The working poor and the working of American labour markets

This paper examines the connection between working poor householdsand industrial restructuring in the US as a whole and threeMidwest manufacturing cities. It question the conventional laboureconomics argument that a main reason for the substantial risein low-wage jobs in the US is 'skills mismatch'. This followsfrom the basic contention that people are paid what they areworth in an unrestricted economy. However, labour market segmentationtheory poses a broader range of factors as determinants of labourmarket outcomes, including industrial structure and the bargainingpower of individuals and groups of workers relative to employers.The paper first examines the nature and extent of globalisation,i.e., the transition from manufacturing to service and retailsectors, and a major consequence, growing income inequality.Government data are used to provide measures of deindustrialisationand income inequality. Government data are used to provide measuresof deindustrialisation and income inequality. It then reportson findings from a four-year study of the working poor in SouthBend, Indiana, one of the three cities studied in the firstpart. Evidence presented in the paper supports segmentationthinking and indicates that other factors beyond individualresources influence labour market outcomes, which are outsidethe control of workers, especially the working poor.