Low pay, progression and local labour markets

Low-pay and limited opportunities for progression are major contemporary concerns in UK labour markets. A number of individual and job-related factors have been shown to influence the likelihood of low-paid workers advancing to higher-paid employment. However, the effects of the characteristics of the local labour market in which workers live are under-explored. This gap is addressed through examining two specific local labour market factors which theory suggests may impact on progression from low pay. Existing studies find that on average workers in (large) cities experience faster progression – cities act as ‘escalators’. This research tests whether such an effect also exists for low-paid workers. First transitions from low pay to higher pay are analysed initially using a national low pay threshold, finding a size effect particularly concentrated on London. However this measure is sensitive to existing geographic wage variations. When using an alternative occupation-based measure of wage progression, little evidence is found that those in (larger) cities see their pay grow more quickly. The second empirical chapter responds to concerns about the potential effect of job polarisation on social mobility and the ability of low-paid workers to move up the occupational ladder. The results show that the extent of ‘hollowing out’ of the local occupational structure during the 2000s had little effect on occupational mobility for those starting in low-paid occupations, suggesting that fears over the impact of job polarisation on the upward mobility of low-paid workers may have been overstated. Taken together, the research suggests that the two main local labour market characteristics considered – size and the degree of polarisation – do not have a substantial impact on progression from low pay, at least in relative terms and when defining local labour markets as Travel-To-Work-Areas. The thesis suggests that the issue of limited mobility from low pay effects all areas of the UK. The policy implication of this is that addressing the lack of advancement from low pay requires a consideration of the individual, sectoral and institutional factors which are constraining progression. Further work should investigate potential other local labour market processes that may be contributing to the lack of progression that many low-paid workers currently experience.