The Instability of Unskilled Earnings

Abstract

The year-to-year variability of unskilled workers’ earnings increased over the period from the 1970s to the early 1990s. Moreover, much of the increase in earnings instability occurred in the 1980s, despite the long economic expansion that took place during the same period. The decline in average job tenure among lessskilled workers and wage instability (rather than hours instability) seem to have contributed to these results. The implication is that recent economic growth has failed to reduce earnings instability and, consequently, the design of income maintenance policies is better served by explicitly addressing access to capital markets and tenure instability (or job retention capacity) among the poor.