PHOTO: JAKE NEBOV ON UNSPLASH
MIT Sloan School of Management associate professor Nathan Wilmers was surprised, then, to find in a new analysis of data that the gap has actually narrowed in the most recent decade, with the lower third of workers seeing faster wage growth for the first time since the 1970s.
“It’s been a period in which workers have had some increased bargaining power and have been able to make some real gains,” says Wilmers, the Sarofim Family Career Development Associate Professor of work and organizations, attributing the decline in part to a tightened labor market in the wake of the Great Recession and Covid-19 pandemic. “The big question, however, is whether that change is going to be durable.”
Without fundamental shifts in how employers organize their businesses, he says, all it would take is a rise in unemployment to see that gap widen once again. To help prevent that from happening, Wilmers is conducting an ambitious new study along with Harvard Business School assistant professor Letian Zhang to examine how the type of work that low-wage workers do might affect their long-term wage growth and economic mobility.
The study is funded by a grant, one of nine totaling $2.1 million, from WorkRise, described as a research-to-action network hosted by Washington, DC-based think tank the Urban Institute. Wilmers and Zhang’s study was chosen from the 343 grant applications for research on jobs, workers, and mobility. Wilmers and Zhang hypothesize that frontline workers are apt to see higher wage growth when their positions include a wide variety of tasks, including some that are more complex, rather than a small number of basic duties.
“If you organize work so that people are doing the same simple, repetitive thing day after day, they are less likely to be learning and developing human capital than if you have a job rotation where people move across multiple tasks within a workplace,” Wilmers says. That higher-order training can lead to more advanced positions in the future. In addition, he says, job variety can translate to higher wages in the current workplace by making a worker more valuable to a company and increasing their bargaining power to negotiate pay raises.
This reorganization of work could look different in various settings. At a call center, for example, it might mean that instead of being required to follow a script with little discretion to deviate, a worker would have the autonomy to address more complex customer problems. In a retail environment, it could mean that instead of working exclusively as a cashier, an employee can check on stock issues and set up product displays. In a medical center, an administrative assistant might not just check in patients, but also coordinate care between multiple providers. “That requires a lot more know-how,” says Wilmers, “but can be a really effective way to expand the job, increasing learning opportunities while at the same time filling a big hole we have in the medical system.”
Insights from wage data, job descriptions
To test their hunch that more complex tasks lead to higher wage potential, Wilmers and Zhang are using a restricted data set from the US Census Bureau drawn from employers’ quarterly earnings data from 2010 to 2015. In addition to tracking wage data over time, the researchers are scraping job sites to identify the range of tasks included in different postings. By combining wage data with job descriptions, they can see directly how a mix of tasks affects long-term economic mobility. They hope to add data from 2015 to 2020 soon, thereby showing trends across a full decade.
Wilmers says the data so far seem to bear out their assumptions that more involved tasks lead to positive wage growth. By drilling down into exactly what job assignments contribute to such growth, Wilmers hopes the study can give workers keener insight about how to maximize earning potential over time.
That doesn’t mean employers will lose out, however. “This isn’t about just getting employers to be altruistic,” he says. By training workers in higher-order duties, Wilmers says, “employers might also benefit by attracting and retaining workers in these frontline positions and potentially increasing productivity and efficiency as well.”
In this way, everyone might reap rewards from the decreasing wage gap of the past decade and continue that momentum in the future. Ultimately, Wilmers adds, distributing economic gains more equitably is better for society. “It’s really exciting that we have an opportunity right now where some of these negative trends are starting to reverse,” he says. “As a researcher, I am interested in identifying ways that employers, workers, unions, and policy makers can all contribute to locking that in and figuring out a way to get us back to more egalitarian economic growth.”