Below-Minimum-Wage Workers: An Application of Dual Labor Market Theory

摘要

The goal of the study is to examine the below-minimum-wage (BMW) labor pool. Ofparticular concern is whether BMW w orkers require disproportionately more training, thereby raising their effective employment cost. To answer the question a model of segmented labor markets has been adapted to the covered/uncovered sectors of the Fair Labor Standards Act. The general conclusion of the study is that BMW workers are almost indistinguishable from other youth earning at or above the minimum wage. The only differentiating characteristic is age. Most young workers hold a BMW job at some point in their early labor market experience. They quickly move up the wage scale, however, as they gain experience. Aside from age, those workers are essentially indistinguishable from other young workers. The observation appears to contradict the segmented labor market model. The findings also imply that BMW workers impose no special training burden on small employers.