Another look at low pay

Abstract

Age, lack of skill, employment in certain industries, all contribute to low pay -but with what weight? The purpose of this study is to present evidence that age and skill have been underestimated and the industrial effect misconstrued as factors in low pay. We then attempt to spell out the handicaps of the low paid in labour markets, of which high rates of unemployment are the main sign.In many ways the more important problem is that of low resources -pay adjusted for family responsibilities. Earnings that are adequate for an older worker might mean poverty for a family. 2 The main reason for looking at low pay as such is that minimum wage legislation affects all the low paideven if they have few family responsibilities.Previous studies have looked at the low paid, mainly in terms of the distribution of earnings between industries. 3 Mrs Judith Marquand in a pioneering study tested for links between low pay and such industrial characteristics as high proportions of small plants, of women workers, of unskilled workers and falling demand for labour. Her study also stressed differences in bargaining power between industries.Differences in the balance of occupations and in the quality of labour contribute to inter-industry differentials. The true differential is smaller than the actual one. It reflects such factors as 'ability to pay', 'profitability' and 'capital intensity'. It is certainly there -in the short run. But neither economic theory nor evidence provides strong grounds for giving it much weight in the long run. The work done on such differentials has not been very successful. Nor can we be dogmatic about how differences in bargaining

Low-pay sectors, earnings mobility and economic policy in the UK

“…An important question is how low pay varies by sector, and whether this is due to the composition of the workforce or some 'sectoral' factor. In an early UK study, Bosanquet and Stephens (1972) investigate patterns of low pay and conclude that it is mainly found in Services, with Manufacturing paying better.…”

Low pay in British manufacturing

“…It follows that where an industry employs a high proportion in such jobs it will be subject to a low incidence of low pay. More recently, however, the view has been expressed that industrial characteristics may also help to explain low pay (Watchel and Betsey, 1972;Atkinson, 1975), and this has received some confirmation from the available British evidence (Marquand 1967;Bosanquet and Stephens 1972). In this section we shall outline the independent variables included under these two broad headings.…”