Escape Velocity: New Research Looks at How Low-Wage Workers Get Ahead

Some jobs aren’t so much opportunities as they are traps: low-wage, low-opportunity roles that don’t offer workers much advancement. Certain industries, occupations, and skills are critical for workers in breaking out of these “poverty trap” roles—and understanding how and why that happens is the goal of research released today using Emsi Burning Glass data.

Four in 10 entry level workers break out of these roles, but most do not, according to the research, released by The Burning Glass Institute and Harvard Business School, with funding from the Bill and Melinda Gates Foundation. At a time when a tight labor market is giving workers more options and leaving employers scrambling for talent, understanding these career paths could be critical for retaining talent and improving worker mobility.

The analysis is based on the Emsi Burning Glass database of resumes, tracking the real-world career pathways of more than 180,000 workers without college degrees between 2012 and 2017, as well as analyzing more than 20 million job postings. 

The wage difference between the 40% who move up and the 60% who don’t is dramatic. The average starting salary in 2012 for people who did not have a bachelor’s degree and who worked in jobs under the low-wage threshold was $30,468. 

• Those who moved up saw a 90.5% salary increase (to more than $58,000 per year). 

• Workers who didn’t move up saw a mere 1.4% increase.

So how do workers move onward and upward from these roles?

The industry you’re in matters. Some industries are better for upward mobility than others. The largest salary increases over the five years were in Educational Services (52%), Finance and Insurance (47%), and Real Estate, Rental and Leasing (47%). Those are also the top three industries with the best odds of workers getting over the low-income threshold.

Other industries are much less likely to provide good launch pads. Workers who started in Accommodation and Food Services (31%), Administrative and Support and Waste Management and Remediation Services (33%), and Retail Trade (33%) experienced the lowest salary increases over the five years.

Not surprisingly, a majority of workers advanced by switching industries. For example, of the construction workers who were below the poverty threshold in 2012, 85% had moved out of poverty by switching industries. But low-wage workers in many industries switch; the main difference is what industry a worker moves into.

There’s a big difference between mobility and upward mobility, however. The average worker below the poverty threshold had roughly three jobs over the five-year period. But only one of those changes, on average, actually moved these workers up a level. Before the pandemic, these low-wage roles had a lot of churn but it didn’t necessarily advance workers.

The occupation you’re in matters: For example, employees who started as tellers saw their salaries increase an average 78% over five years. Six in 10 tellers moved out of poverty, ending up in occupations ranging from customer service representatives to accountants. 

By contrast, caregivers/personal care aides start out making $12,000 more per year compared to bank tellers. But caregivers only saw a 9% salary increase over the same period and only one-third moving out of poverty. 

The skills you have—or acquire—matter: Those who could cite Project Management, Budgeting, Marketing, or Social Media on their resume were more likely to move up. Nearly all industries included Communication Skills, Physical Abilities, Customer Service and Sales as one of their top ten demanded skills in job postings.

While the study focused on career pathways before the Great Resignation, the results have important implications for employers desperately trying to recruit and retain talent, particularly in low-wage occupations. It’s not a coincidence that some of the industries with the lowest advancement rates, such as Retail Sales or Accommodations and Hospitality, are also having the most trouble finding workers right now, when other options are plentiful. And if labor shortages become a permanent fixture of the job market, these businesses will continue to have trouble.

One key point in these pre-pandemic job postings is how few of them mention company values, benefits, or room for advancement. Only 5% of job postings promote upward mobility, while only 2% cited diversity and inclusion. As employers rethink how they attract workers (and recent data shows that they are), promoting career potential may be a key factor in getting the right talent.