Psychological Theories and Low-Wage Work : Theories of Low-Wage Work from Multiple Social Science Perspectives

Low-wage work is a modern social problem, affecting millions of individuals, families, and communities. The field of psychology is a critical starting point for examining the relationship between low-wage work and mental health. This literature review aims to identify psychological theories related to low-wage work. Psychological theories related to work and employment are explored, as is emerging research on the necessity of a paradigm shift from the dichotomous categories of "employed" and "unemployed," which allows for the conceptualization of employment as a continuum. This research focuses on underemployment and may contribute to the development of theory directly relating to low-wage work.

Keywords: working poor; theory; employment; underemployment; unemployment; inadequate employment; well-being; Low-wage work

It has been estimated that over 30 million individuals make up the low-wage workforce in the United States ([23]; [30]). Substantial hardships commonly faced by low-wage workers include poor working conditions, poverty-level wages, and lack of basic benefits, such as health care, sick pay, disability pay, and paid vacation ([3]; [13]; [30]). Low-wage work is now being conceptualized as a significant modern social problem. Many public policy experts and advocacy groups have raised public awareness about the inequities experienced by low-wage workers ([1]). While the economic impact of low-wage work definitely merits attention and influences policy formation, the large population of individuals as well as families and communities affected by low-wage work underscore the importance of understanding the psychological impact of low-wage work on human functioning.

Despite the absence of psychological theory that specifically addresses the phenomenon of low-wage work, the abundance of theoretical frameworks related to human behavior in work environments and employment were explored to gain access to psychological theories that may compose the foundation of future theory addressing low-wage work. This review begins with the literature on the theory related to the function of work for the individual. It then covers psychological theory that arose from work conditions in the early industrial era and followed theoretical frameworks, emerging out of the research on unemployment during the Great Depression. This review concludes with an examination of the recent literature on underemployment as it relates to low-wage work along with a conceptual map that illustrates the interactions between the theoretical frameworks described in this review.

This literature review utilized online journal databases available through the University of California, Berkeley libraries. Specifically, PsychINFO and PsychARTICLES were searched, as they are core psychological databases that provide search information for all CSA Illumina Social Science databases. Additional searches of the online databases JSTOR, ERIC, and Google Scholar were conducted. The University of California Melvyl book and article database was searched as well. Preliminary keywords used included "low-wage work and theor*," "low-wage employment and theor*," "working poor and theor*," "low-wage work, mental health and theor*," and "low-wage labor." Keywords utilized in subsequent searches included "psychology of work," "employment and theor*," "unemployment and theor*," "underemployment," and "inadequate employment." Consultation with two professionals in the field provided suggestions for additional search terms and the identification of a major publication on underemployment. Reference sections of key articles were searched to locate additional relevant literature.

There are a number of limitations in this review given that the search focused primarily on psychological theories and does not reflect economic and sociological theories that may include applicable psychological information. Second, utilizing "low-wage work" as the specific terminology of interest may have also limited results due to low-wage work representing a subject that overlaps significantly with the major research topics of poverty and low-socioeconomic status. Other terms that differ but are commonly associated with low-wage work, such as the minimum wage and living wage, were not searched. Last, for the purpose of this review, studies that used a definition of underemployment solely as working a job for which an individual was over-skilled or overeducated were not included.

A major limitation of this review is the limited literature in psychology on the application of major psychological theories to low-wage work. Another limitation involves the differing approaches to the concept of work and employment. Finally, the limited attention to underemployment (despite the special issue of the Journal of Community Psychology) that links employment status (especially insufficient employment) to mental health suggests that it is an unpopular topic among research psychologists.

The concept of work has drastically changed over time ([32]), and many prominent psychologists have explored the function and meaning of work. Freud postulated that work is necessary for survival and for the development of the ego functions ([17]). According to Freud, work structures imposed rules of conduct that required employees to work according to employee expectations and not a pleasure principle (Freud). Furthermore, Freud viewed the imposed rules of the work environment as forces that prevented the immediate gratification of instinctual impulses that, in turn, strengthened the ego as an internal control mechanism (Freud). This line of thought represented a view of work as central to the need to survive ([25]).

Maslow's theory of human motivation also provides insight into the function of work for individuals, seeking to address the hierarchy of needs related to physiology, safety, love, esteem, and self-actualization ([24]). Work is viewed as a method to achieve the highest level need, self-actualization, if it allows a person to positively use his or her capacities ([25]).

[15] also emphasizes the importance of work for individual development, in his psychoanalytic developmental theory. Erikson identified eight developmental stages associated with challenges that individuals need to complete before coping with the next stage. His fifth stage relates to adolescence and acquiring a sense of identity that can include a sense of occupational identity ([35]). In this light, occupational identity, often achieved through employment, represents a crucial element of healthy psychosocial development.

Building on Freud's view of work decades later, [21] laments the lack of any theory for connecting his theory to the extensive amount of empirical research on work, employment, and unemployment that had evolved during the intervening 50 years. In response to this gap, Jahoda proposes a theoretical framework, eventually labeled deprivation theory, in order to identify the latent by-products of employment by using the concepts of time structure, social contacts, social purposes, status and identity, and regular activity ([5]; [21]). While the manifest function of employment is income, the latent functions relate to structuring one's time, enlarging one's social experience, participating in collective purposes, acquiring status and identity, and engaging in regular activity ([21]).

These significant and groundbreaking psychological theories can be applied to examining the conditions associated with low-wage work and their potential impact on the individual. Using the Freudian view, low-wage work could serve to strengthen ego function, especially early in one's career or during adolescence, as a way to learn how to suppress instinctual impulses when confronted with unfavorable working conditions. In considering Maslow's hierarchy of needs, many characteristics of low-wage jobs may serve to hinder the achievement of self-actualization due to the individual's inability to advance up the hierarchy of employment in order to utilize his or her full capacities. Using Erikson's model, low-wage work can also negatively affect the identity formation of adolescents who may define themselves over time by the low status associated with low-wage work. Finally, by applying deprivation theory to low-wage work, an individual might experience the positive aspects of low-wage work despite poor compensation and unfavorable working conditions.

The field of industrial and organizational psychology reflects a substantial investment in research on work, employment, and occupations that parallels the growth of the modern workforce (Brett & Drasgow, 2002). The scientific study of human behavior in work organizations led to the development of theories of worker productivity, motivation, leadership, job satisfaction, and job stress ([5]; [25]; [31]; [34]). While the industrial-organization theories and methods address particular workplace problems, no general theory of interaction between the individual and the organization exists in contemporary organizational psychology ([25]); therefore, it is not surprising to find so little theory related to low-wage work.

The Great Depression transformed the way Americans viewed poverty, giving way to the recognition that its root causes are located well beyond individual characteristics ([22]). The subsequent view of societal and economic structures as potential causal factors of poverty marked the beginning of the collection of unemployment statistics as a means of measuring the performance of the labor market and the social circumstance of workers ([4]). Since the 1930s, a proliferation of studies has focused on the association between unemployment and mental disorder, leading to the well-documented conclusion that job loss has a generally adverse effect on mental health ([6]). In this section, theories relevant to understanding unemployment are presented to capture the dominant research interest that has prevailed over the past century (e.g., learned helplessness, deprivation theory, stages, and vitamin theory).

Learned helplessness theory ([27]) maintains that exposure to aversive, uncontrollable outcomes can lead to cognitive, motivational, and emotional deficits in people who attribute negative outcomes to internal, stable, and global causes and positive outcomes to external, unstable, and specific causes (Peterson et al.). The theory proposes that individuals who possess an unhealthy attributional style will experience unemployment as an aversive, uncontrollable outcome. Therefore, the individual will be more likely to become helpless and experience a decrease in self-esteem.

As noted by [21], deprivation theory provides a framework for understanding the manifest and latent benefits of employment as it applies to unemployed individuals who are deprived of the unintended consequences of employment. The unintended consequences of time structure, social contact, external goals, status and identity, and enforced activity are seen as producing enough benefits to make unpleasant jobs preferable to unemployment ([21]). However, this theory has not received sufficient research support given that a number of studies show that unpleasant employment can be just as psychologically damaging as unemployment ([26]; [29]).

According to stages theory, psychological response to unemployment occurs in a series of discrete stages ([14]). In the first stage, an individual will experience shock, then engage in an active, optimistic hunt for a job. In the second stage, after intensive efforts to secure employment have failed, the individual becomes pessimistic, anxious, and actively distressed. In the third stage, the unemployed may adapt to the new state of unemployment, however, the individual becomes fatalistic and has an attitude of defeat ([14]).

Vitamin theory is based on an analogy—with the effect of vitamins on physical health and environmental factors as they relate to mental health functioning ([33]). The following nine factors identified by Warr are called "vitamins": opportunity for control, opportunity for skill use, externally generated goals, variety, environmental clarity, availability of money, physical security, opportunity for interpersonal contact, and valued social position. Similar to the harmful effects of the excessive use of vitamins A and D are the factors related to the opportunity for control, opportunity for skill use, externally generated goals, variety, environmental clarity and opportunity for interpersonal contact. The remaining factors (availability of money, physical security, and valued social position) are compared to vitamins C and E, which cease to be beneficial at high levels but do not cause any harm. Vitamin theory provides an evaluation criterion that can be used to assess the environments of various types of jobs and the situation of the unemployed ([16]). Thus, the commonly observed negative experience of unemployed individuals may be a result of transferring to an environment deficient in the nine job vitamins ([16]).

While the theories of unemployment described in this section provide highlights of concepts relevant to low-wage work, it appears that the multifactor vitamin theory can be most readily applied to an examination of low-wage work, given its relevance to various types of employment or work environments.

The most explicit, empirically supported psychological research on low-wage work is found in recently accumulating literature on underemployment ([6]; [6]; [10]; [19]; [22]). Researchers aptly note that shifts in the labor market caused by globalization suggest that workers may no longer be able to rely on full-time jobs and lifetime careers. As a result, the divide between employment and unemployment is not as wide as generally assumed. Furthermore, Fryer (as cited in [6]) argues that many jobs are taking on the negative attributes previously associated with unemployment.

There are currently no widely accepted means by which employment measurements can incorporate the delineation of good and bad jobs ([33]). Bad jobs are classified as unstable, poorly compensated, part-time, and lacking in benefits and prospects for advancement ([22]). Conversely, good jobs are stable, full-time, well paying, and offer advancement opportunities. As a result, a new paradigm of employment needs to be developed ([6]). [6] characterize researchers as standing at the following intersection between two bodies of research: the mature literature that has grown largely from the job-loss paradigm and has decreasing relevance for the emerging form of work relationships and a new concept based upon the conceptualization of an employment continuum that captures various forms of inadequate employment that resembles underemployment more than unemployment.

The increasing amount of psychological literature focused on underemployment has produced many operational definitions of underemployment. Some psychologists have utilized the definition provided in the labor utilization framework (LUF) that was developed to accurately describe the status of the workforce in developing countries ([20]; [22]). The LUF defines inadequate employment as underemployment by using five categories: (1) sub-unemployed, (2) unemployed, (3) underemployed by low hours, (4) underemployed by low wages, and (5) underemployed by occupational mismatch. Individuals who are not working and do not desire to be employed are defined as not in the labor force. The adequately employed include all other workers ([20]).

According to the LUF, the sub-unemployed are classified as "discouraged workers" or "passive workers." Such workers desire to be employed but are not currently working and not involved in an active search for employment. This category also includes those who did not look for work during the previous 4 weeks because they felt no jobs were available. Therefore, a sub-unemployed individual can be understood as one who, though not actively searching for employment, would accept a job if one appeared available ([22]).

The unemployed includes those who are not working but have looked for work during the previous 4 weeks and those who have been laid off from their places of employment. Thus, the LUF's classification for the unemployed follows the traditional definition of unemployment. The unemployed are represented by the unemployment rate as it is typically measured today. Though still widely relied upon as a barometer of labor market performance and workers' social circumstances, the unemployment rate has long been identified as inadequate for its failure to capture the full range of employment hardship ([4]).

The underemployed by low hours are primarily part-time employees who work a low number of hours on an involuntary basis. This includes those who are working part-time for economic reasons. Also classified in this category are individuals working fewer than 35 hours per week due to the inability to find full-time employment. The underemployed by low hours may be less likely to receive the health insurance, pensions, benefits, and job security often afforded to full-time employees.

The underemployed by low income include those whose labor market earnings during the previous year, adjusted for weeks and hours worked, were less than 125% of the official poverty threshold for an individual living alone. This group includes those that have traditionally been classified as the working poor or the low-wage workforce. Hardships faced by the working poor, including substandard working conditions, lack of basic benefits, and lack of job security, have been well documented ([3]; [13]; [23]; [30]). [22] reported that between 1990 and 2000, the underemployed by low income represented the most common form of underemployment in all years except 1992. Thus, throughout the 1990s, the underemployed by low income made up approximately 40% to 50% of the underemployed, which equaled nearly 7% of the entire workforce ([22]). Recent estimates of the size of the low-wage workforce have been as high as 38 million people, or 31% of all workers ([23]).

Finally, the LUF defines the underemployed by occupational mismatch (or overeducated) as those whose educational level (measured as years of schooling) is greater than one standard deviation above the mean education for workers with the same occupation ([20]). Such workers are thought to possess skills that exceed their job requirements and are considered to be overqualified for their positions. Though this category accurately describes a portion of inadequately employed individuals, it is often not used by researchers due to the arbitrary nature of aspects of its measurement ([4]; [22]). For example, education level, when measured as years of schooling, does not reflect quality of schooling, experience gained on the job, or shifts that occur in occupational and educational categorization over time ([4]; [22]).

The LUF provides researchers with concepts relevant to examining the relationship between various forms of employment and psychological well-being. Building on the LUF, [18] analyzed data from a national sample of working adults to examine the influence of various forms of underemployment (hours, income, skills, and status) on physical health and psychological well-being. Results indicated that of the four forms of underemployment, low-income and status were the only types related to lower levels of physical health, lower levels of positive self-concept, and higher levels of depression (Friedland & Price). These results are considered "moderate support" for the hypothesis that underemployed workers will experience lower levels of health and well-being than adequately employed workers (Frieldand & Price). Such findings suggest that there may be fundamental differences between low-income underemployment and other forms of underemployment.

Furthermore, Dooley and various colleagues have conducted a number of research studies on the relationship between underemployment and measures of well-being. [28] found that workers who faced income or hour underemployment after leaving high school reported significantly lower self-esteem than the adequately employed. They also found that chronic exposure to low-income or low-hour underemployment was associated with an increase in alcohol abuse symptoms in young adults ([9]). A similar study found that workers who moved from adequate employment to low-income underemployment experienced increases in depression ([12]). In a study of birth weight and adverse employment change, [11] also found that even with significant risk factors controlled, mothers who moved from adequate employment to underemployment, including poverty-level wage work, delivered infants of significantly lower birth weight than mothers who had remained adequately employed ([11]). Further research is needed to provide more evidence that economically inadequate employment is associated with adverse mental health effects similar to those of job loss ([6]). While researchers have pointed out that studies of the effects of economically inadequate employment are "recent" and "sparse" ([19]), these studies represent a significant empirical basis for the development of psychological theories of low-wage work that may describe the relationship between low-income employment and psychological well-being.

An additional empirical basis for exploring the impact of low-wage work on psychological well-being may be found in previous research that examined the relationship between economic change and behavior disorder. In an extensive analysis of 15 cross-sectional and individual studies, [7] synthesize a diverse body of research that strongly suggests an authentic relationship between economic change and behavioral disorders. Economic change is defined as both objective characteristics of individuals, such as unemployment or change in income, and objective characteristics of economies, such as unemployment rates or industrial trends ([7]). Behavior disorder is considered to include disorders, treated or untreated, that are reflected in literature that describes use of services, symptoms reported in surveys or questionnaires, death by suicide, and hospitalization for functional psychosis ([7]).

[7] present a model that depicts "intervening variables that may causally link changes in the economy with subsequent changes in treated mental disorder" (p. 460). In the proposed model, three direct linkages between economic change and treated behavior disorder are identified as environmental economic change, individually experienced life change (or stressful life events), and individually experienced symptoms (Figure 1). The moderator variables of social support (or integration), coping ability, treatment availability, family and community tolerance, and sick-role disposition are depicted as factors that impact the direct linkages and are also subject to the influence of economic change ([7]). Asymptomatic adaptation and untreated disorder are shown as residual categories that may diverge from the direct pathway to treated disorder. [7] note that each pathway in the model suggests a related intervention with the purpose of reducing the adverse consequences of economic change.

While this model is not intended to be directly applied to low-wage work, it represents a model that could encourage researchers to delve into alternate considerations about environmental economic impact on the psychological well-being of people engaged in low-wage work.

The focus of this review is to view low-wage work through the lens of psychological theories. Given the limited attention to the psychology of low-wage work, major theories in psychology were reviewed for their potential relevance in understanding low-wage work.

There has been an evolution of research that examines work, employment, and unemployment in the field of psychology that parallels industrialization in the United States. The Great Depression and the study of the relationship between unemployment and mental health modified the traditional focus on human behavior in work organizations. Recently, periods of high unemployment have led researchers to question the adequacy of traditional unemployment measures that ignore the social costs of unemployment, especially poor health and well-being as a function of inadequate employment. The impact of low-wage work on human behavior and mental health can also be seen in the emerging area of research related to underemployment ([6]). One barrier to further progression in this area may come from public opinion and the perception in a "down" economy that any job is better than no job at all. In addition, the recent national skyrocketing unemployment rate may encourage researchers to turn their attention again to unemployment (as in the Great Depression) due to its prominence as a major socioeconomic issue of the times.

Graph: FIGURE 1 Hypothetical intervening variables between environmental change and treated disorder ([7]).

Figure 2 is a conceptual map of psychological theory and low-wage work. The conceptual map reflects the progression of psychological theories of work over time. During and after industrialization, psychological theories proposed by Freud, Maslow, Erikson, and Jahoda included explanations of the function of work. Industrial-organization theories of motivation, job performance, personnel selection, and job stress also emerged during this period. After the Great Depression, a number of psychological theories of unemployment were proposed. These theories included learned helplessness, deprivation theory, stages theory, and vitamin theory. Theories explaining the function of work, industrial-organization theories, and theories of unemployment are grouped together due to their development across a time period where the traditional binary paradigm of employment and unemployment predominated. The concept of the employment continuum emerged at a time when record low employment rates brought attention to the insufficiency of traditional measures that do not account for adverse working conditions of a large sector of the employed population. The employment continuum depicts employment as including multiple categories of underemployment: low-hours, sub-unemployment, low-income, qualification, and unemployed. Low-income underemployment is highlighted in the conceptual map due to its potential impact as a research topic that can yield new information on the psychology of low-wage work.

MAP: FIGURE 2 Conceptual map of psychological theory and low-wage work.