Reports 2021/01

The lowest paid jobs

Who occupies these jobs and how long do they occupy them

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The main objective in this text is to describe characteristics of the 20 per cent lowest paid employments, in the following referred to as jobs, and when relevant we will also try to shed light on the employees who hold such jobs. Based on Statistics Norway’s annual earnings statistics for the years 2015 through 2019, with September as the reference month, we have a good basis for not only describing how jobs are distributed and what characteristics they have, but also for making use of the opportunity to follow jobs and employees over time.

The analysis presents characteristics of employees who work in low-paid jobs and special traits typical for the jobs, i.e. in which industries or sectors we find these jobs and which occupations they cover. In particular, we find that young people in early stages of working life dominate at the lowest wage levels. Furthermore, the level of education is lower for people in jobs with lower wages. Jobs with lower wage levels are concentrated in a few industries, such as retail, accommodation and food service activities and other personal services. The distribution of earnings within an industry or a profession are such that far from all jobs within the group fall below the threshold for the lower 20 per cent of the earnings distribution.

By following jobs throughout the period, from 2015 to 2019, we can illustrate how jobs alter their position in the wage distribution over time. The labor market is not static, new employees enter the work force while others leave, some employees change jobs or obtain a higher education along the way. The annual earnings statistics offer a snapshot of each year, in this case September, and the data shows approximately the same distribution of age groups, predominantly younger employees, among the low paid jobs from one year to the next. In other words, there are many young employees in the lower end of the earnings distribution at any given time, but no one stays young forever. This is also the case for certain professions or industries that typically are represented among the lowest paid jobs year after year. The individual employees, however, move upwards in the distribution over time mainly because new employees continue to enter the labor market with lower earnings, while also their own earnings-growth over time contributes to this movement.

Towards the end of the text, we try to shed more light on the longitudinal aspects, by focusing on what happens from the first time we observe an employee to the last time they are observed in the period, 2015 - 2019. By way of a statistical model, a linear regression model, we re-iterate the previously described relationships to examine if this tool supports the descriptive findings. We choose to follow employees and their main job and study the tendency over time to move from the lower end of the earnings distribution and upwards. Employees with their main job in the lowest end of the wage distribution in the first year they are observed, show the greatest tendency to move upwards in the wage distribution. The number of years employees have been observed and whether they obtain higher education or change occupation reinforces this tendency to a higher position in the distribution in the last year we observe the employee. Through this analysis, we cannot derive the explanation or cause for the upward movement, and much less rank these causes or effects, but we can, with the support of the descriptive results, approximate the time it takes to move up and out of the lower end of the earnings distribution.

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