and Strategies Have Not Been Established to Reduce the Billions of Dollars in
Improper Earned Income Tax Credit Payments Each Year.” February 7. Avail-
able at: http://www.treasury.gov/tigta/auditreports/2011reports/201140023fr.
pdf (accessed September 2013).

-1
0
+1

13502-08_CH07-2ndPgs.indd 214 12/10/13 8:34 AM

 Chapter 8 L iving Wages, Minimum Wages,
and Low-Wage Workers

Stephanie Luce

Much has already been written about the modern U.S. “living wage”
movement, which began in 1994 in Baltimore.1 The movement was hailed
as one of the most exciting, and most successful, efforts of labor and com-
munity organizations of the past several decades. Almost twenty years
later, with over 125 ordinances or policies in place around the country,
living wage activists are still fighting for higher wages in a handful of cit-
ies, on college campuses, and in other countries. The living wage concept
is perhaps as popular as ever. A recent poll found that 74 percent of New
York City voters support the idea, and a 2007 poll in California found that
the same proportion supported a living wage proposal in Los Angeles.2
But as successful as the movement has been, it is not clear how much
living wage ordinances help low-wage workers. The ordinances cover
only a small proportion of workers, and although wage levels are a sig-
nificant improvement over minimum wage, they are not necessarily high
enough to raise workers out of poverty—and in fact, on average, the raises
are less than the median wage increase that low-wage workers experience
from unionization (37 percent) (Schmitt et al. 2007). Therefore, some might
ask whether it is worth pursuing living wage campaigns at all.
Living wage organizers never promised that the ordinances would
be sufficient for solving poverty or other issues related to the working
poor; indeed, many of those organizers have also been heavily involved
in other policy campaigns—such as minimum wage or the Earned Income
Tax Credit (EITC)—as well as efforts to organize workers into community
organizations and unions. Many of them saw the living wage as a tool
that could help build coalitions and develop the political power needed -1
to pursue broader policy goals, expand outreach, influence public debate 0
+1
215

13502-09_CH08-2ndPgs.indd 215 12/10/13 8:34 AM

 216    What Works for Workers?

on wages and economic development, and perhaps open space for new
union organizing or strengthening bargaining power for existing unions.
In some respects, the whole existence of the living wage movement can
be seen as an indication of failure on the part of the labor movement and
social movements to raise wages more broadly through national legis-
lation and unionization. Therefore, living wage ordinances cannot be
judged solely as policy tools for directly improving conditions for low-
wage workers. A thorough evaluation must assess the indirect outcomes
on building political power and increasing union density. Still, living wage
proponents should examine ways to improve the coverage and impact of
the ordinances.
This chapter reviews the research on living wage laws, focusing on their
impact on low-wage workers. I first situate the living wage movement in
the context of minimum wage laws, reviewing the relation between the
two policies and summarizing recent academic research on the latter.
I then discuss the challenges to establishing a more effective living wage
and provide some ideas on how to expand the coverage of the ordinances.

Living Wages and Minimum Wages

The most common form of living wage ordinance covers only workers
employed by city service contractors; as such, the coverage is limited,
though not because living wage activists prefer these more narrow ordi-
nances to the broader minimum wage. In fact, many living wage activ-
ists have also been involved in efforts to raise state and federal minimum
wages. The living wage movement grew in large part because activists felt
that they lacked the power to pass the broader legislation. For this reason,
living wage ordinances and minimum wage legislation should be seen as
complements rather than as competing policies. Many activists saw the liv-
ing wage movement as a way to build the political power and momentum
needed to raise wages in a variety of ways, including the minimum wage.
Both the debate and the research on the living wage and the minimum
wage are fairly similar. In both cases, opponents claim that establishing or
raising wage standards will lead to unintended consequences—primarily
job loss. Economists have debated the impact of minimum wage laws for
decades. In the 1970s and 1980s, the dominant view was that an increase
in the minimum wage would lead to job loss. But this work was based on
neoclassical models and assumptions that have been proven to be inad-
equate for studying the low-wage labor market in particular. For example,
the models assumed that workers can be hired and fired, or can quit and
-1 change jobs, without cost, and that both employers and workers have per-
0 fect information about the labor market. The models also assumed a com-
+1

13502-09_CH08-2ndPgs.indd 216 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   217

petitive labor market, where wages are determined through negotiations

between employer and employee. It assumed that employees have access
to other jobs and that workers can withhold their labor if they are not paid
an adequate wage (Fox 2006).
Economists began to study the impact of minimum wage increases
through empirical studies rather than relying on standard models. For
example, David Card conducted a series of studies examining the impact
of state minimum wage increases, and these studies resulted in a number
of pathbreaking publications, including his well-known work coauthored
with Alan Krueger (2000). Card and Krueger surveyed fast-food restau-
rants near the state line of New Jersey and Pennsylvania, both before
and after a 1992 minimum wage increase that happened in New Jersey
alone. Their results were surprising: employment did not decline in New
Jersey despite the higher wage—if anything, there was a slight increase in
employment. Additional studies in other states and countries had similar
results, and some economists tried to explain why the predicted job losses
did not come to pass. First, as mentioned, the basic assumptions of the
neoclassical model did not hold in most labor markets. Second, they sug-
gested, the employers might have experienced some cost savings through
“efficiency wage gains”: with higher wages, they might have experienced
higher productivity and lower turnover and absenteeism. Third, there
might have been a multiplier effect: low-wage workers who received a
wage increase were likely to spend most or all of that new income, put-
ting money back into the economy. Finally, employers might have been
covering the costs of the wage increase in other ways, such as through
reduced CEO or managerial salaries or through a small amount of con-
sumer pass-through. For example, Card and Krueger found in their study
that the New Jersey fast-food restaurants increased the average cost of a
hamburger by one cent.
In addition to empirical studies, economists advanced the field of mini-
mum wage research by moving from the practice of time-series studies
to a differences-in-differences methodology. This allowed researchers to
replicate a form of experimental treatment and control groups: study-
ing the changes in the treatment group (for example, those workers who
received wage increases in New Jersey) with the changes in the control
group (workers in Pennsylvania, where the minimum wage was not
increased). This technique improved upon the time-series analysis, which
attempted to control for a wide range of factors that might have an impact
on employment.
The spate of research led to a large shift in the prevailing thinking in
the field. By the 2000s, a number of prominent economists had changed -1
their minds, acknowledging that serious research had raised doubts about 0
+1

13502-09_CH08-2ndPgs.indd 217 12/10/13 8:34 AM

 218    What Works for Workers?

the earlier held views. By 2006, over 650 economists, including five Nobel
Prize winners and six past presidents of the American Economic Associa-
tion, had signed a letter calling for an increase in the federal minimum
wage, stating that it could “significantly improve the lives of low-income
workers and their families, without the adverse effects that critics have
claimed” (Economic Policy Institute 2006).
This is not to say that the debate is closed. Economists such as David
Neumark continue to produce studies suggesting that minimum wage
increases can have negative impacts on employment, though now the focus
is on particular subsets of workers, particularly low-skilled workers, teen-
agers, and black workers (Neumark, Salas, and Wascher 2013). Neumark
and others find that minimum wage increases lead to statistically sig-
nificant disemployment effects of -0.1 to -0.3 for teenagers. This means
that if the minimum wage is increased by 10 percent, the employment
rate for teenagers would fall by 1 to 3 percent (Neumark and Wascher
2006). Other economists argue that the methodology behind these results
is flawed, as it fails to take into account controls for spatial heterogeneity
(Schmitt 2013). For example, Arindrajit Dube, William Lester, and Michael
Reich (2010) and Sylvia Allegretto, Dube, and Reich (2011) argue that
because teen employment patterns differ significantly by state and census
region, it is difficult to compare aggregate data for states. They argue that
researchers must include controls for census region and for state-specific
trends. In work that compares contiguous counties, Dube and his col-
leagues (2010) find no negative outcomes from minimum wage increases.
These researchers have advanced the field methodologically: previously
there had been two different methodologies for studying minimum wage
impact, a national approach and a case study approach, but their work
combines the two. Improving the methodology in the national approach
and generalizing the case study approach, they find no evidence of job
loss. Perhaps surprisingly, their results hold even for a slack labor market,
such as in the 2007 to 2009 recession. No matter whether unemployment
is relatively high or low, Dube and his colleagues find no evidence that
raising the minimum wage causes job loss (Heidi Shierholz, personal cor-
respondence with the author, May 24, 2013).
While there remains some debate about the impact of minimum wage
laws on teenagers, the vast majority of workers affected by minimum
wage increases are not teenagers. As of 2012, more than three-quarters
of workers who would be affected by a minimum wage increase were
older than twenty. The Fair Minimum Wage Act of 2013 would increase
the federal minimum wage from $7.25 to $10.10 in three stages and then
-1 index it to inflation; it would also increase the tipped minimum wage.
0 Such an increase would affect 30 million workers. Over half of these
+1

13502-09_CH08-2ndPgs.indd 218 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   219

workers work full-time, and 44 percent have completed some college. In

addition, the average affected worker contributes about half of his or her
family’s income. One estimate finds that this wage increase would gener-
ate $51 billion in additional wages (Cooper and Hall 2013). The evidence
seems strong that minimum wage policies have positive impacts for low-
income workers (Cooper 2012). What about living wage laws?

What Do We Know About the Impact of Living Wage

Laws on Low-Wage Workers?
Despite all the attention and research focused on living wage campaigns,
there is little information on the number of workers actually covered or
affected by the ordinances. There are several reasons for this gap. First, the
ordinances themselves differ from city to city. Most cover service contrac-
tors, but some also cover city employees, subcontractors, economic devel-
opment recipients, and concessionaires operating on city-owned property.
In a few places, the “living wage” is more like a minimum wage, covering
most workers within the city borders (in San Francisco and San Jose, Cali-
fornia, Albuquerque and Santa Fe, New Mexico, and Washington, D.C.).3
Some ordinances cover counties and county service contractors. A few
universities have living wage policies that can apply to contractors, sub-
contractors, or university employees.
In many cities, the work done by service contractors was once done by
public employees, but then subcontracted out in an effort to save money.
Contracting practices differ widely by city and state; in most cases, con-
tractors are not required to report the number of employees who work on
contracts.4 It can be difficult to acquire city contracts to review employment
numbers.5 It is even more difficult to get information on subcontracted
employees, as contractors are usually not required to report anything about
this aspect of their work.6 Furthermore, the provision that covers economic
development subsidy recipients applies only to future projects. These proj-
ects are often kept quiet for many years while in negotiation, and there is
no way to easily estimate the number of workers who will be covered.
Another challenge is measuring indirect impacts of the ordinances.
There is strong evidence that increasing wage floors leads to “ripple
effects” within a firm. When employers raise the floor, they also tend to
raise the wages of workers who were already making the new floor or
close to it. Jeanette Wicks-Lim (see Pollin et al. 2008) has attempted to mea-
sure the size of the ripple effect of minimum wage and living wage laws,
but this too varies given the size of the wage increase and the number of
workers covered. Still, living wage opponents are quick to point out the -1
ripple effects of living wage ordinances because they impose an additional 0
+1

13502-09_CH08-2ndPgs.indd 219 12/10/13 8:34 AM

 220    What Works for Workers?

cost on employers. Therefore, it seems appropriate to include these indi-

rect recipients when measuring the coverage of the movement.
There may also be a “spillover effect”: when employers raise wages
in some firms, nearby employers may also raise wages because they are
competing in the same geographic labor market. This effect is even more
difficult to measure, but considering the relatively small coverage of living
wage ordinances, it seems unlikely that it will have a major effect in most
cities. Other workers have benefited from using the term “living wage” in
contract negotiations—such as the National Education Association cam-
paigns to raise the wages of para-educators—or to set employer policy but
these do not result in living wage ordinances, and it is nearly impossible
to track these cases and their coverage.
In addition to the basic challenges of estimating potential coverage
of the laws, there is also the problem of enforcement. In my research,
I found that many cities are doing a poor job of enforcing the ordinances
once passed. Some city administrators refuse to implement the law or
are generous with waivers; in a few cases, politicians have repealed the
ordinances via city or state legislation. In other cases, the laws are on the
books but weakly enforced, making it very difficult to estimate the num-
ber of workers who actually receive the higher wage. There have been a
few cases where workers and/or unions filed charges with the city because
of noncompliance; the fact that the city or courts have ruled in favor of the
workers suggests that there may be other cases where employers are not
in compliance with the law.7
Given these challenges, our efforts to estimate coverage of living wage
laws are necessarily fairly loose. By 2002, we estimated, somewhere
between 100,000 and 250,000 workers had directly benefited from living
wage ordinances. Since that time, forty-seven more cities and counties
have passed laws, including four cities that passed citywide laws and a
Pueblo-wide law in Sandia Pueblo, New Mexico.8
Based on the initial estimate of coverage as of 2002, I took an average
number of workers covered per “traditional” living wage ordinance, using
a total of 175,000 workers (the midpoint between 100,000 and 250,000). That
gives an average of 1,923 workers per ordinance. The 39 traditional living
wage ordinances passed since 2002 would amount to an additional 75,000
workers covered. The four citywide and one Pueblo-wide ordinances are
estimated to have had a direct impact on another 83,000 workers (Pollin
2005; Pollin et al. 2008; Reich and Latinen 2003). This would amount to
approximately 333,000 workers covered directly. Living wage studies
suggest that approximately 50 to 200 percent of directly covered workers
-1 benefit from the ripple effects of these increases. For example, if 500 people
0 are directly covered, ripple effects will impact 250 to 1,000 workers. In the
+1

13502-09_CH08-2ndPgs.indd 220 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   221

most generous estimate, we could assume that 666,000 workers receive

ripple effect wage increases, bringing our total impact to about 1 million
workers covered through living wage ordinances (see Pollin et al. 2008).
Clearly, this is only a very small fraction of the total low-wage workforce.
As of 2011, 28 percent of all workers in the United States—almost 37 mil-
lion people—were earning poverty-level wages.9

Who Are the Workers? Living wage ordinances vary a lot in terms of
who is covered. The majority of ordinances cover city service contracts,
and these workers may be found in janitorial services, security, laundry,
landscaping, bus driving, and food service. The larger ordinances cover
retail and restaurant workers in airports or in sports arenas, and the city-
wide ordinances cover most all low-wage work.
There are at least three major studies of living wage ordinances that
profile the covered workers. The economist David Fairris and Los Angeles
Alliance for a New Economy researchers David Runsten, Carolina Brio-
nes, and Jessica Goodheart (2005) surveyed workers covered by the Los
Angeles ordinance. University of California–Berkeley scholars Michael
Reich, Peter Hall, and Ken Jacobs (2003, 2005) studied workers covered at
the San Francisco airport, and Mark Brenner and Stephanie Luce (2005),
economists at the Political Economy Research Institute (PERI), surveyed
workers in Boston, where those covered worked predominantly in child
care and educational services. Despite the different industries and occupa-
tions, all of these researchers came to some similar conclusions.
Contrary to the claims of some opponents, living wage recipients are
not teenagers working for extra money. Workers covered by traditional
living wage ordinances are in their thirties, support at least one family
member on their income, and have been in their job for at least a few
years. They are disproportionately people of color, and disproportion-
ately from low-income households. For example, Boston workers are on
average thirty-two years old and have 2.9 years of tenure in their current
job. Almost two-thirds are people of color. Their median annual income in
2002 was $23,324. In Los Angeles, 58 percent of covered workers were age
thirty-five or older, 86 percent worked full-time, and the covered workers
had an average of twenty years in the workforce. Half were Latino, 29 per-
cent African American, and 12 percent Asian. Over 75 percent of workers
covered by the San Francisco airport ordinance were twenty-five years or
older, and 86 percent were people of color.
The studies found some differences by location, which seem primarily
explained by the type of work covered. While the Boston workers were -1
79 percent women (employed in child care and educational services), the 0
+1

13502-09_CH08-2ndPgs.indd 221 12/10/13 8:34 AM

 222    What Works for Workers?

San Francisco airport workers were mostly men. Boston workers had a
higher average education level, with 52 percent holding a two- or four-
year college degree and another 11 percent having earned a master’s
degree. In contrast, 71 percent of covered workers in Los Angeles had a
high school degree or less.

The Impact on Workers What was the impact of the living wage increase
on the covered workers? The Boston survey compared workers who had
received a living wage increase to those who did not and found that, on
average, the living wage increased hourly earnings by 25 percent and
annual earnings by 60 percent. Annual earnings were higher because
workers had more hours per week, and more weeks per year, than those
not covered by the living wage. From this study, it appears that employers
began to convert part-time jobs into full-time ones once they were man-
dated to pay the higher wage and provide some benefits. Most of the Boston
workers were initially from poverty or near-poverty households. Although
the living wage resulted in higher earnings, the increase was generally not
enough to raise workers much above poverty, particularly when using
more realistic measures of poverty.
The Los Angeles study found that, on average, workers who stayed
in their jobs and received a raise due to the ordinance received an initial
average raise of $1.48 per hour and an average annual increase of $2,590.
However, 81 percent of workers surveyed said that the living wage was
not enough to enable them to meet the basic needs of their families.
The San Francisco airport ordinance resulted in raises for almost 90 per-
cent of the ground-based nonmanagement workers, with an average pay
increase of 22 percent. Reich, Hall, and Jacobs (2003) estimate that this
resulted in a total pay increase for all covered workers of $56.6 million in
annual earnings. The pay increases greatly reduced the wage differentials
between the in-house employees and the subcontracted employees.

Negative Outcomes? Living wage opponents claim that while the ordi-
nances may help some workers, they hurt other workers who are laid off
or not hired as employers cut jobs to comply with the higher wage man-
date. Much of the research in this area focuses on the impact of minimum
wage laws, and another set of studies engages in a debate about the best
methodology to use to measure the impact of living wage ordinances.
Overall, the impact studies that use employer and worker surveys find
little or no evidence of employment effects due to living wage ordinances.
-1 A set of studies authored primarily by economists David Neumark and
0 Scott Adams do find some negative employment effects. However, their
+1

13502-09_CH08-2ndPgs.indd 222 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   223

methodology has been extensively critiqued by PERI economists Mark

Brenner, Robert Pollin, and Jeanette Wicks-Lim (Pollin et al. 2008).
Another critique of ordinances is that they can lead to labor-labor
substitution—employers replacing one set of workers (predominantly
people of color, or workers with less education) with another (more
white workers, with higher education levels), thereby leading to the
“unintended consequence” of hurting the most disadvantaged workers.
The three major living wage impact studies have different findings on
this point. In the Boston study, no employers reported a change in hiring
standards as a result of the ordinance, suggesting that no labor-labor
substitution occurred in that city. In Los Angeles, researchers compared
employees hired before and after the ordinance was enacted and found
slight changes: workers hired after the ordinance was in place were some-
what more likely to be Latino, to be male, and to have received formal
training before being hired. Otherwise, there was no difference in those
hired before and after by education level, age at hiring, native English
speaker, or school attendance. In San Francisco, the ordinance covering
the airport introduced a new requirement: workers in certain positions
had to have completed a high school degree. Therefore, the finding that
the percentage of workers without a high school degree fell after the ordi-
nance is difficult to attribute to labor-labor substitution.
With few negative impacts and significant positive outcomes for those
directly affected, living wage ordinances can be a valuable policy for rais-
ing the standard of living for low-wage workers. Is it possible to expand
their scope so that more workers benefit?

The Challenges for Expansion

Living wage ordinances have had a significant impact on covered work-
ers, but are limited in several ways. First, the ordinances cover a small pro-
portion of low-wage workers, even when the four citywide ordinances are
included. Second, the wage levels vary but in most cases are not enough
to raise workers to a true living wage. Third, in addition to wage levels,
not all workers are given full-time hours, so even with a higher wage they
may not meet federal poverty thresholds.
A variety of reasons underlie these limitations. First, living wage activ-
ists have had to focus on the local level because of their weak political
power. Living wage supporters would be likely to agree that the best strat-
egy to raise wages would be a significant increase in the federal minimum
wage, with the addition of an automatic annual adjustment for inflation. But
they do not have the political power to make that happen. Their power is -1
strongest at the local level, where they have more direct relations to elected 0
+1

13502-09_CH08-2ndPgs.indd 223 12/10/13 8:34 AM

 224    What Works for Workers?

officials and “people power” has a better chance to counter business lob-
bies and money. But even at the local level, more ambitious ordinances and
those that would target large retailers or hotels have encountered much
more resistance. The success rate for traditional ordinances affecting city
contracts is much higher than the success rate for more ambitious ordi-
nances covering more workers.
Depending on the state and “home rule” laws, legal restrictions also limit
the ability of living wage activists to pass local laws. Only some states per-
mit local governments to enact wage laws. In others (Louisiana, Wisconsin,
Florida, and a handful of other states), the state legislature passed new leg-
islation to repeal living wage or minimum wage laws or prevent localities
from passing them. The federal Employment Retirement Income Security
Act (ERISA) prevents local governments from passing laws mandating that
employers provide health insurance to employees.
Another challenge for living wage campaigns is the level of the wage.
Despite the term “living wage,” the majority of ordinances win only an
hourly wage that would raise a full-time worker with a family of three
or four to the federal poverty line. There is a strong consensus among
poverty scholars that the official poverty calculations are outdated and
the levels are too low (Pollin et al. 2008). Therefore, the poverty line is
not even an accurate measure of poverty, let alone a living wage. Several
methodologies are available to measure a more accurate cost of living.
These utilize government data to calculate the realistic costs of minimal
expenses. For example, the Economic Policy Institute (EPI) developed a
“basic family budget” calculator that accounts for housing, food, shelter,
transportation, health care, taxes, and child care. It also adjusts for family
size and region, which the federal poverty line does not do. The EPI bud-
get numbers are usually much higher than the poverty line.
This suggests that the living wage rates of around $10 to $11 per hour
are too low to meet even basic needs. This is not a surprise to living wage
activists. The poverty line was chosen not because it was the best number
but because it was politically feasible.10
The other alternative is for living wage activists to join in efforts to
reduce the cost of living. Policies that increase affordable housing or
reduce or make free health care, child care, and transportation would have
a large impact on the cost of living and therefore reduce the wage levels
needed to cover basic needs.
Putting aside larger campaigns to dramatically increase the federal
minimum wage or reduce the cost of living through policies like single-
payer health care or universal child care, what can living wage activists do
-1 to expand the impact of the movement? Here I focus on two main avenues
0 to expand coverage and address limited hours of work.
+1

13502-09_CH08-2ndPgs.indd 224 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   225

Table 8.1  Union Density for Low-Wage Occupations, 2012

Total Union Union
Occupation Title Employment Density Members
Retail salespersons 4,340,000 1.1% 47,740
Cashiers 3,314,010 5 165,701
Combined food preparation and serving 2,943,810 11.6 341,482
workers, including fast food
Waiters and waitresses 2,332,020 1.6 37,312
Laborers and freight, stock, and material 2,143,940 14.7 315,159
movers, hand
Janitors and cleaners, except maids and 2,097,380 15.2 318,802
housekeepers
Stock clerks and order fillers 1,806,310 9.3 167,987
Nursing assistantsa 1,420,020 10.7 151,942
Security guardsa 1,046,420 10.7 111,967
Cooks, restauranta 1,000,710 4.2 42,030
Total 22,444,620 7.6 1,700,121
Source: Author’s compilation based on Bureau of Labor Statistics (2013); Hirsch and
Macpherson (2012).
a
CPS occupation titles do not match OES titles exactly. For nursing assistants, I used “nurs-
ing, psychiatric, and home health aides” from Hirsch and Macpherson (2012). For security
guards, I used “security guards and gaming surveillance officers.” For cooks, restaurants,
I used “cooks.”

Expanding Coverage
In order to explore options to expand coverage, we should first look at
where low-wage workers work. The 2012 poverty threshold for a family
of four was $23,497, which means that, with two thousand hours of work
per year, the living wage for a family of four was $12 per hour. According
to tables I.1 and I.2, the largest low-wage occupations can be found in food
service, health care, retail, and building services. There are unions and
organizations working to organize some of these occupations, such as the
Service Employees International Union in home health care, the National
Domestic Workers Alliance on domestic work, and the Restaurant Oppor-
tunities Center on food preparation and serving. The United Food and
Commercial Workers Union and Workers United represent some work-
ers in retail. Overall, however, organization in these occupations is very
low. Data on worker center membership are not available, but CPS data on
union membership show that union density for these ten largest low-wage
occupations ranges from 1.1 percent in retail sales to 15.2 percent among -1
janitors and cleaners, except maids and housekeepers (table 8.1). Overall, 0
+1

13502-09_CH08-2ndPgs.indd 225 12/10/13 8:34 AM

 226    What Works for Workers?

the density for these occupations is 7.6 percent, accounting for just 1.7 mil-
lion workers. In other words, over 20 million of those employed in low-
wage occupations are not union members.
Therefore, the living wage movement might be seen as one way to
find points of leverage or political hooks that could create an opening
to raise wages and lay the groundwork for unionization. The campaigns
could assist unionization in several ways. First, they could simply be
a way for unions to do outreach among workers and create a positive
image of unions as effective avenues for raising wages. After the Com-
munication Workers of America helped pass a living wage ordinance in
Tucson, Arizona, city workers contacted the union and said they wanted
to form a union for themselves; they subsequently succeeded in doing
so (Luce 2004).
The ordinances could also include a range of provisions to make union-
ization a little easier. For example, many ordinances contain “nonretalia-
tion” language for workers who discuss their wage levels and rights on the
job. Even though the National Labor Relations Act (NLRA) makes it illegal
for employers to fire workers who organize in their workplace, employers
do so frequently without much penalty. Living wage ordinances could
provide another layer of protection for workers who talk about workers’
rights in the workplace. A few ordinances allow municipal governments
to deny economic benefits to firms with a history of labor law violations,
on the grounds that the city wants to protect its investment and needs to
ensure “labor peace.”11
Unions have already targeted some of the occupations listed here for
organizing, such as janitors and nursing home workers. It seems more
likely that living wage campaigns could be targeted at the occupations
with lower union density, where it is much harder to win an organizing
drive or achieve gains of any kind. What are the possibilities for these
kinds of campaigns? Living wage ordinances already cover a number of
these occupations, although in a limited fashion. Many of the ordinances
cover the janitorial and food service contractors who service city build-
ings, although this usually represents a small number of workers. The
Boston ordinance covers child care workers hired through county con-
tracts, and most ordinances apply to security and landscaping workers
employed through city contracts.
Living wage ordinances also cover some retail, restaurant, and fast-
food work. This is done directly through living wage ordinances that
cover concessionaires in city-owned property (airports, stadiums, ports)
or in a few designated geographic zones (such as the public Marina in
-1 Berkeley, California). Approximately fifty-six ordinances include a living
0 wage requirement for economic development projects. However, most of
+1

13502-09_CH08-2ndPgs.indd 226 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   227

these have either a high threshold or easy exemptions, so few cities have
really implemented the living wage for economic development.
Would it be possible to expand the living wage policies to cover more
of these low-wage occupations?

Home Health Care

A few living wage ordinances cover counties that administer contracts
covering home health care work. These programs are funded through
Medicaid and run by the state, although in some states the money goes
through county contracts. The living wage ordinances that apply to home
care workers are either in counties (for example, Dane County, Wisconsin)
or in cities that happen to be contiguous with counties (for example, New
York, New York, and San Francisco, California). But in some states the
programs are not run through the counties. And even where they are, rais-
ing wages at the county level still requires lobbying the state to raise reim-
bursement rates. Thus, statewide campaigns to pass living wage policies
covering home health care would be needed in these states, and those are
much more difficult to win than local campaigns, because at the state level
money plays a much larger role and local coalitions do not have the same
access to legislators. Still, statewide policies to mandate living wages for
home health care workers would have a major impact, particularly as this
occupation has the largest predicted job growth through 2018.
Calculations using estimates of employment and union density show
that currently there are potentially 825,712 non-unionized home health care
workers who could be affected. However, not all home health care employ-
ees earn low wages. According to Occupational Employment Statistics
(OES), the median hourly wage in the occupation is $9.91, and the seventy-
fifth-percentile wage is $11.52. A living wage campaign using $11.52 an
hour could cover up to 619,284 current home health care workers. Assum-
ing that new jobs in the field remain at the same level of unionization and
wages, the living wage could also affect another 308,755 workers.
The same dynamics exist for a few other social service programs that
are funded with state and federal money, such as some child care and
special education services. These are covered in only a few living wage
ordinances. Living wage policies at the state level that cover all human
services would also have an impact, although, unlike home health care,
publicly funded child care accounts for a minority of child care work.
About 30 percent of child care workers are self-employed, working from
their homes or in other private homes (Bureau of Labor Statistics 2012).
That is a working situation more similar to that of the occupation “maids -1
and housekeeping workers.” 0
+1

13502-09_CH08-2ndPgs.indd 227 12/10/13 8:34 AM

 228    What Works for Workers?

Domestic Workers
Domestic workers include housekeepers, nannies, and elder care work-
ers who work in private homes. There are a number of domestic worker
organizations around the country, and most have come together to work
through the National Domestic Workers Alliance, formed in 2007. In New
York State, the Domestic Workers United proposed a “Domestic Workers’
Bill of Rights” that set a minimum wage of $12 per hour, to have risen to
$14 per hour by 2010, for domestic workers. The Bill of Rights eventu-
ally passed, but did not include the living wage provision. There is now a
campaign for a Domestic Workers’ Bill of Rights in California. It does not
set a minimum wage level, but would mandate that domestic workers are
entitled to annual cost-of-living increases.
If passed, these laws might be difficult to enforce, as workers tend to
be working on their own, directly for an employer. Yet this is a possible
avenue to begin to raise the floor for a large number of workers in the
large low-wage categories of “maids and nannies” and “personal care,” as
well as one of the fastest-growing occupations, child care. As with home
health care, we can take the total employment and subtract the unionized
workers to get a potential 813,887 workers who might be affected. Then, if
we take the 75 percent of workers who earn up to $11.39 per hour, we get
610,415 current workers who could be affected by a living wage law. This
occupation is expected to grow at a pace slower than the national average,
but still, 111,600 new jobs are predicted. Assuming new jobs in the field
remain at the same level of unionization and wages, the living wage could
also affect another 77,950.
Of course, activists already realize the need to raise wages for home
health care and domestic workers. But these campaigns are hard to win,
owing to the weak political power of the workers in these occupations, let
alone the weakness of the labor movement more generally. Living wage
campaigns have targeted city service contracts not because these are the
most effective target to deal with conditions for low-wage workers, but
because these campaigns have more chance of winning.

Economic Development
The campaigns to apply living wages to public economic development
funding are perhaps easier to win than statewide living wage campaigns,
both because activists can target economic development at the local level,
where they have greater relative strength, and because they have found
-1 ways to hold up development projects through the city council. The cam-
0 paigns may also generate greater support from those who desire greater
+1

13502-09_CH08-2ndPgs.indd 228 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   229

government accountability on spending: even some conservatives believe

that government should not give out large sums of money without attach-
ing more stringent requirements in exchange for that money.
That means that the most likely path to expanding living wage cov-
erage may be through policies to cover more economic development.
Chicago attempted to do this through a “big-box” ordinance that would
have applied to large retail stores, but it was vetoed by Mayor Richard
Daley.12 Still, big-box ordinances could have a significant impact on low-
wage jobs. Despite the economic downturn, retail sales continue to grow,
and national chains predict continued development in the years to come.
Walmart’s CFO recently stated that “WalMart has twice the opportunity
to grow in Los Angeles or New York than the opportunity in India and
China combined,” and the vice chairman noted that Walmart is looking
to grow in the fifty largest urban markets in the coming years (Kellerman
and Luce 2011).
The big-box ordinance in Chicago would have applied to stores of
90,000 square feet or more; the average Walmart “Supercenter” (averaging
185,000 square feet) would have been covered, but not Walmart’s smaller-
format “Neighborhood Market” (averaging 42,000 square feet) or the new
Walmart “Express Market” (which so far averages 15,000 square feet).
A recent study estimated that Walmart will need to build up to eleven Super-
centers in New York City in the coming years if it is to maintain its national
market share (Kellerman and Luce 2011). At an average of 300 employees
per store, this could create 3,300 new jobs (although research shows that
net job gain is much smaller, as a new Walmart tends to drive neighbor-
ing stores out of business). Still, if a big-box ordinance were in place, 3,300
new jobs would be subject to the living wage ordinance. Critics may argue
that with a big-box ordinance, Walmart would not build those eleven
Supercenters, nor would other retailers add stores. That may be the case.
Walmart may choose to build smaller stores not covered by the ordinance,
or to not build at all. But if big-box ordinances were ubiquitous through-
out the major urban areas, Walmart would have fewer options about
where and how to build.
There are no publicly available estimates of Walmart’s Supercenter
plans, so I developed a crude estimate based on the New York estimate.
Using a measure of GDP per metropolitan area for the top fifty urban
centers, I took a ratio of GDP per city relative to New York and applied it
to the eleven Supercenters in New York. This resulted in a possibility of
six supercenters in Los Angeles, five in Chicago, four in Washington, D.C.,
and between one and three for the remaining forty-six urban areas, for a
total of eighty-one new Supercenters (including New York) and a total of -1
about 24,000 jobs. This is clearly not the strategy to cover large numbers 0
+1

13502-09_CH08-2ndPgs.indd 229 12/10/13 8:34 AM

 230    What Works for Workers?

of retail workers. Of course, big-box ordinances would affect not only

Walmart but other retailers like Target and Home Depot. But Walmart
is much larger than these other chains, so it is not likely that extending
the coverage to the other stores would drastically change the estimates.
As of 2011, Walmart had 3,014 Supercenters, 635 “Discount Stores,” 167
Neighborhood Markets, and only a few test Express Markets. In compari-
son, Target has only 1,750 stores total, which includes 240 “SuperTargets.”
Home Depot has 2,200 stores. Other stores, like TJ Maxx, Staples, Best
Buy, and Bed, Bath and Beyond, have much smaller stores—averaging
between 20,000 and 45,000 square feet. A big-box ordinance would need
to lower its size threshold to have any impact on many of these chains.
Therefore, extending the Walmart projections to Target and Home
Depot would add another 30,000 workers, for a total of 54,000 workers
potentially covered by ordinances applying to new big-box development.
These workers are not unionized, but not all earn low wages. A recent study
calculated that approximately 22 percent of Walmart workers earn below
$9 per hour, and 64 percent earn below $12 per hour (Jacobs, Graham-
Squire, and Luce 2011). If these proportions are similar for Target and
Home Depot workers, we estimate that 11,880 workers would be affected
by a big-box ordinance at $9 an hour, and 34,560 at $12 per hour.
Another model is from Los Angeles, which has a living wage policy that
applies to Community Redevelopment Agency (CRA) projects. The liv-
ing wage applies to the developer and any contractors and subcontractors
whose primary work is at the development site, such as janitors, grounds-
keepers, and security. The policy also applies to third-party tenants (such
as retailers) if the land is owned or leased by the CRA. An additional CRA
policy mandates living wages for employees at hotels built on CRA land.
As of 2011, there were 144 CRA projects completed or in process that had
a living wage component (Spivack 2011). These involved over $8 billion in
private investment and $400 million in CRA investment and covered office
space, commercial, industrial, and hotel space, and nonprofit developments
and affordable housing. Altogether they covered approximately 48,700 con-
struction jobs and 23,000 permanent jobs, or 339 construction jobs and 160
permanent jobs per project. The average per project cost was about $56 mil-
lion in private funding and $2.8 million in agency public money.
According to a recent report from Good Jobs First, cities and states cur-
rently spend about $70 billion per year on economic development (Mattera
et al. 2011).13 They conducted a study of 238 state programs and found
that only 135 had job creation standards, and only 98 of those had a wage
standard. The wage levels varied widely, from just above the federal mini-
-1 mum wage up to over $40 an hour, with a median wage requirement of
0 $11.82 per hour.
+1

13502-09_CH08-2ndPgs.indd 230 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   231

The remaining 140 programs had no wage requirement. These programs

cost states $8 billion a year in direct costs. If the CRA projects in Los Angeles
can be taken as an average, $8 billion in public money, at $2.8 million per
project, translates to approximately 2,857 development projects per year.
Again, using CRA numbers, this could create approximately 457,000 per-
manent jobs per project nationally. However, not all of these are low-wage
jobs. If we assume the national average of 25.5 percent low-wage employ-
ment, a living wage requirement could affect 116,535 workers.
Another possibility for reaching large numbers of retail workers is via
shopping malls. One of the largest mall developers in the country is Gen-
eral Growth Properties (GGP). Another Good Jobs First study examined the
subsidies given to fifty General Growth Properties projects that received
over $200 million in subsidies and $9 million in tax savings (Mattera, Lack,
and Walter 2007).14 Malls employ an average of 177 to 3,449 employees
(REMI Consulting 2006). Using an average of 1,391, we can estimate that
the fifty GGP malls employ a total of 69,550 people.15 There are certainly
higher-wage employees at malls, but the percentage of poverty-level jobs
in these workplaces is probably much higher than 25.5 percent. However,
these figures relate to malls that are already in existence, while ordinances
covering economic development apply to new projects. Thus, to cover
employees working in existing malls, living wage activists would most
likely need to pass legislation that applies to a geographic zone—a mea-
sure covering a tourist district or shopping center zone, for instance, but
also perhaps a citywide measure.

Airports and Stadiums

The Federal Aviation Administration (FAA) reports that there are almost
twenty thousand airports in the country, but many of these are small and
private. About 30 percent are public entities—and all of the public passen-
ger airports in the country are run by public entities. Most are run through
the city or county, and some through a public airport authority. In a few
places, an airport is run through the state, such as in Maryland.
A living wage campaign can be directed at the airport through a city
or county ordinance campaign to require all firms receiving contracts for
work at the airport to comply with the ordinance.16 The North Ameri-
can Industry Classification System (NAICS) code for airport operations
(48811) provides data on establishments that operate airports or support
airport operations, though it does not include food services and janitorial
contractors. This makes it difficult to get comprehensive data on the num-
ber of people employed in airports, particularly the number of low-wage -1
workers. Also, as some airports have moved from a “master concessionaire” 0
+1

13502-09_CH08-2ndPgs.indd 231 12/10/13 8:34 AM

 232    What Works for Workers?

model to a “developer” model for food and retail, there are more subten-
ants and more discrepancies over employment numbers.17
Formal employment in NAICS 48811 has been declining rapidly as air-
ports subcontract work and replace jobs with technology (such as elec-
tronic check-in), but airports remain a large source of employment. Large
airports can be the largest employer in the state, as with the Hartsfield-
Jackson Airport in Atlanta, where over 58,000 people work for the airlines,
ground crew, security, TSA, and concessionaires.18 The San Francisco
International Airport has 30,000 employees, and the living wage policy
affected about 10,000 of them (Reich et al. 2005).
A study by Airports Council International (2006) found that 2,042,000
people work in airports in North America. Data are not available for
the U.S. share, but if we estimate that 85 percent of these workers are
employed in U.S. airports, and that, based on the San Francisco case, one-
third of those are low-wage, then we get approximately 573,000 low-wage
workers. Unions have already organized some of these workers, who
work in everything from food service to retail concessions, janitorial, secu-
rity guards, airport parking, parking garage, rental car agencies, and other
passenger services. UNITE HERE represents 30,000 workers at sixty-eight
airports. According to an Airport Group report, unionized concession
workers at the Cleveland airport earned $9.96 per hour in 2007, while non-
union employees at the same airport earned $8.50 an hour. (All the union-
ized workers also received health and retirement benefits, compared to
fewer than half of the non-unionized workers.)19 Other unions also repre-
sent airport workers, including the United Food and Commercial Workers
Union (UFCW), the International Brotherhood of Teamsters (IBT), and the
Service Employees International Union (SEIU). We do not have good den-
sity numbers, but if we assume 12 percent density based on the density
for food preparation workers, it means that approximately 68,000 of the
573,000 low-wage workers are unionized. This leaves a potential 505,000
airport workers who are low-wage, are not represented by a union, and
could be covered by a living wage ordinance. In July 2012, the city council
of Syracuse, New York, extended its municipal living wage ordinance to
cover the city’s airport, which is expected to affect about fifty food service
workers (Abbott 2012).
Some living wage ordinances also cover sports stadiums, such as the
living wage policy that was won in 2007 covering Camden Yards in Balti-
more. The stadium is owned and run by the state (through the Maryland
Stadium Authority), and the living wage campaign was targeted at this
state authority. The majority of the ninety-two professional sports stadi-
-1 ums in the country were built with at least some public money (Good Jobs
0 First 2010).
+1

13502-09_CH08-2ndPgs.indd 232 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   233

In addition to campaigns targeting the authority, a living wage could be

won through a community benefits agreement (CBA) that covers a specific
project. The CBA that covers the San Diego baseball stadium mandates
a living wage for all service contract employees in the ballpark. Activ-
ists could run a CBA campaign with a living wage component approved
before or during the building or expansion of a stadium.
A drawback to a stadium-based campaign is the limited number of
workers affected. According to economists John Seigfried and Andrew
Zimbalist (2000), the average sports team employs 70 to 130 people in the
front office, and 1,000 to 1,500 people are hired on game days to work in
security, concessions, ticket sales, and cleaning.20 If we assume those same
1,000 to 1,500 workers are employed per stadium, we get between 92,000
and 138,000 workers in stadiums, primarily in low-wage, temporary jobs.
The ninetieth-percentile worker in food preparation earns $11.19 per
hour, so it is likely that a large proportion of stadium workers would be
affected. Taking the midpoint, we get a total of 115,000 workers. However,
these workers would not experience a large jump in income, owing to
limited work hours.

Geographic-Based Ordinances
Another option is to promote more living wage ordinances or policies that
apply to a specific geography. Of course, the most comprehensive of these
are the citywide ordinances, but the opportunity to pass these is restricted
by law in some cases, and also by aggressive employer countercampaigns.
Smaller zones within a city might be more feasible. However, a zone is
not necessarily easier to win just because it is smaller. The Santa Monica
City Council passed a living wage that would have applied to large hotels,
restaurants, and retail establishments in the Third Street Promenade area,
but employers organized a ballot initiative to repeal the law and spent
large sums of money and employed dirty tricks to defeat it (Luce 2004).
Still, living wage activists might consider attempting the strategy in
other places. Most large cities have tourist zones that have benefited
from large economic development subsidies. These might include tax-
incremental financing, business improvement districts, industrial devel-
opment agency loans, and other policies that provide subsidized land
purchases, below-market-rate loans, tax abatements, tax credits, and
subsidized job training, as well as public-sector investment in the infra-
structure necessary for promoting tourism and retail (parking garages,
landscaping, well-paved roads and sidewalks, traffic lights, and adequate
streetlamps). As the Good Jobs First study shows, some of the state subsidy -1
programs do include wage requirements, as do a few of the geographic 0
+1

13502-09_CH08-2ndPgs.indd 233 12/10/13 8:34 AM

 234    What Works for Workers?

or “zone” programs (Mattera et al. 2011). For example, the Pine Trees
Development Zones in Maine require employers to pay wages that are
“at least equal to the per-capita income of a county where the project is
located.” Currently, this translates into an hourly wage of $14.04 to $21.71
per hour. Businesses locating in an Iowa enterprise zone must pay 90 per-
cent of the average county or regional wage, whichever is lower, but not
below $7.50 per hour. Currently this results in hourly wages of $10.29 to
$16.44. Many other states have zone programs that do not include a wage
mandate, so this might be an obvious place to start attaching living wage
requirements.
Another geographic-based strategy is to pass ordinances that cover
land at or near ports and airports. In Los Angeles, the city living wage
ordinance initially covered the publicly owned airport directly, but in
2007 the city council passed an extension to the ordinance so that it now
covers hotels in the “airport corridor.” The council argued that the hotels
benefit from their proximity to a public facility, as well as from public
investment in the roads in the area. The extension to the ordinance cov-
ers approximately a dozen hotels. This campaign was difficult to win and
faced legal challenges, so while it could be a model to cover hotels in every
city, anyone undertaking such a campaign should expect a hard fight.
Unfortunately, it is difficult to estimate the number of workers cov-
ered by geographic zone ordinances. We can get some estimates of exist-
ing proposals or policies. For example, Robert Pollin and Mark Brenner
(2000) predicted that 2,477 workers would be directly affected by the
Santa Monica living wage ordinance. The State of Iowa (Gordon 2008)
reports that 9,000 jobs were created through the enterprise zone program
across the state through 2007, although this does not tell us what kinds of
jobs these were.21 Yet to get a comprehensive estimate of potential work-
ers covered by geographic zone ordinances, we would need to estimate
employment in all enterprise zone programs, all tourist districts, all air-
port corridors, and so on, which is beyond the scope of this chapter.

Hours Worked
A second way in which the living wage movement might expand to more
effectively bring low-wage workers out of poverty is to address the issue
of hours of work. A major challenge for low-wage workers is that in addi-
tion to earning low hourly wages, many fall even further behind finan-
cially because they are not given as many hours to work as they would
like. “Involuntary part-time” workers make up one of the largest compo-
-1 nents of “labor underutilization” today, and their numbers are on the rise
0 (Bureau of Labor Statistics 2013).
+1

13502-09_CH08-2ndPgs.indd 234 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   235

The problem is endemic in retail, where employers are increasingly

using “just-in-time” scheduling practices to fine-tune employment based
on customer flow and decrease their payroll costs. Some retailers clas-
sify workers as “part-time” even if they regularly work full-time hours
because this allows them to avoid paying some of the benefits that are
restricted to full-time employees. This “flexibility” so desired by manag-
ers comes at a big cost for workers, whose paychecks are unpredictable
from week to week and whose work schedules can vary day by day, mak-
ing it especially difficult to coordinate child care or elder care, school, or
another job.
Much of labor economics predicts that a rise in wages will result in a
drop in the demand for hours, similar to the finding that higher wages
leads to fewer jobs. Daniel Hamermesh (1996) finds that a 1 percent decline
in total labor costs is associated with a 0.3 percent increase in the demand
by employers for hours worked. Yet other researchers have found some
evidence that this prediction might not always hold true. Susan Lambert,
Anna Haley-Lock, and Julia Henly (2012) argue that low-wage employ-
ers tend to treat workers as a variable cost, but when forced to increase
wages they may begin to treat them more like fixed costs and increase
their demand for hours.
Our research on the Boston living wage found this same phenom-
enon: employers that were mandated to comply with the city living
wage ordinance appeared to convert part-time jobs into full-time ones
(Brenner and Luce 2005). In the firms we surveyed, the living wage
ordinance prompted a shift away from part-time jobs. Total employ-
ment went up by 22 percent, on average, and the number of part-time
jobs fell by 11 percent.
The Los Angeles study found that while the majority of firms did not
cut employment or hours, employers did cut back on overtime hours com-
pared to firms that were not covered by the living wage (Fairris et al. 2005).
The San Francisco airport study did not find evidence that hours were cut
or increased with the implementation of the living wage program (Reich,
Hall, and Jacobs 2003).
Lambert, Haley-Lock, and Henly (2012) argue that employers might
increase hours when they are required to provide benefits to all employ-
ees, such as health insurance. Many firms limit benefit packages to a
small number of full-time workers and fill in employment gaps with low-
wage, nonbenefited, part-time workers. In addition, some government
programs incentivize this practice. For example, employees must work at
least 1,250 hours in twelve months to be eligible for family medical leave,
and the majority of states have rules that exclude many part-time workers -1
from unemployment insurance (National Employment Law Project 2004). 0
+1

13502-09_CH08-2ndPgs.indd 235 12/10/13 8:34 AM

 236    What Works for Workers?

Policies that mandate benefits for all employees might push employers
away from this strategy.
This might also happen with minimum hours-per-shift, or pay-per-
day policies. Haley-Lock (2011) studied restaurant chains in the United
States and Canada and found that U.S. managers tended to send workers
home early if business was slow. In the same chain in British Columbia,
Canada, managers never did this. Provincial law requires them to pay a
minimum of four hours for any shift scheduled up to four hours, and a
minimum of eight hours for shifts scheduled for up to eight hours. The
“minimum daily wage” leads to employers increasing their demand for
hours per employee.22

The Living Wage as a Stepping-Stone

The estimates presented here are crude, and further research is needed
to refine the numbers and assess potential obstacles to these campaigns.
Table 8.2 summarizes the estimates. Excluding the impact of geographic
zones, the campaigns listed here have the potential to affect over 2 million
low-wage workers. However, several of these estimates are not realistic
because they would require a state-level campaign, which would more
likely be cast as a statewide minimum wage campaign than as an industry-
specific living wage campaign. At the same time, home health care and
domestic workers organizations have conducted—and are working on—
statewide, industry-specific campaigns and policy, and so perhaps the
strategy to include a living wage is possible.
Table 8.2 estimates only the direct impact of living wages. In real-
ity, more workers would benefit from indirect increases (ripple effects).
In addition, the table does not include the future jobs created—those
expected to be added to the economy in the next ten years. Still, the num-
bers are far from reaching all of the 37 million workers estimated to earn
poverty-level wages.
In the end, living wage campaigns may work best as a tool for improv-
ing wages indirectly and as a way to build movements for broader policy
changes. In particular, the living wage movement may be responsible for
ensuring raises to statewide and federal minimum wages, which is where
the greatest coverage lies. Ideally, we would have a way to test the coun-
terfactual case: specifically, would Congress have raised the minimum
wage in 1996 and 2007, and would over thirty states have raised statewide
wages, without the living wage movement? We cannot know the answer,
but the evidence suggests that these phenomena are related. For example,
-1 some of the organizations and staff most heavily involved in living wage
0 campaigns, such as ACORN and the Brennan Center for Justice, were key
+1

13502-09_CH08-2ndPgs.indd 236 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   237

Table 8.2  Estimated Impact of New Living Wage Campaigns

Estimated Workers
Target Affected Type of Campaign
Home health care 619,284 Statewide
Maids and housekeeping 611,151 Statewide
Airports 505,000 City or county
CRA-type economic 116,535 State programs
development policy
Stadiums 115,000 County or state
sports authority
Total 2,040,746
Source: Author’s calculations based on Bureau of Labor Statistics (2013).

players in the 2006 state minimum wage ballot initiatives. Those efforts
had a direct impact on several million workers at the time of the increases,
and the effects continue in the states that now use indexing. For example,
the Economic Policy Institute estimated that just over 1 million workers
benefited from indexed wage increases in eight states on January 1, 2012
(Cooper 2012). According to Jen Kern, former director of the ACORN
National Living Wage Resource Center, the experience gained and lessons
learned from working on local campaigns helped advocates pass stronger
minimum wage laws, such as ones that include indexing for inflation (Jen
Kern, personal correspondence with the author, May 13, 2013).

Conclusion
Living wage campaigns have been one of the most successful pro-worker
policy efforts of the last fifteen years. Popular support has been consis-
tently high, and most major cities now have ordinances. However, liv-
ing wage ordinances cover only a small proportion of low-wage workers.
Wage levels have been significantly improved, but not necessarily high
enough to raise workers out of poverty. And while the wage increases are
substantial, on average they are lower than the median wage increase that
low-wage workers experience from unionization (37 percent).
Raising the federal and state minimum wages, and indexing them,
would be a more effective way to cover a large number of low-wage
workers. Senate bill S.460 (Fair Minimum Wage Act of 2013) would affect
over 30 million low-wage workers. Programs like universal health care
and universal child care, as well as expanded affordable housing, would -1
reduce expenses for low-wage workers and therefore lower the hourly 0
+1

13502-09_CH08-2ndPgs.indd 237 12/10/13 8:34 AM

 238    What Works for Workers?

wage needed for a living wage. Living wage activists have pursued liv-
ing wage campaigns not because they are necessarily the most effective
way to address the needs of low-income workers, but because they are
more politically feasible, and because of other potential benefits as well,
such as building new coalitions, developing or strengthening alliances,
and supporting unionization efforts. Therefore, living wage ordinances
should not necessarily be evaluated by the same criteria we might bring to
evaluating other low-wage worker policy.
Other research assesses the impact of living wage campaigns on these
other outcomes (coalition building, support for unionization). Here we
have just tried to focus on the possibility of expanding living wage cam-
paigns to cover a greater share of low-wage workers through campaigns
that might be more feasible and might have some of the side benefits. The
results suggest that certain avenues are more fruitful than others. Big-box
ordinances would address some of the largest and most powerful low-
wage employers, but if they cover only stores larger than 90,000 square
feet and apply only to new development, their impact might not be great.
And because ordinances affecting home health workers must be won pri-
marily at the state level, these relatively difficult fights might just as likely
be statewide minimum wage campaigns.
The more promising avenues for campaigns that would affect large
numbers of low-wage workers yet remain local are ordinances that cover
airports and ordinances or policies that apply to economic development
projects, like the CRA policy in Los Angeles.
In addition, living wage activists should support campaigns that extend
benefits to all workers, regardless of hours worked, and possibly “mini-
mum shift hours” policies, in order to encourage the shift away from part-
time work to more full-time jobs. In addition to a higher hourly wage,
a reduction in involuntary part-time work would greatly assist workers
living below the poverty line.
Still, our estimates suggest that living wage policies are not likely to
reach the majority of the 37 million low-wage workers. The expansion
proposed here would involve numerous difficult campaigns, each prob-
ably taking years and many resources and staff hours. The process of
building a campaign may be useful in itself, however, and for that rea-
son living wage campaigns can be valuable in ways that other policies
may not be. But to truly make a dent in addressing low-wage work in
the United States, much more dramatic efforts are necessary. The living
wage movement may not be the most effective way to increase wages for
large numbers of low-wage workers in the short run, but it may be one
-1 of the few ways to build the political power needed for greater change
0 in the long run.
+1

13502-09_CH08-2ndPgs.indd 238 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   239

Notes
1. The author thanks Arin Dube, Jen Kern, and Heidi Shierholz, plus anony-
mous reviewers, for comments on this chapter.
2. See Julia Rosen, “Working Californian’s L.A. Living Wage Poll,” Calitics,
January 29, 2007; and David Seifman, “74 Percent Support Increase in Living
Wage: Poll,” New York Post, December 14, 2011.
3. These laws have exemptions. For example, the Santa Fe law exempts firms
with fewer than twenty-five employees and employees of the school district.
The San Francisco law exempts workers who are not covered by the state
minimum wage, such as workers classified as independent contractors.
4. They may bid by total hours of work instead of full-time equivalents (FTEs).
Even if they bid by number of FTEs, there is no monitoring to verify the actual
number of workers who do the job in the end.
5. For example, when my colleague and I submitted a Freedom of Information
Act (FOIA) request to see the contracts held by the city of Boston, we were ini-
tially told that we would have to pay $18,000 for photocopying and staff time.
6. In fact, the lack of transparency around contracting practices and subsidy
money is a strong motivation for living wage activism. Policymakers have been
advocating greater reliance on the private sector for many years, on the prem-
ise that this automatically leads to cost savings and more effective service pro-
vision and development. Yet research shows that these promises often do not
hold up (Chang 2008; Luce 2004; Sclar 2001). There is fraud and waste in the
contracting and subsidy process, and some contractors have extracted excess
profits by paying very low wages and providing no benefits. Living wage cam-
paigns challenge the logic of privatization and reliance on the private sector.
7. In a few cities, employers challenged the scope of the law, arguing that their
employees should not be covered since they worked on other contracts as
well as on contracts with the city. For example, the industrial laundry com-
pany Cintas argued that it should be exempt from the L.A. living wage ordi-
nance because its employees worked fewer than twenty hours a month on
laundering city uniforms (covered under the city living wage ordinance), and
because they launder city uniforms with other items, it was not possible for
them to distinguish which employees washed the city uniforms. An appellate
court ruled in favor of the workers. Cintas agreed to pay $6.5 million to settle
the suit, giving over five hundred workers over $3.3 million in back wages
and interest (McDonell 2009).
8. Three cities in Wisconsin passed citywide wage ordinances, but state law has
since repealed these.
9. Data are from State of Working America (Mishel et al. 2013), using total non-
farm employment. “Poverty level” is defined as the hourly wage needed to -1
bring a full-time worker to the federal poverty line for a family of four. 0
+1

13502-09_CH08-2ndPgs.indd 239 12/10/13 8:34 AM

 240    What Works for Workers?

10. See Wicks-Lim and Thompson (2010) for estimates of how high a minimum
wage could go before there might be some job loss.
11. For more on using living wage campaigns to assist unionization, see Luce (2004).
12. This was Daley’s only veto in nineteen years as mayor of Chicago.
13. There is no consistent data source for this information, but one estimate, by
Timothy Bartik (2002), is that states and local governments spend $20 billion
to $30 billion a year on economic development programs, and the federal
government $6 billion per year.
14. GGP owns over two hundred malls and probably received much more than
this in public subsidies, but the report focuses on only fifty of its malls.
15. I use data for “Regional Shopping Malls” for years 6 to 10. REMI provides
estimates for malls in different types of settings (city, suburban, and metro-
politan statistical area).
16. These might be tied to worker retention ordinances (WROs) that apply when
the airport switches contractors. The WRO mandates that the new contractor
must retain the existing employees and can fire them only for just cause. For
example, the WRO at the Los Angeles airport mandates that a new contractor
retain the workforce for ninety days. The initial campaign was launched after
one thousand unionized food service workers on an airport contract were
faced with losing their jobs when the airport awarded the contract to a non-
union firm.
17. See, for example, Airport Group, UNITE HERE, “Five Things to Know About
Developers: How BAA and Other Developers Shortchange Workers and Air-
ports,” available at: http://www.airportgroup.info/documents/Airport%20
Development%207-08.pdf (accessed September 2013).
18. Hartsfield-Jackson International Airport, “ATL Fact Sheet,” available at:
http://www.atlanta-airport.com/Airport/ATL/ATL_FactSheet.aspx (accessed
September 2013).
19. Airport Group, UNITE HERE, “Five Things to Know About Developers.”
20. The average shift for a football game is four hours, and with only ten home
games a year, a football team generates only twenty to thirty full-time-
equivalent jobs outside of the front office. However, the living wage applies to
all employees, not just FTEs.
21. However, Colin Gordon (2008) finds that almost 30 percent of the jobs created
were paying wages below the mandate, because they were probably set just
above the mandate when created and then were not subject to annual cost-
of-living increases.
22. The law requires a minimum of three hours’ pay for shifts initially sched-
uled. Some U.S. states have a similar law. For example, New York State Pro-
tection of Employees (Part-time Work) Act of 2001 requires employers to pay
-1 workers for a minimum of four hours per shift, even if the employee is sent
0 home early.
+1

13502-09_CH08-2ndPgs.indd 240 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   241

References
Abbott, Ellen. 2012. “Syracuse Adds More Workers to Living Wage Law.” WRVO
Public Media, August 1. Available at: http://www.wrvo.fm/post/syracuse-adds-
more-workers-living-wage-law (accessed September 2013).
Airports Council International. 2006. “Airports Stimulate Employment and Eco-
nomic Growth.” Geneva, Switzerland: ACI (April 11).
Allegretto, Sylvia A., Arindrajit Dube, and Michael Reich. 2011. “Do Minimum
Wages Really Reduce Teen Employment? Accounting for Heterogeneity and
Selectivity in State Panel Data.” Industrial Relations 50(2): 205–40.
Bartik, Timothy J. 2002. “Evaluating the Impacts of Local Economic Development Pol-
icies on Local Economic Outcomes: What Has Been Done and What Is Doable?”
Working Paper 03-89. Kalamazoo, Mich.: W. E. Upjohn Institute for Employment.
Brenner, Mark D., and Stephanie Luce. 2005. “Living Wage Laws in Practice:
The Boston, New Haven, and Hartford Experiences.” Amherst: University of
Massachusetts, Political Economy Research Institute.
Bureau of Labor Statistics. 2012. Occupational Outlook Handbook. Washington: U.S.
Department of Labor.
———. 2013. “Employment Situation Summary.” Washington: U.S. Department of
Labor.
Card, David, and Alan B. Krueger. 2000. “Minimum Wages and Employment:
A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania:
Reply.” American Economic Review 90(5): 1397–1420.
Chang, Ha-joon. 2008. Bad Samaritans: The Myth of Free Trade and the Secret History
of Capitalism. London: Bloomsbury Press.
Cooper, David. 2012. “A Rising Tide for Increasing Minimum Wage Rates.” Wash-
ington, D.C.: Economic Policy Institute, Working Economics blog (April 13).
Available at: http://www.epi.org/blog/proposals-increasing-minimum-wage/
(accessed September 2013).
Cooper, David, and Doug Hall. 2013. “Raising the Federal Minimum Wage to
$10.10 Would Give Working Families, and the Overall Economy, a Much-
Needed Boost.” Washington, D.C.: Economic Policy Institute (March 13). Avail-
able at: http://www.epi.org/publication/bp357-federal-minimum-wage-increase/
(accessed September 2013).
Dube, Arindrajit, T. William Lester, and Michael Reich. 2010. “Minimum Wage
Effects Across State Borders: Estimates Using Contiguous Counties.” Review of
Economics and Statistics 92(4): 945–64.
Economic Policy Institute. 2006. “Hundreds of Economists Say: Raise the Minimum
Wage.” Washington, D.C.: Economic Policy Institute. Available at: http://www.
epi.org/page/-/pdf/epi_minimum_wage_2006.pdf (accessed September 2013).
Fairris, David, David Runsten, Carolina Briones, and Jessica Goodheart. 2005.
The Los Angeles Living Wage Ordinance: Effects on Workers and Employers. Los -1
Angeles: Los Angeles Alliance for a New Economy. 0
+1

13502-09_CH08-2ndPgs.indd 241 12/10/13 8:34 AM

 242    What Works for Workers?

Fox, Liana. 2006. “Minimum Wage Trends: Understanding Past and Contempo-
rary Research.” Washington, D.C.: Economic Policy Institute.
Good Jobs First. 2010. “Case Study of Professional Sports.” Available at: http://
www.goodjobsfirst.org/corporate-subsidy-watch/professional-sports
(accessed August 9, 2012).
Gordon, Colin. 2008. “EZ Money: Assessing Iowa’s Enterprise Zone Program.”
Iowa City: Iowa Fiscal Partnership.
Haley-Lock, Anna. 2011. “Place-Bound Jobs at the Intersection of Policy and
Management: Employer Practices in Seattle, Chicago, and Vancouver Restau-
rant Chains.” American Behavioral Scientist 55(7): 823–42.
Hamermesh, Daniel. 1996. Labor Demand. Princeton, N.J.: Princeton University
Press.
Hirsch, Barry T., and David A. Macpherson. 2010. “Union Membership, Coverage,
Density, and Employment by Occupation, 2012.” Available at: www.union-
stats.com (accessed September 2013).
Jacobs, Ken, Dave Graham-Squire, and Stephanie Luce. 2011. “How a Higher Wage
Standard Would Impact Walmart Workers and Shoppers.” Research Brief.
Berkeley: University of California, Center for Labor Research and Education.
Kellerman, Josh, and Stephanie Luce. 2011. “The Walmartization of New York
City.” New York: ALIGN: The Alliance for a Greater New York. Available at:
http://www.alignny.org/wp-content/uploads/2011/09/The-Walmartization-of-
NYC-Sep-2011.pdf (accessed September 2013).
Lambert, Susan J., Anna Haley-Lock, and Julia R. Henly. 2012. “Schedule Flex-
ibility in Hourly Jobs: Unanticipated Consequences and Promising Directions.”
Community, Work, and Family 15(3): 293–315.
Luce, Stephanie. 2004. Fighting for a Living Wage. Ithaca, N.Y.: Cornell University
Press.
Mattera, Phillip, Thomas Cafcas, Leigh McIlvaine, Andrew Seifter, and Kasia Tarc-
zynska. 2011. “Money for Something: Job Creation and Job Quality Standards
in State Economic Development Subsidy Programs.” Washington, D.C.: Good
Jobs First.
Mattera, Philip, Allison Lack, and Karla Walter. 2007. “Growing at Whose Expense?
How Tax Avoidance by Shopping Mall Developer General Growth Inc. Harms
Communities and Burdens Other Tax Payers.” Washington, D.C.: Good Jobs First.
McDonell, Patrick J. 2009. “Industrial Laundry Firm Settles ‘Living Wage’ Law-
suit.” Los Angeles Times, December 18.
Mishel, Lawrence, Josh Bivens, Elise Gould, and Heidi Shierholz. 2013. State of
Working America, 12th ed. Washington, D.C.: Economic Policy Institute.
National Employment Law Project. 2004. “Part-time Workers and Unemployment
Insurance.” March. Available at: http://www.nelp.org/page/-/UI/parttimeui0304.
pdf (accessed September 2013).
-1 Neumark, David, J. M. Ian Salas, and William Wascher. 2013. “Revisiting the Mini-
0 mum Wage Debate: Throwing Out the Baby with the Bathwater?” Discussion
+1 Paper 7166. Bonn, Germany: Institute for the Study of Labor (IZA).

13502-09_CH08-2ndPgs.indd 242 12/10/13 8:34 AM

 Living Wages, Minimum Wages, and Low-Wage Workers   243

Neumark, David, and William Wascher. 2006. “Minimum Wage and Employment:
A Review of Evidence from the New Minimum Wage Research.” Working
Paper 12663. Cambridge, Mass.: National Bureau of Economic Research.
Pollin, Robert. 2005. “The Albuquerque Living Wage Proposal: Rough Estimates
of How Workers and Businesses Will Be Affected by the Measure.” Working
Paper 103. Amherst: University of Massachusetts, Political Economy Research
Institute (September).
Pollin, Robert, and Mark D. Brenner. 2000. “Economic Analysis of the Santa Mon-
ica Living Wage Proposal.” Amherst: University of Massachusetts, Political
Economy Research Institute.
Pollin, Robert, Mark D. Brenner, Jeannette Wicks-Lim, and Stephanie Luce. 2008.
A Measure of Fairness. Ithaca, N.Y.: Cornell University Press.
Reich, Michael, Peter Hall, and Ken Jacobs. 2003. “Living Wages and Economic Per-
formance: The San Francisco Airport Model.” Berkeley: University of California,
Institute of Industrial Relations.
———. 2005. “Living Wage Policies at the San Francisco Airport: Impacts on Work-
ers and Businesses.” Industrial Relations 44(1): 106–38.
Reich, Michael, and Amy Latinen. 2003. “Raising Low Pay in a High-Income City:
The Economics of a San Francisco Minimum Wage.” Working Paper 99. Berkeley:
University of California, Institute of Industrial Relations.
REMI Consulting, Inc. 2006. “Economic Impact of Shopping Center Develop-
ments: Final Report.” Amherst, Mass.: Regional Economic Models, Inc.
Schmitt, John. 2013. “Studying the Studies on the Minimum Wage.” Washington,
D.C.: Center for Economic and Policy Research (February 26). Available at:
http://www.cepr.net/index.php/blogs/cepr-blog/studying-the-studies-on-the-
minimum-wage (accessed September 2013).
Schmitt, John, Margy Waller, Shawn Fremstad, and Ben Zipperer. 2007. “Unions
and Upward Mobility for Low-Wage Workers.” Washington, D.C.: Center for
Economic and Policy Research.
Sclar, Eliot. 2001. You Don’t Always Get What You Pay For: The Economics of Privatiza-
tion. New York: Century Foundation.
Seigfried, John, and Andrew Zimbalist. 2000. “The Economics of Sports Facilities
and Their Communities.” Journal of Economic Perspectives 14(3): 95–114.
Spivack, Donald R. (retired Deputy Chief of Operations and Policy, Community
Redevelopment Agency of Los Angeles). 2011. Testimony on INT. 251-A (The
Fair Wages for New Yorkers Act) before the New York City Council Committee
on Contracts. May 12.
Wicks-Lim, Jeannette, and Jeff Thompson. 2010. “Combining Minimum Wage and
Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to
All U.S. Workers.” Amherst: University of Massachusetts, Political Economy
Research Institute. -1
0
+1

13502-09_CH08-2ndPgs.indd 243 12/10/13 8:34 AM

-1
0
+1

13502-09_CH08-2ndPgs.indd 244 12/10/13 8:34 AM

 Part IV S ocial Insurance Programs
and Low-Wage Work

-1
0
+1

13502-10_CH09-2ndPgs.indd 245 12/10/13 8:34 AM

-1
0
+1

13502-10_CH09-2ndPgs.indd 246 12/10/13 8:34 AM

 Chapter 9 Improving Low-Income Workers’
Access to Unemployment Insurance

Jeffrey B. Wenger

Unemployment insurance (UI) was passed into law in 1935 as part of the
Social Security Act. The system was designed to serve two purposes: pro-
vide income to eligible workers during periods of involuntary job loss,
and stabilize demand in local economies with high unemployment rates.
The program provides benefits to workers who have a strong workforce
attachment and who lose their jobs through no fault of their own. While
the UI program in the United States aims to achieve these goals, it was
designed to allow the methods by which the individual states pursue
them to vary. Instead of operating as one national system, the UI program
in the United States comprises fifty-one separate systems.1
Each of the separate systems is operated by the state in partnership
with the federal government, and each state develops UI policies that
establish the conditions for eligibility, benefit amounts, and tax schedules.
However, the federal government ensures that state policies comply with
federal statutes. On occasion, the federal government utilizes financial
incentives and penalties to encourage states to adopt its preferred poli-
cies. To fund the UI program, the federal government collects tax reve-
nue, while states collect the taxes that pay for UI benefits to individuals.
Employers pay a lower tax rate if their former employees do not collect
UI benefits, so employers have an incentive to minimize the number of
unemployed workers receiving UI benefits.
Figure 9.1 illustrates the percentage of the U.S. labor force who were
unemployed and the percentage of the labor force who received UI ben-
efits during the last three decades. The insured unemployment rate is
-1
simply the percentage of the U.S. labor force receiving regular weekly
0
+1
247

13502-10_CH09-2ndPgs.indd 247 12/10/13 8:34 AM

 248    What Works for Workers?

Figure 9.1   U.S. Total and Insured Unemployment, 1980 to 2011

20 58.4% 0.6
18 51.7%
49.3% 0.5
16
Unemployment

14
0.4

IU/TU Ratio
12 32.6%
35.9% 35.2%
10 0.3
8
0.2
6
4
0.1
2
0 0
19
19

19
19
19
19
19
19
19
20
20
20
20
20
20
19
80
82

86
88
90
92
94
96
98
00
02
04
06
08
10
84

Year
IU/TU Ratio (right axis)
Total Unemployment Rate
Insured Unemployment Rate

Source: Author’s compilation based on U.S. Department of Labor, Employment and Training
Administration (various years) and Center for Economic and Policy Research (2012).

benefits, and this rate is always less than the total unemployment rate.
Between 1980 and approximately 2008, the gap between the two rates
declined, meaning that a growing proportion of the unemployed had been
receiving UI benefits; this modest increase followed two decades (1960 to
1980) of declines in the UI recipiency rate. As can be seen in the figure,
during recessions the gap between the total unemployment (TU) rate and
the insured unemployment rate increases. Surprisingly, the current reces-
sion has generated the largest decline in the IU/TU ratio since the 1980s,
despite policies extending benefits for up to ninety-nine weeks. In 2011 the
ratio reached a minimum at 32.6, indicating that fewer than one-third of
the unemployed were receiving UI benefits.
In the 1920s and 1930s, when the UI system was designed and imple-
mented, men represented a significant majority of the labor force; they were
typically the “breadwinners” for their families and were the primary focus
-1 of the UI program. Many men worked in manufacturing and in unionized
0 shops. During this early period, the percentage of the unemployed who
+1

13502-10_CH09-2ndPgs.indd 248 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   249

received UI benefits often exceeded 60 percent. This high rate was due in
part to UI’s eligibility criteria being designed to benefit full-time workers
with incomes large enough to support a family; as such, the eligibility rules
explicitly made low-income and part-time workers ineligible for benefits.2
This led to a system that often failed to cover earnings losses by women,
workers in the service sector, or those without union representation. State
eligibility rules failed to consider the social and economic issues that affect
low-income workers’ employment patterns (Lovell and Hill 2001; Um’rani
and Lovell 2000). This was particularly true in the service sector, where
workers experienced higher turnover and informal employment arrange-
ments. From its inception, the design of the UI system created inequities
between “core” workers (such as unionized manufacturing workers) seek-
ing access to benefits and those on the “periphery.”
Prior to the onset of the Great Recession in 2007, part-time workers
were still largely ineligible for UI benefits because many states had inter-
preted “seeking employment” to mean searching for full-time employ-
ment (Wenger, McHugh, and Segal 2002). This stipulation is applied to
workers who have historically worked part-time as well as individuals
whose obligations, such as child care, prohibit them from working full-
time. This criterion disproportionately hinders UI eligibility for women,
since one-fourth of all unemployed women are seeking part-time jobs
(U.S. Department of Labor 2000). To aid these part-time job-seekers, the
American Recovery and Reinvestment Act (ARRA) of 2009 sought to
expand UI eligibility among part-time workers. However, an analysis of
national data indicates that this policy change is likely to have little effect
(Shaefer 2010).
Overall, research also shows that the UI system tends to deny benefits
to many workers while many others fail to file for benefits (Lovell and Hill
2001; National Employment Law Project 2001a, 2001b; Um’rani and Lovell
2000). The cumulative effects are evidenced in the consistently lower fil-
ing rates and take-up rates for women, part-time workers, service-sector
workers, and those without union representation.3 In general, it appears
that the kinds of factors that limit eligibility (earnings requirements, inter-
mittent employment, rules for part-time employment, and other disquali-
fications) have a sizable impact on UI take-up rates. However, there are
other state-specific effects that reduce UI take-up but are more difficult to
ascribe to UI policy attributes.
Nevertheless, UI remains an important program, owing largely to a lack
of other resources for the working poor and the generally meager bene-
fits from other poverty assistance programs. In this chapter, I discuss the
structure of UI policy, focusing on the determinants of eligibility, financ- -1
ing, and benefit generosity and the disproportionate impact of these 0
+1

13502-10_CH09-2ndPgs.indd 249 12/10/13 8:34 AM

 250    What Works for Workers?

determinants on the working poor. I also discuss the UI program’s imple-

mentation issues, which have received minimal attention in the litera-
ture. The effect of bureaucratic errors should not be underestimated—as
many as 10 percent of UI claims are wrongfully denied owing to admin-
istrative error. After investigating the long-term trends in UI recipiency
and discussing state-level effects and policy changes to determine the
factors that lead to low UI recipiency rates, I conclude with policy rec-
ommendations and implications.

Risk-Pooling and Family Risk Capacity

Many people believe UI is the primary safety net for workers who have
lost their job through no fault of their own, but this view cannot be consis-
tently applied to the entire U.S. workforce. Because of the often burden-
some requirements to qualify for UI, the primary safety net for low-wage
workers who lose their jobs is family. Workers’ families allow for pooled
risk, helping cushion the effects of bad economic, social, and health-related
outcomes. Recognizing the role of the family is not to harken back to a
day when Ozzie and Harriett ruled the airwaves or to romanticize an age
when women were economically trapped in marriages. My purpose in
mentioning family here is to recognize that modern family structures and
the lack of extensive family networks make the operation of the social
insurance system more necessary, and the lack of access to UI potentially
more problematic.
Although the Great Depression is often credited as the driving force
behind the adoption of the Social Security Act, what is often omitted from
this history is that work was already under way to set up the system. By
the turn of the nineteenth century, economists had already recognized the
severity of the poverty problem and how close to poverty many in the
newly industrialized society were living. What made the phenomenon of
poverty increasingly salient was its concentration in cities. Prior to mass
industrialization, rural life afforded people access to food during eco-
nomic downturns, whereas urban life offered no such relief. More impor-
tantly, moving from farm to factory often meant leaving extended family
networks of support.

Urbanization disrupted vital family support networks. The extended family

had long served as a critical risk management device in rural communi-
ties. When one family member fell sick or was otherwise incapacitated for a
-1 lengthy period, others often lent a hand to support him and his dependents.
0 (Moss 2002, 154–55)
+1

13502-10_CH09-2ndPgs.indd 250 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   251

The consequence of mass urbanization was to leave industrial work-

ers entirely dependent on their wages. With the disruption of family net-
works, spells of unemployment—even relatively short spells—could lead
to a downward spiral of increasingly desperate poverty. The risk of pov-
erty, even absent an economic depression, made providing unemployment
insurance a necessity.
The necessity comes about because the economic risks faced by most
families are greater than a single family can self-insure against. Families
remain an extremely important buffer against economic hardship, but
a buffer that is insufficient given modern exigencies. However, when
families have a very limited capacity to help (their insurance capacity is
limited), one spell of unemployment or illness may result in economic
catastrophe for the extended family. Indeed, even when families have
the capacity to help, there is no guarantee that help will be forthcom-
ing, and given the low levels of savings and the skewed distribution of
wealth, most families have only a limited capacity to help during eco-
nomic crisis.
Most analysts who evaluate the risk-pooling effects of family have
focused on families’ positive benefits. For insurance to be fully effective,
however, risks have to be independent. This is clearly not the case with
families—illnesses are often contagious, industrial disruption may be
regional or industry-specific, and many workers within the family are often
employed in the same industry. The lack of independent risk makes fami-
lies less than the ideal social unit for self-insuring. This is especially true
when the size of the economic misfortune is larger than a single family’s
capacity to carry itself through the hardship. It is often said that UI was
designed to provide temporary income to people during periods of invol-
untary unemployment. But it is equally true that UI was designed because
families lacked the capacity to bear the economic risks of industrial pro-
duction. Since the benefits of insurance are coupled with the costs of pro-
viding aid, it is not clear that families can shoulder the burden. Instead of
being able to provide benefits to family members who are unemployed, a
family may be unable to pay such benefits, and one person’s misfortune
may then compromise the financial security of the entire family.
Similarly, workers with limited resources may have significant demands
placed on them by elderly parents or children and may become involun-
tarily unemployed through their own illness or because of their caretak-
ing responsibilities. In most cases, “involuntariness” is understood to
mean that the unemployment spell was not the worker’s fault, and many
states have provisions for leaving work because of illness and caregiving
tasks. However, most states fail to apprise workers of these policies, and -1
their utilization is uncommon. In other states, laws and regulations make 0
+1

13502-10_CH09-2ndPgs.indd 251 12/10/13 8:34 AM

 252    What Works for Workers?

it more difficult to leave employment for good cause related to illness or

caregiving.
In the sections that follow, I discuss the policies that create barriers for
low-income workers to be eligible for UI. Unlike previous analysis, I also
examine the role of policy implementation and the role of the UI bureau-
cracy (to the extent possible) in making UI less available to low-income
workers.

Policy Issues
To be eligible for UI benefits in a given state, a worker must satisfy three
requirements: meet or exceed the minimum earnings threshold; have a
qualifying reason for job separation; and be actively and continuously
searching for employment. The earnings threshold is set by each state
and helps determine the extent of labor force attachment, while separa-
tion requirements determine who was responsible for separation from
the job in question. In cases where the worker was responsible for the
job separation because he or she quit or was terminated for misconduct,
benefit payments are denied. When the employer lays off workers due to
slack demand, the unemployed person is most likely to meet the separa-
tion requirements. The final test of eligibility is whether the worker is able
to work and continuously available for work. An unemployed person is
eligible for UI benefits when all three conditions are met.
For many low-income workers who leave their jobs, the reasons for
job separation are complex. Many low-income workers quit employment
because of work conditions, personal illness, child care necessities, or
transportation issues. In most states, leaving employment as a result of
illness or to provide care or meet other family obligations is considered
“good cause,” and the UI policies in place allow workers to be eligible for
UI benefits. In other states, the requirements for establishing good cause
for illness or family obligations fall heavily on the employee. In these
states, a physician must advise leaving work for a worker to be eligible for
UI benefits due to illness, or the worker must negotiate with the employer
for reasonable accommodations. Both of these added requirements make
it more unlikely that workers will receive UI benefits, and if they are
eligible, it is unclear whether they will satisfy the “able and available”
requirements.
The second issue related to illness and family obligations is that these
factors tend to reduce wages and cause employment to be sporadic. Even
prior to welfare reform, most women who received welfare worked
-1 while receiving benefits, and most welfare exits occurred as a result of
0 transitioning to work (Harris 1993). However, work histories were often
+1

13502-10_CH09-2ndPgs.indd 252 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   253

interrupted, and job tenures were short (Edin and Lein 1997). As a conse-
quence, workers earned less and thus found it more difficult to qualify for
UI benefits. With the current weak labor market and stagnant or declining
wages, many workers find it increasingly difficult to qualify for UI. Even
in the robust labor market of the late 1990s, many workers left welfare
and failed to earn enough money to quality for UI benefits (Boushey and
Wenger 2006).
A third issue facing the unemployed is the financing of the UI system.
Many state trust funds are depleted, requiring them to borrow heavily
from the federal government. The UI system has a negative net balance,
with total borrowing by the end of the third quarter of 2011 in excess of
$38 billion while trust fund balances equaled only $12.7 billion. In the
late 1970s and early 1980s, such trust fund insolvency led to consider-
able reductions in benefit generosity and eligibility. Similarly, between
2004 and 2009, twenty-five states made significant increases in the earn-
ings requirement necessary to qualify for UI benefits. Along these lines,
Daniel Smith and Jeffrey Wenger (2013) find that trust fund balances play
an important role in altering benefit generosity: when UI trust funds are
exhausted, the amount of available benefits falls, and the effect can be large
and last for a number of years. Also, given that the fiscal situation of the UI
trust funds is not likely to improve in the near future, legislatures will be
faced with the dilemma of raising taxes, cutting benefits, or reducing the
number of eligible beneficiaries. This will clearly have a disproportionate
impact on lower-income workers should they become unemployed.

Implementation Issues
Among the lesser-studied and more poorly understood aspects of the
UI system are the differences between state UI recipiency rates. The
recipiency rate, which is simply the ratio of the number of unemployed
individuals receiving regular UI benefits to the number of unemployed
individuals, varies widely across states. Six states have recipiency rates
that exceed 40 percent of the total unemployed population, while five
other states have rates below 20 percent. Although some of this difference
is due to industrial composition that differs by region and to varying poli-
cies that determine eligibility, these two aspects cannot fully explain the
wide range of recipiency rates across the United States.
Perhaps more disconcerting is the gap between total unemployment
in the United States and the percentage of unemployed receiving ben-
efits. When the unemployment rate peaked at 10.8 percent in Novem-
ber 1982, the percentage of the labor force receiving UI benefits was -1
5.4 percent—a ratio of 0.50. In the current economic downturn, national 0
+1

13502-10_CH09-2ndPgs.indd 253 12/10/13 8:34 AM

 254    What Works for Workers?

unemployment peaked at 10.1 percent in October 2009 while the per-

centage of unemployed workers receiving benefits was 4.4 percent—a
ratio of 0.44.4 A one-percentage-point decline in the percentage of work-
ers receiving UI benefits translates to nearly 1 million fewer workers
receiving UI benefits.
Finally, what is particularly interesting about the decline in benefit pay-
ments relative to unemployment is that the gap between unemployment
rates and the percentage of the unemployed receiving benefits has nar-
rowed during the thirty years preceding the current economic crisis; it is
only during the most recent recession that the gap has increased. While
policy changes probably explain some of this (in particular increases in
earnings requirements), those changes are insufficient to fully explain the
differences in UI recipiency across states.
It would seem plausible that the administration of the UI program
would make a difference in the proportion of the unemployed population
eligible for benefits. Research on bureaucratic discretion has produced
several different views of how bureaucrats use their discretion and its
ultimate impact on outcomes for clients. One view holds that bureaucrats
use their discretion to “stretch the law” to respond to the needs of their cli-
ents (Keiser 1999; Keiser et al. 2002; Maynard-Moody and Musheno 2003).
Under this view, minority and female bureaucrats use their discretion to
reduce the disparate treatment that minority and female clients have his-
torically received from an agency and to improve outcomes for these cli-
ents. This allows bureaucrats to pursue more equitable outcomes for their
clients. In her work on social security disability benefits, Lael Keiser (1999)
finds support for this view. She concludes that street-level bureaucrats
who administer disability programs rely on professional norms and con-
sider the client’s level of need when making decisions. Similarly, Steven
Maynard-Moody and Michael Musheno (2003) examine the stories of 150
street-level bureaucrats and offer evidence that they act as agents of the
clients (or citizens). According to Maynard-Moody and Musheno, these
“citizen agents” assess the needs and worthiness of individual clients in
determining eligibility and do not rely exclusively on the rules and hierar-
chies of the organization.
The bureaucrats working in public agencies are often the first, and
sometimes the only, contact that the public has with the bureaucracy.
Because this contact is most often with street-level bureaucrats who exer-
cise discretion, their attitudes, values, and predispositions are important
factors in determining whether clients are provided aid or are further
disadvantaged (Lipsky 1980). In some contexts, the race and sex of the
-1 bureaucrat and the culture of the bureaucracy may determine, at least in
0 part, how willing a public agent is to advocate on behalf of a client.
+1

13502-10_CH09-2ndPgs.indd 254 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   255

When the bureaucrat and the client share an attribute (such as race),
the bureaucrat may be more willing to stretch the rules to overcome past
discriminatory factors. In the administration of UI benefits, the majority of
bureaucrats are male, and they may be less willing (or able) to sympathize
with the combination of difficulties arising from child care and family
responsibilities combined with unemployment. Jeffrey Wenger and Vicky
Wilkins (2009) have tested this claim by examining the recent introduc-
tion of telephone claims in state unemployment insurance offices. Using
state-level panel data from 1992 to 2005, they estimate the effect of filing a
claim via telephone rather than in person. They contend that if street-level
bureaucrats in this agency use their discretion to disentitle and punish
clients they deem “undeserving” of policy benefits, then the introduction
of automation could increase UI payments for clients. Indeed, they found
that automated telephone claims filing increased the number of women
receiving UI benefits while having no effect on the number of men. They
posit that this finding is due in part to the elimination of the biases that
women previously faced when they entered a UI office.
Altering the amount of discretion that bureaucrats are able to exercise
or the number of errors made by frontline workers can have tremendous
effects on the UI system and UI recipients. Besides its possible effect on
eliminating biases against women clients, the automation of the claims
process has curtailed discretion in UI systems in other ways as well. In an
increasingly automated environment, bureaucrats have little control over
the input of data by claimants and management has increased opportuni-
ties for monitoring. Also, given the possibility that clients will deal with
multiple bureaucrats, coworkers can now identify agents whose denial
rates are higher or lower than the norm. In these ways, automation of the
UI system has been not entirely detrimental to the unemployed.
The public administration literature has also begun paying attention
to bureaucratic error as a critical performance measure. Unlike most pro-
grams, the UI program has systematically collected performance data
and independently audited those data to determine error responsibil-
ity (employer, employee, or agency). In a recent analysis of these data,
Sangyub Ryu, Jeffrey Wenger, and Vicky Wilkins (2012) examine the prob-
ability that a bureaucrat will make an error and theorize about the reasons
for bureaucratic errors. They find that the previous UI office error rate
is a good predictor of current error rates, demonstrating that poor per-
formers remain poor performers. This finding is somewhat disheartening
for UI claimants, in that low performance is systematic and often leads
to their being wrongfully denied benefits. Additionally, local offices with
high error rates account for a disproportionate percentage of the errors, -1
indicating a need to examine agency management. 0
+1

13502-10_CH09-2ndPgs.indd 255 12/10/13 8:34 AM

 256    What Works for Workers?

Second, errors are more commonly made on cases involving white UI

claimants and claimants with a college education. In the cases studied by
Ryu, Wenger, and Wilkins, white claimants and college-educated claim-
ants were more likely to be wrongfully denied benefits. The authors indi-
cate that bureaucrats may work from “rules of thumb,” or preconceived
ideas, about whose application needs additional scrutiny. When claims
conform to the expectations of bureaucrats (when the situation is “nor-
mal”), the bureaucrat can safely rely on shortcuts and easily adjudicate the
claim. This kind of assessment is often optimal: bureaucrats must process
many claims, and paying strict attention to details cannot be sustained
over the course of months and years. In cases that are outside the norm,
the bureaucrat is less likely to rely on rules of thumb and will more heav-
ily scrutinize the claim; the extra scrutiny, in turn, lowers the likelihood
that the claim will be wrongfully denied. The bureaucrat may provide
additional scrutiny to a claim by an African American, thereby reducing
the likelihood of making a wrongful denial; this is the same as making
more errors for white claimants by providing less scrutiny to those claims.
Finally, we find that claimants who have higher self-valuation are less
likely to experience agency errors. Taken together, these results point to
the presence of systematic agency errors in UI programs. Public managers
and the unemployed would be better served if training efforts and perfor-
mance targets were developed with these systematic error effects in mind.

State-to-State Differences and the Changing

Nature of Unemployment Insurance
Trends in UI Recipiency Before and After Welfare Reform
Figure 9.2 presents a picture of state-level recipiency rates for UI benefits.
In this figure, we examine state-to-state differences in UI recipiency. The
recipiency rate is the percentage of unemployed receiving UI benefits rela-
tive to total unemployment. For reference, the U.S. average recipiency rate
(not shown) in 2011 was 28 percent. We should note that no state has a
recipiency rate higher than 53 percent (Alaska) and that the remainder
of the states have recipiency rates below 50 percent. This is a surprising
development considering that the national average was 51 percent in
April 2009. Even with this low national average, many states have rates
significantly below the U.S. average, owing, in part, to the level of dis-
cretion that each state exercises in setting UI policy, as well as industrial
composition and unionization rates. For example, Arkansas is the only
-1 Southern state that has a recipiency rate above 30 percent; Florida and
0 Texas more accurately reflect the regional norm with recipiency rates of
+1

13502-10_CH09-2ndPgs.indd 256 12/10/13 8:34 AM

 Hawaii

0.4
0.53
Alaska

0.28
California

0.38
Oregon
Washington

0.3
0.26
Nevada

0.23 0.240.22
Utah
Arizona
0.37

Source: Author’s compilation based on U.S. Department of Labor, Employment and Training Administration (various years).
New Mexico
0.32 Colorado
0.31 Wyoming
Idaho
0.41

Montana
0.18
Texas
0.29

Oklahoma
0.32

Louisiana
0.38

Arkansas
0.24

Mississippi
0.24

Alabama
0.18 0.19

Tennessee
0.22

Kentucky
Florida
0.24

Georgia
0.28 0.28

South Carolina
0.29

North Carolina

Region
West Virginia
0.22

Virginia
0.19

District of Columbia
0.33

Maryland
0.34

Delaware
Figure 9.2   UI Recipiency Rates (by Region), 2011

Kansas
0.3
0.43

Nebraska
0.19

South Dakota
0.36 0.36

North Dakota
0.25

Missouri
Iowa
0.33

Minnesota
0.42

Wisconsin
0.28

Michigan
Illinois
0.3
0.25

Indiana
0.24

Ohio
0.47

Pennsylvania
0.38 0.37 0.38

New Jersey
0.35

New York
Connecticut
0.27

Rhode Island
Massachusetts
0.45

Vermont
0.34

New Hampshire
0.31

Maine
-1
0.6

0.5

0.4

0.3

0.2

0.1

0
+1
UI Reporting Rate

13502-10_CH09-2ndPgs.indd 257 12/10/13 8:34 AM

 258    What Works for Workers?

18 percent. Clearly when fewer than one in five unemployed workers is

receiving UI, the program is failing to provide temporary income or main-
tain consumer demand.
Contrasts between adjacent states can be stark as well. In Ohio, for exam-
ple, only 24 percent of the unemployed are receiving regular state benefits,
while 47 percent of the unemployed in neighboring Pennsylvania receive
regular state benefits. Meanwhile, in the Southwest, New Mexico’s UI recip-
iency rate (37 percent) dwarfs Arizona’s (24 percent).
Our examination of the trends in UI recipiency concludes with a look at
the percentage of first payments as a fraction of initial claims, using a stan-
dard regression framework. For the period prior to welfare reform (1976
to 1995) and the period after welfare reform (1996 to 2011), using monthly
data from each state, we estimate the following equation:

 First Payments 
  = α + β1Trend + β 2Unemployment Ratei ,t + σ i + µ i ,t (9.1)
 Initial Claims  i ,t

We also include in each specification a state fixed-effect and month indica-

tor variable to adjust for seasonality. In the first model, we find that, over
time, states increased the proportion of first payments made relative to the
number of initial claims. For each year that passed before welfare reform,
we see an increase in the first payment rate of 0.116 percent. In the years
after welfare reform, we find that the trend reverses sign, lowering the
first payment rate by 0.047 percent each year. However, this change in the
trend is probably not the effect of welfare reform, but rather an effect of
the current recession, which has caused states to tighten their fiscal belts.
When we estimate equation 9.1 from 1976 to 2005, the trend variable is still
positive and statistically significant. It is only when we estimate the effect
from 2005 to 2011 that the coefficient on the trend variable turns negative
and becomes statistically significant. It appears that the trend has been
for states to make fewer first payments relative to initial claims as a result
of the weak recovery and recession. One interpretation is that over time
workers have learned not to apply for UI benefits if they are unlikely to
receive them, and this would make each applicant more likely to receive
benefits but would also lower overall recipiency rates, since fewer people
are applying and thus “self-selecting” out of participation.
A second set of evidence gathered from these results is the state-level
effects. In each model, we include a state-specific dummy variable that
controls for time-invariant effects. Although many state-level parameters
are changing (such as benefit generosity, earnings requirements, and labor
-1 force demographics), the state indicators tell us about the potential unique
0 effect of each state owing to the other unobserved (and time-invariant
+1

13502-10_CH09-2ndPgs.indd 258 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   259

factors). It is interesting to note that in no case are we able to reject the null
hypothesis that the state-level fixed effects are jointly zero. This provides
at least tangential evidence that state-specific attributes such as imple-
mentation, culture, and the financial soundness of the UI program can
determine policy outcomes in a fundamental way. In general we find that
Northeastern states have higher recipiency rates and more generous ben-
efits, while states in the South fare considerably worse on both measures.
Multiple researchers have investigated the reasons behind the long-
term decline in UI recipiency, which peaked at 49.2 percent in 1975.5
Daniel McMurrer and Amy Chasinov (1995) investigated the reasons for
the long-term decline and concluded that the characteristics of the U.S.
labor force have changed in ways that systematically reduce recipiency.
Migration from the Midwest to the Southeast and Mountain regions of the
country, where UI recipiency rates are lower than the national average,
lowered overall recipiency; this finding is similar to the findings of Rebecca
Blank and David Card (1991). A second reason for the overall decline was
employment reductions in industries with traditionally higher UI recipi-
ency rates (construction, manufacturing, mining) as well as declines in
private-sector unionization rates. McMurrer and Chasinov also deter-
mined that the shift in demographics to a younger, more mobile, and more
female workforce led to lower UI recipiency rates.

Monetary Eligibility
Did differences among states make a difference in UI uptake? When we
examined whether states with illness and caregiving “good cause” exemp-
tions are more likely to pay benefits to workers, we found that these states
paid a small proportion of first payments as a fraction of initial claims. This
result held for the whole sample (1990 to 2010) and for the 2005 to 2010 sub-
sample. The difference between take-up rates in states with hard-to-satisfy
good cause exemptions compared to states with more liberal good cause
exemptions was statistically significant at better than the 1 percent level.
Table 9.1 provides summary information about the earnings require-
ments for UI eligibility in each state for the 2010 calendar year. As discussed
earlier, UI earnings requirements differ dramatically across the states.
Although some states have week- or hours-based requirements, states typi-
cally require earnings in multiple quarters. The base year constitutes the four
quarters of earnings that determine eligibility, with one of the four quarters
in the base period marked as the “high quarter” (that is, the quarter during
which the worker earned the most money during the base period). Some
states require relatively large earnings within the high quarter in order to -1
achieve eligibility; these high-quarter requirements are often more difficult 0
+1

13502-10_CH09-2ndPgs.indd 259 12/10/13 8:34 AM

 260    What Works for Workers?

Table 9.1  State-Level Earnings Requirements

and Median Wages, 2010
Hours
Median Required to
Hourly Wage Qualify for
High (Women, Benefits
Quarter Base Period High School
State (HQ) (BP) or Less) HQ BP
Alabama >$1,157 >$2,314 $10.00 115.70 231.4
(in two HQs)
Alaska $2,500 $12.35 202.4
Arizona $1,500 $2,250 $11.00 136.4 204.5
Arkansas $2,187 $10.00 — 218.7
California $900 $1,125 $10.75 83.7 104.7
Colorado $1,084 $2,500 $11.00 98.5 227.3
(in two HQs)
Connecticut $600 $12.60 — 47.6
Delaware $720 $12.57 — 57.3
District of $1,300 $1,950 $12.15 107.0 160.5
Columbia
Florida $2,267 $3,400 $11.08 204.6 306.9
Georgia $567 $1,134 $10.25 55.3 110.6
(in two HQs)
Hawaii $130 $12.00 — 10.8
Idaho $1,872 $2,340 $10.00 187.2 234.0
Illinois $1,600 $10.70 — 149.5
Indiana $2,800 $4,200 $10.25 273.2 409.8
Iowa $1,290 $1,940 $10.89 118.5 178.1
Kansas $2,542 $3,240 $10.25 248.0 316.1
Kentucky $1,963 $2,944 $10.00 196.3 294.4
Louisiana $800 $1,200 $9.80 81.6 122.4
Maine $1,383 $4,148 $10.90 127.2 380.6
(in two HQs)
Maryland >$576 $900 $12.00 48.0 75.0
Massachusetts $3,500 $12.00 — 291.7
Michigan $2,871 $4,307 $11.00 261.0 391.5
Minnesota $1,000 $1,250 $11.50 87.0 108.7
Mississippi $780 $1,200 $10.00 78.0 120.0
Missouri $1,500 $2,250 $11.00 136.4 204.5
-1
(Table continues on p. 261.)
0
+1

13502-10_CH09-2ndPgs.indd 260 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   261

Table 9.1   (Continued)

Hours
Median Required to
Hourly Wage Qualify for
High (Women, Benefits
Quarter Base Period High School
State (HQ) (BP) or Less) HQ BP
Montana $1,521 $2,305 $10.30 147.7 223.8
Nebraska $800 >$2,807 $10.90 73.4 257.5
Nevada $400 $600 $12.00 33.3 50.0
New Hampshire $1,400 $2,800 $12.00 116.7 233.3
New Jersey $2,900 $12.00 — 241.7
New Mexico $1,750 $1,751 $10.25 170.7 170.8
New York $1,600 $2,400 $11.50 139.1 208.7
North Carolina $1,118 $4,558 $10.50 106.5 434.1
North Dakota $1,864 $2,795 $10.65 175.0 262.4
Ohio $4,300 $11.13 — 386.3
Oklahoma $375 $1,500 $10.25 36.6 146.3
Oregon $667 $1,000 $10.00 66.7 100.0
Pennsylvania $800 $1,320 $11.50 69.6 114.8
Rhode Island $1,480 $2,960 $11.00 134.5 269.1
South Carolina $1,092 $4,455 $10.25 106.5 434.6
South Dakota $728 $1,288 $10.52 69.2 122.4
Tennessee >$780 >$1,560 $10.20 76.5 152.9
Texas $1,488 $2,220 $10.00 148.8 222.0
Utah $2,066 $3,100 $10.68 193.4 290.3
Vermont $2,203 $3,085 $11.50 191.6 268.3
Virginia $2,700 $10.15 — 266.0
(in two HQs)
Washington 600 hours $11.12 — —
West Virginia $2,200 $10.02 — 219.6
Wisconsin $1,350 $1,890 $11.00 122.7 171.8
Wyoming $2,215 $3,100 $10.00 221.5 310.0
Source: Author’s compilation based on Center for Economic and Policy Research (2012) and
U.S. Department of Labor, Employment and Training Administration (various years).
Note: Median wages are for all women, with high school diploma or less education. The author
thanks John Schmitt for making and updating the CEPR ORG files.

-1
0
+1

13502-10_CH09-2ndPgs.indd 261 12/10/13 8:34 AM

 262    What Works for Workers?

to satisfy for low-income workers than base period earnings requirements.

High-quarter earnings requirements range from a high of $2,800 in Indiana
to a low of $375 in Oklahoma.
Monetary requirements provide only part of the information necessary to
assess how difficult it will be for low-income workers to qualify for UI ben-
efits. To make an accurate assessment we must compare monetary require-
ments to labor market earnings information. Table 9.1 shows the median
hourly wage for women in each state, calculated by using the Current Popu-
lation Survey (Outgoing Rotation Groups); that median hourly wage is used
to determine the number of hours that a woman would have to work in
order to satisfy the high-quarter and base period earnings requirements. In
general, the states with the highest earnings requirements also require the
most hours of work in order to qualify. In Indiana (the state with the highest
quarterly earnings requirement), a woman earning the median wage ($10.25
per hour) would have to work 273 hours in a quarter to qualify for benefits.
If she earned wages at the twenty-fifth percentile ($9.00 per hour), she would
have to work 311 hours in the quarter. In both of these cases, low-income
women would have to work more hours for the quarter than a typical part-
time schedule allows. Kansas and Michigan would also require that women
earning at the twenty-fifth percentile work, on average, more than twenty
hours per week (for at least a quarter) in order to qualify for benefits.
Although we have highlighted those states where earnings requirements
may be difficult to achieve, fourteen states have earnings requirements
necessitating fewer than one hundred hours of work at the median wage
in order to meet the state’s high-quarter threshold. In general, the main
issue is not workers failing to meet the earnings requirements for mone-
tary eligibility. Anu Rangarajan and her colleagues (2001), in their analysis
of welfare-leavers (post–welfare reform), find that most workers achieve
monetary eligibility. Their study focused exclusively on New Jersey, a state
with relatively low earnings requirements ($2,900 in the base period). But
New Jersey also required that a worker have wages in at least twenty weeks
to be eligible. Of those who left welfare for employment (that is, they had
employment earnings in the three months after leaving welfare), 60 percent
attained UI monetary eligibility. The largest percentage of welfare-leavers
to attain monetary eligibility occurred five quarters after welfare exit; in no
other quarter did eligibility exceed 60 percent. Utilizing national data and
the UI eligibility thresholds in all fifty states, Boushey and Wenger (2006)
found that, despite a strong labor market in the late 1990s relative to the
early 1990s, former welfare recipients were less likely to meet the earnings
requirements for UI eligibility, owing largely to an increase in the share of
-1 welfare-leavers with little or no earnings. Selection effects (positive selection
0 into leaving welfare prior to reform) played a significant role in Boushey
+1

13502-10_CH09-2ndPgs.indd 262 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   263

Table 9.2  States That Raised the Base Period Earnings Requirements

Faster Than the Median Wage, 1990 to 2010
1990 to 1995 1995 to 2000 2005 to 2010
Delaware Alabama Alaska
Colorado Arkansas
Florida District of Columbia
Idaho
Indiana
Iowa Iowa
Kansas Kansas
Maine Maine
Massachusetts Massachusetts Massachusetts
Michigan Michigan
Nebraska Nebraska
Montana New Jersey
New Mexico New Mexico New Mexico
New York
North Carolina North Carolina
Ohio Ohio
Texas Rhode Island
Utah Utah Utah
Vermont Vermont
Virginia
Wisconsin
Wyoming Wyoming
Source: Author’s analysis of U.S. Department of Labor, Employment and Training Adminis-
tration (various years).

and Wenger’s conclusion that welfare-leavers in the post–welfare reform

era were qualifying for benefits, because many leavers, by dint of not hav-
ing wages, were not included in the post-reform analyses.
We should exercise caution in inferring too much from any of these stud-
ies for today’s labor market. These analyses of welfare-leavers were con-
ducted at a time of historically low unemployment and significant wage
gains for the lowest quartile of the earnings distribution. Additionally, this
was a time when UI monetary eligibility requirements were relatively low
and had not been increased in the recent past. Table 9.2 provides informa-
tion on the increase in monetary requirements over three periods; only states -1
that raised their monetary eligibility requirements are listed. Immediately 0
+1

13502-10_CH09-2ndPgs.indd 263 12/10/13 8:34 AM

 264    What Works for Workers?

prior to welfare reform (1990 to 1995), only thirteen states had raised their
earnings requirements at all. Consequently, as wages increased the pro-
portion of workers eligible to receive UI benefits in the event of becom-
ing unemployed also rose. Similarly, only nine states raised their earnings
requirements immediately following welfare reform (1995 to 2000). The last
period (2005 to 2010) paints quite a different picture—twenty-one states
raised their earnings requirement during this five-year span. Given the rela-
tively weak labor market and slow wage growth from 2005 to 2010, these
increases were significant. In fact, all of the increases were larger than the
median wage growth in the respective state over the same period.6
As an example, Massachusetts raised its earnings requirements at a
faster rate than the rate of growth in the median wage during all three time
periods—from $1,200 to $2,000 between 1990 and 1995, from $2,000 to $2,700
between 1995 and 2000, and from $3,000 to $3,500 between 2005 and 2010.
The cumulative increase, when compared with the rate of growth for the
average wage of women workers, paints an even bleaker picture. While the
earnings requirement nearly tripled ($3,500/$1,200 = 2.92), the median wage
of women in Massachusetts increased by less than double (from $9.20 to
$17.50; $17.50/$9.20 = 1.90). During the same time period, the median wage of
women across the United States also increased at a rate well below that of the
earnings requirement in Massachusetts (from $7.50 to $14.50; $14.50/$7.50 =
1.93). Massachusetts is not alone, however, in raising the earnings require-
ment at a rate greater than wage growth: Utah and New Mexico have also
engaged in the practice, despite state politics that are considerably differ-
ent. The determinants of earnings requirements certainly warrant additional
research since research on these factors is virtually nonexistent.
Further increases in earnings requirements are likely to come. As a way
to directly cut costs, states can reduce the total number of weeks that indi-
viduals are eligible to receive UI, reduce benefit amounts, reduce access to
the program, or enact a combination of these approaches. Given the poor
fiscal health of the UI trusts, states are likely to reduce access to their UI
programs by continuing to raise earnings requirements for eligibility. It
is likely that it was more difficult to make changes in 2012 since it was an
election year, but steps to reduce access are likely to be taken in 2013. Addi-
tionally, raising the earnings requirements directly affects the lowest-wage
workers who are the most vulnerable, but as a “technical” issue, it captures
scant media or public attention.

Nonmonetary Eligibility and Nonfilers

-1 Although much attention has been focused on monetary eligibility for
0 UI, this is not the most significant barrier to UI receipt for low-income
+1

13502-10_CH09-2ndPgs.indd 264 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   265

workers. The biggest barriers to receiving UI benefits are nonmonetary in

nature, such as shifts in population and industry, failure to apply for UI
benefits, failure to meet nonmonetary eligibility requirements, and inabil-
ity to retain a qualifying job. Despite the quantity and magnitude of these
barriers, they may be the most difficult to overcome in an effort to increase
UI recipiency. Luke Shaefer (2010) finds that a large majority of disadvan-
taged workers in the United States meet UI earning requirements. How-
ever, low-income workers face barriers to accessing UI benefits because
they assume that they are ineligible or they fail to meet nonmonetary eli-
gibility requirements (for example, having voluntarily quit or having
been terminated for cause). These finding are consistent with survey data
on why unemployed workers do not receive UI benefits (Vroman 1991;
Wandner and Stettner 2000).
Unfortunately, there is limited evidence about the specific reasons why
large populations of workers fail to apply for UI benefits when they are
eligible. More direct and microlevel evidence about nonfiling comes from
Wayne Vroman (1991), who evaluated the responses to the first Current
Population Survey supplementary questionnaire on UI nonfiling. The
survey was administered to approximately three thousand households
where at least one worker was unemployed and inquired as to whether
the unemployed person in the household applied for and received UI ben-
efits. If the unemployed person had not received benefits, follow-up ques-
tions explored why that person had not applied for, received, or otherwise
believed himself or herself to be eligible for benefits. Vroman found that
there were three factors that led to the decline of the percentage of the
unemployed receiving benefits: the change in the regional composition
of unemployment (movement from Rust Belt states to Sun Belt states); a
change in the industrial composition of unemployment; and a decline in
union membership.
Wandner and Stettner (2000) conducted a follow-up analysis using data
collected in 1993 that included 4,500 respondents. The data included more
detailed information about job prospects, such as whether the worker was
expecting a recall, whether the worker had a job in hand, or whether the
worker was confident about finding a job quickly. Wandner and Stettner
(2000, 6) found that “between 55 and 65 percent (depending on the busi-
ness cycle) of experienced unemployed workers do not file for benefits.”
Even among job-losers (those most likely to be eligible for benefits),
40 percent of nonfilers chose not to apply for reasons unrelated to their
perceived ineligibility.
Analysts have long recognized the importance of nonmonetary barriers
to UI. Christopher O’Leary and Stephen Wandner (1997) point to impor- -1
tant policy changes in the UI system that have made it much more difficult 0
+1

13502-10_CH09-2ndPgs.indd 265 12/10/13 8:34 AM

 266    What Works for Workers?

for certain groups of workers to receive UI benefits, in particular those

who left work voluntarily, were discharged for misconduct, or refused
suitable work. In 1952 only twelve states disqualified a claimant for the
duration of the unemployment spell if the claimant had left employment
voluntarily; by 1990 all fifty states had such a policy. Kelleen Kaye (1997,
2001), ­Rangarajan, Corson, and Wood (2001), and Shaefer (2010) all note
that nonmonetary eligibility presents significant barriers for low-income
workers to qualify for benefits. For example, Rangarajan and her colleagues
(2001) find that among welfare recipients earning enough to achieve eli-
gibility, 50 percent were ineligible for UI because they had voluntarily
left their job. In general, only 30 percent of welfare recipients achieved
both monetary and nonmonetary eligibility; the largest share (45 percent)
earned enough, but their reasons for job separation were likely to have
made them ineligible for benefits; 25 percent of welfare-leavers (who had
left for employment) did not achieve monetary eligibility.
Luke Shaefer (2010) arrives at a similar set of conclusions using nation-
ally representative data from the Survey of Income and Program Partic-
ipation (SIPP). Shaefer finds evidence that most workers surveyed had
attained monetary eligibility and finds no evidence that restricting UI ben-
efits to full-time workers significantly reduced UI receipt among part-time
workers. Perhaps most importantly, he questions whether reforming UI
eligibility policies related to part-time work or the alternate base period
will significantly reduce disparities between higher- and lower-paid
workers. Similar to other findings, Shaefer reports that only half of the
workers who are disadvantaged and eligible for benefits actually receive
them. This may be largely due to the lack of understanding about the pro-
gram or the administrative burden of applying for benefits.

Job Retention Programs

Research has consistently found that earnings among the poor are not the
most important barrier to achieving UI eligibility. Instead, the reasons for
job separation are the single most important factor in disqualifying work-
ers from eligibility. Rangarajan and her colleagues (2001) find that for for-
mer welfare recipients who had experienced a job separation, 44 percent
had quit their job, 16 percent were fired, and 40 percent were laid off (all
self-reported numbers). Of those who quit, more than half (52 percent)
quit for job-related reasons. As discussed earlier, health and child care rea-
sons were also important factors: fully 25 percent of those who quit work
did so for these reasons. If the definitions of leaving for good cause were
-1 systematically expanded and consistently applied by state agencies, many
0 workers might be in a better position to attain eligibility.
+1

13502-10_CH09-2ndPgs.indd 266 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   267

However, there are still more than 50 percent of job-quitters who leave
work for job-related reasons. Recent research has focused attention on job
retention for lower-wage workers; in general, the results have not been
encouraging. From 2003 to 2006, a series of experimental studies were
conducted in seven regions of the United Kingdom. In the Employment
Retention and Advancement Program, workers were provided with advi-
sory and financial incentives to help sustain their employment and pro-
mote their job advancement. A rigorous evaluation of the experimental
evidence found short-term earnings gains for two of the single-parent
treatment groups, generally in the form of a larger proportion of the treat-
ment group working more hours. By year three there were no differences
between control and experimental groups on most measures. However,
the long-term unemployed treatment group, consisting mostly of men,
experienced significant, substantial, and sustained increases in earnings
(see Hendra et al. 2011).
Another set of studies in the United States used random assignment
design to test the effectiveness of programs designed to help “at-risk”
workers stay employed and advance in their jobs. Of the twelve sites eval-
uated by MDRC, only three had positive impacts. Although this evalua-
tion demonstrates that policy interventions aimed at employee retention
can work, it also points to the difficulty of developing, implementing, and
maintaining these programs, since 75 percent of them showed no signifi-
cant improvements. Even among the programs that were successful, dif-
ferences between experimental and control groups tended to fade over
time. Finally, rates of job loss among the at-risk population were high, and
staffing the program with qualified candidates was difficult. This second
issue was critical, since the actions of the staff were often instrumental in
influencing work outcomes for program participants.
Overall, the experimental evidence on job retention is somewhat dis-
couraging. In their review of the policy evaluation literature, Harry Holzer
and Karin Martinson (2005, 21) find that “relatively few programs improve
retention and advancement with certainty. Many promising efforts have
not yet been rigorously evaluated; others have, but their success rate is
mixed, and our ability to replicate successes and implement them on
a large scale remains uncertain.” They also describe some policies that
might be helpful in mending the safety net for low-income workers. In
general, financial incentives and supports tend to be more successful than
programs without these features. Policies that promote full-time work and
longer spells of employment are more likely to enable workers to qualify
for benefits if they should be laid off. Despite these attempts to ensure
qualification for benefits, however, “voluntary” turnover among the low- -1
paid remains high. 0
+1

13502-10_CH09-2ndPgs.indd 267 12/10/13 8:34 AM

 268    What Works for Workers?

Conclusion and Policy Recommendations

Many analysts of the unemployment system of the United States, argu-
ing that the system is in need of major reform, point to the changes in the
demographics of the U.S. labor force, industrial composition, level of trade
unionism, and interstate mobility. However, few analysts have commented
on the fact that the UI systems of the states have changed a great deal since
the program was initiated. Some programmatic changes have tended to
reduce access to benefits, while others have expanded access or reduced
the cost of applying for, and receiving, benefits. Often left unstudied is the
administrative culture of UI programs. In states with low union density
and weak worker representation, UI programs may be subject to adminis-
trative capture by business interests, which generally seek to make benefits
less available and less generous while reducing their tax burden. Compa-
nies such as Talx now provide business services to handle UI claims and
contest experience-rating assessments, further tilting the balance toward
business interests. Most of the resistance by business interests to expand-
ing the UI system is due to the experience rating of UI taxation and the fact
that businesses perceive that they “pay” UI taxes, despite the well-known
findings that most UI taxes are paid by workers via lower wages.
Given the lack of access and the administrative difficulties discussed in
this chapter, there are significant policy changes that could alter the long-
run effectiveness of the UI program. I highlight four changes that would
be easy (although perhaps politically difficult) to implement. I focus pri-
marily on funding, since that issue is likely to be addressed regardless
of administration or political party. Additionally, there is some research
linking funding with program generosity (Smith and Wenger 2013). Fund-
ing may also lead to reductions in access to the program.

Generate policies that require states to have adequate UI trust fund reserves.
In the absence of adequate reserves, states reduce access to the pro-
gram by raising earnings requirements and making programs less
generous by lowering benefit amounts or weeks of benefits available
to unemployed workers, or both.
To build adequate trust fund reserves the federal government should
raise the wage base used to assess UI taxes to equal the social security wage
base and index it to wage growth. This change will make the program
considerably more progressive and less tax-distortionary (that is, it
will broaden the base and lower the tax).
-1 Reduce employers’ tax burden by shifting the bulk of UI taxes onto workers.
0 Only the firm-specific turnover proportion of UI taxes should be
+1

13502-10_CH09-2ndPgs.indd 268 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   269

assessed to the firm. The worker should pay the base tax rate associ-
ated with the industry. Changes to this type of financing will result
in an experience-rated system, but one that changes the employee’s
expectations about benefits and changes the political economy of
UI legislation and representation on UI boards. The added advan-
tage of this change is that when the UI trust funds are solvent and
legislatures provide a UI tax holiday, workers will see their wages
increase in the short term.
The U.S. Department of Labor should analyze—and independent researchers
should evaluate—states with low levels of UI recipiency. Do states with low
levels of UI recipiency have disparate benefit eligibility for low-income
workers? If so, can advocates pressure those states to raise recipiency
rates? As discussed at length here, monetary eligibility is not the most
significant barrier for most workers. Advocates should focus more
attention on getting states to adopt and enforce “good cause” leaving.
The penalties for voluntary leaving, discharge for misconduct, and
refusal of suitable work have all increased since the 1950s. Instead of
disqualifying workers for the duration of the unemployment spell, we
could work to make benefits available after a suitable waiting period.

Overall, there are simple and significant changes to UI policy that would
make benefits more readily available to low-income workers. Since ben-
efits are unlikely to replace more than 50 percent of lost wages, low-income
workers may not receive much in the way of benefits from the UI program.
However, in difficult labor markets with limited job openings and high
unemployment, a small benefit from the UI system may make a substantial
difference in the lives and livelihoods of families.

Notes
1. With programs in the U.S. Virgin Islands, Puerto Rico, and Washington, D.C.,
there are actually fifty-three “state” programs. We analyze the performance of
all the states and Washington, D.C., in this chapter.
2. In this context, I am using “low-income” to denote both workers who had insuf-
ficient earnings to qualify for unemployment benefits and those who worked in
historically low-wage industries, such as agriculture and domestic service, who
were excluded from UI coverage.
3. In general, filing has become less common among the unemployed, as discussed
by Stephen Wandner and Andrew Stettner (2000). Many of the unemployed fail
to file for unemployment benefits because they do not believe that they are -1
eligible or that they worked or earned enough to receive benefits. Additionally, 0
+1

13502-10_CH09-2ndPgs.indd 269 12/10/13 8:34 AM

 270    What Works for Workers?

some stated that they voluntarily left their previous employment or that they
expect to have a new job soon. However, we do not know if this effect differs by
gender, since Wandner and Stettner (2000) do not provide a separate analysis
for men and women.
4. Note that in the current recession the peak in the insured unemployment rate
(the percentage of unemployed receiving benefits) occurred in June 2009 at
4.8 percent, when the unemployment rate was 9.5 percent.
5. This was the annual average in 1975. The rates shown in figure 9.1 are based
on monthly data.
6. All comparisons use nominal median wage growth in the state and nominal
increases in UI base period earnings requirements.

References
Blank, Rebecca M., and David E. Card. 1991. “Recent Trends in Insured and Un­
insured Unemployment: Is There an Explanation?” Quarterly Journal of Econom-
ics 106(4): 1157–89.
Boushey, Heather, and Jeffrey B. Wenger. 2006. “Unemployment Insurance Eligi-
bility Before and After Welfare Reform.” Journal of Poverty 10(3): 1–23.
Center for Economic and Policy Research. 2012. CPS-ORG Uniform Extracts, ­Version 1.7.
Washington, D.C.: Center for Economic and Policy Research.
Edin, Kathryn, and Laura Lein. 1997. Making Ends Meet: How Single Mothers Survive
Welfare and Low-Wage Work. New York: Russell Sage Foundation.
Harris, Kathleen Mullan. 1993. “Work and Welfare Among Single Mothers in
Poverty.” American Journal of Sociology 99(2): 317–52.
Hendra, Richard, James A. Riccio, Richard Dorsett, David H. Greenberg, Genevieve
Knight, Joan Phillips, . . . and Jared Smith. 2011. Breaking the Low-Pay, No-Pay
Cycle: Final Evidence from the U.K. Employment Retention and Advancement (ERA)
Demonstration, vol. 765. London: Department for Work and Pensions.
Holzer, Harry, and Karin Martinson. 2005. “Can We Improve Job Retention and
Advancement Among Low-Income Working Parents?” Washington, D.C.: Urban
Institute.
Kaye, Kelleen. 1997. “Unemployment Insurance as a Potential Safety Net for For-
mer Welfare Recipients.” Paper presented to the conference of the National
Association of Welfare Research and Statistics, Atlanta, Ga. (July 27–30).
———. 2001. “Re-examining the Potential Role of Unemployment Insurance as a
Safety Net for Workers at Risk of Public Assistance Receipt.” Paper presented
to the National Research Conference on Workforce Security Issues, Washington,
D.C. (June 26–27).
Keiser, Lael R. 1999. “State Bureaucratic Discretion and the Administration of
-1 Social Welfare Programs: The Case of Social Security Disability.” Journal of Public
0 Administration Research and Theory 9(1): 87–106.
+1

13502-10_CH09-2ndPgs.indd 270 12/10/13 8:34 AM

 Improving Low-Income Workers’ Access   271

Keiser, Lael R., Vicky M. Wilkins, Kenneth J. Meier, and Catherine A. Holland.
2002. “Lipstick and Logarithms: Gender, Institutional Context, and Representa-
tive Bureaucracy.” American Political Science Review 96(3): 553–64.
Lipsky, Michael. 1980. Street-Level Bureaucracy: The Critical Role of Street-Level
Bureaucrats. New York: Russell Sage Foundation.
Lovell, Vicky, and Catherine Hill. 2001. “Today’s Women Workers: Shut Out of
Yesterday’s Unemployment Insurance System.” Washington, D.C.: Institute for
Women’s Policy Research.
Maynard-Moody, Steven W., and Michael C. Musheno. 2003. Cops, Teachers, Coun-
selors: Stories from the Front Lines of Public Service. Ann Arbor: University of
Michigan Press.
McMurrer, Daniel P., and Amy B. Chasanov. 1995. “Trends in Unemployment
Insurance Benefits.” Monthly Labor Review 118(September): 30.
Moss, David A. 2002. When All Else Fails: Government as the Ultimate Risk Manager.
Cambridge, Mass.: Harvard University Press.
National Employment Law Project. 2001a. “Part-time Workers and Unemployment
Insurance: Expanding UI for Low-Wage and Part-time Workers.” New York:
NELP.
———. 2001b. “Expanding Unemployment Insurance for Low-Wage Workers: State
Legislative Highlights (1996–2001).” New York: NELP.
O’Leary, Christopher J., and Stephen Wandner. 1997. “Summing Up, Achieve-
ments, Problems, and Prospects.” In Unemployment Insurance in the United States:
Analysis of Policy Issues. Kalamazoo, Mich.: W. E. Upjohn Institute for Employ-
ment Research.
Rangarajan, Anu, Walter Corson, and Robert G. Wood. 2001. “Is the Unemploy-
ment Insurance System a Safety Net for Welfare Recipients Who Exit Welfare
for Work?” Princeton, N.J.: Mathematica Policy Research.
Ryu, Sangyub, Jeffrey B. Wenger, and Vicky M. Wilkins. 2012. “When Claimant
Characteristics and Prior Performance Predict Bureaucratic Error.” American
Review of Public Administration 42(6): 695–714.
Shaefer, H. Luke. 2010. “Identifying Key Barriers to Unemployment Insurance
for Disadvantaged Workers in the United States.” Journal of Social Policy 39(3):
439–60.
Smith, Daniel L., and Jeffrey B. Wenger. 2013. “State Unemployment Insurance
Trust Solvency and Benefit Generosity.” Journal of Policy Analysis and Manage-
ment 32(3): 536–53.
Um’rani, Annisah, and Vicky Lovell. 2000. “Unemployment Insurance and Welfare
Reform: Fair Access to Economic Supports for Low-Income Working Women.”
Washington, D.C.: Institute for Women’s Policy Research.
U.S. Department of Labor, Employment and Training Administration. Various years.
“Comparison of State Unemployment Insurance Laws from 1990 to 2010.” Wash- -1
ington: U.S. Department of Labor, Employment, and Training Administration. 0
+1

13502-10_CH09-2ndPgs.indd 271 12/10/13 8:34 AM

 272    What Works for Workers?

Vroman, Wayne 1991. “The Decline in Unemployment Insurance Claims Activity

in the 1980s.” Unemployment Insurance Occasional Paper 91-2. Washington:
U.S. Department of Labor, Employment and Training Administration.
Wandner, Stephen, and Andrew Stettner. 2000. “Why Are Many Jobless Workers
Not Applying for Benefits?” Monthly Labor Review (June): 21–32.
Wenger, Jeffrey B., Rick McHugh, and Nancy Segal. 2002. “Part-time Work, Inad-
equate Unemployment Benefits.” Indicators: The Journal of Social Health 1(4):
99–111.
Wenger, Jeffrey B., and Vicky M. Wilkins. 2009. “At the Discretion of Rogue Agents:
How Automation Improves Women’s Outcomes in Unemployment Insurance.”
Journal of Public Administration Research and Theory 19(2): 313–33.

-1
0
+1

13502-10_CH09-2ndPgs.indd 272 12/10/13 8:34 AM

 Chapter 10  an the Affordable Care Act
C
Reverse Three Decades of
Declining Health Insurance
Coverage for Low-Wage Workers?

John Schmitt

About half of all U.S. residents without health insurance are workers
(Rho and Schmitt 2010a). Indeed, non-elderly workers are less likely to
have health insurance than many groups generally viewed as more eco-
nomically vulnerable. According to the most recent census data, for exam-
ple, only 2 percent of adults age sixty-five and older and about 10 percent
of children under the age of eighteen lacked health insurance coverage in
2010. By contrast, about 20 percent of workers age eighteen to sixty-four—
and 15 percent of full-time workers in that age range—had no health
insurance in the same year (U.S. Census Bureau 2011, 26–27, table 8).
Yet, we know surprisingly little about workers and their health insurance
or how their coverage has changed over the last three decades.1 In recent
years, the annual reports on health insurance coverage produced by the Cen-
sus Bureau have included a brief mention of the share of workers with health
insurance, but these same published data give no breakdowns by workers’
earnings, gender, race, or education level, and no breakdowns by the source
of coverage (their own employer, a spouse’s employer, Medicaid, Medicare,
directly purchased private insurance, or other sources).2 Moreover, consis-
tent, publicly available data for workers’ coverage start only in the late 1990s,
long after the decline in overall health insurance rates was well under way.3
The most important attempt to fill this data gap has been the regular
estimates produced by the Economic Policy Institute (EPI) for its bien- -1
nial publication The State of Working America.4 The EPI figures, however, 0
+1
273

13502-11_CH10-3rdPgs.indd 273 12/10/13 8:34 AM

 274    What Works for Workers?

focus exclusively on own-employer-provided coverage for private-sector

workers. These data provide important information about compensation,
employer costs, and job quality, but do not tell us about the strategies used
by workers—especially low-wage workers, who are least likely to have
employer-provided insurance—to secure coverage through other means.5
All estimates of health insurance coverage must contend with several
important changes over time in the Current Population Survey (CPS), the
large, nationally representative survey that is the source of official cover-
age numbers.6 During the last three decades, the Census Bureau has made
improvements to the survey methodology, most of which have increased
the ability of the survey to identify health insurance coverage. The improve-
ments are welcome, but can make it much more difficult to track trends. If
the Census Bureau were to travel back in time to 1980, the first year the CPS
asked respondents about their health insurance, and field the same survey
it uses today, it would almost certainly find a higher health insurance cover-
age rate in that year than what was actually found using the earlier version
of the survey. As a result, comparing current coverage estimates with older
estimates without adjusting for the methodological changes systematically
understates the long decline in health coverage. The Census Bureau typi-
cally sidesteps this methodological challenge by reporting coverage rates
only over the recent period (since 1999), when the survey design has been
stable. The EPI takes a more conservative route and reports the changes as
they appear in each year’s survey, which has the effect of underestimating
the decline in coverage over time.7
In this chapter, I seek to paint a more complete picture of trends in health
insurance coverage for workers, especially low-wage workers. To do so, I
first calculate low-wage workers’ coverage rates from all sources of health
insurance, including their own employers, other family members’ employ-
ers, directly purchased policies, Medicaid, and other public sources, with
separate breakdowns for the most important of these categories. I then
adjust these data to reflect changes in the survey methodology over time.
To give some idea of the likely future path of coverage rates for low-
wage workers, I also summarize outside projections of the impact on
coverage rates of the Affordable Care Act (ACA) of 2010. Given the
strong similarities between the ACA and health insurance reforms
passed in Massachusetts in 2006, I also review the experience of workers
in that state.
Based on public and private forecasts of the impact of the ACA—and on
the concrete experience of Massachusetts—I conclude that the full imple-
mentation of recent health care reforms would substantially increase health
-1 insurance coverage for low-wage workers. The main mechanisms for rais-
0 ing low-wage workers’ coverage under the ACA would be expanded eli-
+1

13502-11_CH10-3rdPgs.indd 274 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    275

gibility for Medicaid for low-wage workers in families below 133 percent
of the federal poverty line and federal subsidies for the purchase of private
insurance for low-wage workers in families between 100 and 400 percent of
the poverty line.8 If, however, full implementation of the ACA is blocked
by federal or state executive or legislative action before 2014, every indi-
cation is that low-wage workers will continue to lose access to health
insurance.

Data and Methods

The source of all estimates of health insurance coverage presented here is the
Current Population Survey, the nationally representative survey of 50,000
to 60,000 households conducted monthly by the Census Bureau. Since 1980,
the March version of the CPS has asked respondents detailed questions
about their health insurance coverage during the preceding calendar year.
These responses serve as the basis for the official annual estimates for health
insurance coverage in the United States.
Over the past thirty years, the March CPS has undergone several
important methodological changes that have had an impact on the sur-
vey’s estimates of health insurance coverage rates. Most of these changes
had the effect of raising the reported coverage rate for health insurance,
with the result that comparisons of recent coverage rates with those of
three decades ago systematically understate the decline in health insur-
ance coverage that actually took place over the period. Hye Jin Rho and
I (Rho and Schmitt 2010b) have provided a detailed summary of these
changes and proposed a methodology for adjusting results from the raw
CPS data to make earlier survey data more directly comparable with the
current survey methodology. All estimates here use this recommended
adjustment.
The main focus in this chapter is on low-wage workers, defined for
simplicity as those in the bottom quintile of the hourly earnings dis-
tribution in each year of the survey.9 For purposes of comparison, all
figures also report results for the second quintile of wage earners (the
quintile immediately above the bottom quintile), as well as for the
top quintile. Following Elise Gould (2009), the analysis is limited to
“attached workers,” defined as those who worked at least twenty-six
weeks in the year and usually worked at least twenty hours per week.
Since the interest here is in low-wage employees, the data exclude self-
employed workers.
All reported data refer to workers between the ages of eighteen and sixty-
four. Younger workers may be covered under parental plans or through gov- -1
ernment programs aimed at children (most notably the Children’s Health 0
+1

13502-11_CH10-3rdPgs.indd 275 12/10/13 8:34 AM

 276    What Works for Workers?

Figure 10.1  Health Insurance Among Workers Age Eighteen to

Sixty-Four, Own-Employer, by Wage Quintile,
1979 to 2010

100
92.2

78.9
Percentage of Workers

65.6

51.8
42.9

Bottom Quintile 25.9

Second Quintile
Top Quintile

0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

Insurance Program, or CHIP). Almost all workers (and all U.S. residents)
age sixty-five and older are covered by Medicare, the universal, single-payer
health insurance program for the elderly established in 1965.

Coverage Levels and Trends, 1979 to 2010

As figure 10.1 shows, in 2010 only about one-fourth (25.9 percent) of low-
wage workers had health insurance through their own employer, down
from 42.9 percent in 1979 (see also table 10A.1 in the appendix).10 The 2010
rates for low-wage workers were well below even those in the next quintile
up, where just over half (51.8 percent) of workers had coverage through
their own employer (see also table 10A.2). In the same year, 78.9 percent of
workers in the top quintile had health insurance through their employer
(see table 10A.5).
The last three decades have seen substantial erosion in employer-
-1 provided coverage across workers at all pay levels. Low-wage workers saw
0 the biggest decline in own-employer coverage—17.0 percentage points
+1

13502-11_CH10-3rdPgs.indd 276 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    277

Figure 10.2  Health Insurance Among Workers Age Eighteen

to Sixty-Four, Other Family Member’s Employer,
by Wage Quintile, 1979 to 2010

30
28.1
Percentage of Workers

19.3
17.9
15.2

11.6

Bottom Quintile
5.0 Second Quintile
Top Quintile
0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

between 1979 and 2010. But coverage losses were almost as large for
workers in the second quintile (down 13.8 percentage points) and the top
quintile (down 13.3 percentage points).
A rise in families with second earners, particularly women in married-
couple families, could arguably have reduced the need for own-employer
coverage, because second earners may be able to obtain coverage through
their spouse (or, in some cases, through another family member). Figure 10.2
shows that for low-wage workers, coverage through a spouse’s (or another
family member’s) employer has not made up for the decline in own-
employer insurance. In fact, for low-wage workers, coverage through a
spouse or other family member actually fell ten percentage points between
1979 and 2010. Workers in the second quintile saw a similar, but smaller,
decline. Coverage through another family member’s employer, however,
did increase for workers in the top quintile (and, to a smaller degree, for
workers in the fourth quintile [not shown]).11
Nor have low-wage workers been able to make up for the decline in -1
employer-provided coverage through other forms of private insurance— 0
+1

13502-11_CH10-3rdPgs.indd 277 12/10/13 8:34 AM

 278    What Works for Workers?

Figure 10.3  Health Insurance Among Workers Age Eighteen

to Sixty-Four, Other Private Insurance,
by Wage Quintile, 1979 to 2010

10

8.1
7.6
Percentage of Workers

5.4
4.6
3.6

Bottom Quintile
1.6 Second Quintile
Top Quintile
0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

most importantly, individual policies purchased directly from insurers.

As figure 10.3 shows, in 2010 only about one in twelve low-wage workers
(8.1 percent) had directly purchased or other private coverage, a rate that
had increased only slightly in the preceding thirty years. An even smaller
share of higher-wage workers had directly purchased insurance or other
private coverage: about 5 percent of second-quintile workers and about
4 percent of those in the top quintile. (The low reliance of workers in the
top quintile on non-employer-based private insurance suggests that these
policies are probably not as good as employer-provided coverage.)
The only area where low-wage workers have seen any improvement
over the last three decades is in coverage through public insurance pro-
grams, particularly Medicaid. As figure 10.4 demonstrates, in 2010 about
one of every eight low-wage workers (12.8 percent) had some form of
public health insurance, up from about one in twelve in 1979 (8.8 per-
cent). And as figure 10.5 illustrates, the vast majority of low-wage work-
-1 ers receiving public health insurance in 2010 were covered by Medicaid.
0 (Higher-wage workers with public insurance were much less likely to be
+1

13502-11_CH10-3rdPgs.indd 278 12/10/13 8:34 AM

 Figure 10.4  Health Insurance Among Workers Age Eighteen
to Sixty-Four, All Public Sources, by Wage Quintile,
1979 to 2010

20
Bottom Quintile
Second Quintile
Top Quintile
Percentage of Workers

12.8

8.8 8.5
6.3
4.4
2.6

0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

Figure 10.5  Health Insurance Among Workers Age Eighteen

to Sixty-Four, Medicaid, by Wage Quintile,
1979 to 2010

15
Bottom Quintile
Second Quintile
Top Quintile
Percentage of Workers

9.6

4.7 5.1
3.3

0.9 1.3
0
1980 1990 2000 2010
-1
Year
0
+1
Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

13502-11_CH10-3rdPgs.indd 279 12/10/13 8:34 AM

 280    What Works for Workers?

Figure 10.6  No Health Insurance Among Workers Age Eighteen to

Sixty-Four, from Any Source, by Wage Quintile,
1979 to 2010

50
Bottom Quintile
Second Quintile
Percentage of Workers

Top Quintile 38.5

22.8

16.4

8.2
0.3 4.5
0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

on Medicaid and more likely to have coverage through other government

programs, including those covering military veterans.) Currently, almost
one of every ten low-wage workers (9.6 percent) is covered by Medicaid,
more than double the rate in 1979 (4.7 percent).
After counting coverage from all possible private and public sources,
almost four in ten low-wage workers (38.5 percent) have no health insur-
ance coverage whatsoever (see figure 10.6). This is more than double the
noncoverage rate in 1979 (16.4 percent). By contrast, fewer than 5 percent
of high-wage workers have no form of coverage (though that figure is up
somewhat from the essentially universal coverage that prevailed for high-
wage workers in 1979).
Sample-size limitations make it difficult to obtain corresponding esti-
mates of coverage rates for low-wage workers by race and ethnicity. Data
for all workers, however, indicate that coverage problems are particularly
severe for Latinos. As figure 10.7 indicates, almost 40 percent of all Latino
workers (that is, not just low-wage Latino workers) have no health insur-
-1 ance of any form. Assuming that access to health insurance for low-wage
0 Latinos is below the average for all Latinos, a very high share of low-wage
+1

13502-11_CH10-3rdPgs.indd 280 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    281

Figure 10.7  No Health Insurance from Any Source, by Race-Ethnicity,

1979 to 2010

50
White
Black
Percentage of Workers

Latino 37.9
Asian

22.3 22.3
17.1
13.3 11.8
10.5
4.5
0
1980 1990 2000 2010
Year

Source: Author’s analysis of March Current Population Survey (Center for Economic and
Policy Research 2013).

Latinos workers are likely to be without any coverage. African American

workers (about 22 percent) and Asian workers (about 17 percent) are also
much more likely than whites (about 12 percent) to be without coverage.
In all cases, the noncoverage rates are probably much higher for low-wage
workers within each racial and ethnic group.

Future Trends
The decline in coverage rates has its roots in two long-standing economic
processes. The first is the rising cost of health care, which has squeezed
workers’ wages and made it less economical for firms to offer health insur-
ance, especially to low-wage workers. In the absence of reforms to the
existing health care system, these costs—and implicitly the pressure on
workers’ after-health-insurance compensation—are projected to continue
rising indefinitely.12
The other force behind falling coverage rates, especially for low-wage
workers, is the decline over the last three decades in the bargaining power
of most workers. Beginning in the late 1970s, a set of structural changes -1
in the economy significantly reduced the bargaining power of workers, 0
+1

13502-11_CH10-3rdPgs.indd 281 12/10/13 8:34 AM

 282    What Works for Workers?

especially those at the middle and bottom of the wage distribution. These
structural changes included: a steep decline in unionization; an erosion
in the inflation-adjusted value of the minimum wage; the deregulation of
many historically high-wage industries (trucking, airlines, telecommuni-
cations, and others); the privatization of many state and local government
functions (from school cafeteria workers to public-assistance adminis-
trators); the opening up of the U.S. economy to much higher volumes of
foreign trade; a sharp rise in the share of immigrant workers, who often
lack basic legal rights and operate in an economy that provides few labor
protections regardless of citizenship; and a macroeconomic policy envi-
ronment that has typically maintained the unemployment rate well above
levels consistent with full employment. All of these changes have acted to
reduce the bargaining power of workers, especially those at the middle
and bottom of the wage distribution. As a result, low- and middle-wage
workers have seen their relative (and even absolute) wages fall and the
availability and quality of health insurance and retirement plans decline.13
Despite the Great Recession and the ensuing national debate on eco-
nomic inequality, there are few signs—at least at the time of this writing—
that any of these structural factors undermining workers’ bargaining
power are likely to change anytime soon. The passage of the Affordable
Care Act in 2010, however, holds out the prospect that low-wage work-
ers could see a significant expansion in their health insurance coverage
rates—and at least some possibility that the rate of growth of health care
costs could be reduced relative to the long-term trend.

The Affordable Care Act of 2010

The ACA sets in motion a large and complicated restructuring of the
nation’s health care system, with a particular emphasis on the public and
private health insurance sectors. A full analysis of the ACA—particularly
the measures designed to address long-term cost concerns—is beyond the
scope of this chapter, which focuses instead on those elements of the ACA
that are most likely to affect coverage rates of low-wage workers.
The centerpiece of the ACA is a requirement that most U.S. citizens and
legal residents enroll in some form of private or public health insurance.14
When fully phased in, the act will require that those without coverage
pay a tax penalty of between $695 and 2.5 percent of taxable income (and
indexed, subsequently, to inflation).15
Arguably, the path to coverage preferred by the ACA’s sponsors is
through existing employer-provided private insurance. To this end, the
-1 ACA establishes a “pay-or-play” system for employers with fifty or more
0 full-time employees. Employers above this size threshold that do not offer
+1

13502-11_CH10-3rdPgs.indd 282 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    283

coverage or that have employees who rely on government tax credits to ful-
fill their personal requirement to maintain coverage will pay a tax penalty.16
Smaller employers will not face tax penalties, but many will be eligible to
receive tax credits for providing coverage and will be permitted to buy
insurance through newly created, state-level health insurance exchanges.
However, expansions of coverage through the existing Medicaid program
and through new health insurance exchanges for individual and family cov-
erage are likely to provide the biggest boost in coverage to low-wage workers.
Low-wage workers who have family incomes above 100 percent of the pov-
erty line and whose employers either do not provide insurance or provide
insurance that is deemed too expensive by ACA criteria will be eligible to
receive a federal subsidy to buy private insurance through a health exchange,
as long as their family income is less than 400 percent of the poverty line.
Two kinds of uncertainty hang over any analysis of the likely impact of
the ACA on low-wage workers. The first uncertainty is the exact nature of
the final form of the law and related regulations. On the judicial front, the
ACA has survived several court challenges centered on the constitutionality
of the individual mandate.17 On the legislative front, however, Republicans
in the House and Senate have vowed to repeal all or part of the ACA. At the
state level, several Republican governors and Republican-controlled state
legislatures have announced their intention to block or slow the implemen-
tation of key aspects of the ACA, especially those related to the expansion of
Medicaid, which is particularly important for low-wage workers.18
The second element of uncertainty is related to the inherent difficulties
in predicting individual and institutional responses to large and complex
changes in existing systems, an issue compounded by the fact that many
particulars of the law—especially those involving the workings of the
separate state-level insurance exchanges and the states’ decisions about
full implementation of the ACA’s proposed Medicaid expansion—are still
evolving.19 The following analysis assumes that the ACA will be imple-
mented as passed, and it relies on the educated guesses made by health
care experts concerning the final features and behavioral responses to the
system put in place from 2014 forward.
With these caveats in mind, the Congressional Budget Office (2011, 17)
projects that under the ACA, “the share of legal non-elderly residents with
insurance coverage in 2021 will be about 95 percent, compared with a pro-
jected share of about 82 percent in the absence of that legislation (and an esti-
mated 83 percent currently).” Meanwhile, CBO continues, “about 23 million
non-elderly residents will remain uninsured; about one-third of that group
will be unauthorized immigrants, who are not eligible to participate in Med-
icaid or the insurance exchanges; another quarter will be eligible for Med- -1
icaid but are not expected to enroll; and the remaining fraction will include 0
+1

13502-11_CH10-3rdPgs.indd 283 12/10/13 8:34 AM

 284    What Works for Workers?

individuals who are ineligible for subsidies, are exempt from the mandate
to obtain insurance, choose to not comply with the mandate (and take the
risk of paying a penalty), or have some combination of those characteristics.”
Other researchers generally agree with the CBO that the ACA will result
in a substantial increase in coverage rates.20 Disagreements arise, however,
around the likely mix of coverage. The CBO, like most analysts, believes
that the large majority of the increase in coverage will flow from increases
in directly purchased insurance (which is particularly relevant for workers
in families between 100 and 400 percent of the poverty line) and Medicaid
(particularly relevant for workers in families with incomes below 133 per-
cent of the poverty line), with only a small net decline in employer-provided
coverage.21 The net drop in employer-based coverage, the CBO believes,
will reflect declines in employer offers of coverage. Those declines will be
made up disproportionately of “smaller employers and employers with
predominantly lower-wage workers—people who will be eligible for Med-
icaid or subsidies through the exchanges,” and will largely offset increases
in coverage through other employers responding to the “combined impact
of the insurance mandate, the penalties for employers, and the tax credits
for small employers” (Congressional Budget Office 2011, 19–20). Other ana-
lysts believe that the high costs of providing health insurance to low-wage
workers will lead many employers to reduce their provision of coverage,
pushing many workers currently covered by employer plans onto Medicaid
and the new state-level health exchanges.22
For present purposes, however, the exact mix of the coverage is less rel-
evant than the net increase in total coverage for low-wage workers, which
by almost all accounts is likely to be substantial. Unfortunately, neither the
CBO nor other sources have produced coverage projections for workers
specifically, let alone for low-wage workers. The CBO estimate of a 95 per-
cent coverage rate for the non-elderly population in 2016, however, can—
with a few assumptions about the distribution of this coverage—give some
general guidance about the likely improvement in health insurance access
for low-wage workers.
To produce a rough estimate of the share of low-wage workers who will
remain without coverage after the implementation of the ACA, let’s start with
the CBO’s projection that by 2016 the noncoverage rate for the non-elderly
population of the United States will be 5 percent. The CBO does not provide
a separate breakdown for children (ages zero to seventeen) and adults (ages
eighteen to sixty-four), but we can assume that improvements in coverage
will maintain the same (roughly) two-to-one ratio for the noncoverage rates
of adults to children. Given the relative size of the child and adult popula-
-1 tions in 2010, a 5 percent overall noncoverage rate and the two-to-one ratio
0 imply that the noncoverage rate for all adults will be about 5.8 percent after
+1

13502-11_CH10-3rdPgs.indd 284 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    285

the ACA (and 2.9 percent for children). For simplicity, if we assume that all
adults—both workers and nonworkers—have the same coverage rate, then
under the CBO’s projections, workers as a group will have a 5.8 percent non-
coverage rate after the ACA.23 By comparison, in 2010 the actual noncover-
age rate for all workers was about 17.7 percent. The CBO gives no guidance
about how the coverage improvements for workers will be divided across
the wage distribution. If, at the extreme, we assume that all of the uncovered
workers are low-wage workers by our definition—that is, that all 5.8 percent
of the workers remaining without coverage are in the bottom quintile—then
the noncoverage rate for low-wage workers will be about 29.0 percent.24 This
would be a reduction of one-fourth in the share of low-wage workers without
coverage relative to the actual noncoverage rate for low-wage workers in 2010
(38.5 percent). A less extreme assumption about the distribution of noncover-
age rates by wage level after the ACA produces larger gains for low-wage
workers. For example, if instead we assume that the top 80 percent of workers
have a frictional 3 percent noncoverage rate, then an overall noncoverage rate
for workers of 5.8 percent implies a 17.0 percent noncoverage rate for low-
wage workers—well short of universal coverage, but a noncoverage rate that
is less than half of the current rate.

Massachusetts
The recent experience of Massachusetts provides an important bench-
mark for the likely impact of the ACA.25 The 2006 Massachusetts reforms
included many key elements that would be written into the ACA, including
an individual mandate, a (weak) penalty for employers that fail to provide
coverage, expanded eligibility for Medicaid, and government subsidies to
purchase private insurance for individuals in families with incomes up to
300 percent of the federal poverty line.26 Early results suggest that this com-
bination of policies has substantially increased health insurance coverage
in the state. Sharon Long, Lokendra Phadera, and Victoria Lynch (2010),
for example, find that after the implementation of the reforms, the share of
the state’s population between the ages of nineteen and sixty-four without
coverage was less than 6 percent, compared to a 15 percent rate for the rest
of the nation. Massachusetts had higher coverage rates than the rest of the
country even before the 2006 reforms. But as suggested by Sharon Long,
Alshadye Yemane, and Karen Stockley’s (2010) comparison of changes in
coverage rates in Massachusetts before and after the 2008 implementation
of the reforms with the change over the same period in coverage rates in
New York State—which also had relatively high coverage rates but was
not implementing any reforms—the reforms did substantially increase -1
coverage rates for non-elderly adults. Aakanksha Pande and her colleagues 0
+1

13502-11_CH10-3rdPgs.indd 285 12/10/13 8:34 AM

 286    What Works for Workers?

(2011) reached similar conclusions when they compared adults in Mas-

sachusetts with a control group in Connecticut, New Hampshire, Rhode
Island, and Vermont.
Unfortunately, evaluations of the Massachusetts experience have paid
little attention to the specific outcomes for workers. The sharp declines in
noncoverage rates for all working-age adults, as well as survey evidence
that non-elderly workers in Massachusetts have very low noncoverage
rates (3 percent in 2008, compared to about 17 percent nationally in the
same year),27 suggest that the various reforms have greatly reduced non-
insurance rates for workers, even for those earning low wages.28
The experience of Massachusetts, therefore, offers support for the vari-
ous model-based projections that the ACA will substantially increase cover-
age rates for non-elderly adults, including non-elderly workers. To put the
Massachusetts results into perspective, if we assume that the United States
in 2010 had the same 3.0 percent noncoverage rate for workers that Mas-
sachusetts achieved in 2008, and even if we assume that all of the workers
without coverage were in the bottom quintile of the wage distribution, only
15 percent of low-wage workers nationally would have been without cover-
age in 2010. As figure 10.6 shows, the actual share of low-wage workers in
2010 was 38.5 percent, more than twice as high. If, instead, we assume that
workers at all wage levels experience at least some frictional level of non-
coverage, then the Massachusetts results would imply even better outcomes
for low-wage workers.

Conclusion
Overall, health insurance coverage for low-wage workers has been fall-
ing steadily over the last three decades. The drop in employer-provided
health insurance coverage is the single most important explanation for
this trend. A rise in the share of low-wage workers receiving Medicaid
was able to counteract only a small portion of the falloff in coverage
for low-wage workers. However, based on reasonable projections of
the impact of the ACA, as well as on the experience of Massachusetts
with state-level reforms similar in spirit to the ACA, recent reforms to
the health insurance system stand a reasonable chance of reversing this
long-standing trend.
Low-wage workers are likely to be among the biggest beneficiaries of
the ACA, particularly those provisions that seek to increase employer-
sponsored insurance, expand access to Medicaid, and subsidize the pur-
chase of private insurance. The coverage gap between low-wage workers
-1 and the rest of the workforce will almost certainly fall sharply after 2014.
0
+1

13502-11_CH10-3rdPgs.indd 286 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    287

The ACA does not provide the universal coverage that many health
care reformers were seeking before the bill’s passage, but the ACA may
also act, in the words of economist Heather Boushey (2012), as a “beach-
head” for universal coverage down the line. If, however, full implementa-
tion of the ACA is blocked or delayed, every indication is that coverage
rates will continue their three-decades-long decline.

-1
0
+1

13502-11_CH10-3rdPgs.indd 287 12/10/13 8:34 AM

 0
-1

+1
APPENDIX

13502-11_CH10-3rdPgs.indd 288
Table 10A.1  Adjusted Health Insurance Coverage of Low-Wage Workers, Age Eighteen to Sixty-Four,
1979 to 2010
Private Health Insurance
Public Health Insurance
Health Employment-Based
Insurance Other Other
Year (Total) Total Total Own Private Total Medicaid Public
1979 83.6% 78.7% 71.1% 42.9% 7.6% 8.8% 4.7% 4.0%
1980 n.a. n.a. 70.4 42.3 n.a. 8.6 4.5 4.0
1981 n.a. n.a. 69.7 41.9 n.a. 8.7 4.2 4.4
1982 77.3 72.4 67.6 39.9 4.8 7.8 3.6 4.1
1983 77.1 72.5 65.9 38.2 6.6 7.4 3.2 4.1
1984 75.2 69.8 63.3 36.0 6.5 8.3 3.8 4.4
1985 75.1 69.6 63.0 35.4 6.6 8.8 4.0 4.7
1986 74.0 68.3 62.0 35.2 6.3 8.7 4.1 4.5
1987 73.1 67.0 60.6 34.3 6.5 9.0 4.4 4.6
1988 72.4 66.3 59.1 34.7 7.3 8.6 4.3 4.3
1989 72.0 64.7 58.1 33.7 6.7 10.0 4.8 5.2
1990 70.5 62.8 56.2 32.8 6.7 10.4 5.5 4.9
1991 69.3 61.2 55.1 31.9 6.2 10.8 5.8 5.0
1992 67.9 59.1 52.9 30.9 6.3 11.4 6.5 4.9

12/10/13 8:34 AM
 1993 69.0 61.0 53.3 33.8 7.8 11.5 7.1 4.4
1994 68.5 60.5 52.7 33.8 7.8 11.6 7.4 4.2
1995 68.5 60.2 53.1 34.0 7.1 11.1 7.6 3.5

13502-11_CH10-3rdPgs.indd 289
1996 68.7 60.0 52.5 34.0 7.5 11.9 8.3 3.6
1997 67.7 59.7 52.7 33.9 7.0 11.1 7.7 3.4
1998 67.8 60.1 53.2 33.2 6.9 10.8 7.5 3.3
1999 67.3 59.6 52.8 32.9 6.8 10.7 7.5 3.2
2000 67.0 64.2 57.2 33.5 7.0 9.9 6.7 3.2
2001 66.6 59.3 52.1 33.0 7.2 10.1 7.1 3.0
2002 65.5 57.9 51.0 32.3 6.9 10.7 7.5 3.2
2003 63.8 55.8 48.9 31.4 6.9 10.9 7.7 3.2
2004 64.7 56.3 48.8 30.9 7.5 11.7 8.7 3.0
2005 64.0 55.0 48.1 30.8 6.9 12.3 9.1 3.2
2006 62.9 54.2 47.4 30.1 6.8 11.6 8.7 2.9
2007 64.3 55.2 48.0 30.9 7.2 12.3 9.1 3.2
2008 62.6 53.4 46.1 29.8 7.3 12.4 9.4 3.0
2009 60.1 49.7 43.0 27.5 6.7 13.4 10.5 2.9
2010 61.5 51.9 43.8 25.9 8.1 12.8 9.6 3.2

1979 to -22.1 -26.8 -27.3 -17.0 0.5 4.1 4.9 -0.8

2010
Source: Author’s analysis of Center for Economic Policy Research extract of March Current Population Survey (2013).
Notes: Low-wage workers are defined as those in the bottom fifth of the wage distribution. “Other private” includes directly purchased insur-
ance; “other public” includes Medicare, Veterans Administration, and other public sources. Raw CPS data are adjusted for survey changes using
the procedure described in Rho and Schmitt (2010b).

12/10/13 8:34 AM
0
-1

+1
 0
-1

+1

13502-11_CH10-3rdPgs.indd 290
Table 10A.2  Adjusted Health Insurance Coverage of Second-Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010
Private Health Insurance
Public Health Insurance
Health Employment-Based
Insurance Other Other
Year (Total) Total Total Own Private Total Medicaid Public
1979 91.8% 89.5% 84.9% 65.6% 4.6% 6.3% 3.3% 3.1%
1980 n.a. n.a. 86.7 67.0 n.a. 6.4 3.2 3.3
1981 n.a. n.a. 86.7 67.0 n.a. 7.1 3.2 4.0
1982 91.0 88.7 86.1 66.0 2.6 6.1 2.6 3.6
1983 91.1 89.0 84.9 65.6 4.1 5.6 2.3 3.4
1984 89.4 87.1 83.3 64.0 3.8 6.3 2.7 3.7
1985 88.7 86.4 82.7 63.6 3.7 5.6 2.4 3.3
1986 88.2 86.0 82.1 62.1 3.9 6.0 2.5 3.6
1987 87.5 85.1 81.0 61.2 4.0 6.3 2.6 3.7
1988 86.3 84.1 79.1 60.4 4.9 6.0 2.4 3.6
1989 85.4 81.7 77.2 58.6 4.4 7.5 2.9 4.6
1990 84.9 81.0 76.4 56.9 4.5 8.1 3.1 5.0
1991 84.7 80.4 76.2 57.2 4.1 8.5 3.5 5.0
1992 82.1 77.8 72.9 55.2 4.8 8.0 3.8 4.2
1993 82.5 78.9 73.7 58.1 5.1 8.1 3.9 4.2

12/10/13 8:34 AM
 1994 82.1 78.5 73.4 57.9 5.1 8.0 3.9 4.1
1995 81.6 78.1 72.9 56.9 5.2 7.3 3.4 3.9
1996 82.3 78.6 73.7 56.8 4.9 7.7 4.1 3.6

13502-11_CH10-3rdPgs.indd 291
1997 81.2 78.0 73.7 57.3 4.3 7.0 3.2 3.8
1998 81.7 78.6 74.3 57.5 4.3 6.4 3.0 3.4
1999 81.3 78.2 74.0 57.2 4.2 6.2 2.9 3.3
2000 81.9 81.2 77.1 59.2 4.1 5.6 2.6 3.0
2001 80.7 77.5 73.2 57.5 4.3 6.2 3.1 3.1
2002 79.6 76.4 72.0 56.2 4.4 6.4 3.3 3.1
2003 78.3 74.7 70.7 54.9 4.0 6.6 3.3 3.3
2004 78.4 73.9 69.3 54.0 4.6 8.0 4.7 3.3
2005 78.0 73.8 68.7 52.5 5.1 7.3 4.1 3.2
2006 76.8 72.7 68.4 53.5 4.3 7.5 4.7 2.8
2007 77.5 72.8 68.0 53.8 4.8 7.7 4.4 3.3
2008 78.1 73.5 69.0 54.1 4.5 7.7 4.6 3.1
2009 77.0 71.8 66.8 52.8 5.0 8.7 5.3 3.4
2010 77.2 72.4 67.0 51.8 5.4 8.5 5.1 3.4

1979 to -14.6 -17.1 -17.9 -13.8 0.8 2.2 1.9 0.3

2010
Source: Author’s analysis of Center for Economic Policy Research extract of March Current Population Survey (2013).
Notes: “Other private” includes directly purchased insurance; “other public” includes Medicare, Veterans Administration, and other public
sources. Raw CPS data are adjusted for survey changes using the procedure described in Rho and Schmitt (2010b).

12/10/13 8:34 AM
0
-1

+1
 0
-1

+1

13502-11_CH10-3rdPgs.indd 292
Table 10A.3  Adjusted Health Insurance Coverage of Middle-Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010
Private Health Insurance
Public Health Insurance
Health Employment-Based
Insurance Other Other
Year (Total) Total Total Own Private Total Medicaid Public
1979 94.5% 93.1% 89.6% 75.9% 3.4% 5.8% 1.8% 4.1%
1980 n.a. n.a. 90.2 75.7 n.a. 5.6 1.7 4.0
1981 n.a. n.a. 89.7 75.4 n.a. 6.5 1.4 5.2
1982 93.8 92.7 90.0 75.7 2.6 5.5 1.3 4.3
1983 93.8 92.6 89.4 75.3 3.1 5.2 1.1 4.2
1984 93.4 92.2 88.8 74.7 3.3 5.3 1.2 4.2
1985 93.4 92.1 88.9 74.4 3.1 5.5 1.3 4.3
1986 93.6 92.1 89.1 74.2 2.9 5.4 1.3 4.2
1987 93.5 91.7 88.7 73.7 3.0 5.6 1.3 4.2
1988 93.2 91.2 88.0 74.0 3.2 5.7 1.4 4.2
1989 93.3 90.5 87.4 72.6 3.1 6.7 1.4 5.2
1990 93.0 90.3 87.0 72.1 3.3 6.2 1.5 4.6
1991 92.7 89.5 86.4 71.3 3.1 6.7 1.7 4.9
1992 91.8 88.9 85.8 69.8 3.1 6.3 1.6 4.6
1993 91.0 88.5 84.4 70.7 4.1 6.2 1.8 4.3

12/10/13 8:34 AM
 1994 90.7 88.3 84.1 70.5 4.1 5.9 1.8 4.1
1995 90.1 87.9 83.2 69.4 4.6 5.5 1.7 3.8
1996 90.2 88.0 83.3 68.8 4.6 5.7 1.7 4.0

13502-11_CH10-3rdPgs.indd 293
1997 90.5 88.5 84.8 69.6 3.6 4.7 1.4 3.3
1998 90.2 88.3 84.7 70.7 3.6 4.6 1.3 3.3
1999 89.9 88.1 84.6 70.5 3.5 4.5 1.3 3.2
2000 89.5 89.0 86.1 71.1 2.9 4.2 1.3 2.9
2001 89.8 87.9 84.4 70.8 3.5 4.3 1.4 2.9
2002 88.9 86.8 83.3 68.7 3.5 4.7 1.6 3.1
2003 88.4 86.6 82.9 69.0 3.7 4.8 1.7 3.1
2004 88.2 86.0 82.5 69.2 3.5 5.7 2.5 3.2
2005 88.4 86.0 82.3 68.6 3.7 5.7 2.4 3.3
2006 87.7 85.4 81.8 68.0 3.6 5.4 2.4 3.0
2007 88.0 85.6 81.7 67.9 3.9 6.0 2.6 3.4
2008 87.5 84.7 81.1 67.4 3.6 6.1 2.7 3.4
2009 87.2 84.0 80.2 66.8 3.8 6.9 3.3 3.6
2010 86.8 83.6 79.6 66.0 4.0 6.4 2.9 3.5

1979 to -7.7 -9.5 -10.0 -9.9 0.6 0.6 1.1 -0.5

2010
Source: Author’s analysis of Center for Economic Policy Research extract of March Current Population Survey (2013).
Notes: “Other private” includes directly purchased insurance; “other public” includes Medicare, Veterans Administration, and other public
sources. Raw CPS data are adjusted for survey changes using the procedure described in Rho and Schmitt (2010b).

12/10/13 8:34 AM
0
-1

+1
 0
-1

+1

13502-11_CH10-3rdPgs.indd 294
Table 10A.4  Adjusted Health Insurance Coverage of Fourth-Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010
Private Health Insurance
Public Health Insurance
Health Employment-Based
Insurance Other Other
Year (Total) Total Total Own Private Total Medicaid Public
1979 97.8% 96.6% 95.5% 87.3% 1.2% 4.8% 1.5% 3.3%
1980 n.a. n.a. 96.8 88.5 n.a. 4.7 1.3 3.4
1981 n.a. n.a. 97.1 89.2 n.a. 4.9 1.1 3.8
1982 98.3 97.1 96.6 88.2 0.6 4.9 0.9 4.0
1983 98.2 97.2 96.6 87.6 0.7 4.4 0.8 3.6
1984 97.7 96.6 95.4 86.1 1.3 4.5 0.8 3.7
1985 98.0 96.9 96.1 86.8 0.9 4.6 0.9 3.7
1986 98.3 97.3 96.3 86.5 1.1 4.6 0.8 3.8
1987 98.2 97.2 96.0 85.9 1.2 4.7 0.8 3.9
1988 97.6 96.5 95.2 84.8 1.3 5.0 0.8 4.2
1989 98.1 96.2 94.3 84.0 1.9 5.3 0.8 4.5
1990 97.5 95.8 93.9 83.3 1.9 5.5 0.8 4.7
1991 97.6 95.9 94.5 83.1 1.4 5.6 0.8 4.8
1992 97.0 95.1 93.2 81.5 1.9 5.5 0.9 4.6
1993 96.3 94.6 92.2 81.7 2.4 5.5 1.0 4.5

12/10/13 8:34 AM
 1994 96.0 94.3 91.9 81.3 2.4 5.4 1.0 4.4
1995 95.4 93.6 91.2 80.1 2.4 5.1 1.2 3.9
1996 96.2 94.6 92.1 80.2 2.5 4.6 1.1 3.5

13502-11_CH10-3rdPgs.indd 295
1997 95.7 94.3 91.6 79.7 2.7 4.2 0.8 3.4
1998 95.2 93.8 91.4 79.9 2.4 4.2 0.8 3.4
1999 94.9 93.6 91.1 79.3 2.5 4.0 0.8 3.2
2000 94.1 93.3 91.0 79.0 2.3 3.5 0.7 2.8
2001 94.1 93.0 90.5 78.5 2.5 3.5 0.9 2.6
2002 93.6 92.2 89.7 77.2 2.5 4.2 0.8 3.4
2003 93.5 92.2 89.2 76.3 3.0 3.9 1.0 2.9
2004 93.5 92.0 88.9 75.8 3.1 4.8 1.3 3.5
2005 92.9 91.3 88.1 75.1 3.2 4.7 1.4 3.3
2006 92.1 90.5 87.2 74.4 3.3 4.5 1.5 3.0
2007 93.2 91.7 88.5 75.9 3.2 4.5 1.3 3.2
2008 93.1 91.3 88.3 75.4 3.0 4.6 1.3 3.3
2009 92.1 90.2 86.9 74.9 3.3 5.2 1.7 3.5
2010 92.6 90.6 87.1 74.6 3.5 5.2 1.9 3.3

1979 to -5.2 -6.0 -8.3 -12.7 2.3 0.4 0.4 0.0

2010
Source: Author’s analysis of Center for Economic Policy Research extract of March Current Population Survey (2013).
Notes: “Other private” includes directly purchased insurance; “other public” includes Medicare, Veterans Administration, and other public
sources. Raw CPS data are adjusted for survey changes using the procedure described in Rho and Schmitt (2010b).

12/10/13 8:34 AM
0
-1

+1
 0
-1

+1

13502-11_CH10-3rdPgs.indd 296
Table 10A.5  Adjusted Health Insurance Coverage of Top-Quintile Workers, Age Eighteen to Sixty-Four,
1979 to 2010
Private Health Insurance
Public Health Insurance
Health Employment-Based
Insurance Other Other
Year (Total) Total Total Own Private Total Medicaid Public
1979 99.7% 98.8% 97.2% 92.2% 1.6% 2.6% 0.9% 1.7%
1980 n.a. n.a. 98.1 92.6 n.a. 2.8 0.8 2.0
1981 n.a. n.a. 98.6 93.4 n.a. 4.0 0.9 3.1
1982 100.2 99.3 98.8 93.2 0.5 3.3 0.7 2.6
1983 99.8 99.1 98.4 92.5 0.7 3.1 0.6 2.5
1984 99.4 98.6 97.6 91.5 1.0 3.3 0.7 2.6
1985 99.4 98.6 97.6 91.5 1.0 3.4 0.8 2.6
1986 99.5 98.5 98.0 91.3 0.5 3.3 0.8 2.5
1987 99.4 98.3 97.7 90.7 0.6 3.3 0.8 2.5
1988 99.0 98.0 97.4 90.0 0.6 2.8 0.8 2.0
1989 99.3 97.7 96.6 88.8 1.1 3.8 0.9 2.9
1990 98.9 97.4 96.1 87.8 1.3 3.9 0.8 3.1
1991 99.0 97.5 96.0 87.5 1.5 3.6 0.9 2.7
1992 98.8 97.2 95.4 86.2 1.8 3.6 0.8 2.8
1993 97.5 96.1 93.4 85.4 2.7 4.1 0.9 3.2

12/10/13 8:34 AM
 1994 97.2 95.9 93.0 84.8 2.9 4.0 0.8 3.2
1995 97.2 96.1 93.1 84.0 3.0 3.2 0.8 2.4
1996 97.1 96.0 93.0 83.9 3.0 3.1 0.8 2.3

13502-11_CH10-3rdPgs.indd 297
1997 97.0 96.1 93.2 83.5 2.9 2.8 0.6 2.2
1998 96.7 95.9 93.1 83.1 2.8 2.8 0.4 2.4
1999 96.5 95.8 93.0 82.6 2.8 2.7 0.4 2.3
2000 96.0 95.6 93.2 82.1 2.4 2.7 0.5 2.2
2001 95.5 94.7 92.0 81.1 2.7 3.0 0.7 2.3
2002 95.6 94.7 91.4 80.7 3.3 3.0 0.5 2.5
2003 95.7 94.9 91.8 80.7 3.1 3.1 0.6 2.5
2004 95.9 94.9 91.3 79.8 3.6 3.7 0.9 2.8
2005 95.6 94.6 91.1 79.5 3.5 3.9 1.0 2.9
2006 95.6 94.6 90.8 79.1 3.8 3.6 1.0 2.6
2007 95.6 94.6 90.6 79.1 4.0 3.7 1.0 2.7
2008 95.6 94.3 90.9 79.1 3.4 4.1 1.1 3.0
2009 95.3 93.9 90.2 78.3 3.7 4.2 1.2 3.0
2010 95.5 94.1 90.5 78.9 3.6 4.4 1.3 3.1
1979 to -4.2 -4.7 -6.7 -13.3 2.0 1.8 0.5 1.4
2010
Source: Author’s analysis of Center for Economic Policy Research extract of March Current Population Survey (2013).
Notes: “Other private” includes directly purchased insurance; “other public” includes Medicare, Veterans Administration, and other public
sources. Raw CPS data are adjusted for survey changes using the procedure described in Rho and Schmitt (2010b). The adjustment procedure
yields a coverage rate above 100.0 percent in 1982.

12/10/13 8:34 AM
0
-1

+1
 298    What Works for Workers?

Notes
1. For a brief introduction to the origins and development of the employer-
provided health insurance system in the United States, see Blumenthal (2006).
2. See, for example, U.S. Census Bureau (2011, 27, table 8). The census, instead,
devotes extensive analysis to health insurance coverage by age (particularly
for the population zero to seventeen and eighteen to sixty-four) and other
demographic characteristics.
3. See U.S. Census Bureau, “Health Insurance Historical Tables—HIB Series,”
available at: http://www.census.gov/hhes/www/hlthins/data/historical/HIB_
tables.html (accessed May 2013).
4. The State of Working America has been published biennially for two decades.
The most recent data are available at: http://www.stateofworkingamerica.
org/ (accessed May 2013).
5. Paul Fronstin (2000, 2009) tracks the health insurance coverage of workers and
examines workers’ coverage through all possible sources, not just employer-
provided insurance. Lisa Clemans-Cope and Bowen Garrett (2006) analyze
coverage rates for adults, workers, and children through employers and other
sources. This chapter differs from this earlier research in two key ways. First, I
divide workers into wage quintiles and focus on low-wage workers; Fronstin
and Clemans-Cope and Garrett analyze all workers as a group. Second, I pro-
duce consistent estimates from 1979 through 2010; Fronstin (2000) covers the
period 1987 through 1998, and the period 1994 through 2008 (Fronstin 2009);
and Clemans-Cope and Garrett cover 2001 through 2005.
6. See Rho and Schmitt (2010b) for a review of changes in the CPS methodology
related to health insurance coverage.
7. I use the same approach (Schmitt 2008). Using unadjusted CPS data, Hye
Jin Rho and I (Rho and Schmitt 2010b) find a 7.5-percentage-point decline
between 1979 and 2008 in overall coverage rates for workers age eighteen to
sixty-four (see our table 10A.2); after adjusting for survey changes, we esti-
mate that the decline was 10.2 percentage points—about 36 percent higher
than the unadjusted estimate.
8. U.S. House of Representatives, Office of the Legislative Counsel, “Compilation
of Patient Protection and Affordable Care Act,” as amended through May 1,
2010, 111th Cong., 2nd session, p. 113, available at: http://housedocs.house.
gov/energycommerce/ppacacon.pdf (accessed May 2013). In practice, the
ACA allows states to disregard up to 5 percent of family income, potentially
raising the effective threshold to 138 percent of the poverty line (Kaiser Family
Foundation 2012a).
9. Hourly wages are calculated in the standard way by dividing each worker’s
-1 annual earnings from work by the product of the worker’s total number of
0 weeks worked in the year and his or her usual hours per week. The upper
+1

13502-11_CH10-3rdPgs.indd 298 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    299

limit for hourly wages received by workers in the bottom wage quintile in
2010 was $10.10; the upper limit for the second wage quintile in the same year
was $14.96; and workers in the top quintile made at least $30.77 per hour (all
in 2010 dollars).
10. A worker is covered if the employer offers a plan and the employee partici-
pates in that plan. Low-income workers are both less likely to be in a job that
offers health insurance and less likely to accept coverage when it is available
(Clemans-Cope et al. 2007, 1).
11. For details on coverage for workers in the fourth quintile, see table 10A.4.
Coverage through a spouse’s or other family member’s employer was basi-
cally unchanged for workers in the middle quintile (see table 10A.3).
12. On the long-standing rise in health care costs, see, for example, Congressional
Budget Office (1991), Goodell and Ginsburg (2008), and the Center for Eco-
nomic and Policy Research’s “Health Care Budget Deficit Calculator,” available
at: http://www.cepr.net/calculators/hc/hc-calculator.html (accessed May 2013).
13. For a longer discussion of these structural shifts, see, among others, Baker
(2007), Bivens (2011), Mishel, Bernstein, and Shierholz (2009), and Schmitt
(2009). For a discussion of the importance of full employment, see Bernstein
and Baker (2003).
14. The Kaiser Family Foundation (2011) provides an excellent summary of the
main provisions of the legislation.
15. As the Kaiser Family Foundation (2011, 1) notes: “Exemptions will be granted
for financial hardship, religious objections, American Indians, those without
coverage for less than three months, undocumented immigrants, incarcerated
individuals, those for whom the lowest cost plan option exceeds 8% of an indi-
vidual’s income, and those with incomes below the tax filing threshold (in 2009
the threshold for taxpayers under age 65 was $9,350 for singles and $18,700 for
couples).” See also Blue Cross/Blue Shield of Rhode Island, “Federal Healthcare
Reform,” available at: https://www.bcbsri.com/BCBSRIWeb/pdf/Individual_
Mandate_Fact_Sheet.pdf, p. 2 (accessed May 2013); and U.S. House of Repre-
sentatives, Office of the Legislative Counsel, “Compilation of Patient Protection
and Affordable Care Act.”
16. The tax penalty will apply (but differently) in both the case where the
employer does not provide coverage and the case where the employer pro-
vides coverage but the employee does not accept it.
17. See, for example, “Justices to Hear Health Care Case as Race Heats Up,” New
York Times, November 15, 2011.
18. For a summary of state-level actions to challenge the ACA, see Cauci (2013).
19. As passed, the ACA made all legal residents under the age of sixty-five eligible
for Medicaid if their family income is less than 133 percent of the federal pov-
erty line. The Supreme Court’s June 2012 ruling on the constitutionality of the -1
ACA, however, allowed states to opt out of this requirement. States may decline 0
+1

13502-11_CH10-3rdPgs.indd 299 12/10/13 8:34 AM

 300    What Works for Workers?

to expand Medicaid coverage, but in doing so they stand to lose some federal
support for their Medicaid program. In the discussion of future projections,
I assume that states will (eventually) agree to the proposed ACA Medicaid
expansion, on the assumption that cash-scrapped states will not long leave free
money on the table (federal funds cover up to 90 percent of states’ added costs).
This assumption is consistent with state behavior after the initial creation of
Medicaid and Medicare in 1965. For a discussion of the Supreme Court’s deci-
sion and the implications for implementation of the ACA’s proposed Medicaid
expansion, see Kaiser Family Foundation (2012a, 2012b).
20. The CBO cites studies by the Centers for Medicare and Medicaid Services
(Foster 2010), the Urban Institute (Buettgens, Garret, and Holahan 2010), the
Lewin Group (2010), and RAND (Eibner, Hussey, and Girosi 2010).
21. The CBO estimates that by 2019 the ACA will have reduced offers of
employer-provided health insurance about 4 percent relative to what the fig-
ure would have been in the absence of the legislation.
22. See, for example, Holtz-Eakin and Smith (2010) and Pizer, Frakt, and Iezzoni
(2011). A more recent CBO analysis has also suggested that a higher number of
workers will lose employer-provided health insurance; see also Congressional
Budget Office, staff of the Joint Committee on Taxation, “CBO’s February 2013
Estimate of the Effects of the Affordable Care Act on Health Insurance Cover-
age,” available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/
43900_ACAInsuranceCoverageEffects.pdf (accessed May 2013).
23. In fact, non-elderly workers in 2010 had a slightly lower noncoverage rate
(19.5 percent) than nonworking adults (21.8 percent). If we were to adjust for
this difference, the results for workers under the ACA would be somewhat bet-
ter than appears under the assumption of a uniform rate for non-elderly adults.
24. Imagine that there are exactly one hundred workers divided into five groups
by wage level, each with twenty workers. If six of the total are without insur-
ance (rounding up from 5.8 percent), and if they are all in the bottom group,
then six of twenty members of that group, or 30 percent, are without coverage.
25. In 1974 Hawaii passed a law requiring employers to provide health insurance
coverage to all full-time employees. Legal challenges delayed implementa-
tion until the mid-1980s, but the law has been in place and enforced since
then. The lack of an individual mandate in Hawaii significantly reduces the
usefulness of the Hawaiian experience for projecting the likely effects of the
ACA. For a recent and comprehensive review of the Hawaiian experience,
see Buchmueller, DiNardo, and Valetta (2011).
26. For a brief overview of the Massachusetts reforms, see Dorn, Hill, and Hogan
(2009) and Gruber (2008).
27. The Massachusetts figure is from Long, Cook, and Stockley (2009, 11); the
-1 national figure is from Rho and Schmitt (2010b, table 4).
0
+1

13502-11_CH10-3rdPgs.indd 300 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    301

28. Long, Phadera, and Lynch (2010) also note that those non-elderly adults who
remain uncovered are less likely to be employed than those with coverage—
though this does not rule out that low-wage workers are even less likely than
the non-employed to have coverage.

References
Baker, Dean. 2007. The United States Since 1980. Cambridge: Cambridge University
Press.
Bernstein, Jared, and Dean Baker. 2003. The Benefits of Full Employment: When Mar-
kets Work for People. Washington, D.C.: Economic Policy Institute.
Bivens, Josh. 2011. Failure by Design: The Story Behind America’s Broken Economy.
Washington, D.C.: Economic Policy Institute.
Blumenthal, David. 2006. “Employer-Sponsored Health Insurance in the United
States—Origins and Implications.” New England Journal of Medicine 355(1):
82–88.
Boushey, Heather. 2012. Remarks at the conference “What Works for Workers?
Public Policies and Innovative Strategies for Low-Wage Workers.” Washington,
D.C.: Georgetown University (February).
Buchmueller, Thomas C., John DiNardo, and Robert G. Valetta. 2011. “The Effect
of an Employer Health Insurance Mandate on Health Insurance Coverage and
the Demand for Labor: Evidence from Hawaii.” American Economic Journal: Eco-
nomic Policy 3(4): 25–51.
Buettgens, Matthew, Bowen Garrett, and John Holahan. 2010. “America Under the
Affordable Care Act,” Washington, D.C.: Urban Institute (December). Available
at: http://www.urban.org/uploadedpdf/412267-america-under-aca.pdf (accessed
May 2013).
Cauci, Richard. 2013. “State Legislation and Actions Challenging Certain Health
Reforms.” Denver: National Conference of State Legislatures (July). Available at:
http://www.ncsl.org/issues-research/health/state-laws-and-actions-challenging-
ppaca.aspx (accessed May 2013).
Center for Economic and Policy Research. 2013. Extract of the March Supplement of
the Current Population Survey, 1980–2012. Available at: http://ceprdata.org/cps-
uniform-data-extracts/march-cps-supplement/ (accessed May 2013).
Clemans-Cope, Lisa, and Bowen Garrett. 2006. “Changes in Employer-Sponsored
Health Insurance Sponsorship, Eligibility, and Participation: 2001 to 2005.”
Menlo Park, Calif.: Henry J. Kaiser Family Foundation (December 31). Avail-
able at: http://www.kff.org/uninsured/upload/7599.pdf (accessed May 2013).
Clemans-Cope, Lisa, Genevieve M. Kenney, Matthew Pantell, and Cynthia D. Perry.
2007. “Access to Employer-Sponsored Health Insurance Among Low-Income
Families: Who Has Access and Who Doesn’t?” Washington, D.C.: Urban Insti- -1
0
+1

13502-11_CH10-3rdPgs.indd 301 12/10/13 8:34 AM

 302    What Works for Workers?

tute. Available at: http://www.urban.org/UploadedPDF/411533_fringe_benefits.

pdf (accessed May 2013).
Congressional Budget Office. 1991. “Rising Health Care Costs: Causes, Implica-
tions, and Strategies.” Washington: CBO (April 1). Available at: http://www.
cbo.gov/ftpdocs/76xx/doc7665/91-CBO-001.pdf (accessed May 2013).
———. 2011. “CBO’s Analysis of the Major Health Care Legislation Enacted in
March 2010.” Testimony of Douglas M. Elmendorf before the Subcommit-
tee on Health of the House Committee on Energy and Commerce, March 30.
http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-healthcarelegislation.pdf
(accessed May 2013).
Dorn, Stan, Ian Hill, and Sara Hogan. 2009. “The Secrets of Massachusetts’ Success:
Why 97 Percent of State Residents Have Health Coverage.” Washington, D.C.:
Urban Institute (November). Available at: http://www.urban.org/Uploaded
PDF/411987_massachusetts_success.pdf (accessed May 2013).
Eibner, Christine, Peter S. Hussey, and Federico Girosi. 2010. “The Effects of the
Affordable Care Act on Workers’ Health Insurance Coverage.” New England
Journal of Medicine 363(15): 1393–95.
Foster, Richard S. 2010. “Estimated Financial Effects of the ‘Patient Protection and
Affordable Care Act,’ as Amended” (memo). Washington: U.S. Department
of Health and Human Services, Centers for Medicare and Medicaid Services
(April 22). Available at: http://www.cms.gov/ActuarialStudies/Downloads/
PPACA_2010-04-22.pdf (accessed May 2013).
Fronstin, Paul. 2000. “The Working Uninsured: Who They Are, How They Have
Changed, and the Consequences of Being Uninsured.” Issue Brief 224. Wash-
ington, D.C.: Employee Benefit Research Institute (August). Available at: http://
www.ebri.org/pdf/briefspdf/0800ib.pdf (accessed May 2013).
———. 2009. “Sources of Health Insurance and Characteristics of the Uninsured:
Analysis of the March 2009 Current Population Survey.” Issue Brief 334. Wash-
ington, D.C.: Employee Benefit Research Institute (September). Available at:
http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=4366
(accessed May 2013).
Goodell, Sarah, and Paul D. Ginsburg. 2008. “High and Rising Health Care Costs:
Demystifying U.S. Health Care Spending.” Research Synthesis Project Report 16.
Princeton, N.J.: Robert Wood Johnson Foundation (October). Available at: http://
www.rwjf.org/files/research/101508.policysynthesis.costdrivers.rpt.pdf (accessed
May 2013).
Gould, Elise. 2009. “Employer-Sponsored Health Insurance Erosion Continues.”
Briefing Paper 2473. Washington, D.C.: Economic Policy Institute (October 27).
Available at: http://www.epi.org/publication/bp247/ (accessed May 2013).
Gruber, Jonathan. 2008. “Massachusetts Health Care Reform: The View from One
-1 Year Out.” Risk Management and Insurance Review 11(1): 51–63.
0
+1

13502-11_CH10-3rdPgs.indd 302 12/10/13 8:34 AM

 Can the Affordable Care Act Reverse Three Decades?    303

Holtz-Eakin, Douglas, and Cameron Smith. 2010. “Labor Markets and Health
Care Reform: New Results.” Washington, D.C.: American Action Forum
(May 27). Available at: http://americanactionforum.org/sites/default/files/
OHC_LabMktsHCR.pdf (accessed May 2013).
Kaiser Family Foundation. 2011. “Summary of New Health Reform Law.” Menlo
Park, Calif.: Henry J. Kaiser Family Foundation (April 25). Available at: http://
www.kff.org/healthreform/upload/8061.pdf (accessed May 2013).
———. 2012a. “A Guide to the Supreme Court’s Decision on the ACA’s Medicaid
Expansion.” Menlo Park, Calif.: Henry J. Kaiser Family Foundation (June 29).
Available at: http://www.kff.org/healthreform/8332.cfm (accessed May 2013).
———. 2012b. “Implementing the ACA’s Medicaid-Related Health Reform Pro-
visions After the Supreme Court’s Decision.” Menlo Park, Calif.: Henry J.
Kaiser Family Foundation (August 1). Available at: http://www.kff.org/
healthreform/8347.cfm (accessed May 2013).
Lewin Group. 2010. “Patient Protection and Affordable Care Act (PPACA): Long-
Term Costs for Governments, Employers, Families, and Providers.” Staff Work-
ing Paper 11. Falls Church, Va.: Lewin Group (June). Available at: http://www.
lewin.com/publications/publication/409/ (accessed May 2013).
Long, Sharon K., Allison Cook, and Karen Stockley. 2009. “Health Insurance
Coverage in Massachusetts: Estimates from the 2008 Massachusetts Health
Insurance Survey.” Boston: Massachusetts Division of Health Care Finance and
Policy (March). Available at: http://www.urban.org/UploadedPDF/411815_
Massachusetts_Insurance.pdf (accessed May 2013).
Long, Sharon, Lokendra Phadera, and Victoria Lynch. 2010. “Massachusetts
Health Reform in 2008: Who Are the Remaining Uninsured Adults?” Wash-
ington, D.C.: Robert Wood Johnson Foundation (August). Available at: http://
www.shadac.org/files/shadac/publications/MassReform2008UninsuredBrief.
pdf (accessed May 2013).
Long, Sharon K., Alshadye Yemane, and Karen Stockley. 2010. “Disentangling the
Effects of Health Reform in Massachusetts: How Important Are the Special Pro-
visions for Young Adults?” American Economic Review: Papers and Proceedings
100(2): 297–302.
Mishel, Lawrence, Jared Bernstein, and Heidi Shierholz. 2009. The State of Working
America, 2008–2009. Ithaca, N.Y.: Cornell University Press.
Pande, Aakanksha H., Dennis Ross-Degnan, Alan M. Zaslavsky, and Joshua A.
Salomon. 2011. “Effects of Healthcare Reforms on Coverage, Access, and Dis-
parities: Quasi-Experimental Analysis of Evidence from Massachusetts.” Amer-
ican Journal of Preventive Medicine 41(1): 1–8.
Pizer, Steven D., Austin B. Frakt, and Lisa I. Iezzoni. 2011. “The Effect of Health
Reform on Public and Private Insurance in the Long Run.” Unpublished paper. -1
0
+1

13502-11_CH10-3rdPgs.indd 303 12/10/13 8:34 AM

 304    What Works for Workers?

Boston: Boston University (March 9). Available at: http://papers.ssrn.com/sol3/

papers.cfm?abstract_id=1782210 (accessed May 2013).
Rho, Hye Jin, and John Schmitt. 2010a. “Who Are the 46.3 Million Uninsured?”
Center for Economic and Policy Research (April 5). Available at: http://www.
cepr.net/index.php/graphic-economics/who-are-the-463-million-uninsured/
(accessed January 16, 2012).
———. 2010b. “Health-Insurance Coverage Rates for U.S. Workers, 1979–2008.”
Washington, D.C.: Center for Economic and Policy Research (March). Avail-
able at: http://www.cepr.net/documents/publications/hc-coverage-2010-03.pdf
(accessed May 2013).
Schmitt, John. 2008. “The Decline of Good Jobs.” Challenge 51(1): 5–25.
———. 2009. “Inequality as Policy: The United States Since 1979.” Washington, D.C.:
Center for Economic and Policy Research (October). Available at: http://www.
cepr.net/documents/publications/inequality-policy-2009-10.pdf (accessed May
2013).
U.S. Census Bureau. 2011. “Income, Poverty, and Health Insurance Coverage in
the United States, 2010.” Current Population Reports. Washington: U.S. Depart-
ment of Commerce, U.S. Census Bureau (September). Available at: http://www.
census.gov/prod/2011pubs/p60-239.pdf (accessed May 2013).

-1
0
+1

13502-11_CH10-3rdPgs.indd 304 12/10/13 8:34 AM

 Chapter 11 L ow-Wage Workers and Paid
Family Leave: The California
Experience

Ruth Milkman and Eileen Appelbaum

As family and work patterns have shifted over recent decades, the demand
for time off from work to address family needs has grown rapidly.1 “Work-
family balance” has become an urgent but elusive priority for millions of
Americans, driven by high labor force participation rates among mothers as
well as the caregiving needs of an aging population. Women—and increas-
ingly men as well—often find themselves caught between the competing
pressures of paid work and family responsibilities, especially when they
become parents or when serious illness strikes a family member. Affluent
families can often fill the gap with paid care­giving services, but their low-
income counterparts can rarely afford to do so.
The United States is notoriously lacking in public policies that support
workers who need time off to attend to family needs. Across the indus-
trialized world, long-standing government-sponsored programs provide
mothers—and, in many countries, fathers as well—with wage replace-
ment and job security for extended periods immediately before and after
the birth of a new child. Paid sick leave and vacation policies are universal
in most industrialized nations, and some governments make provision for
elder care as well (see Gornick and Meyers 2003).
By contrast, the only major federal legislation to address these issues
in the United States was the 1993 Family and Medical Leave Act (FMLA),
which guarantees up to twelve weeks of job-protected leave, with continu-
ing fringe benefits, for both men and women who need time off from work
to attend to their own medical conditions or for family care. However, -1
FMLA’s coverage is limited to only about half of the nation’s workers, and 0
+1
305

13502-12_CH11-4thPgs.indd 305 12/10/13 8:34 AM

 306    What Works for Workers?

to less than one-fifth of all new mothers (Ruhm 1997; Waldfogel 2001).2 And
because the leaves that FMLA provides are unpaid, even those workers
who are covered often cannot afford to take advantage of it.
In the absence of government provision for wage replacement during
family leave, U.S. workers typically rely on a patchwork of employer-
provided benefits to make ends meet, such as paid sick leave, vacation,
disability insurance, and/or parental and family leave. However, such
employer-provided benefits are by no means universally available. Man-
agers and professionals, as well as public-sector workers and others cov-
ered by collective bargaining agreements, often have access to benefits
that provide some form of wage replacement during a family leave. But
vast sectors of the U.S. workforce have little or no access to paid sick days
or paid vacation, and paid parental or family leave is even rarer. The situ-
ation is particularly acute for low-wage workers as well as for the growing
number of “precarious workers”—independent contractors, freelancers,
and others who lack any stable connection to an employer.
Against this background, California’s passage of the nation’s first com-
prehensive paid family leave (PFL) program on September 23, 2002, was a
historic breakthrough. Only two other states (New Jersey in 2009 and Rhode
Island in 2013) have established such programs.3 Both programs were
enacted into law as a result of sustained campaigns led by broad coalitions of
paid leave advocates, including women’s organizations, advocates for chil-
dren, senior citizens’ groups, medical practitioners, and critically, organized
labor, which supplied much of the necessary lobbying expertise and political
clout. Although the business lobby opposed these programs (in both states)
and succeeded in scaling them back to some extent, the advocates of paid
leave prevailed, in part owing to the broad public support for the issue.
California’s PFL benefits became available on July 1, 2004. Unlike the
FMLA, California’s PFL program covers the entire private sector, regard-
less of employer size. Self-employed workers are not automatically covered,
but can opt into the program; unionized public-sector workers can also opt
in through the collective bargaining process. Workers need not have been
with their current employer for any specific period of time to be eligible
for PFL; they need only to have earned $300 or more in a job covered by
state disability insurance (SDI) during any quarter in the “base period,”
which is five to seventeen months before they file a PFL claim. With this
very minimal earnings requirement, most part-time workers are covered
by the program. In short, with its near-universal coverage, the California
PFL program presented a pathbreaking opportunity to address the issue of
inequality in access to paid leave.
-1 The program offers partial wage replacement for covered workers who
0 go on leave to bond with a new biological, adopted, or foster child; this
+1 benefit is available to fathers as well as mothers during the first year after

13502-12_CH11-4thPgs.indd 306 12/10/13 8:34 AM

 Low-Wage Workers and Paid Family Leave   307

a child is born or placed with the family. The program also offers wage
replacement during leaves to care for certain seriously ill family mem-
bers (a parent, child, spouse, or registered domestic partner). For both
bonding and caring leaves, covered workers can receive up to six weeks
of wage replacement at 55 percent of their usual weekly earnings, up to a
maximum benefit of $987 per week in 2011. (The maximum is indexed in
relation to the state’s average weekly wage.) The six weeks of leave can be
continuous or intermittent.
The PFL program is funded by an employee-paid payroll tax, with ben-
efit levels indexed to inflation. It builds on California’s long-standing state
disability insurance system, which has provided income support for medi-
cal and pregnancy-related leaves for many years. PFL is available to biolog-
ical mothers for six weeks in addition to the SDI benefits they may receive
during pregnancy leave.4 Unlike SDI payments, however, PFL benefits
have been deemed taxable income by the U.S. Internal Revenue Service.
The PFL program is structured as an insurance benefit, like SDI. There
are no direct costs to employers: the wage replacement benefit is funded
entirely by an employee payroll tax. (Currently a 1.0 percent tax on the
first $95,585 in earnings finances both SDI and PFL.) All California private-
sector wage and salary workers, except for the self-employed (unless they
opt in), pay this modest tax. Workers can claim PFL benefits after a one-
week waiting period by submitting appropriate documentation, including
certification from a health care provider, to the state’s Employment Devel-
opment Department. Employers may require workers to take up to two
weeks of earned (unused) vacation before collecting PFL benefits; in such
cases, this vacation period runs concurrently with the one-week waiting
period required under the PFL program.
The PFL program does not provide job protection, although in many
cases leave-takers have such protection under the FMLA or the California
Family Rights Act (CFRA), a state law that took effect in 1992, a year before
the federal FMLA became law, but which has broadly similar provisions.
For those who are covered by these laws, the PFL leave and the FMLA/
CFRA leave must be taken concurrently.
In operation for nearly eight years now, the California program has a
track record of sufficient length to permit a serious evaluation of how well
it is working and the extent to which its potential to improve the access of
low-wage workers to paid leave has been realized. How well has the pro-
gram served the growing numbers of low-wage workers, many of them
female, who have limited access to employer-sponsored fringe benefits
providing paid time off? How widespread are awareness and usage of
the program? What has been the experience of workers who have used -1
the program, and how has it affected their families? These are among the 0
questions we address in this chapter. +1

13502-12_CH11-4thPgs.indd 307 12/10/13 8:34 AM

 308    What Works for Workers?

To explore these issues we have conducted a series of surveys of

­ alifornia employers and workers since 2004. Here we focus primarily on
C
a screening survey, with telephone interviews in both English and Span-
ish, conducted between December 2009 and February 2010. It included
five hundred employed respondents who had experienced an event in the
preceding four years (becoming a parent or having a close family mem-
ber become seriously ill) that could have triggered a paid family leave.5
Although the screening survey did not attempt to capture a representative
sample but rather screened for individuals who were eligible for PFL, the
2009–2010 survey sample proved demographically diverse in regard to
age, gender, race and ethnicity, and immigrant status, like the California
population. It includes workers across the economic spectrum, with var-
ied levels of education and income. One of the most useful features of the
sample, and one that we exploit extensively here, involves the contrast
between respondents with what we call “high-quality jobs,” defined as
those that pay more than $20 an hour and include employer-paid health
insurance, and those who have “low-quality jobs” that fail to meet this
standard. In our sample of 500 ­workers, 30 percent (149 respondents) held
high-quality jobs and 70 percent (351 respondents) held low-quality jobs—
roughly similar to the proportions in other studies of California workers
that differentiate between good and bad jobs.6 Comparing and contrasting
their experiences with family leave offers insight into the on-the-ground
effect of the ­California PFL program and allows us to assess its effective-
ness as a social leveler in particular.
We also briefly discuss the findings of a more recent national survey
regarding the FMLA that was conducted for the U.S. Department of Labor
in 2012 and focused on the situation of low-income and non-college-
educated workers. These additional data are especially valuable for the
broader perspective they provide on our analysis of California, situating
it in the context of the United States as a whole.

Paid Family Leave and the Problem

of Inequality
Inequalities between “haves” and “have-nots” in the United States have
grown steadily in recent decades, along with rapid expansion in the ranks
of low-wage workers whose jobs not only provide minimal pay but also
have few or no benefits; such workers often lack employer-provided
health insurance coverage, for example. At the other end of the spectrum,
professional and managerial workers not only are paid relatively well but
-1 also typically have access to an array of employer-provided benefits.
0 This growing polarization among workers is also manifested in the
+1 availability of employer-provided wage replacement during parental

13502-12_CH11-4thPgs.indd 308 12/10/13 8:34 AM

 Low-Wage Workers and Paid Family Leave   309

and other family-related leaves. As many commentators have pointed

out (see, for example, Heymann 2000; Williams and Boushey 2010), ben-
efits that can be used to support family leaves—from paid sick leaves and
paid vacations to short-term disability benefits and explicitly defined paid
parental leave benefits—are offered disproportionately to well-paid work-
ers like managers and professionals, while low-wage workers frequently
are offered few or no such benefits. Ironically, although women typically
continue to have far greater family caregiving responsibilities than men
do, employers tend to provide male employees with more extensive wage
replacement for family-related absences or leaves from work than female
employees receive—not because they are men but because they are con-
centrated in the better jobs. More generally, because many employers
are especially interested in retaining their most highly trained workers
and are aware that providing income support during leaves from work
increases retention, they are disproportionately inclined to offer profes-
sional and managerial workers wage replacement during family-related
leaves. In contrast, employers tend to view low-wage workers as dispens-
able and are less concerned about reducing their high turnover rates.
The resulting disparities in access to the range of employer-provided
benefits that can be used during family leaves are now well documented.
For example, a 2011 report from the U.S. Census Bureau (Laughlin 2011)
covering the 2006 to 2008 period found that, among women who worked
during the pregnancy preceding the birth of their first child, the percent-
age of those with a bachelor’s degree who received some type of wage
replacement during their maternity leave (66.3 percent) was more than
double that of high school graduates (31.6 percent) and more than triple
that of those with less than a high school education (18.5 percent). Simi-
larly, the National Compensation Survey of Employee Benefits (2011) con-
ducted by the U.S. Bureau of Labor Statistics found that in 2010 the top
25 percent of private-sector wage-earners had access to paid family leave
at four times the rate of the bottom 25 percent.7
Our 2009–2010 screening survey of California workers who expe-
rienced life events that might qualify them for the state’s PFL program
offers further confirmation of the inequality in employer-provided bene-
fits. Whereas 93.5 percent of respondents who had high-quality jobs (with
pay over $20 per hour and employer-provided health insurance) also had
access to employer-provided paid sick days and/or paid vacation, only
62.1 percent of those with low-quality jobs had such access, a statistically
significant difference (p < 0.001, using a two-sample independent Z-test).8
The U.S. Department of Labor’s 2012 survey on family and medical leave
shows that workers who lack access to paid leave often are unable to afford -1
to go on leave even when they have a need to do so. Among respondents 0
who reported that they needed family or medical leave but did not take it, +1

13502-12_CH11-4thPgs.indd 309 12/10/13 8:34 AM

 310    What Works for Workers?

by far the most common reason reported—by 42.7 percent—was that they
“couldn’t afford to take an unpaid leave.” For non-college-educated respon-
dents, this figure rose to 53.8 percent, compared to 36.6 percent for those
with at least some college education. Similarly, for those whose household
incomes were below $40,000, 50.6 percent reported that they did not take a
needed leave because they could not afford to do so, compared to 38.9 per-
cent of those with household incomes between $40,000 and $74,999 and
32.6 percent of those with household incomes of $75,000 or more.9
California’s PFL program, with its nearly universal scope, was designed
in part to address these unmet needs. The state’s professionals, managers,
and others whose employers already provide them with paid time off can
now draw on PFL as well as the benefits they had before. For this group,
indeed, access to wage replacement historically has been as good as or bet-
ter than what the new state program offers. By contrast, low-wage ­workers
who previously had limited or no access to wage replacement during
leaves stood to gain far more from the PFL program, which promised to
narrow or even close the gap in access to paid leave between the “haves”
and “have-nots.”
As we show later, those low-wage workers who take advantage of PFL do
benefit greatly from the new program, both economically and in terms of its
impact on their health and well-being, as well as that of their family mem-
bers. The program remains largely ineffective, however, in reducing inequal-
ity. One reason for this is that many Californians remain unaware of the
program’s existence. Although Californians, like most Americans, strongly
support the concept of paid family leave (see Milkman and ­Appelbaum
2004), public awareness in California of the PFL program remains limited
nearly eight years after it began operations. Moreover, those Californians
who need the program most—low-wage workers and other disadvantaged
groups—are the least likely to be aware of it.
Another factor limiting the effectiveness of PFL as a social leveler is that
it often operates as a subsidy to those employers that have historically pro-
vided benefits of their own for workers who go on family leaves. Most of
those employers now coordinate their benefits with the state PFL program,
which gives them an incentive to encourage their employees to access the
state program. In contrast, low-wage workers with no employer-provided
benefits receive no such encouragement. As a result, the preexisting inequal-
ity in access to wage replacement is reproduced in a new form rather than
eliminated.

Inequality in Awareness of PFL

-1 Over the past decade, we have conducted a series of surveys to assess
0 the extent of public awareness of the program in California. The first of
+1

13502-12_CH11-4thPgs.indd 310 12/10/13 8:34 AM

 Low-Wage Workers and Paid Family Leave   311

these surveys was fielded in late 2003, a year after the PFL legislation
was passed (but prior to the program’s implementation). At that time, we
found that only 22.0 percent of California adult respondents were aware
of PFL (for details see Milkman and Appelbaum 2004). Awareness rose
somewhat after benefits became available: our mid-2005 follow-up survey
of California adults found that 29.5 percent of respondents were aware of
the program a year after its initial implementation, and about the same
proportion (28.1 percent) were aware of it in mid-2007, when we con-
ducted another awareness survey. In all three of these surveys, we found
that low-income respondents, those with less education, young workers,
Latinos, and immigrants had substantially lower levels of awareness of
PFL than the state’s adult population as a whole.
In 2011, this time in association with the California Field Poll, we once
again assessed Californians’ awareness of the state’s PFL program. The Field
Poll included 1,001 registered voters and was conducted ­September 1–12,
2011. Well under half (42.7 percent) of the Field Poll respondents had “seen,
read [about], or heard [of]” the PFL program. As in the previous surveys,
awareness varied by ethnicity, gender, and age, as figure 11.1 shows, and
once again awareness of PFL was substantially lower among economically
disadvantaged groups such as those with lower household incomes, those
with limited education, and renters.
The Field Poll methodology differed somewhat from that of our ear-
lier surveys, but a systematic comparison to the results of our initial 2003
survey shows that awareness has increased by about 50 percent over the
past eight years, as shown in table 11.1. Here the comparison is limited to
respondents who voted in the last general election (the 2008 election for
the 2011 poll, and the 2000 election for the 2003 survey), so the data do not
correspond to those shown in figure 11.1.
Although fewer than half of these voters (44.9 percent) were aware of
PFL in 2011, this is a dramatic and significant increase over 2003, when the
figure was only 29.7 percent. Awareness grew even more among female
voters, from 25.9 to 51.2 percent. For men, however, there was very little
change. Awareness nearly doubled among Latinos and Asians who voted
in the 2008 election. (It is important to note, however, that immigrant non-
citizens are not part of this group.)
Awareness of FMLA is far higher than awareness of PFL, but the pat-
terns of inequality are similar. Overall, 64.2 percent of respondents in the
2012 U.S. Department of Labor survey were aware of FMLA’s existence,
and awareness was higher among women—71.1 percent, compared to
57.5 percent for men. As with PFL, the sharpest disparities in awareness
were by education and income: 82.9 percent of college graduates were -1
aware of FMLA, compared to only 44.2 percent of those with no college 0
+1

13502-12_CH11-4thPgs.indd 311 12/10/13 8:34 AM

 Figure 11.1  Awareness of Paid Family Leave Among Registered Voters
in California, by Selected Respondent Characteristics,
September 2011

All respondents 42.7%

Male 35.5
Female 49.0
Age eighteen to twenty-nine 26.6
Age thirty to thirty-nine 46.2
Age forty to forty-nine 52.4
Age fifty to sixty-four 55.9
Age sixty-five and older 30.8
White 44.7
Asian/other 44.9
Latino 35.4
African American 38.2
High school graduate or less 28.5
Some college 39.9
College graduate 47.8
Postgraduate 52.1
Household income under $20,000 22.8
Household income $20,000 to $39,999 25.4
Household income $40,000 to $59,999 37.8
Household income $60,000 to $100,000 59.4
Household income over $100,000 54.3
Renter 32.9
Homeowner 47.4
Married/cohabiting 51.2
Separated/divorced/widowed 33.9
Never married 23.2
Union household 52.4
Non-union household 40.4
Registered Democrat 44.2
Registered Republican 42.8
Northern California 49.1
Southern California 38.5
0 20 40 60

Source: Authors’ analysis of 2011 Field Poll data (N = 1,000).

Notes: The categories Asian/others, whites, and African Americans do not include Latinos.
For these race-ethnicity groups, using whites as the reference group, the only statistically
significant difference is for Latinos (p < 0.05). The gender differences shown are statistically
significant (p < 0.001). Using age forty to forty-nine as the reference group, the only statisti-
cally significant differences are for ages eighteen to twenty and sixty-five and older (for both
p < 0.001). For household income, the differences between the top two and bottom two
categories and the reference group (the middle category, $40,000 to $59,999) are statistically
significant (p < 0.05). For education, with college graduates as the reference group, the only
statistically significant difference is for the high school graduates, which includes respon-
-1 dents with less than high school education (p < 0.001). The difference between renters and
0 homeowners is also statistically significant (p < 0.001).
+1

13502-12_CH11-4thPgs.indd 312 12/10/13 8:34 AM

 Low-Wage Workers and Paid Family Leave   313

Table 11.1  Paid Family Leave Awareness Among Respondents Who

Voted in the Previous General Election, 2003 and 2011
Percentage Aware of
Paid Family Leave 2003 2011
All respondents 29.7 44.9***
Women 25.9 51.2***
Men 34.3 37.7
Latinos 22.0 40.8***
Blacks 35.3 38.0
Whites 30.9 45.7***
Asians/other 24.9 49.3***
Source: Authors’ analysis of 2011 Field Poll data (N = 1,000).
***p < 0.001

education. Among respondents with household incomes over $75,000,

71.0 percent knew about FMLA, compared to only 47.7 percent among
those with household incomes below $40,000. Race disparities were also
present: 72.2 percent of white respondents were aware of FMLA, com-
pared to 53.8 percent of blacks and 40.7 percent of Hispanics.10
Our 2003 and 2011 PFL surveys did not probe in any detail the extent to
which respondents were familiar with the details of the PFL program, nor
how they learned about it. However, we were able to include questions
about those topics in the 2009–2010 screening survey. Not surprisingly,
because all five hundred screening survey respondents were employed
and all had experienced a life event that the PFL program was designed
to cover (a new child or a seriously ill family member), their awareness
of PFL was greater than in the representative surveys, with nearly half
(48.6 percent) indicating that they were aware of PFL’s existence.
Among PFL-aware respondents to the screening survey, knowledge of
the details of the program followed a similar pattern of inequality to that
of the overall awareness data, as table 11.2 shows. Respondents with high-
quality jobs consistently knew more about the details of the PFL program
than those with low-quality jobs; although these differences are more modest
than those in overall awareness, all but one of them is statistically significant.
The screening survey also explored how PFL-aware respondents had
learned about the program. As figure 11.2 shows, the most common source
of information was employers: 63.4 percent of respondents employed
in the private or nonprofit sector indicated that they had learned about
the program from their employer—twice the proportion for any other -1
information source except family or friends. Of particular interest for 0
+1

13502-12_CH11-4thPgs.indd 313 12/10/13 8:34 AM

 Table 11.2  Knowledge of Paid Family Leave Program Details Among
Respondents Aware of PFL, by Job Quality, 2009 to 2010
Respondents Respondents
with with
Specific Information All High-Quality Low-Quality
About Paid Family Leave Respondents Jobs Jobs
Can be used for bonding 86.4% 92.3% 82.9%*
with a newborn
Can be used for bonding 68.5 75.9 63.6*
with an adopted or foster
child
Available to both fathers 78.2 88.1 72.2***
and mothers
Can be used to care for 64.2 68.2 62.0
a seriously ill family
member
Source: Authors’ 2009–2010 screening survey (N = 246).
*p < 0.05; ***p < 0.001

Figure 11.2  How Respondents Learned About Paid Family Leave,

2009 to 2010

100
All Respondents
78.0 Respondents with High-Quality Jobs
80
Respondents with Low-Quality Jobs
63.4
Percentage

60 56.6
52.6
49.3 47.7

40
31.9
29.0 27.6 26.2 26.6 26.0 24.3 25.4
22.0
20
6.8 8.5
3.2
0
Employer Family or Internet Letter from Doctor Mass
Friends State or Clinic Media
Source

Source: Authors’ 2009–2010 screening survey (N = 178).

-1 Note: Includes only respondents who were aware of paid family leave and who were employed
0 in the private or nonprofit sector; total adds to more than 100 percent because respondents
+1 could cite more than one information source.
***p < 0.001

13502-12_CH11-4thPgs.indd 314 12/10/13 8:35 AM

 Low-Wage Workers and Paid Family Leave   315

our purposes here, 78.0 percent of respondents in high-quality jobs had

learned about PFL from their employers, compared to only 56.6 percent of
those in low-quality jobs, a statistically significant difference.
This disparity reflects the reality, as noted earlier, that employers that
provide paid time off to their workers have an economic incentive to inform
those employees about the existence of PFL: if such workers draw benefits
from the state PFL program in lieu of some part of what the employer would
otherwise provide, the employer enjoys a cost savings. Since employers are
more likely to provide wage replacement to higher-paid workers, it follows
that those workers are more likely to receive information about PFL from
their employers. As one manager we interviewed just before PFL benefits
became available predicted, “Paid family leave in California was intended
to help people who don’t have any pay during maternity leave or other
family leaves. But in fact the main beneficiaries will be higher-paid workers
who already have paid sick leave and vacation and who will use the state
program to top off their current benefits.”
Indeed, among PFL-aware respondents to our 2009–2010 screening survey,
half (49.8 percent) of those with high-quality jobs who were eligible for the
program had used PFL, but only 36.6 percent of those in low-quality jobs had
done so, a statistically significant difference (p < 0.05).11 Similarly, an analysis
of PFL claims data by the California Senate Office of Research (Sherriff 2007)
found that low-wage workers were underrepresented among PFL claimants.

Why PFL-Aware Workers Did Not Take Up

the Program Benefits
Limited awareness has obviously contributed to what has thus far been a
lower-than-expected take-up rate for California’s PFL program. Our screen-
ing survey suggests some other factors that also help explain the low take-
up. Among respondents to that survey who were aware of PFL, some
were ineligible because they worked in the public sector, others were eli-
gible but believed that they were not, and still another group received full
wage replacement from their employer and thus had no reason to draw on
PFL benefits.
But even after eliminating all these groups from consideration, about
one-fifth of the total screening survey sample (those who were aware of
PFL, worked in the private or nonprofit sector, believed they were eli-
gible for the program, and did not receive full wage replacement from
employer-provided sources while on leave) still did not use the PFL pro-
gram for a covered life event. When asked why they did not apply for
PFL when they needed to go on a family leave, these respondents cited a -1
variety of concerns, summarized in figure 11.3. 0
+1

13502-12_CH11-4thPgs.indd 315 12/10/13 8:35 AM

 316    What Works for Workers?

Figure 11.3  Reasons Cited by Selected Respondents Who Were

Aware of Paid Family Leave and Who Did Not Apply for
Paid Family Leave, 2009 to 2010

40

31.5 31.2
28.9

23.9
Percentage

20 17.7

0
Afraid Would Worried Afraid Thought
Unemployer Not Have It Would of Being About
Would Be Received Hurt Fired Applying,
Unhappy Enough Opportunities but Too Much
Money for Hassle to Fill
Advancement Out Forms

Source: Authors’ 2009–2010 screening survey (N = 89).

Note: Total adds to more than 100 percent because respondents could cite more than one
reason.

Caution should be used in interpreting these data, as the sample is lim-

ited and unrepresentative. Nevertheless, it is striking that many of the
reasons cited involve concerns that taking advantage of PFL would have
negative consequences for them at work: that their employer would be
unhappy, that using PFL might hurt their chances for advancement, or, at
the extreme, that they might actually be fired for doing so. In all, 36.9 per-
cent of the subset of respondents who were asked why they did not apply
for PFL cited at least one such concern.
This highlights one key limitation of the PFL program, namely, that
it does not include job protection—an unfortunate result of the fact that
-1 PFL was established through an amendment to California’s preexisting
0 SDI program, which does not explicitly offer job protection to workers on
+1

13502-12_CH11-4thPgs.indd 316 12/10/13 8:35 AM

 Low-Wage Workers and Paid Family Leave   317

disability leaves. At the time PFL was won, advocates feared that includ-
ing a job protection provision in the program legislation would provoke
insurmountable opposition from employers. Some PFL-covered workers
do have job protection under other statutes, such as the federal FMLA. But
for the rest, taking a PFL leave could mean that they would not have a job
to return to, or that they would suffer other negative consequences. Fear
of these outcomes appears to be another important reason—apart from
lack of awareness of the PFL program—for the low take-up rate.
Finally, almost one-third of the PFL-aware respondents who were
asked why they did not use the program pointed to the limited wage
replacement it provides. Indeed, the PFL program provides only 55 per-
cent of workers’ usual pay, which for many workers—especially those in
low-wage jobs—may make it unaffordable.

The Impact of PFL on Low-Wage Workers

and Their Families
For those workers who did use PFL, however, our data show that the pro-
gram made a highly positive contribution to their well-being and that of
their families. Respondents to the 2009–2010 screening survey who uti-
lized the PFL program when they took a leave from work to bond with a
new child or to care for a seriously ill family member reported far better
economic, social, and health-related outcomes than those who did not use
the program. PFL users had significantly higher levels of wage replace-
ment, were able to take longer leaves, and were more satisfied with the
length of their leaves. In addition, using PFL enhanced workers’ ability
to care for their children or ill family members and, for those in low-
quality jobs, increased the likelihood of returning to work with the same
employer.
As noted earlier, workers in low-quality jobs had the most to gain from
the introduction of PFL but were less likely to be aware of its existence and
(among those who were aware of it) less well informed about the details
of the program than workers in high-quality jobs. But for the minority of
workers in low-quality jobs who not only were aware of PFL but actually
used it during their family leaves, outcomes were greatly improved over
those for workers in low-quality jobs who did not use PFL.

Wage Replacement During Family Leave

Most importantly, use of PFL made a significant difference in the level of
wage replacement. Over one-fourth (28.4 percent) of all workers who did
not use the PFL program during their leave, as table 11.3 shows, received -1
no wage replacement at all. In contrast, the vast majority (91.7 percent) 0
+1

13502-12_CH11-4thPgs.indd 317 12/10/13 8:35 AM

 0
-1

+1

13502-12_CH11-4thPgs.indd 318
Table 11.3  Wage Replacement During Family Leave, by Paid Family Leave Use and Job Quality,
2009 to 2010
All Workers High-Quality Jobs Low-Quality Jobs
Proportion
of Usual Pay Used Paid Did Not Use Used Paid Did Not Use Used Paid Did Not Use
Received Family Paid Family Family Paid Family Family Paid Family
During Leave All Leave Leave Leave Leave Leave Leave
No pay 21.8% 0.0% 28.4%*** 0.0% 11.0%* 0.0% 38.2%***
Less than half 11.5 8.3 12.5 0.0 12.4** 16.2 12.5
About half 20.1 40.2 14.1*** 55.3 9.6*** 25.9 16.7
More than half 20.0 43.1 13.1*** 37.8 17.0 48.2 10.9***
Full pay 26.5 8.3 31.9*** 6.9 50.0*** 9.7 21.6
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Authors’ 2009–2010 screening survey (N = 204).
Note: Columns may not add to 100.0 percent due to rounding.
*p < 0.05; **p < 0.01; ***p < 0.001

12/10/13 8:35 AM
 Low-Wage Workers and Paid Family Leave   319

Figure 11.4  Wage Replacement During Family Leave Among

Workers in Low-Quality Jobs, by Use of Paid Family
Leave, 2009 to 2010

Used Paid Family Leave Did Not Use Paid Family Leave

9.7
16.2 21.6 No Pay
Less Than Half
38.2
About Half
25.9 10.9
48.2 More Than Half
Full Pay
16.7
12.5

Source: Authors’ 2009–2010 screening survey (N = 204).

of those who used PFL while on leave received at least half their usual
weekly pay, a much higher proportion than among those who did not use
PFL (59.1 percent) (p < 0.001).12
All workers who used the program benefited from PFL with regard to
wage replacement, whether they were in high-quality or low-quality jobs.
Among respondents with high-quality jobs, all of those (100.0 percent) who
used PFL drew at least half their usual pay while on leave, compared to
only 76.6 percent of those in high-quality jobs who did not use the program,
a statistically significant difference (p < 0.001). However, many workers in
high-quality jobs can draw on accumulated paid sick days, paid vacation,
or other paid leave benefits for wage replacement when they go on leave.
Indeed, in our sample, half (exactly 50.0 percent) of those in high-quality
jobs who did not use PFL nevertheless received full pay from such sources.
These employees, with access to generous employer-provided benefits,
may not need PFL. But for all other respondents employed in high-quality
jobs (that is, those who did not receive full pay), PFL sharply boosted the
level of wage replacement, as table 11.3 and figure 11.4 show.
Workers in low-quality jobs received even greater economic benefits
from PFL. Among respondents in this group who did not use PFL, 50.7 per-
cent received either no wage replacement at all or less than half their usual
pay. In sharp contrast, among those in low-quality jobs who used PFL,
only 16.2 percent received less than half their income, a statistically sig- -1
nificant difference (p < 0.001). All the other respondents in low-quality jobs 0
+1

13502-12_CH11-4thPgs.indd 319 12/10/13 8:35 AM

 320    What Works for Workers?

Table 11.4  Median Length of Family Leave (in Weeks), by Gender,

Leave Type, and Job Quality, 2009 to 2010
High-Quality Low-Quality
Jobs Jobs
All
Type of Leave Respondents Male Female Male Female
All
Baby bonding leaves 9.5 3 14.5*** 3 12***
Ill family member 4 3 3.5 6 8
caring leaves

Used paid family leave

Baby bonding leaves 12.5 4 18* 8 12
Ill family member 7 3 5 6 11
caring leaves

Did not use paid family leave

Baby bonding leaves 8 2 12*** 3 12***
Ill family member 4 3 3 4.5 8
caring leaves
Source: Authors’ 2009–2010 screening survey (N = 98 for bonding leaves, 53 for caring leaves).
*p < 0.05; ***p < 0.001, using the Mann-Whitney-Wilcoxon test

who used PFL (83.8 percent) received at least half of their usual income
while on leave, compared with only 49.2 percent of those who did not use
PFL; this also is a statistically significant difference (p < 0.001). For those
low-wage workers who actually use it, then, the PFL program is a critically
important source of income support when they go on leave from work to
attend to their families’ needs.

Length of Leaves
Although PFL made a substantial difference in access to wage replace-
ment during leave, especially for those in low-quality jobs, its effects on
the length of family leaves were more complex. As table 11.4 shows, the
median length of baby bonding leaves taken by all new parents in our sam-
ple was nine and a half weeks. Mothers took significantly longer bonding
leaves than fathers, regardless of job quality, and in most subgroups these
gender differences were statistically significant. (Those in low-quality jobs
who used PFL were the only exceptions.) However, for leaves to care for
-1 an ill family member, there was no significant gender difference in median
0 leave length. Among mothers in low-quality jobs, the median length was
+1

13502-12_CH11-4thPgs.indd 320 12/10/13 8:35 AM

 Low-Wage Workers and Paid Family Leave   321

Figure 11.5  Workers Who Were “Very Satisfied” or “Somewhat

Satisfied” with Length of Family Leave, by Job Quality
and Use of Paid Family Leave, 2009

100 96.8

82.8
79.3 79.4
80
72.7
Percentage

60

40

20

0
All Workers High-Quality High-Quality Low-Quality Low-Quality
Jobs, Used Jobs, Did Jobs, Used Jobs, Did
Paid Family Not Use Paid Family Not Use
Leave Paid Family Leave Paid Family
Leave Leave

Source: Authors’ 2009–2010 screening survey (N = 164).

the same whether or not they used PFL. Mothers in high-quality jobs took
longer bonding leaves, however, with a median length of eighteen weeks
for those who used PFL, compared to only twelve weeks for those who
did not take advantage of the program.
Most respondents (79.3 percent) reported being “very satisfied” or
“somewhat satisfied” with the length of their family leaves. Among
workers in high-quality jobs, many of whom had access to income from
employer benefits while on leave, satisfaction with the length of leave was
similar regardless of whether they used PFL or not; as figure 11.5 shows,
about four-fifths of these workers reported that they were very satisfied or
somewhat satisfied with the length of their leave.
For workers in low-quality jobs, however, the use of PFL made a strik-
ing difference in satisfaction with the length of leave. Among workers -1
in these jobs, nearly all (96.8 percent) of those who used PFL were very 0
+1

13502-12_CH11-4thPgs.indd 321 12/10/13 8:35 AM

 322    What Works for Workers?

Figure 11.6  Workers Who Returned to Former Employer After a Family

Leave, by Job Quality and Use of Paid Family Leave, 2009

98.6
100
87.6 88.4 88.7
81.2
80
Percentage

60

40

20

0
All Workers High-Quality High-Quality Low-Quality Low-Quality
Jobs, Used Jobs, Did Jobs, Used Jobs, Did
Paid Family Not Use Paid Family Not Use
Leave Paid Family Leave Paid Family
Leave Leave

Source: Authors’ 2009–2010 screening survey (N = 165).

satisfied or somewhat satisfied with the length of their leave, compared

with only 72.7 percent of those who did not use PFL, a statistically signifi-
cant difference (p < 0.001).13

Turnover and Retention

More than 95 percent of screening survey respondents who took a family
leave returned to work at the end of their leave, and more than four-fifths
returned to the same employer they had worked for prior to the leave.
As figure 11.6 shows, the proportion of workers returning to the same
employer was highest among respondents in high-quality jobs who did
not use PFL. This probably reflects the more generous employer-provided
pay these workers received during leave—as noted earlier, nearly half the
-1 workers in high-quality jobs who did not use PFL received full pay from
0 their employers.
+1

13502-12_CH11-4thPgs.indd 322 12/10/13 8:35 AM

 Low-Wage Workers and Paid Family Leave   323

Those workers in low-quality jobs who used the PFL program, how-
ever, were slightly more likely to return to the same employer after a fam-
ily leave. Within this group, the retention rate was 88.7 percent for those
who used the PFL program compared with 81.2 percent for those who
did not. This difference is not statistically significant, but it suggests the
possibility that California’s PFL program provides an important benefit
for employers, especially smaller employers that hope to retain workers
who need to take a family leave but that are unable to afford high levels of
wage replacement for them.

PFL’s Effects on Caregivers and on Those Receiving Care

The screening survey data also offer insight into the impact of family
leaves on outcomes for caregivers and care recipients. Relevant outcomes
include the ability of respondents to care for their new children and for
seriously ill family members, new mothers’ ability to initiate and to sus-
tain breastfeeding, parents’ ability to make child care arrangements, and
the effects on the ill family member’s health. Table 11.5 summarizes our
key findings regarding these outcomes.
About four-fifths (82.3 percent) of respondents who took leaves reported
that the leave had a positive effect on their ability to care for their child
or seriously ill family member. Among respondents in low-quality jobs,
87.0 percent of workers who used PFL reported that the leave positively
affected their ability to care for the new child, compared with 72.2 percent
of those who did not use PFL, a statistically significant difference.
Most new mothers in our sample (85.2 percent) reported that they had
breastfed their new baby. Nearly all new mothers in low-quality jobs
who used PFL (94.0 percent) had initiated breastfeeding, and the rate was
nearly as high (89.1 percent) among those who did not use PFL. However,
PFL use had no impact on the duration of breastfeeding for workers in
low-quality jobs, whereas for those in high-quality jobs the duration of
breastfeeding more than doubled (a statistically significant difference).
Previous research suggests that longer leaves for new mothers are asso-
ciated with longer duration of breastfeeding of the infant (Guendelman
et al. 2009); our results confirm this, but also suggest that there may be
important variation by social class (Blum 2000).
Leaves were also helpful in enabling parents of a new child to make
child care arrangements. Among all parents, 62.5 percent reported that
PFL had a positive effect on their ability to arrange child care. Among
parents in low-quality jobs, 70.0 percent of PFL users reported a positive
effect, compared to 58.3 percent who did not use PFL; however, this dif- -1
ference is not statistically significant. 0
+1

13502-12_CH11-4thPgs.indd 323 12/10/13 8:35 AM

 0
-1

+1

13502-12_CH11-4thPgs.indd 324
Table 11.5  Family Leave Effects on Caregiving Ability and Health of Care Recipients, by Job Quality and
Use of Paid Family Leave, 2009 to 2010
High-Quality Jobs Low-Quality Jobs
Did Not Did Not
Used Paid Use Paid Used Paid Use Paid
All Family Family Family Family
Effects of Leave Respondents Leave Leave Leave Leave
Said that leave had positive effect on ability to care 82.3% 100.0% 91.8%* 87.0% 72.2%*
for new child or ill family member (N = 164)
New mothers who initiated breastfeeding (N = 67) 91.3% 88.5% 89.7% 89.1% 94.0%
Median months of breastfeeding (N = 57) 6 11.5 4.5** 4.5 5
Said that leave had positive effect on ability to 62.5% 56.7% 67.4% 70.0% 58.3%
arrange child care (N = 92)
Said that leave had positive effect on ill family 86.5% 100.0% 100.0% 69.2% 79.9%
member’s health (N = 49)
Source: Authors’ 2009–2010 screening survey.
Note: For median months of breastfeeding, the Mann-Whitney-Wilcoxon test was used.
*p < 0.05; **p < 0.01

12/10/13 8:35 AM
 Low-Wage Workers and Paid Family Leave   325

Conclusion
In some respects, California’s PFL program provides a pathbreaking
and positive example, one that might be replicated by policymakers in
other states and nationally.14 At the same time, however, the California
case is a cautionary tale about the key obstacles such programs must
overcome. These obstacles are different from those so often highlighted
by the ­business organizations that routinely oppose efforts to create new
programs to address work-family needs. Indeed, as we have documented
elsewhere (­Appelbaum and ­Milkman 2011), the alleged negative impacts
of such ­programs on ­business are largely nonexistent. But the California
PFL experience does expose other serious challenges that policymakers
must address if they wish to provide access to paid leave to workers who
have no other means of obtaining it.
On the one hand, our findings strongly suggest that public policy ini-
tiatives like PFL that support workers who need time off to care for their
families can make a real and positive difference—even programs like
California’s PFL, which by international standards offers minimal ben-
efits. As we have seen, PFL use is associated with better economic, social,
and health outcomes for both workers and their families. Wage replace-
ment levels were significantly higher for workers who used PFL than for
those who did not, especially for workers in low-quality jobs. Among that
group, the proportion receiving half or more of their usual weekly pay
rose to 83.8 percent for those who used PFL, compared to just 49.2 percent
for those who did not use the program. Moreover, workers in low-quality
jobs who used PFL were more likely than those who did not to return
to the same employer after a family leave, were more satisfied with the
length of their leave, were better able to care for newborns and ill family
members, and were better able to make child care arrangements.
As we have also shown, however, the problem of unequal access to
paid time off remains a serious challenge in this case. Not only is general
public awareness of the PFL program woefully limited, but those who
stand to benefit most from it are the least likely to be aware of it. Low-
wage workers, Latinos, blacks, and young workers—the very groups that
have limited access to other sources of wage replacement during family
leaves—have especially low levels of awareness of the program.
The main source of information about PFL—for those workers who are
aware of it—is employers. Whereas employers who provide some form of
paid leave themselves and are now coordinating the benefits they provide
with the state program stand to gain if employees use PFL, those who pro-
vide no company-paid benefits have little incentive to inform employees
of the state program. This employer behavior has combined with unequal -1
awareness to re-create a new form of the previous inequality in access to 0
wage replacement during leaves. +1

13502-12_CH11-4thPgs.indd 325 12/10/13 8:35 AM

 326    What Works for Workers?

Among workers who were aware of PFL, some did not apply for the pro-
gram when they needed a family leave because the level of wage replace-
ment was too low. And many of them feared that taking PFL would lead to
negative consequences on the job, perhaps even causing them to be fired.
The lack of job protection in the PFL program is another key concern.
Thus, the promise of California’s new program to extend access to paid
leave to all the state’s workers, including those who previously lacked access
to wage replacement, has yet to be fulfilled, as awareness of the program
remains unacceptably low among the groups who need it most. Until aware-
ness of PFL spreads more widely, especially among low-wage workers and
other disadvantaged groups, and until the issues of job protection and more
extensive levels of wage replacement are addressed, the program will not
achieve its intended effect of reducing the long-standing disparity between
the workers, most of them well-paid managers and professionals, who
have access to paid leave through employer-provided benefits and the less-
privileged workers who lack such access.15 Instead, this pattern of inequality
has been reproduced in a new form. The challenge ahead is to ensure that
PFL benefits are universally accessible in practice as well as in theory.

Notes
1. The authors thank Laura Braslow and Sara Jane Glynn for assistance with the
data analysis in this chapter. The chapter also draws on material from chap-
ter 5 of Milkman and Appelbaum (2013), which offers a more comprehensive
analysis of California’s PFL program.
2. FMLA covers all public-sector workers and private-sector workers who work
for organizations with fifty or more employees on the payroll at or within
seventy-five miles of the worksite. In addition, to be eligible for FMLA leave,
one must have been with the same employer for at least twelve months and
have worked 1,250 hours or more in the year preceding the leave.
3. Washington State passed a paid family leave law in 2007, but to date no fund-
ing has been provided to implement it.
4. SDI benefits for pregnancy typically cover up to four weeks before delivery
and an additional six to eight weeks afterward, at the doctor’s discretion. For
biological mothers, the PFL benefit supplements the pregnancy disability
benefits previously available under SDI. Although it does not increase the
amount of job-protected leave available to women who have given birth, it
provides six additional weeks of partial wage replacement.
5. Fifty of the five hundred respondents lived in households whose only tele-
phone was a cellular one; on average, they were younger and had lower
-1 incomes than the rest of the sample. All results are weighted to adjust for the
0 number of telephones per household, which affects the probability of selec-
+1 tion in random digit dialing.

13502-12_CH11-4thPgs.indd 326 12/10/13 8:35 AM

 Low-Wage Workers and Paid Family Leave   327

6. See, for example, Neil Fligstein and Ofer Sharone’s (2002, 91–92) analysis
of the California workforce in 2001–2002, which found two worlds of work:
one at the top, “with lots of pressures but many rewards . . . in income . . .
job satisfaction, paid benefits and more security on the job,” that comprised
34 percent of the workforce; and another where 66 percent of respondents
worked at jobs that were “more onerous . . . with fewer paid benefits and . . .
more insecurity.” By the time we conducted our 2009–2010 survey, almost
a decade later than Fligstein and Sharone’s and immediately following the
Great Recession, the proportion of desirable jobs was presumably lower.
7. These data are for paid family leave as such—in contrast to the Census Bureau
report (Laughlin 2011)—and do not include paid sick leave and vacation ben-
efits, which are often used as wage replacement during family leaves. The
National Compensation Survey found sharp disparities in access to paid sick
leave and paid vacation benefits between high earners and low earners as well.
8. All significance levels reported later in the chapter are based on Z-tests unless
otherwise noted.
9. These differences by education and household income are statistically signifi-
cant (p < 0.05). For this question in the 2012 survey, N = 410.
10. All these differences were statistically significant (p < 0.001). N = 2,824.
11. Eligible respondents are those employed in the private or nonprofit sectors
(since most public-sector workers are not eligible for the state PFL program).
Take-up rates did not vary much by race and ethnicity or between U.S.-born
and immigrant workers.
12. The figure is 91.7 percent rather than 100 percent because some respondents
took leaves longer than the six weeks for which they could receive wage
replacement through the state PFL program.
13. The other differences in satisfaction levels (shown in figure 11.2) are not sta-
tistically significant.
14. This is much easier in the few states (Hawaii, New York, Rhode Island, and
Puerto Rico) that already have temporary disability programs (as the New
Jersey and Rhode Island cases exemplify) than elsewhere, because the neces-
sary administrative machinery is already in place.
15. Specific recommendations for expanded outreach include requiring hospi-
tals, clinics, and pediatricians’ offices to inform new parents about PFL (see
Milkman and Appelbaum 2013, 113).

References
Appelbaum, Eileen, and Ruth Milkman. 2011. Leaves That Pay: Employer and Worker
Experiences with Paid Family Leave in California. Washington, D.C.: Center for -1
Economic and Policy Research (January). Available at: http://www.cepr.net/ 0
index.php/publications/reports/leaves-that-pay (accessed September 2013). +1

13502-12_CH11-4thPgs.indd 327 12/10/13 8:35 AM

 328    What Works for Workers?

Blum, Linda M. 2000. At the Breast: Ideologies of Breastfeeding and Motherhood in the
Contemporary United States. Boston: Beacon Press.
Fligstein, Neil, and Ofer Sharone. 2002. “Work in the Postindustrial Economy of
California.” In The State of California Labor 2002. Berkeley: University of California
Press.
Gornick, Janet C., and Marcia K. Meyers. 2003. Families That Work: Policies for Rec-
onciling Parenthood and Employment. New York: Russell Sage Foundation.
Guendelman, Sylvia, Jessica Lang Kosa, Michelle Pearl, Steve Graham, Julia Good-
man, and Martin Kharrazi. 2009. “Juggling Work and Breastfeeding: Effects of
Maternity Leave and Occupational Characteristics.” Pediatrics 123(1): 38–46.
Heymann, Jody. 2000. The Widening Gap: Why America’s Working Families Are in
Jeopardy—and What Can Be Done About It. New York: Basic Books.
Laughlin, Lynda. 2011. “Maternity Leave and Employment Patterns of First-Time
Mothers: 1961–2008.” Current Population Reports P70-128. Washington: U.S.
Census Bureau (October). Available at: http://www.census.gov/prod/2011pubs/
p70-128.pdf (accessed September 2013).
Milkman, Ruth, and Eileen Appelbaum. 2004. “Paid Family Leave in California:
New Research Findings.” In The State of California Labor 2004. Berkeley: Univer-
sity of California Press.
———. 2013. Unfinished Business: Paid Family Leave in California and the Future of U.S.
Work-Family Policy. Ithaca, N.Y.: Cornell University Press.
Ruhm, Christopher J. 1997. “Policy Watch: The Family and Medical Leave Act.”
Journal of Economic Perspectives 11: 175–86.
Sherriff, Rona Levine. 2007. Balancing Work and Family. Sacramento: California
Senate Office of Research (February).
U.S. Bureau of Labor Statistics. 2011. “Employee Benefits in the United States—
March 2011.” Washington: U.S. Department of Labor, Bureau of Labor Statistics
(July 26). Available at: http://www.bls.gov/ncs/ebs/sp/ebnr0017.pdf (accessed
September 2013).
U.S. Department of Labor. 2012. Family and Medical Leave Act in 2012: Final Report.
Available at: http://www.dol.gov/whd/fmla/survey/ (accessed September
2013).
Waldfogel, Jane. 2001. “Family and Medical Leave: Evidence from the 2000 Sur-
veys.” Monthly Labor Review 124(9): 17–23.
Williams, Joan C., and Heather Boushey. 2010. The Three Faces of Work-Family Con-
flict: The Poor, the Professionals, and the Missing Middle. San Francisco: University
of California Hastings College of the Law, Center for American Progress and
Work Life Law (January).

-1
0
+1

13502-12_CH11-4thPgs.indd 328 12/10/13 8:35 AM

 Index

Boldface numbers refer to figures and tables

A8 migrant workers, 142–45 tion outcomes, 85–87, 88; employ-

ABM, 141 ment outcomes, 84–85, 88; health
abuse, of immigrant workers, 137–38, insurance coverage, 281; homeown-
144 ership gap, 31; poverty of, 1; school
ACA (Affordable Care Act) (2010), 7, enrollment rates, 84; wage gap, 5
274–75, 282–87 age, and California paid family leave
academic achievement, 85–87. See also awareness, 312
education agricultural workers, 6, 136, 137–38,
ACORN, 236–37 148
Adams, Scott, 222–23 Airport Group, 232
adult basic skills, 177 Airports Council International, 232
Affordable Care Act (ACA) (2010), 7, airport workers, 221, 222, 223, 231–32,
274–75, 282–87 237
affordable housing, 224 Alabama: unemployment insurance
AFL-CIO: National Day Laborer Orga- earnings requirement, 260, 263;
nizing Network partnership, 64; unemployment insurance recipiency
National Domestic Workers Alliance rate, 257
endorsement, 65; New York Taxi Alaska: unemployment insurance
Workers Alliance charter, 65; non- earnings requirement, 260, 263;
collective bargaining strategy, 69–70; unemployment insurance recipiency
undocumented immigrant advo- rate, 256, 257
cacy, 141–42; unions’ withdrawal ALEC (American Legislative Exchange
to form Change to Win, 53; worker Council), 53
centers, 147; Working America, 59, Allegrett, Sylvia, 218
62–63 Alliance for a New Economy, 221
African Americans: California paid Alliance@IBM, 60, 66–67
-1
family leave awareness, 313; educa- American Apparel, 141
0
+1
329

13502-13_Index.indd 329 12/10/13 8:35 AM

 330   Index

American Crystal Sugar, 70–71n8 attached workers, definition of, 275

American dream, 42 Austin, Tex., Capital Idea, 176
American Graduation Initiative, 82 automobile industry, 52, 54, 111
American Jobs Act, 96 Autor, David, 101n11
American Legislative Exchange Coun-
cil (ALEC), 53 back wage violations, 121–22, 129n17,
American Recovery and Reinvestment 239n7
Act (ARRA) (2009), 82, 181, 190, 208, Baltimore, Md.: living wage ordinance,
249 232
American Taxpayer Relief Act (2012), 199 banking, 30–31, 37, 61–62
Americorps, 96 Bank of America (BOFA), 61–62
Annual Social and Economic Supple- bargaining power of workers, 281–82
ment (ASEC), 201 Barnett, George, 50, 70
antidiscrimination laws, 37, 117, 137 Bartik, Timothy, 207, 240n13
anti-poverty programs and effects: basic skills, 177
EITC, 43n6; Keynesians, 25–27; liv- Berinsky, Adam, 71n13
ing wage movement, 215, 237 Bewley, Truman, 126n4
A. Philip Randolph Institute, 29 bias, of bureaucrats, 254–55
Appelbaum, Eileen, 305 big-box ordinances, 229–30
Apple, 109 Bishop, John, 207
apprenticeships, 96 blacks. See African Americans
Arizona: immigration law, 142; public Blank, Rebecca, 259
sector collective bargaining limita- BLS (Bureau of Labor Statistics), 2–3, 4,
tions, 68; unemployment insurance 168, 225, 237, 309
earnings requirement, 260; unem- blue-collar work, 168
ployment insurance recipiency rate, Boston, Mass.: health care career
257, 258 ladder program, 170–72, 175; hotel
Arkansas: unemployment insurance career ladder program, 173–74; liv-
earnings requirement, 260, 263; ing wage ordinance, 221–22, 223, 235
unemployment insurance recipiency Boushey, Heather, 262, 287
rate, 256, 257 brand reputation, 122
ARRA (American Recovery and Rein- Braslow, Laura, 326n1
vestment Act) (2009), 82, 181, 190, breadwinner model, 248–49
208, 249 breastfeeding, 323
ASEC (Annual Social and Economic Brennan Center for Justice, 236–37
Supplement), 201 Brenner, Mark, 221, 223, 234
ASGK, 67–68 Briones, Carolina, 221
Asian Americans: California paid Brown, Jerry, 65
family leave awareness, 313; health bureaucrats, discretion to meet client
insurance coverage, 281 needs, 254–56
-1 associate’s degrees, 90, 178, 180 Bureau of Labor Statistics (BLS), 2–3, 4,
0 AT&T, 115 168, 225, 237, 309
+1

13502-13_Index.indd 330 12/10/13 8:35 AM

 Index   331

Burtless, Gary, 205 Carson, Rachel, 27

Bush, George W.: homeownership Carter, Jimmy: pro-union labor law
policies, 41; immigration policy, 139, reform, 53
140 car wash workers, 150
business, attitudes toward, 57 Cascom, Inc., 121
cashiers, 3, 4, 225
cable industry, 121–22 CBAs (community benefits agree-
California: Domestic Workers’ Bill of ments), 233
Rights, 228; Family Rights Act, 307; CBO (Congressional Budget Office),
farmworkers, 6; living wage sup- 283–85
port, 215; unemployment insurance CEA (Council of Economic Advisers),
earnings requirement, 260; unem- 25
ployment insurance recipiency rate, Census Bureau, 273, 274, 309
257; Walmart worker strike, 68 Center for Economic and Policy
California paid family leave (PFL) Research, 261
program, 305–28; benefits, 306–7; Center for Employment Opportunity
establishment, 306; funding, 307; (CEO), 95
historical background, 305–6; impact CEO (Center for Employment Oppor-
on low-wage workers, 317–24; and tunity), 95
inequality, 308–10, 325–26; lessons certificate programs, 90, 178, 180
from, 325; methodology of study, certified nursing assistants (CNAs),
308; public awareness of, 310–15, 170, 172, 178
325–26; take-up rates, 315–17; uni- Chamber of Commerce v. Whiting, 142
versal scope, 310 Change.org, 59, 61–62
Camden Yards, 232 Change to Win, 53
Capital Idea program, 176 Chasinov, Amy, 259
Card, David, 217, 259 Chett, Raj, 200
career academies, 91 Chicago, Ill.: big-box ordinance, 229
career and technical education (CTE), 91 child care, 237, 323
career ladders, 165–85; argument child care workers, 4, 227, 228
for, 165–66; challenges, 177–80; childless workers, 202–3, 206
community college use, 180–81; children: California paid family leave
evaluations of, 175–77; features of, program’s impact on, 323–24; and
168–70; funding of, 181–82; in health EITC eligibility, 190. See also disad-
care, 170–72, 175, 177–78; in hotel vantaged youth
industry, 173–74; in manufacturing, child support, 39
174–75, 176, 179; and polarization Chimienti, Elizabeth, 183n5
of labor force trend, 166–68; policy Chipotle, 141
framework, 166 Chirinko, Robert, 208
career pathways, 174, 176, 179 Chrysler, 70n5
caregivers, California paid family leave churning, 199, 200 -1
program’s impact on, 323–24 Cintas, 239n7 0
+1

13502-13_Index.indd 331 12/10/13 8:35 AM

 332   Index

Citizens United petition, 63 community service, 96

city service contractors, 216, 219, 221, computers, 167
239n6 concession bargaining, 52
Civil Rights Act (1964), 28 Congressional Budget Office (CBO),
civil rights movement, 28 283–85
classical economics, 186 Congressional Research Service (CRS),
cleaners, 3, 4 21
Clemans-Cope, Lisa, 298n5 Connecticut: Retention and Advance-
Clergy and Laity United for Economic ment Demonstration Program,
Justice, 150 174–75; unemployment insurance
Clinton, Bill: homeownership policies, earnings requirement, 260; unemploy-
41; job creation policy, 7; pro-union ment insurance recipiency rate, 257
labor law reform, 53; welfare reform, construction industry, 118–21
39–40 “Contract with America” reform
CNAs (certified nursing assistants), agenda, 38–39
170, 172, 178 cooks, 3, 225
collective bargaining, 51–57, 97 cooperative agreements, 118
college education: attainment vs. core competencies, 110–11, 125
enrollment rates, 83; disadvantaged corporations, 23, 57
youth, 86; job openings requiring Corson, Walter, 266
degree, 168. See also community costs, fissured workplace’s focus on,
colleges 111, 125
Colorado: unemployment insurance Council of Economic Advisers (CEA),
earnings requirement, 260, 263; 25
unemployment insurance recipiency CRA (Community Redevelopment
rate, 257 Agency) projects, 230, 237
Communications Workers of America crime, 89
(CWA), 60, 66–67, 226 CRS (Congressional Research Service),
community-based advocacy, 59, 63–64 21
community benefits agreements CTE (career and technical education),
(CBAs), 233 91
community colleges: career ladder Current Population Survey (CPS):
programs, 170, 178; disadvantaged March Annual Demographic Survey,
youth programs, 98; enrollment, 180; 201, 203, 274, 275–81; Outgoing
government funding, 181; gradu- Rotation Groups, 85, 99n1, 182n1;
ation improvement initiatives, 82, unemployment insurance, 265
92–93; graduation rates, 181; return CVS Pharmacy, 171
on investment, 180; student demo- CWA (Communications Workers of
graphics, 180 America), 60, 66–67, 226
community corrections, 95
-1 Community Redevelopment Agency Daley, Richard, 229
0 (CRA) projects, 230, 237 Day, Liz, 128n12
+1

13502-13_Index.indd 332 12/10/13 8:35 AM

 Index   333

day laborers, 64 Dosha Salon Spa petition, 62

Delaware: unemployment insurance drug offenders, 95
earnings requirement, 260, 263; Dube, Arindrajit, 218, 239n1
unemployment insurance recipiency Durbin, Richard, 61–62
rate, 257
demand-side labor policy, 95–97 Earned Income Tax Credit (EITC):
Democrats: California paid family anti-poverty effects, 43n6; benefits,
leave awareness, 312; EITC support, 188–89; childless adult proposal,
37; job creation, 7; union attitudes, 93–94; compliance, 190; cost of, 190,
55, 56, 57 191–92, 206; creation of, 35–36, 188;
demographic shifts, 5 eligibility, 188; expansions of, 36–37,
deportations, 138, 139 40, 190; growth of, 22; IRS adminis-
deregulation, 5, 21, 22, 39, 282 tration, 189–90; maximum amounts,
Desai, Bhairavi, 65 43n6; number of recipients, 191–92;
de-unionization, 3–4, 5, 23, 87, 281–82 political support for, 190; program
Diamond, Wayne, 67 participation, 201–3; qualifying chil-
Dickert-Conlin, Stacy, 188 dren, 190; refundability of credits,
disability insurance, 307 194; work incentives and effects,
disadvantaged workers, living wage 199–201, 206; vs. WOTC, 186, 193–98
impact, 223 earnings. See wages and earnings
disadvantaged youth, 81–107; educa- economic development projects, 226,
tion, 82, 83–93; EITC expansion, 228–31
93–94; employment rates, 83–85, economic growth, 26–27, 40
87–89; ex-offenders, 94–95; Great Economic Policy Institute (EPI), 224,
Recession impact, 81, 85; introduc- 237, 273–74
tion, 81–83; noncustodial parents, economy, of 1970s, 35, 37–38
94–95; policy considerations, 81–83, Edelman, Peter B., 81
90–99; skill and work incentive education: adult basic skills, 177;
improvement, 90–93 disadvantaged youth, 82, 83–93; and
disclosure, 122–23 inequality, 167; para-educators, 220;
discrimination, 32, 95, 138–39, 254–55 remedial programs, 93. See also col-
displaced workers, 7 lege education
District of Columbia: unemployment educational attainment: and California
insurance earnings requirement, paid family leave awareness, 311,
260, 263; unemployment insurance 312; and employer-provided train-
recipiency rate, 257 ing, 169; low income effects, 165;
domestic workers: living wage cam- and maternity leave access, 309; and
paigns, 228, 237; unionization, 59, wages, 167
64–65, 147, 225, 228; worker centers, Education Department, U.S., 98, 183n8
147 Eidelson, Josh, 74n42
Domestic Workers United, 147 Eisenhower, Dwight: unions, 55 -1
Donovan v. Brandel, 127n8 Eissa, Nada, 206, 210n11 0
+1

13502-13_Index.indd 333 12/10/13 8:35 AM

 334   Index

EITC (Earned Income Tax Credit). See (EITC); Work Opportunity Tax
Earned Income Tax Credit (EITC) Credit (WOTC)
elder care workers. See domestic enforcement of law, 117–24, 136–42,
workers 150
Elliott, Mark, 101n14 English for speakers of other lan-
Emergency Contingency Fund, 96 guages (ESOL), 171–72, 177
employees: definition of, 113–14; reten- enterprise zones, 234
tion of, 199, 266–67, 309, 322–23 EPI (Economic Policy Institute), 224,
employer-based labor organizations, 237, 273–74
60, 66–69 ERISA (Employment Retirement
employer-employee relationship, 108, Income Security Act), 224
113–15 ESOL (English for speakers of other
employer-provided benefits: health languages), 171–72, 177
insurance, 273–74, 276–77, 284, 288–97; European Union (EU): migrant worker
inequality of access to, 308–10 policy, 142–43; union density, 51
employers: definition of, 113–15; evaluations: job retention programs,
sanctions for hiring undocumented 267; of sectoral training programs,
workers, 138–42, 151 175–77
employment: boundaries, 115–17; E-Verify, 142, 152
definition of, 113–15; employer- executive agencies, transparency of, 123
employee relationship, 108, 113–15; ex-offenders, 94–95, 203
job quality, 97, 167–68, 170; job
retention, 199, 266–67, 309, 322–23; FAA (Federal Aviation Administra-
prospects for disadvantaged youth, tion), 231
90; work hours, 234–36. See also Facebook, 67–68
employment rates fair housing, 31–32, 37
employment and training programs, Fair Housing Act (1968), 32–33, 38
91–92 Fair Labor Standards Act (FLSA):
employment discrimination, 95, 138–39 cable installers covered by, 121–22;
employment rates: disadvantaged employee definition, 114; hot cargo
youth, 83–85, 87–89; EITC effects, provision, 116; immigrant workers
200; minimum wage impact, 218; covered by, 6, 137; War on Poverty
WOTC effects, 200 expansion, 5; workers excluded
Employment Retirement Income Secu- from, 28
rity Act (ERISA), 224 Fair Minimum Wage Act (2013), 218,
employment subsidies, 186–214; future 237
prospects, 206–8; for job creation, Fairris, David, 221
207–8; labor market effects, 186, family, as safety net for low-wage
187; overview of current programs, workers, 250–52
188–99; program participation, Family and Medical Leave Act (FMLA)
-1 201–6; work incentives, 199–201. (1993), 128n15, 305–6, 311–13
0 See also Earned Income Tax Credit Family Assistance Plan (FAP), 34, 35
+1

13502-13_Index.indd 334 12/10/13 8:35 AM

 Index   335

family budget calculator, 224 FLSA (Fair Labor Standards Act). See
family leave, 305–6. See also California Fair Labor Standards Act (FLSA)
paid family leave (PFL) program FMLA (Family and Medical Leave Act)
family reunification, 136 (1993), 128n15, 305–6, 311–13
Fannie Mae (Federal National Mort- food preparation workers, 3, 4, 225
gage Association), 30, 38 food stamp program, 190, 203, 205
FAP (Family Assistance Plan), 34, 35 Ford Motor Company, 70n5, 111
Farm Labor Organizing Committee Foulkes, Fred, 126n4
(FLOC), 148–49 franchising, 112, 116, 117–18, 123–24.
farmworkers, 6, 136, 137–38, 148 See also fissured workplace
fast food industry, 129n17, 217 Freddie Mac (Federal Home Loan
FCC (Federal Communications Com- Mortgage Corporation), 38
mission), 62 Freelancers Union, 57, 60, 66
Federal Aviation Administration freelance workers. See independent
(FAA), 231 contractors
Federal Communications Commission Freeman, Richard B., 50, 67
(FCC), 62 free trade, 7
Federal Home Loan Mortgage Corpo- Fresh Direct, 140
ration (Freddie Mac), 38 Fronstin, Paul, 298n5
Federal Housing Administration full employment, 26–27, 29, 41
(FHA), 32, 34
Federal National Mortgage Association Galbraith, John Kenneth, 27
(Fannie Mae), 30, 38 Gallup poll, 53–57
Fehr, Ernst, 126n4 Gangmasters and Licensing Authority,
FHA (Federal Housing Administra- 145
tion), 32, 34 GAO (Government Accountability
Field Poll, 311 Office), 137, 202
financialization, 21, 22, 38, 40–41 Garrett, Bowen, 298n5
Fine, Janice, 149 GED (General Educational Develop-
fissured workplace, 108–33; elements ment) degree, 92, 172
of, 110–12; employment relationship gender differences: California paid
in, 108; enforcement strategies using family leave awareness, 311, 312,
existing legislation, 117–24; growth 313; education outcomes, 85–87;
of, 108–9; new legislation, 112–17; employment outcomes for disadvan-
social consequences, 109, 125–26 taged youth, 84, 87–88; family leave,
Fligstein, Neil, 327n6 309; pay gap, 6; school enrollment
FLOC (Farm Labor Organizing Com- rates for disadvantaged youth, 84
mittee), 148–49 General Educational Development
Florida: unemployment insurance (GED) degree, 92, 172
earnings requirement, 260, 263; General Growth Properties (GGP),
unemployment insurance recipiency 231 -1
rate, 256–58, 257 General Motors, 70n5 0
+1

13502-13_Index.indd 335 12/10/13 8:35 AM

 336   Index

geographic zone living wage ordi- Hamersma, Sarah, 102n23, 186

nances, 233–34 Harrington, Michael, 1–2, 5, 6, 7
Georgia: public sector collective Harrison, Amy, 126n5
bargaining ban, 68; unemployment Hart-Cellar Act (1965), 6
insurance earnings requirement, 260; Hartsfield-Jackson Airport, 232
unemployment insurance recipiency Hawaii: employer-sponsored health
rate, 257 insurance mandate, 300n25; unem-
GI Bill, 30, 32 ployment insurance earnings
globalization, 21, 87 requirement, 260; unemployment
Glynn, Sara Jane, 326n1 insurance recipiency rate, 257
Glynn, Timothy, 116 Health and Human Services Depart-
Goodheart, Jessica, 221 ment, U.S., 175
Good Jobs First, 230, 231, 233–34 health care, 170–72, 175, 177–78, 237
Gordon, Colin, 240n21 health insurance coverage, 273–304;
Gordon, Jennifer, 134 and Affordable Care Act, 274–75,
Gould, Elise, 275 282–87; data sources, 273–74,
Government Accountability Office 275; freelancers, 60, 66; future
(GAO), 137, 202 predictions, 281–82; living wage
grade point average (GPA), 86 campaign efforts, 224; and Mas-
Great Depression, 50, 53–54, 250 sachusetts reforms, 274–75, 285–86;
Great Recession (2007-2009): and methodology of study, 275–76;
disadvantaged youth outcomes, 81, population without, 273, 280, 283,
85, 87–88; recovery from, 42; unem- 284–85; trends, 274, 276–81,
ployment during, 2; unemployment 288–97
insurance benefits, 253–54; union health status, 165
status, 50–51, 54–55 Henly, Julia, 235
Great Society, 26 Hersch, Joni, 57
green cards, 136 Hershey, 148
Griffith, Joel, 74n42 high school dropouts, 7, 86
guaranteed income, 34 high schools, 90–91
guest workers: employer mobility Hiring Incentives to Restore Employ-
restrictions, 152; employer spon- ment (HIRE) Act, 207–8
sorship, 137–38, 151, 152; employ- Hispanics: California paid family leave
ers’ use to avoid sanctions, 141; in awareness, 313; education outcomes,
U.K., 142–45, 151–52; unionization, 85–87; employment outcomes,
147–49; visa issuance, 136 84–85; health insurance coverage,
280–81; school enrollment rates, 84;
H-2A visas, 136, 137–38, 148 working poor, 6
H-2B visas, 136, 137–38, 148 historical perspective, 19–49;
Haley-Lock, Anna, 235, 236 1970s-1980s, 34–38; introduction,
-1 Hall, Peter, 221, 222 19–25; lessons for current policy
0 Hamermesh, Daniel, 235 decisions, 41–43; neoliberalism
+1

13502-13_Index.indd 336 12/10/13 8:35 AM

 Index   337

reform triumph, 38–41; New Deal IBT (International Brotherhood of

policies, 25–34 Teamsters), 232
Hoffman Plastics Compounds v. ICE (Immigration and Customs
NLRB, 137, 150 Enforcement), 138, 139, 140
Holtz-Eakin, Douglas, 188 Idaho: unemployment insurance earn-
Holzer, Harry J., 81, 88, 90, 101n12, 267 ings requirement, 260, 263; unem-
home care aides, 4, 225 ployment insurance recipiency rate,
Home Depot, 230 257
home equity, 31 illegal immigrants. See undocumented
home health aides, 4, 225 immigration
home health care, 227, 237 Illinois: unemployment insurance
Homeland Security Department, 138 earnings requirement, 260; unem-
home mortgage deduction, 37 ployment insurance recipiency rate,
homeownership, 20, 31–32, 34, 38, 40–41 257
Horowitz, Sara, 66 ILO (International Labor Organiza-
hot cargo provision, 116 tion), 147
Hotel Employees and Restaurant immigrants and immigration, 134–62;
Employees Union, 146 competition with natives for jobs,
hotel industry, 108, 173–74, 230, 234 136–37; law governing, 136–42; low-
Hotz, V. Joseph, 190, 200 wage work, 6; population, 134; U.K.
hours of work, 234–36 as example of open labor migration
household income, 310, 312, 313 policy, 142–45, 151–52; unioniza-
housekeepers. See domestic workers tion, 139, 144–51; worker centers,
Housing Act (1949), 31 59, 63–64, 147, 225; workers’ rights,
Housing and Urban Development Act 137, 149–51. See also undocumented
(1968), 32 immigration
Housing and Urban Development Immigration and Customs Enforce-
Department (HUD), 32 ment (ICE), 138, 139, 140
housing policy: of 1970s–1980s, 37–38; Immigration and Nationality Act
financialization of homeownership, (1965), 6
38, 40–41; historical perspective, 20; Immigration and Naturalization Ser-
New Deal era, 30–33; Section 235 vice (INS), 138, 139
program, 32–33, 34, 37 immigration reform, 142, 152
Hoynes, Hilary, 206, 210n11 Immigration Reform and Control Act
human resources (HR), 111, 174–75, (IRCA), 6, 134, 135, 138
178 incarceration: effects of, 22–23, 89;
Humphrey-Hawkins Act (1978), 24 gender differences, 86; and labor
Hutchins, B. L., 126n5 market disconnection, 88; programs
to reduce employment barriers after,
I-BEST (Integrating Basic Education 94–95; racial differences, 81, 86, 87
and Skill Training) program, 93 income, household, 310, 312, 313. See -1
IBM, 60, 66–67, 109 also wages and earnings 0
+1

13502-13_Index.indd 337 12/10/13 8:35 AM

 338   Index

income inequality, 6–7, 21 IPEDS (Integrated Post-Secondary

income support, 20, 27–30. See also Data System), 183n8
welfare IRCA (Immigration Reform and Con-
income tax returns, 203 trol Act), 6, 134, 135, 138
independent contractors: cable install- IRS (Internal Revenue Service), 123,
ers, 121–22; classification as, 113–14; 189–90, 194
Freelancers Union, 57, 60, 66; labor IWJ (Interfaith Worker Justice), 64
organizations for, 67; misclassifi-
cation of workers as, 123. See also Jacobs, Ken, 221, 222
fissured workplace janitors, 3, 4, 123–24, 225, 230
Independents, union attitudes, 56 Jewish Vocational Services, 171–72,
Indiana: unemployment insurance 175
earnings requirement, 260, 262, 263; Ji, MinWoong, 129n17
unemployment insurance recipiency Jin, Ginger, 123
rate, 257 Job Corps, 92
inequality, 6–7, 21, 167, 308–17, 325–26 job creation, 7, 29, 95–96, 98–99,
information technology workers, 207–8
66–67 job loss, and minimum wage, 216–17,
INS (Immigration and Naturalization 218. See also unemployment
Service), 138, 139 job quality, 97, 167–68, 170. See also
institutions, attitudes toward, 57 career ladders
Integral Development Solutions, job retention, 199, 266–67, 309, 322–23
121–22 jobs. See employment
Integrated Post-Secondary Data Sys- job separations, 200, 252, 266
tem (IPEDS), 183n8 Jobs for the Future, 183n8
Integrating Basic Education and Skill Johnson, Lyndon B.: housing policies,
Training (I-BEST) program, 93 32
Interfaith Worker Justice (IWJ), 64 Jones, Jeffrey N., 54, 55, 56
intermediaries. See sectoral training Jost, Micah, 127n7
programs Justice for Janitors campaign, 146
Internal Revenue Service (IRS), 123, justice reinvestment, 95
189–90, 194 J visas, 148
International Brotherhood of Team-
sters (IBT), 232 Kaiser Family Foundation, 299n14–15
International Labor Organization Kalmanovitz Initiative for Labor and
(ILO), 147 the Working Poor of Georgetown
International Taxi Workers Alliance, University, 8–9
147 Kansas: unemployment insurance
Iowa: enterprise zones, 234; unemploy- earnings requirement, 260, 263;
ment insurance earnings require- unemployment insurance recipiency
-1 ment, 260, 263; unemployment rate, 257
0 insurance recipiency rate, 257 Kasich, John, 71n10
+1

13502-13_Index.indd 338 12/10/13 8:35 AM

 Index   339

Katchpole, Molly, 61–62 landscaping workers, 4

Kaye, Kelleen, 266 Las Vegas, Nev., hotel career ladder
Keiser, Lael, 254 program, 173
Kemp, Jack, 40 Latinos. See Hispanics
Kentucky: unemployment insurance laws and legislation. See specific legisla-
earnings requirement, 260; unem- tive acts
ployment insurance recipiency rate, learning communities, 93
257 legalization of undocumented work-
Kern, Jen, 237, 239n1 ers, 152
Kerner Report, 32 LEHD (Longitudinal Employer House-
Keynesian economics, 21, 24, 25–27, hold Dynamics), 101n12
29, 35 Leslie, Philip, 123
Kletzer, Laurie, 7 Lester, William, 218
Knutson, Ryan, 128n12 liability, of employers, 116–17
Krueger, Alan, 217 LIHTC (Low-Income Housing Tax
Credit), 37
labor demand, 88–89, 95–97 Lilly Ledbetter Fair Pay Act (2009),
Labor Department, U.S.: disadvan- 128–29n15
taged youth programs, 98; Employ- LIUNA (Laborers International Union
ment and Training Administration of North America), 147
data, 257, 261, 263; family and living wage, 215–43; airports, 231–32,
medical leave survey, 309–10, 311; 237; anti-poverty effects, 215, 237;
immigrant workers, 139, 149; unem- coverage of, 219–22, 237; domes-
ployment insurance state recipiency tic workers, 228, 237; economic
evaluation, 269; Wage and Hour development projects, 228–31;
Division, 116, 121; WOTC adminis- enforcement of, 220; expansion
tration, 194, 203 opportunities, 225–27, 238;
laborers, 3, 4, 225 geographic-based ordinances,
Laborers International Union of North 233–34; home health care, 227, 237;
America (LIUNA), 147 and hours of work, 234–36; impact
labor force participation, 200 of, 222–23, 236–37; level of wage,
labor-labor substitution, 223 224; limitations of, 223–24; minimum
labor market: subsidy effects, 187; wage law context, 216–19; move-
supply and demand shift effects on ment origins, 215; sports stadiums,
disadvantaged youth, 88–89 232–33, 237; unions, 24, 225–26
labor organizations, non-collective lobbying, 69
bargaining opportunities, 57–70. See local government, wage laws, 223–24
also unions and unionization lockouts, 52–53
labor recruiters, 144, 151 Long, Russell, 36
labor supply, 88–89 Long, Sharon, 285, 301n28
labourstart.org, 72n24 Longitudinal Employer Household -1
Lambert, Susan, 235 Dynamics (LEHD), 101n12 0
+1

13502-13_Index.indd 339 12/10/13 8:35 AM

 340   Index

Los Angeles, Calif.: living wage ordi- Massachusetts: health care reform,
nance, 221, 223, 230, 235; workers’ 274–75, 285–86; unemployment
rights campaigns, 150 insurance earnings requirement, 260,
Louisiana: unemployment insurance 263, 264; unemployment insurance
earnings requirement, 260; unem- recipiency rate, 257
ployment insurance recipiency rate, mass incarceration. See incarceration
257 maternity leave, 309
Lower-Basch, Elizabeth, 208 Maynard-Moody, Steven, 254
Low-Income Housing Tax Credit McCartin, Joseph A., 1
(LIHTC), 37 McMurrer, Daniel, 259
low-wage work and workers: defi- MDRC, 267
nition of, 275; growth of, 2–6; by Medicaid, 227, 278–80, 283–84, 288–97
occupation, 2–3. See also specific index medical leave, 309–10
headings meet-and-confer agreements, 69
Luce, Stephanie, 1, 215, 221 men, unemployment insurance
Luff, Jennifer, 1 benefits, 248–49. See also gender
Lynch, Victoria, 285, 301n28 differences
Mexican Americans. See Hispanics
Madland, David, 57 Meyer, Bruce, 206, 210n11
Maguire, Sheila, 101n14 Meyerson, Harold, 63
Maine: Pine Trees Development Zones, Michigan: Retention and Advancement
234; unemployment insurance Demonstration Program, 174–75;
earnings requirement, 260, 263, 264; right-to-work law, 53; unemploy-
unemployment insurance recipiency ment insurance earnings require-
rate, 257 ment, 260, 263; unemployment
management, career ladder resistance, insurance recipiency rate, 257
178 Microsoft, 67
manufacturing: career ladder pro- middle class, 5, 31, 165–66
grams, 174–75, 176, 179; offshoring middle-skill level jobs, 90, 168
of, 2, 7 midterm elections (1994), 23
March Current Population Survey, migrant workers, in U.K., 142–45, 151–52
201, 203, 275–81 migration, in U.S., 259
Marculewicz, Stefan, 64, 73n33 Milkman, Ruth, 1, 305
marriage status, and California paid minimum wage, 5, 37, 97, 216–19,
family leave awareness, 312 236–38. See also living wage
Marriott, 198 Minnesota: unemployment insurance
Martinson, Karin, 267 earnings requirement, 260; unem-
Maryland: unemployment insurance ployment insurance recipiency rate,
earnings requirement, 260; unem- 257
ployment insurance recipiency rate, Mishel, Larry, 57
-1 257 Mississippi: public sector collec-
0 Marzulli, John, 154n17 tive bargaining limitations, 68;
+1

13502-13_Index.indd 340 12/10/13 8:35 AM

 Index   341

unemployment insurance earnings National Guestworker Alliance (NGA),

requirement, 260; unemployment 64, 148
insurance recipiency rate, 257 National Labor Relations Act (NLRA)
Missouri: unemployment insurance (1935), 28, 51–52, 64, 114
earnings requirement, 260; unem- National Labor Relations Board
ployment insurance recipiency rate, (NLRB), 52, 114
257 National Longitudinal Survey of Youth
Montana: unemployment insurance (NLSY97), 100n5
earnings requirement, 261, 263; National Research Program, 210n14
unemployment insurance recipiency national service, 96
rate, 257 National Welfare Rights Organization
mortgages, 38 (NWRO), 29
Mott Foundation, 175 Nations Roof, LLC, 119–21
Mullin, Charles, 200 NBA lockout, 70n8
multi-factor employee test, 127n7 NBER (National Bureau of Economic
The Murphy Institute for Worker Edu- Research), 57
cation and Labor Studies of the City NDLON (National Day Laborer Orga-
University of New York, 8–9 nizing Network), 64, 147
Musheno, Michael, 254 NDWA (National Domestic Workers
Alliance), 59, 64–65, 147, 225, 228
Naduris-Weissman, Eli, 64, 73n32 Nebraska: unemployment insurance
NAICS (North American Industry earnings requirement, 261, 263;
Classification System), 231–32 unemployment insurance recipiency
NAM (National Association of Manu- rate, 257
facturers), 169, 174–75, 176 negative tax, 187–88
nannies. See domestic workers NELS (National Educational Longitu-
National Association of Manufacturers dinal Survey), 183n7
(NAM), 169, 174–75, 176 neoliberalism, 23, 38–41
National Bureau of Economic Research Neumark, David, 207, 218, 222–23
(NBER), 57 Nevada: unemployment insurance
National Compensation Survey of earnings requirement, 261; unem-
Employee Benefits, 309 ployment insurance recipiency rate,
National Day Laborer Organizing 257
Network (NDLON), 64, 147 New Deal programs, 25–34; as frame-
National Domestic Workers Alliance work for current policy discussions,
(NDWA), 59, 64–65, 147, 225, 228 42; housing, 30–33; Nixon’s attack
National Educational Longitudinal on, 35; social movement activists’
Survey (NELS), 183n7 challenges, 27–30; Tobin’s anti-
National Education Association, 220 poverty plan’s expansion on, 25–27;
National Employment Law Project, 150 welfare, 27–30
National Guard ChalleNGe program, New Hampshire: unemployment -1
92 insurance earnings requirement, 261; 0
+1

13502-13_Index.indd 341 12/10/13 8:35 AM

 342   Index

unemployment insurance recipiency NLRA (National Labor Relations Act)

rate, 257 (1935), 28, 51–52, 64, 114
New Hope program, 94 NLRB (National Labor Relations
New Jersey: minimum wage study, Board), 52, 114
217; paid family leave, 306; unem- NLRB v. Hearst Publications Inc., 114
ployment insurance earnings NLRB v. United Insurance, 128n10
requirement, 261, 263; unemploy- NLSY97 (National Longitudinal Sur-
ment insurance recipiency rate, 257 vey of Youth), 100n5
New Jobs Tax Credit (NJTC), 198, 207 non-collective bargaining tactics, 57–69
New Mexico: unemployment insur- noncustodial parents, 88, 94–95
ance earnings requirement, 261, 263; non-governmental organizations
unemployment insurance recipiency (NGOs), 59, 60, 67–68
rate, 257, 258 North American Industry Classifica-
New Orleans Workers’ Center for tion System (NAICS), 231–32
Racial Justice, 148 North Carolina: public sector collective
The New Republic, 25 bargaining ban, 68; unemployment
Newsies, 127–28n9 insurance earnings requirement,
New York: “Domestic Workers’ 261, 263; unemployment insurance
Bill of Rights,” 228; ex-offender recipiency rate, 257
employment, 95; Freelancer Union, North Carolina Growers Association,
66; Office of Multiple Pathways to 148
Graduation, 92; Restaurant Oppor- North Dakota: unemployment insur-
tunities Center, 147; State Protec- ance earnings requirement, 261;
tion of Employees Act (2001), unemployment insurance recipiency
240n22; unemployment insurance rate, 257
earnings requirement, 261, 263; nursing aides, 4
unemployment insurance recipi- nursing assistants, 3, 225
ency rate, 257 nursing homes, 178
New York City: high school graduation NWRO (National Welfare Rights Orga-
rates, 91; living wage support, 215 nization), 29
New York City Opera, 71n8
New York Taxi Workers Alliance, 59, Obama, Barack: American Gradua-
65 tion Initiative, 82; Change.org Bank
NFL lockout, 70n8 of America petition, 61; health care
NGA (National Guestworker Alliance), reform, 7, 274–75, 282–87; immigra-
64, 148 tion policy, 140–41; job creation
NGOs (non-governmental organiza- policy, 7; New York Taxi Workers
tions), 59, 60, 67–68 Alliance recognition, 65; pro-union
Nike, 122 labor law reform, 53; subsidized
Nixon, Richard M.: Family Assistance employment for disadvantaged
-1 Plan, 34, 35; housing policy, 37 youth, 96; transparency across
0 NJTC (New Jobs Tax Credit), 198, 207 executive agencies, 123; workplace
+1

13502-13_Index.indd 342 12/10/13 8:35 AM

 Index   343

law enforcement, 150; youth policy, Pande, Aakanksha, 285–86

97–98 para-educators, 220
Obamacare, 7, 274–75, 282–87 part-time workers, 234–36, 249, 266
Occupational Employment Statistics Patient Protection and Affordable Care
(OES), 2, 227 Act (2010), 7, 274–75, 282–87
Occupational Safety and Health Act payroll tax, 307
(OSHA) (1970), 114–15, 119–21, 137 Pennsylvania: minimum wage study,
occupations, 2–3, 4. See also 217; Retention and Advancement
employment Demonstration Program, 174–75;
Occupy Wall Street, 58, 59 unemployment insurance earnings
O’Connor, Alice, 19 requirement, 261; unemployment
Office of Economic Opportunity insurance recipiency rate, 257, 258
(OEO), 26–27 PERI (Political Research Institute), 221,
Office of Multiple Pathways to Gradu- 223
ation (OMPG), 92 personal care aides, 4
offshoring, 2, 7 Personal Responsibility and Work
Ohio: public-sector collective bargain- Opportunity Reconciliation Act
ing, 53; unemployment insurance (PRWORA) (1996), 39, 192
earnings requirement, 261, 263; petitions, 59, 61–62
unemployment insurance recipiency Phadera, Lokendra, 285, 301n28
rate, 257, 258 Philadelphia, Pa., Local 1199C career
Oklahoma: unemployment insurance ladder program, 172, 178
earnings requirement, 261, 262; Philadelphia Youth Network, 93
unemployment insurance recipiency Plueger, Dean, 202, 205–6, 210n12
rate, 257 polarization of labor force, 166–68,
O’Leary, Christopher, 265–66 308–9
online petitions, 59, 61–62 Polish migrant workers, 143, 144
on-the-job training programs, 96 political activity, of non-collective
Opening Doors demonstration, 93 bargaining unions, 69
open source union model, 69 political parties, 23. See also Democrats;
Oregon: unemployment insurance Republicans
earnings requirement, 261; unem- Political Research Institute (PERI), 221,
ployment insurance recipiency rate, 223
257 politics, structural transformation of,
Osterman, Paul, 97, 165 23–24, 35
The Other America (Harrington), 1–2 Pollin, Robert, 223, 234
OUR Walmart, 60, 67–68 Poo, Ai-Jen, 65
overtime, 67, 235 Post-Secondary Longitudinal Students
Survey, 183n8
paid family leave (PFL), 306, 308–9. Postville, Iowa, ICE raid, 140
See also California paid family leave poverty: 1960s, 27; after WWII, 1; and -1
(PFL) program urbanization, 250–51 0
+1

13502-13_Index.indd 343 12/10/13 8:35 AM

 344   Index

poverty line, 2, 165, 224, 225 Restaurant Opportunities Center

private health insurance coverage, (ROC-NY), 147, 225
277–78, 288–97 restaurants, 3, 123, 147, 225, 236
privatization, 239n6, 282 restorative justice, 95
Project QUEST, 175–76 retail, 3, 4, 225, 229–30, 231, 235
Promise Neighborhoods, 98 retention, of employees, 199, 266–67,
public assistance. See welfare 309, 322–23
public housing, 31–33, 37 Retention and Advancement Demon-
public opinion, of unions, 53–57 stration Program, 174–75
public policies for low-wage workers: revenues, 110, 125
historical perspective, 19–49; job Rho, Hye Jin, 275
creation, 7; recommendations, 41–43; Rhode Island: paid family leave, 306;
research, 8, 19; types of approaches, unemployment insurance earnings
166, 167. See also specific index requirement, 261, 263; unemploy-
headings ment insurance recipiency rate, 257
public sector unions, 53, 54, 60, 68 rights, of immigrant workers, 137,
149–51
Race to the Top, 98 right-to-work law, 53
racetrack workers, 154n17 risk-pooling effects, of family, 250–52
racial differences: California paid ROC-NY (Restaurant Opportunities
family leave awareness, 312, 313; Center), 147, 225
health insurance coverage, 280–81; Roder, Ann, 101n14
unemployment insurance eligibility, Rogers, Brishen, 116
255–56 Rogers, Joel, 69
Randolph, A. Philip, 28 Romney, George, 37
Rangarajan, Anu, 262, 266 Roosevelt, Franklin D., 26, 28
Reagan, Ronald: EITC expansion, 36; Rosenfeld, David, 64
housing policy, 37 Runsten, David, 221
real estate industry, 30–31, 37 Rutherford Food Corp. v. McComb,
recessions, 206–7, 248. See also Great 127n8
Recession (2007–2009) Ryu, Sangyub, 255, 256
recidivism, 95
recruitment agencies, in U.K., 144, 151 Saez, Emmanuel, 200
redlining, 32 safety, workplace, 119–21
Reich, Michael, 218, 221, 222 safety net, 250–52
remedial education, 93 San Antonio, Tex., Project QUEST,
Republicans: Affordable Care Act 175–76
repeal threat, 283; California paid Sandoval, Edgar, 154n17
family leave awareness, 312; “Con- San Francisco, Calif.: living wage ordi-
tract with America” reform agenda, nance, 221–22, 223, 235
-1 38–39; EITC support, 37; job cre- San Francisco International Airport,
0 ation, 7; union attitudes, 55, 56, 57 232
+1

13502-13_Index.indd 344 12/10/13 8:35 AM

 Index   345

Santa Monica, Calif.: living wage ordi- Sierra Club, 150

nance, 233, 234 Signal Shipbuilding, 148
Schlademan, Dan, 74n39 Simon, Jonathan, 23
Schmidt, Klaus, 126n4 single mothers, 29, 200
Schmitt, John, 273 SIPP (Survey of Income and Program
Scholz, John Karl, 190, 200, 202 Participation), 203, 266
school enrollment trends, 83–85. See Small Business Job Protection Act, 190
also education smart probation, 95
seasonal workers, H-2B visas, 136, Smith, Daniel, 253
137–38, 148 SNAP (Supplemental Nutrition Assis-
Secretary of Labor v. Lauritzen, 127n8 tance Program), 190, 203, 205
Section 8 program, 37 social contract, 39
Section 235 program, 32–33, 34, 37 social economy, 27
sectoral training programs: challenges, social mobility, 41–42, 42–43
177–80; for disadvantaged youth, social movements, 27–28
102n26; earnings impact, 101n14; Social Security Act (1935), 28, 250
employer resistance, 177–78; evalua- South Carolina: public sector collective
tions of, 175–77; features of, 169–70; bargaining ban, 68; unemployment
health care, 170–72, 175, 177–78; insurance earnings requirement, 261;
hotel industry, 173–74; in manufac- unemployment insurance recipiency
turing, 174–75, 176, 179 rate, 257
security guards, 3, 4, 225, 230 South Dakota: unemployment insur-
segregation, 30, 32, 33, 37 ance earnings requirement, 261;
Seigfried, John, 233 unemployment insurance recipiency
SEIU (Service Employees International rate, 257
Union), 97, 146, 147, 149, 225, 232 Southern Poverty Law Center, 138
self-employed workers, 200, 227, 306 special education, 227
self-sufficiency, 22 sports stadium workers, 232–33, 237
Service Employees International Union stagflation, 35
(SEIU), 97, 146, 147, 149, 225, 232 standards, 111–12
service sector: exclusion from New The State of Working America, 239n9,
Deal welfare programs, 28; job 273–74
growth, 167–68; unemployment states: disadvantaged youth policies,
insurance, 249; unionization, 24 99; job creation tax credits, 208;
Shaefer, Luke, 265, 266 unemployment insurance adminis-
Sharone, Ofer, 327n6 tration, 247, 253, 256–64, 268; welfare
Shelley v. Kraemer, 30 reform, 39–40
Shierholz, Heidi, 239n1 Stettner, Andrew, 265, 269–70n3
shopping malls, 231 stigma, 188, 205
Shriver, Sargent, 26 stock clerks, 3, 225
Shulman, Beth, 97 Stockley, Karen, 285 -1
sick leave, 305, 309 strict liability, 116 0
+1

13502-13_Index.indd 345 12/10/13 8:35 AM

 346   Index

strikes, 52, 68 Temporary Assistance for Needy Fami-

structural unemployment, 28–29 lies (TANF), 39–40, 96, 190
subcontractors, 116, 118–21, 143–44 temporary help services firms, 193
subprime mortgages, 38 temporary worker visas, 136, 137–38,
subsidiaries, 109 148
subsidies. See employment subsidies Tennessee: unemployment insurance
subsidized employment programs, 96, earnings requirement, 261; unemploy-
208 ment insurance recipiency rate, 257
Supplemental Nutrition Assistance Texas: public sector collective bargain-
Program (SNAP), 190, 203, 205 ing ban, 68; unemployment insur-
Supreme Court, U.S., 114, 299n19 ance earnings requirement, 261, 263;
Survey of Income and Program Partici- unemployment insurance recipiency
pation (SIPP), 203, 266 rate, 256–58, 257
Syracuse, N.Y.: living wage ordinance, third-party management, 116. See also
232 fissured workplace
Thomas, Jennifer, 64, 73n33
TANF (Temporary Assistance for Time, 65
Needy Families), 39–40, 96, 190 TimeWarner, 121–22
Target, 230 TJTC (Targeted Jobs Tax Credit),
Targeted Jobs Tax Credit (TJTC), 102n23, 198, 205
102n23, 198, 205 Tobin, James, 25–27
taxation: income inequality growth, tourist zones, 233
21; unemployment insurance, 247, tracking, 91
268–69 training: for disadvantaged youth,
tax credits: Low-Income Housing 91–92, 96; employer provision,
Tax Credit (LIHTC), 37; model of, 168–70, 179. See also sectoral training
187–88; New Jobs Tax Credit (NJTC), programs
198, 207; for private-sector employ- transnational labor citizenship, 152
ers, 96–97; stigma, 188; Targeted Jobs transparency, 122–23
Tax Credit (TJTC), 102n23, 198, 205; Treasury Department, 207
Welfare-to-Work Credit, 192. See also Truman, Harry: fair housing, 31–32
Earned Income Tax Credit (EITC); Trumka, Richard, 69
Work Opportunity Tax Credit Tucson, Ariz., living wage ordinance,
(WOTC) 226
taxi drivers, 59, 65 turnover, employee, 322–23
tax incidence theory, 187–88, 200–201
Tax Policy Center, 189, 201 UAW (United Automobile Workers),
Tax Reduction Act (1975), 36 52, 54
Tax Reform Act (1986), 36, 37 UFCW (United Food and Commercial
technological change, 2, 87 Workers), 67, 68, 140, 146, 225, 232
-1 teenagers, minimum wage impact, 218. UI (unemployment insurance). See
0 See also children unemployment insurance (UI)
+1

13502-13_Index.indd 346 12/10/13 8:35 AM

 Index   347

undocumented immigration: employer United Food and Commercial Workers

sanctions for hiring, 138–42, 151; (UFCW), 67, 68, 140, 146, 225, 232
growth of, 6, 141; labor organiza- United Kingdom (U.K.): job retention
tions, 144–47; legalization of, 152; study, 267; migrant workers, 142–45,
low-wage work, 136, 141; population 151–52
statistics, 134, 136, 141; workplace United Steel Workers (USW), 150
rights, 137 United Workers Congress, 147
unemployment: during Great Reces- UNITE HERE, 173–74, 232
sion (2007-2009), 2; poverty associ- urbanization, 250–51
ated with, 1; trends, 100n4, 247–48, USW (United Steel Workers), 150
253–54; and unions, 54 Utah: unemployment insurance earn-
unemployment insurance (UI), 247–72; ings requirement, 261, 263, 264;
administration of, 247, 253–56, 268; unemployment insurance recipiency
creation of, 247; eligibility, 249, rate, 257
252–56, 259–67; and family support
network limitations, 250–52; funding vacation, paid, 305, 309
of, 247, 253, 268–69; nonfiling, 265; Verizon, 62
part-time worker ineligibility, 249; Vermont: unemployment insurance
percentage of workforce receiving, earnings requirement, 261, 263;
247–49, 253–54; policy recommenda- unemployment insurance recipiency
tions, 268–69; purposes of, 247; state rate, 257
recipiency rates, 253, 256–59, 269 veterans, 30, 198–99
uninsured Americans, 273, 280, 283, vicarious liability, 128n14
284–85 Virginia: public sector collective
union density, 50, 51, 52, 53, 225–26 bargaining ban, 68; unemployment
unions and unionization, 50–78; insurance earnings requirement,
airport workers, 232; career lad- 261, 263; unemployment insurance
der programs, 173–74; collective recipiency rate, 257
bargaining role contraction, 51–57; visas, temporary, 136, 137–38, 148
current status of, 50–51; density Voorhies, Rachel, 62
trends, 50, 51, 52, 53, 225–26; de- Vow to Hire Heroes Act (2011), 199
unionization trends, 3–4, 5, 23, 87, Vroman, Wayne, 265
281–82; disadvantaged youth, 97; of
immigrant workers, 139, 144–51; liv- wage and hour law violations, 5, 6,
ing wage movement as opening for, 116, 121
24, 225–26; need for, 70; non- wage replacement, California paid
collective bargaining opportunities, family leave program, 317–20, 325
57–69; policy impact, 24; public wages and earnings: career academy
opinion, 53–57; transnational institu- participants, 91; current trends, 42;
tions, 152. See also specific unions disadvantaged youth, 84; and edu-
United Automobile Workers (UAW), cational attainment, 167; gender gap, -1
52, 54 6; immigrant impact on native work- 0
+1

13502-13_Index.indd 347 12/10/13 8:35 AM

 348   Index

ers, 137; living wage impact, 222; rate, 257

minimum wage, 5, 37, 97, 216–19, whites: California paid family leave
236–38; overtime, 67, 235; racial awareness, 313; education outcomes,
gap, 5; unemployment insurance 85–87; employment outcomes,
eligibility, 259–64; union members, 84–85; school enrollment rates, 84
4; WOTC effects, 200–201. See also WIA (Workforce Investment Act), 82,
living wage 98, 181
wage theft, 5 Wicks-Lim, Jeanette, 219, 223
Wagner Act (1935), 28 Wilkins, Vicky, 255, 256
waiters and waitresses, 3, 4, 225 Wilson, Daniel, 208
Walker, Scott, 53 winner-take-all politics, 23
Walmart, 60, 67–68, 122, 148, 229–30 Wisconsin: public-sector collec-
Walter, Karla, 57 tive bargaining restrictions, 53;
Wandner, Stephen, 265–66, 269–70n3 unemployment insurance earnings
WARN (Worker Adjustment and requirement, 261, 263; unemploy-
Retraining Notification) Act (1988), ment insurance recipiency rate, 257;
128n15 WOTC, 193–94, 200, 206
War on Poverty, 1, 2, 5, 24, 25–26 women: unemployment insurance
Washington: paid family leave law, benefits, 249, 254–55, 260–61,
326n3; unemployment insurance 262; wage gap, 6. See also gender
earnings requirement, 261; unem- differences
ployment insurance recipiency rate, women’s rights movement, 28, 29
257 Wood, Robert G., 266
WashTech, 60, 66 work. See employment
wealth, as economic growth engine, Worker Adjustment and Retraining
40–41 Notification (WARN) Act (1988),
Webb, Beatrice, 126n4 128n15
Webb, Sidney, 126n4 worker centers, 59, 63–64, 147, 225
Weil, David, 108, 129n17, 150 workers’ compensation, 137
welfare: 1970s-1980s, 34–37; cut-backs, workers’ rights, 137, 149–51
21; Family Assistance Plan (FAP), work-family balance, 305
34; New Deal programs, 27–30; and Workforce Investment Act (WIA), 82,
unemployment insurance eligibility, 98, 181
252–53, 266 work hours, 234–36
welfare reform, 39–40, 192, 256–59, work incentives, of EITC vs. WOTC,
262–64 199–201
welfare rights activists, 24, 29 Working America, 59, 62–63
Welfare-to-Work Credit, 192 working conditions, 63–64, 112–13
Wenger, Jeffrey B., 247, 253, 255, 256, working poor, definition of, 20
262 Working Today, 57
-1 West Virginia: unemployment insur- Work Opportunity Tax Credit
0 ance earnings requirement, 261; (WOTC): administration of, 194,
+1 unemployment insurance recipiency 205; benefits, 192–93, 205–6; certi-

13502-13_Index.indd 348 12/10/13 8:35 AM

 Index   349

fications, 194–98, 205; compliance Credit). See Work Opportunity Tax

issues, 194, 198; cost of, 206; dis- Credit (WOTC)
advantaged workers, 97; vs. EITC, Wyoming: unemployment insurance
186, 193–98; eligibility, 205; expan- earnings requirement, 261, 263;
sions, 198–99; future prospects, unemployment insurance recipiency
206–8; history of, 198–99; program rate, 257
participation, 203–6; purpose of,
190–92; refundability of credits, Year Up, 91–92
194; work behavioral incentives Yemane, Alshadye, 285
and effects, 199–201; work require- youth. See children
ment, 193–94, 199 YouthBuild, 92
work requirements, 39 Youth Opportunities, 93
work stoppages, 52–53
WOTC (Work Opportunity Tax Zimbalist, Andrew, 233

-1
0
+1

13502-13_Index.indd 349 12/10/13 8:35 AM

-1
0
+1

13502-13_Index.indd 350 12/10/13 8:35 AM