Boosting the Earnings and Employment of Low-Skilled Workers in the United States by Steven Raphael

The last few decades of the twentieth century witnessed fairly dramatic changes in the labor market outcomes and socioeconomic status of American workers at the bottom of the earnings distribution. Earnings of the least skilled adults either stagnated or fell. Moreover, labor force participation and employment have declined considerably, suggesting a reduction in demand for the labor of the least skilled and an accompanying withdrawal from the labor force on the part of many low-skilled workers unwilling to accept diminished wages. Certain economy-wide developments have affected the employment prospects of all low-skilled workers regardless of race or gender. For example, the well-documented changes in the earnings distribution beginning in the late 1970s have increased the relative returns to postsecondary schooling as well as the returns to experience (Katz and Autor 1999).1 Nonetheless, certain social and institutional developments are likely to have had disproportionate impacts on the labor market prospects of certain subgroups within the population of low-skilled adults. For example, the prison incarceration rate between the late 1970s and the present more than quadrupled. That has had a disproportionate impact on less-educated black men and has left in its wake large groups of less-educated men who are hampered by their criminal histories in their search for employment.2 As a further example, the expansion of the Earned Income Tax Credit (EITC), welfare reform, the Medicaid