Employer practices

Do Good Jobs Promote Economic Mobility, and If So, How?

Pamela J. Loprest , William J. Congdon, Batia Katz, Jessica ShakesprereMarch 03, 2021

This post is the second in a series devoted to exploring the elements of what makes a “good” or “quality” job and understanding the relationship between job quality and economic mobility, that is, the ability to advance and increase earnings in the labor market. These posts elevate key insights from a new body of work from the Urban Institute that develops an agenda for research on how stakeholders, including policymakers, employers, advocates, and practitioners, can accelerate economic mobility among low-wage workers through elements of job quality. This post explores evidence on job quality elements that facilitate economic mobility; other posts explore a new framework for defining good jobs, taking a racial equity lens in improving access to good jobs, what workers value in jobs, and a new agenda for research on job quality and mobility. To learn more about this project, visit Building America’s Workforce.

The argument for good jobs often focuses on the day-to-day reality of workers’ lives—and for good reason. Quality jobs can help workers achieve economic security, provide for themselves and their families, and maintain their health and well-being. A quality job can be a source of dignity, respect, and feelings of inclusion in the workplace.

But do good jobs provide a pathway for workers to advance in the labor market? Are they a vehicle for promoting economic mobility, which we define as workers’ ability to increase their lifetime earnings, advance in their careers, and acquire new skills? These questions animated our effort to understand whether and how different elements of job quality influence long-term mobility outcomes.

Direct and indirect relationships to mobility

As noted in our previous post, we consulted 11 prominent definitions of job quality to create a common framework for describing what makes a good job. We identified five broad categories to include all the elements experts considered important: pay, benefits, working conditions, business culture and job design, and on-the-job training.

Our goal was then to understand the relationship between different job quality elements and workers’ ability increase their earnings and advance their careers. As we explore in a recent brief, we argued there are elements with a direct relationship to economic mobility and those that operate more indirectly by improving workers’ physical, mental, and economic well-being, fueling job satisfaction, and supporting their productivity and labor force attachment.

We observed that many of the job quality elements that could directly affect workers’ long-term earnings or career advancement were those that allowed them to build their human capital through the new skill acquisition. Jobs with elements that facilitate skill development through education, training, work experiences, and other learning opportunities could be considered jobs with greater potential for mobility.

Specific job quality features such as mentoring, cross-training, defined career pathways, and tuition reimbursement or other educational benefits are those we identified as directly supporting upward mobility. Elements of job design outside of formal structures of on-the-job training or a defined career pathway could also facilitate mobility. For example, a job with a diversity of tasks or greater power and autonomy within an organization can provide worker opportunities to gain new technical or managerial skills that could lead to promotions or support transitions into higher-wage jobs or occupations.

jq mobility table
Source: Pamela J. Loprest, Batia Katz, and Jessica Shakesprere, “Good Jobs: An Agenda for Future Study,” Urban Institute, February 4, 2021.

 

Elements we characterize as having an indirect relationship with economic mobility exert this influence through other worker outcomes—productivity, job satisfaction, economic stability and security, health and well-being, and labor force attachment. For example, greater scheduling predictability may keep workers in jobs, make it easier for them to maintain child care, and allow them to save money to invest in further education and training. Level of pay and wage growth are critically important measures of economic mobility, and higher-paying jobs likely have other components that allow workers to continue to build their human capital and advance in the labor market.

Evidence on job quality and mobility is suggestive but not conclusive

The interaction of specific job quality elements and economic mobility is complex. We characterize different elements as having direct and indirect effects on mobility outcomes, but because every job is a package of elements, isolating the effects of any single element is challenging and merits further study.

In our review of the research, we found limited evidence on causal connections between job quality elements and long-term economic mobility. And if certain job quality elements influence economic mobility indirectly through other factors, pinpointing causality can be elusive. Although the evidence is mixed and more suggestive than conclusive, studies on specific job characteristics and mobility offer important insights. For example, although we identify on-the-job training as directly supporting human capital development—an important mechanism for economic mobility—one study finds that the skills acquired through employer-provided training increase wages at the current employer but do not enhance a worker’s ability to get a higher-wage job at another firm, reducing mobility.

Employer-sponsored health insurance demonstrably benefits workers’ health and financial well-being,  yet it potentially impairs economic mobility through “job lock,” when workers remain in jobs in order to maintain their coverage. Studies have shown that low-wage workers in particular increase their wages by switching jobs. In the US, where access to health insurance outside of employers is limited, job lock could impede career advancement and increasing lifetime earnings. This also shows the importance of context for studying job quality. In European countries with national health insurance, this issue doesn’t apply. There is also evidence that firm characteristics have implications for economic mobility. One study shows some workers are willing to accept lower starting wages for higher rates of earnings growth, but another study shows that workers at higher-paying firms have a greater chance of moving up the earnings ladder than do workers at lower-paying firms.

Longitudinal data sources: Rare but necessary

Upward economic mobility is an outcome tracked over a worker’s lifetime. Therefore, longitudinal data sources that capture workers earnings and job characteristics over time are necessary to generating evidence on the effects of specific job quality elements on long-term earnings. The reality, however, is that these data sources are rare and have limitations.  

Even while highlighting these limitations, to illustrate an approach to using such data in this way, we conducted an analysis of earnings data in the Panel Survey of Income Dynamics, a longitudinal household survey that has been conducted since 1968 (annually until 1997; biennially since then). We consulted the 1984 sample because this was the year the survey included a one-time module with rich data on respondents’ job characteristics, including data on health and dental insurance coverage, retirement benefits, and different forms of paid leave.

Although we observed earnings growth over this sample’s 10-year period (from 1984 to 1994), correlating this growth with specific job quality measures proved inconclusive. A few patterns emerged—for example, workers with paid sick leave were more likely to have moved up the earnings distribution—but nothing definitive enough to illustrate strong, independent effects of specific job quality elements on mobility.

Our analysis points to the need for richer and more current data sources to fully understand whether and how quality jobs lead to economic mobility. We will delve further into this and other knowledge gaps in a forthcoming post that outlines a bold, new research agenda for better understanding how job quality affects workers’ economic mobility.

We drew insights from the following briefs in this post:

“Job Quality and Economic Mobility: Potential Mechanisms, an Empirical Approach, and Directions for Research”

“Good Jobs: An Agenda for Future Study”

Read other research in the job quality and economic mobility project:

Understanding Good Jobs: A Review of Definitions and Evidence

“What’s Important in a Good Job? An Analysis of What Matters and for Whom”