A Comprehensive Profile of the Working Poor

In this paper, a comprehensive profile of the 'working poor' is presented using data from the 2003 March Supplement of the Current Population Survey. We test an earnings model with effective cost constraints. The dependent variable is the likelihood of an employed individual being a member of the working poor. The explanatory variables are the worker's occupation and firm characteristics, and cost constraints comprising, on the one hand, the worker's family characteristics (notably family income), and, on the other, the costs to the worker of signals used by firms in making employment decisions. These include not only the cost of education but also what we call 'discriminatory signals', e.g. gender, race, ethnicity and citizenship status. The paper provides new insight into the complex set of relationships between the signaling variables themselves, between signals and occupations, and between industries and occupations, in the formation of relative wage rates