This paper examines and discusses labor market inequalities and disparities utilizing the theoretical framework of the Dual Labor Market approach in order to frame gender inequalities found in social welfare and occupational status of peripheral-sector service workers.

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Gender Disparities in the Peripheral and Core Sectors
of the U.S. Services Labor Market
“Today’s service economy is in many ways like the Edwardian-era economy in which a small number of
wealthy people employed a large number of servants — except that we tend to outsource the service, relying on
restaurants and cleaning services instead of cooks and maids. And our outsourced servants are, he notes, arguably
paid and treated worse than the in-house servants of the past, even in absolute terms — let alone relative to per
capita GDP.” - Paul Krugman
In this paper I will explore labor market inequalities and disparities utilizing the
theoretical framework of the​Dual Labor Market ​approach rather than that of the neoclassical
lens. The ​Dual Labor Market​approach views the labor market as a two-sector model “in which
workers in the core sector are said to have high bargaining power and workers in the peripheral
sector have low bargaining power.” (Sakamoto & Chen 1991) Furthermore, “rather than
interpreting group differences in earnings or poverty as due to different rates of individual
‘failure’ in a competitive market, the [dual labor market] theory suggest that such group
differences may be the outcome of differential assignments of group member within the
sectoral structure of the economic order.” (Gordon, 1972; Tussing, 1975; Bluestone et al., 1973)
In other words, the ​Dual Labor Market​perspective focuses on structural factors in relation to
occupational success and labor market distributions. ​Dual Labor Market ​theorists classify
categories of the labor market into two sectors: the peripheral sector and the core sector.
In the peripheral sector, there are many, many jobs (think of those who provide daily
provisional/clean-up services for hotels, restaurants etc.) In the core sector, there are the
managers, analysts, programmers, and other technically-skilled employees who the media loves
to talk about in terms of favored tech companies of the moment (think of, Google, Apple,
Facebook, Amazon. etc). These core employees, employers and entrepreneurs are those who
the service economy smiles upon (and almost obsessively talks about); not the low-skilled

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peripheral employees who have been protesting for $15/hour minimum wages. Furthermore,
over one-half of all low-wage workers (those making $7.25 to $10 per hour in 2013) work in just
two service industries – retail sales (e.g., Macy’s, 7-Eleven, Safeway) and leisure/hospitality
(e.g., the franchize hotels and restaurants of the nation). In addition, “​the lowest paid workers
in some services industries earned less than the lowest paid workers in other industries outside
of services. For example, the lowest paid 10% of workers in personal services (including hotels
and other lodging places, beauty shops, cleaning and garment services) earned $184 per week
or less.” (Meisenheimer 1998) For the sake of my discussion, I ​will be focusing on this
peripheral service sector throughout the paper.
Why should we care about the
service sector? Because it is the fastest
growing and largest sector of the American
economy - hence why our economy is
dubbed a ‘service economy’. ​In 1950, 57%
of workers were employed in the service
sector, by 2010 - 84% were employed in
the service sector and that number is
steadily growing. In other words, anyone who is planning to enter the workforce today has
more than an 84% chance that he or she will be working in a service providing organization. The
Bureau of Economic Analysis reported that in 2009, services produced $9.81 trillion of our GDP
from around 89.7 million jobs. However, “while the relative service sector employment is

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increasing, the relative wage of service workers has remained roughly constant.” (Lee & Wolpin
2004)
Many researchers have declared that the expansion of the service economy is an
extremely important development in our society. Blau for example states that, ​“the great
expansion of the service sector during this century has been one of the most significant changes
in the economy of highly industrialized societies...the expansion of the service sector is rooted
in productivity improvements resulting from technological developments and differences in
productivity among industries...however, technological advances and rising productivity (and
industrial outsourcing) in manufacturing have made it possible to expand the production of
goods with relatively small increases in industrial workers.” (Blau 1980) From this conflict
perspective, this economic change will have very significant implications for our society.
“Economic developments are at the roots of society’s class differences and conflicts, and they
shape the social structure through their effect on the lines of differentiation and the processes
of integration in it.” (Blau 1980)
In order to further explore labor market disparities we must first layout a typology to
understand who and what makes up the core and peripheral sectors of the services labor
market. ​The services sector includes a broad variety of industries; the core sector includes
occupations such as health care, advertising,
computer and data processing services,
management and legal services. The peripheral
sector includes, social services, food services, retail
trade, recreation and hotel/lodging services.

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(Meisenheimer 1998) This paper will discuss disparities specifically within gender in relation to
the dichotomous view of the service economy. Not surprisingly, ​“core workers, on the average,
have more schooling, have better educational credentials, have parents who are better
educated and with higher occupational status, and are more likely to be male and white than
female and non-white.” (Beck, Horan & Tolbert 1978) In contrast, peripheral workers tend to
have fewer years of education, come from low-income homes and are more likely to be female
and non-white. Beck et al. states that the economic position of workers in the peripheral sector
is “substantially inferior” to that of workers in the core. From this table provided by the New
York Times and Economic Policy Institute we can extrapolate that the majority of low-wage
earners are young or middle aged, high school graduates working in retail and hospitality
service industries.
While it is true that a major structural characteristic of the services industry is that, on
the average, earnings are much lower than compared to compensation in manufacturing
industries - this debate will not focus on the disparities between manufacturing and service
industries, rather I will focus on disparities between men and women in the services industry,
specifically the peripheral sector. Mellor (1987) finds that the poorest paid members of the
labor force are in service industries. “The lower wages in service industries are particularly
detrimental to women since they are predominantly employed in service industries, whereas
men are more likely to work in higher paying goods-producing industries.” (Lorence 1991)
Research has found that even when controlling for human capital factors ​there are significant
negative effects of being female and being nonwhite on annual earnings. In addition, “in both

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sectors, female workers have a greater probability of being poor than do male workers.” (Beck,
Horan & Tolbert 1978)
This discussion will be framed using two models from Lorence’s 1991 research: first, the
Open Opportunity Model​hypotheses that g​reater service employment is conductive to
equalizing earnings differences between the sexes due to “the advancing technology that will
reduce the need for physically demanding work”, thus enabling women to enter occupations
and industries from which they had been previously excluded. This is supported by census data,
“showing that women are far more likely to obtain managerial and professional jobs in service
than in manufacturing industries.” (Browning & Singelmann 1975:121-24) and second, the
Reduced Male Opportunity Model​which states that the “gender earnings gap may narrow
because of diminished male earnings.” This model speculates that dwindling manufacturing
employment opportunities among men decreases the gender earnings differential because
men have to take low-wage service jobs as high-paying blue-collar manufacturing positions
disappear.
The consensus from most research shows that for both men and women, “increased
employment in social services and personal services significantly decreases median earnings,
net of changes in human capital and community variables.” (Lorence 1991) Furthermore, what
can we learn about job mobility? An important factor for low-wage earners is the prospect to
be able to advance their careers and obtain a better job. Research shows that ​“rates of
employer change, industrial mobility, and occupational mobility are relatively low for
(peripheral sector) service workers.” (DiPrete & Nonnemaker 1997) In addition, women in the
peripheral service sector have lower rates of job-to-job mobility than do men. Why do these

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gender differences in mobility within the service sector exist? The answer may lie in the nature
of the factors that cause women to change industries. It is well known that women receive less
on-the-job training than to men (Duncan & Hoffman 1979). “Women consequently may have
faced a lower average earnings penalty when changing industries than did men.” (DiPrete &
Nonnemaker 1997) Women are also more likely to hold positions made redundant by
computerization, such as bank tellers and other clerical work. In addition, many workers may
not be able to start work in a different sector due to a lack of resources - Lee & Wolpin 2004
estimate that the cost of switching sectors can be as high as 75% of an individual’s average
annual earnings.
Next, let’s look at employee benefits and health in the service industries - “low tier
service workers (peripheral) are generally less likely than those in manufacturing to receive
employer-provided health, retirement, and disability benefits, in several large segments of
services.” (Meisenheimer 1998) However, workers in the services industry are “much less likely
to lose their jobs than are those in manufacturing, and work-related injuries, illnesses, and
deaths are far less common in services than other industries.“ And about “35% of workers in
private services industries participated in an employer-sponsored retirement plan in April 1993.
By comparison, 69% of workers in mining participated in a retirement plan, the highest
proportion of any major industry group. In retail trade, 26% of workers were covered by a
retirement plan, the lowest proportion of any major nonagricultural industry.” (Meisenheimer
1998) On one hand, low-tier peripheral service workers receive less employer sponsored
benefits than their counterparts in the manufacturing industry. However, in contrast to
manufacturing, service workers do not have to worry nearly as much about work related injury

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and death. Although service occupations with relatively high incidence rates tended to be jobs
occupied by the lower-income workers such as residential care (11.7), hotels and other lodging
services (9.7) and “two-thirds of deaths in retail trade resulted from homicides.” (Meisenheimer
1998)
Overall, these figures exemplify the stark disparities between the sexes and between
the two sectors of the service economy. But there are some benefits of the shift to a service
economy. For example, some social scientists may argue that the “growth in services has been
accompanied by a dramatic rise in the educational level of the American population.” (Blau
1980) However, Fuchs (1968:131-57) finds that earnings are lower in the service than in the
industrial sector, whether or not educational and demographic compositions are controlled. In
addition, “growth in services increases the occupational heterogeneity of the population” this
helps reduce inequality in education substantially and inequality in occupational status and
prestige to some degree. Furthermore, “growth in services may help bring about, increasing
intersection of sex differences with participation in the labor force and of differences in race
with differences in education, occupation and income.” (Blau 1980) According to Blau, as the
service economy expands, it creates a more pronounced division of labor, this in turn supports
changes in the occupational structure - expanding high-status occupations and contracting
low-status occupations. “All of these changes involve increasing heterogeneity, decreasing
inequality or increasing intersection, which are three structural conditions which are predicted
to raise rates of integrative intergroup relations.” (Blau 1980) Blau argues that the changes in
occupational structure due to a shift towards a service economy may lend itself to a positive
social climate, which involves improved intergroup relations.

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While there are both positive and negative effects due to factors associated with an
established and growing service economy, the majority of studies assert that current trends
give rise to degraded social welfare in the peripheral sector of the services labor market.
Lorence contends that greater service sector employment increases the concentration of men
in peripheral service occupations, thus transforming the male occupational structure more
similar to that of women. Largely, research supports the​Reduced Male Opportunity ​model.
“​Although expanding employment in service industries substantially decreases the earnings of
both women and men, growth in service sector jobs evidences a more negative impact on male
earnings. Median gender earnings are becoming more similar as men’s earnings fall to levels
more comparable to the earnings women receive.” (Lorence 1991) Furthermore, occupations
are viewed as the key determinants of income (Nelson & Lorence 1988) - this understanding
gives rise to the difference in structure of inequality for the sexes. ​“For men, services increase
inequality through disparities created by high earners whereas for women services increase
inequality through disparities between median and low earners. These disparities in turn reflect
the sectors in the service economy where men and women work and the kinds of jobs they
hold. High inequality among the men is found in metropolitan areas specializing in producer
and business related services with high proportions of professional and managerial personnel.
For women, inequality is related to retail trade and social services, which require high
proportions of unskilled, service related occupations. The data consequently suggests how the
heterogeneous service sector provides a setting in which traditional linkages between gender
and occupation influence inequality in earnings.” (Nelson & Lorence 1988) This research
supports my suggestion that the great dynamic of the service economy lends itself to a highly

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stratified labor market brimming with intersectional factors, which show that the services
industry is very diverse in terms of job quality. However, the bulk of research supports the
conclusion that limited occupational choice creates downward pressure on the wages,
decreased job mobility, and inferior benefits offered to women in service sector occupations.
On the whole, American’s face a highly stratified service sector labor market due to
increasing budgetary pressures and a growing free-market ideology over the past few decades.
“These ideological factors have permeated many industrialized nations which have begun to
rely more heavily on the workplace as a means of alleviating poverty.” (Theodos & Bednarzik
2006) A rise in the general perception that job security and earnings in the United States has
diminished has been “fueled by well publicized restructuring and job reductions at major
corporations; rapid employment growth in the temporary help industry; firms’ increasing use of
outside contractors to perform activities that previously were done by in-house personnel;
technological advancements that may reduce the demand for low-skilled workers while often
raising the demand for highly skilled and educated workers; and intensified domestic and
international competition.” (Meisenheimer 1998) In summary, the peripheral sector of the U.S.
services labor market mounts a multitude of challenges specifically aimed at women. These
challenges include; inferior wages, reduced unionization, lousy employer sponsored benefits,
diminished job mobility and routinized labor which may likely be replaced by automated
technology in the near future.

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