Beyond Exit: Understanding Pathways and Transitions out of Low-Wage Employment

Background and Purposes: Many workers remain in low-wage employment for extended periods, experiencing economic insecurity and limited upward mobility. Prolonged exposure to low-wage work is associated with negative economic and social consequences, underscoring the need to understand how workers move out of low-wage employment.

Existing research has examined mobility out of low-wage work, but has largely relied on binary outcomes and focused on single transitions, providing limited insight into longer-term pathways such as sustained mobility, instability, or re-entry into low-wage work.

To address these limitations, this study integrates sequence analysis with event history analysis to examine post–low-wage trajectories. By capturing both sequence patterns and transition processes, this study provides a more comprehensive understanding of low-wage mobility. Specifically, this study asks: (1) what pathways do workers follow after exiting low-wage employment, and (2) how do time-varying individual, family, and structural factors shape these trajectories?

Methods: This study uses data from the National Longitudinal Survey of Youth 1979, a nationally representative cohort followed 1979–2020. The sample includes individuals who experienced low-wage employment at least once between ages 25 and 56 (N=4,864). Individual-level monthly employment and wage data are constructed.

We combine sequence analysis with event history methods. Subsequences capturing five-year periods following exits from low-wage employment are extracted and clustered to identify distinct post–low-wage pathways. Competing-risk Cox proportional hazards models are then estimated to assess how time-varying individual, family, and labor market factors shape the likelihood of following different trajectories.

Results: Sequence analysis identified five distinct pathways out of low-wage employment: upward mobility to lower-middle wages (32.2%), labor force exit (18.6%), high upward mobility (11.7%), re-entry into low-wage employment (19.6%), and persistent extreme low-wage trajectories (17.8%).

Competing-risk Cox models reveal that transition patterns are highly stratified. Women are less likely to experience high upward mobility (HR=0.38, p<.001) and more likely to exit the labor force (HR=1.70, p<.001). Education strongly predicts mobility: individuals with a bachelor’s degree or higher are more likely to transition into high upward mobility trajectories (HR=3.97, p<.001), while those with lower education are more likely to remain in disadvantaged trajectories.

Workers in service occupations face higher risks of re-entry into low-wage employment (HR=1.58, p<.05), highlighting structural constraints on mobility. Family dynamics further shape transitions: having young children is associated with both higher upward mobility (HR=1.73, p<.001) and labor force exit, while marriage reduces the likelihood of returning to low-wage work (HR=0.76, p<.001).

Conclusions and Implications: Mobility out of low-wage employment is limited and often characterized by instability, labor force exit, or returns to low-wage work rather than sustained upward mobility. Mobility is not a one-time event but an ongoing and uneven process shaped by dynamic individual, family, and labor market conditions.

Policies that focus solely on moving workers out of low-wage jobs at a single point in time may be insufficient. Promoting stable employment, supporting skill development, and addressing structural barriers in low-wage sectors are critical for facilitating sustained upward mobility. The findings also highlight the importance of accounting for family circumstances in workforce and social policy design.