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Service Jobs in the US: Do We Pay Low-Wage Workers Enough?

August 30, 2013  • Maureen Conway

Maureen Conway is the executive director of the Economic Opportunities Program.

Work is central to the American experience. Americans work more hours per week than residents of most other industrialized nations, and they draw a significant amount of their identity from it, finding friends and building important social networks. People take personal pride in their ability to do it well. And of course, the income earned from work is what the vast majority of American households rely on to support themselves and their families.

Over the past several decades, and increasingly since the Great Recession, however, the income earned from work is insufficient to meet the basic needs of individuals and families in American society. Today in the US, roughly one in five working adults between the ages of 25 and 64 earn hourly wages that will not bring them up to the poverty threshold for a family of four, even if they work full-time year-round. And to make matters worse, economic mobility in America compares poorly to that in other developed countries, and research increasingly points to the likelihood that low-wage workers in America will remain low-wage throughout the course of their lives.  

The dominant policy response to the plight of low-wage workers has been to improve the skills workers bring to the workforce to increase their likelihood of success. Affording working adults with opportunities to improve their skills and make greater contributions to our economy remains important and necessary. A modern economy certainly relies on the skills of its workforce, and we need to continue to improve our education and job training system and address its inequities. And while not sufficient to the need, today’s job training system does provide opportunities for many Americans to develop skills and move into better jobs. 

The question I’m struggling with this Labor Day is: why do we expect so many jobs to pay so poorly? For the people who care for our children and our elderly, prepare and serve us our food, ring up our purchases, guard the buildings in which we work, and a host of other occupations, our policy response is that these individuals should become more skilled so that they can move out of these jobs. 

But in our service economy, these jobs form a large and growing proportion of the available work. Why do we not want these jobs to be done well, and compensated decently? And fundamentally, when the men and women who perform these vital services are not afforded compensation for their labor that is sufficient to meet their basic needs, what does this say about the value and dignity of work? 

Through its Working in America discussion series, the Institute’s Economic Opportunities Program has been exploring the changing nature of work in today’s economy, with a particular focus on the challenges faced by workers in the bottom half of the wage scale. The series brings together business leaders, philanthropists, policy makers, academics, worker advocates, and others to discuss the issues we face and to explore new ideas for creating successful businesses and quality jobs at the same time. At a time when so many workers are struggling to earn a decent wage and make ends meet, revisiting how we value and reward work has never been so urgent.