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What Facilitates—or Impedes—Upward Economic Mobility: An IWER Research Compendium

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Credit: Andrea Mongia

What factors make it easier—or harder—for workers, particularly those in low-wage jobs, to achieve upward economic mobility and better employment opportunities? 

The following collection of links highlights some of the research and analysis related to this topic that has been conducted in recent years by scholars affiliated with the MIT Institute for Work and Employment Research (IWER) and their coauthors at other universities.

I. What Factors Facilitate Upward Economic Mobility?

1. How Work is Organized

Research has found that a key facilitator of upward economic mobility for frontline workers is how work is organized—in particular, how much employees are able to gain new skills, provide input and value, and take on new responsibilities.

  • “Work Organization and High-Paying Jobs,” by Dylan Nelson, Nathan Wilmers, and Letian Zhang.  Upjohn Institute Working Paper 24-397, March 2024 (Kalamazoo, MI: W.E. Upjohn Institute for Employment Research).
    This study by Nelson, MIT Sloan Associate Professor Nathan Wilmers, and Zhang found that having certain kinds of tasks in a job description allows new employees, including frontline workers, to earn more.  

    Specifically, employees earned more when their jobs included tasks that either involved more autonomy or were more complex. “We find that when employers raise the task complexity and autonomy of jobs, new hires’ starting earnings increase and subsequently grow faster,” Nelson, Wilmers, and Zhang wrote in an Upjohn Institute policy brief about this study.  

    For a brief article summarizing these research findings, see “How Job Tasks Can Contribute to Higher Pay for Frontline Workers”, by Martha Mangelsdorf, October 23, 2024.
     

  • “The Case For Good Jobs,”  by Zeynep Ton. Harvard Business Review, November 30, 2017.
    MIT Sloan Professor of the Practice Zeynep Ton, who is also a faculty affiliate of IWER, has long argued that service companies can provide better-paying jobs for their frontline workers if they organize work differently. She recommends a strategy that involves simplifying and standardizing operations to promote efficiency, empowering and cross-training frontline employees to improve productivity, and operating with some slack to facilitate high-quality service and employee input.

    For more in-depth information on Ton’s work, you can also read her books The Case for Good Jobs: How Great Companies Bring Dignity, Pay, and Meaning to Everyone’s Work (Harvard Business Review Press, 2023) and The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits (New Harvest/Houghton Mifflin Harcourt, 2014).
     

  • “Earnings Effects of Direct Worker Voice in Production,” by Dylan Nelson and Nathan Wilmers. ILR Review (2025). (Note: This article is behind a paywall.)
    What happens when manufacturing companies regularly incorporate worker feedback and ideas into their production processes? The researchers found that productivity is generally higher—and so is production worker pay. 

    For a summary of this study’s findings, see  “The Effects of Worker Voice on Manufacturing Pay and Productivity,” by Martha Mangelsdorf, September 25, 2025.
     

  • “Productivity and Pay in the United States and Canada,” by Jacob Greenspon, Anna Stansbury, and Lawrence H. Summers.  International Productivity Monitor 41 (Fall 2021): 3-30.
    In both the U.S. and Canada in recent decades, pay for the average employee has grown significantly more slowly than productivity. But this analysis by Greenspon, MIT Sloan Assistant Professor Anna Stansbury, and Summers finds that there is nonetheless still a linkage, with productivity growth leading to pay growth for workers, particularly in the U.S.

    You can also read a brief column by the authors that highlights their findings: “Productivity and Pay: A Comparison of the US and Canada,”  by Anna Stansbury, Lawrence H. Summers, and Jacob Greenspon. VoxEU, February 15, 2022.
     

  • “Job Turf or Variety: Task Structure as a Source of Organizational Inequality,” by Nathan Wilmers.  Administrative Science Quarterly 65, no. 4 (December 2020): 1018-1057.
    In this study of pay differences between colleagues, Wilmers found that employees who do more types of tasks—and who can do a task that no one else in the workplace does—tend to earn more than colleagues who don’t have as much “job turf.” 

    You can also read a brief interview about this research:  “Find Your 'Job Turf' For Salary Bargaining Power,” Interview with Nathan Wilmers by Martha E. Mangelsdorf, March 24, 2020.
     

2. Management Practices

 In addition to decisions about how work is organized, a range of other management practices—on topics ranging from raising entry-level wages to the availability of training to hiring practices to leave policy—have an impact on workers’ ability to get ahead economically.

  • “How Do Employer Practices Affect Economic Mobility?” by Erin L. Kelly, Hazhir Rahmandad, Nathan Wilmers, and Aishwarya Yadama, ILR Review 76, no. 5 (October 2023): 792-832. (Note: This article is behind a paywall.)
    Which management practices have the most effects on worker mobility? Scholars affiliated with MIT IWER analyzed a wide range of prior research on this topic and identified promising practices. One key insight is that while upward economic mobility can be supported directly by increasing wages, addressing workers’ other concerns, such as unstable schedules or a need for family leave, can reduce quits and allow employees to move up. 

    For a brief article summarizing this paper’s findings, see “Highlighting Management Practices That Benefit Disadvantaged Workers,” by Martha Mangelsdorf, September 2, 2023.

     In addition, a  related WorkRise research report by the authors is also available:
    “Employer Practices and Worker Outcomes: A Landscape Report,”  by Erin L. Kelly, Hazhir Rahmandad, Nathan Wilmers, and Aishwarya Yadama, WorkRise research report, June 2022.
     

  • “Corporate Minimum Wages and Working Poverty,” by Nathan Wilmers, Soohyun Roh, and Jiawei Tang, working paper, May 2024.
    In this working paper, Wilmers, Roh, and Tang, all at MIT Sloan, analyzed the effect of many large U.S. retail companies choosing, starting in 2014, to raise the minimum wage they pay. The authors find that adopting a higher entry-level wage significantly reduced the rate of working poverty among these firms’ employees while eliminating a majority of the wage gap between Black and white hourly workers. There were signs that employers engaged in work intensification after raising wages. 
     

  •  “How American Adults Obtain Work Skills: Results of a New National Survey,” by Paul Osterman. ILR Review 75, no. 3 (May 2022): 578-607. 
    Past research has shown that receiving employer-provided training is linked to employee wage growth and career advancement. In a nationally representative survey, MIT Sloan Professor Paul Osterman found that while more than half of U.S. adult workers reported receiving employer-provided training in the past 12 months, not everyone is equally likely to have access to it. White employees and employees who are college-educated are more likely to receive employer-provided training, and employees without a high-school education are less likely to be given such training. 

    For a brief article about this research, see “Survey: Workers Who Need Training Most Aren’t Getting It,” by Meredith Somers, March 2, 2022.
     

  • “Points of Departure: Family Leave Policy and Women’s Representation in Management in U.S. Workplaces,”  by Eunmi Mun, Shawna Vican, and Erin L. Kelly. Social Forces 103, Issue 2 (December 2024): 520–549.  (Note: This article is behind a paywall; email iwer@mit.edu to inquire about receiving a copy from the author, if needed.)
    Do policies that make it easier for employees to meet pressing family needs increase the ability of women to advance in organizations? Recent research from Mun, Vican, and MIT Sloan Professor Erin L. Kelly suggests that was indeed the case with the Family and Medical Leave Act (FMLA) in the U.S. 

    For a short article about these findings see, “How the Family and Medical Leave Act Helped Women’s Careers,” by Martha Mangelsdorf and Erin Kelly,  October 17, 2024.
     

  • “How Internal Hiring Affects Occupational Stratification,” by Nathan Wilmers and William Kimball. Social Forces 101, Issue 1, (September 2022): 111–149. (Note: This article is behind a paywall.)
    Intuitively, one might expect low-wage workers to benefit when employers fill more of their open positions with internal candidates, but this study by Wilmers and Kimball found that was not the case. In part because many low-wage workers today are segregated into organizations that have few higher-paying jobs for frontline workers to move up into, low-paid workers, the authors discovered, experience more upward economic mobility when external hiring increases in their labor market than when internal hiring does.  That’s because, the researchers conclude, contemporary low-wage workers tend to achieve more economic benefits from moving to a different organization than they do from moving to a different job with the same organization. 
     

II. What Factors Impede Upward Economic Mobility for Workers?

Credit: Mimi Phan/iStock

What gets in the way of upward economic mobility for workers, particularly low-wage ones? Recent IWER faculty research identifies a number of factors: corporate power that is strong enough to depress wages; declining union power and union membership rates; an increase in contract employment; inadequate penalties for wage law violations; bias in the workplace; and an economy where low-wage workers are increasingly segregated into low-wage organizations. 

1.  The Power of Large Employers and Corporate Customers 

  • “Employer Concentration and Wages: Evidence from Large Firms' Hiring Shocks,” by Gregor Schubert, Anna Stansbury, Bledi Taska, and Matthew Dey, MIT Sloan Research Paper No. 7334-25 (August 1, 2025).
     This analysis by MIT Sloan Assistant Professor Anna Stansbury and colleagues finds that employer concentration contributes significantly to lowering workers’ wages, as a result of employers having greater market power in a local labor market. The authors “estimate that more than one in six U.S. workers face wage suppression of 2.5% or more as a result of above-median employer concentration.”

    To read an overview of this research project and its policy implications, see “Employer Concentration Suppresses Wages for Several Million U.S. Workers: Antitrust and Labor Market Regulators Should Respond,” by Anna Stansbury, Washington Center for Equitable Growth, January 26, 2021. 
     

  •  “Wage Stagnation and Buyer Power: How Buyer-Supplier Relations Affect U.S. Workers’ Wages, 1978 to 2014,” by Nathan Wilmers. American Sociological Review 83, no. 2 (April 2018): 213-242. 
    In this study, Wilmers found that, when a workplace depends heavily on sales to large corporate buyers, employee wages in that workplace tend to be reduced due to the corporate customers’ economic power. His analysis concluded that 10% of the wage stagnation experienced by U.S. workers in nonfinancial businesses between 1978 and 2014 was a result of their employers’ dependence on large corporate customers. 

    For a quick overview of this research, read:  The Hidden Culprit Behind Stagnant Wages,” by Nathan Wilmers, The Hill, October 4, 2018; or  “The Links Between Stagnating Wages and Buyer Power in U.S. Supply Chains,” by Nathan Wilmers, Washington Center for Equitable Growth, May 22, 2018.
     

  • “Incentives to Comply with the Minimum Wage in the United States and the United Kingdom,” by Anna Stansbury. ILR Review 78, no. 1 (January 2025): 190-216. 
    For many firms in the United States and the United Kingdom, the legal system does not create sufficient incentive to comply with the minimum wage” laws, Stansbury concludes in this analysis. “This conclusion is consistent with a body of research in both the US and the UK that finds very substantial non-compliance” with these laws.

    For a brief overview of the U.S. portion of this research, “US Firms Have Little Financial Incentive to Comply with the Minimum Wage,” by Anna Stansbury, VoxEU, April 15, 2024.
     

    2. Contract Employment and Outsourcing 
     

  • “Contract Employment: Measurement and Implications for Employer–Employee Relationships,” by Paul Osterman. ILR Review 76, no. 2 (March 2023): 320-356. (Note: This article is behind a paywall.)
    This study by MIT Sloan Professor Emeritus Paul Osterman found that more than one in ten U.S. workers is a contract employee, employed by a different organization (such as a staffing firm) from the workplace for which they do their work.  While contract employees vary widely in wage and skill level, Osterman finds that, at all levels, they tend to be less well-off than counterparts in standard employment arrangements: Contract employees are, on average, paid less and are less likely to receive employer-provided training. They are, overall, more likely to be Black or Hispanic, to be younger, and to have less education.

    For a short article summarizing this study’s findings, see “Shedding New Light on Contract Employment in the U.S.,” by Martha Mangelsdorf, April 13, 2023.
     

  • “Consolidated Advantage: New Organizational Dynamics of Wage Inequality,” by Nathan Wilmers and Clem Aeppli. American Sociological Review 86, issue 6 (December 2021): 1100-1130.
    Some workplaces offer higher pay than others for similar positions. And in recent years, “the two main axes of inequality in the U.S. labor market—occupation and workplace—have increasingly consolidated,” Wilmers and Aeppli write. For example, high-paying corporate workplaces that once hired maintenance workers and food service workers as full-time employees may now contract that work out. As a result, “workers benefiting from a high-paying workplace are increasingly those who already benefit from membership in a high-paying occupation,” the authors explain. Wilmers and Aeppli’s research finds that as much as two-thirds of the increase in wage inequality from 1999 to 2017 is a result of what they call increasing “consolidated advantage.” 
     

3. Biases and Social Capital Disadvantages

  • The Meritocracy Paradox: Where Talent Management Strategies Go Wrong and How to Fix Them by Emilio J. Castilla (Columbia University Press, 2025).
    As part of his comprehensive new book on the pitfalls and potential of meritocratic talent management processes, MIT Sloan Professor Emilio J. Castilla explores the many ways biases can creep into an organization’s talent management system, where they can serve as an obstacle to some employees’ economic mobility. For example, Castilla’s research has found that telling decision-makers that the organization is a meritocracy can result in their offering male employees larger bonuses than equally-performing female peers.
     

  • “The Class Gap in Career Progression: Evidence from US Academia,” by Anna Stansbury and Kyra Rodriguez, MIT Sloan Working Paper 7130-24 (Cambridge, MA: MIT Sloan School of Management, June 18, 2025).(Conditionally accepted by the journal Econometrica.)
    Using parental education as an indicator of class background, Stansbury and Rodriguez find a that there is a substantial  “class gap” that affects career progression among tenure-track academics in the U.S. The authors write that “when comparing two PhD recipients from the same institution and same field, those from less advantaged socioeconomic backgrounds on average end up tenured at less research-intensive and lower-ranked institutions, earn less, and are less satisfied with their jobs.” The authors’ analysis suggests that scholars from less-advantaged backgrounds having less “social and cultural capital” in the world of academia was an important factor in this gap. Stansbury and Rodriguez also found a class gap among PhDs who work in industry, suggesting this phenomenon is not limited to academia.

4. Declines in Worker Power

Working in a unionized workplace can have a significant positive effect on workers’ economic prosperity. However, declines in union membership and power in the U.S. mean that fewer employees can access such earnings benefits. 

  • “The Declining Worker Power Hypothesis: An Explanation for the Recent Evoluation of the American Economy,”  by Anna Stansbury and Lawrence H. Summers. Brookings Papers on Economic Activity (Spring 2020): 1-77.   
    “Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers—with profound consequences for the labor market and the broader economy,” Stansbury and Summers conclude in this paper. “We argue that the reduction in workers’ ability to lay claim to rents within firms could explain the entirety of the change in the distribution of income between labor and capital in the United States in recent decades and could also explain the rise in corporate valuations, profitability, and measured markups…”
     

  • “Solidarity Within and Across Workplaces: How Cross-Workplace Coordination Affects Earnings Inequality,” by Nathan Wilmers. RSF: The Russell Sage Foundation Journal of the Social Sciences 5, no. 4 (September 2019): 190-215.
    The post-World-War-II era saw much more broadly distributed economic prosperity than more recent decades of heightened inequality. In this article, Wilmers draws on U.S. Bureau of Labor Statistics microdata from 1968 to 1977 to make the case that one factor constraining inequality during that period was coordination of pay across workplaces, through mechanisms ranging from formal union-negotiated multi-employer collective bargaining agreements to informal coordination and comparisons among large employers in a labor market. Wilmers concludes that, during the period he studied, “unionization, large establishments, and pension provision reduced inequality across workplaces, not only among coworkers within workplaces. These findings indicate that cross-workplace coordination mitigated inequality during the postwar period of egalitarian economic growth.”

  • “Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991,” by Maxim Massenkoff and Nathan Wilmers. American Economic Journal: Applied Economics 15, no. 1 (January 2023): 474-507.
    Massenkoff and Wilmers note that, in the mid-twentieth century, blue-collar workers in organizations often saw their pay determined by “standardized pay rates”—that is, their pay was a function of job title and seniority. Unions generally supported standardized pay rates, and during a period of declining union power in the 1980s, many employers abandoned standardized pay rates in favor of systems that gave managers more discretion in setting individual workers’ pay. The result, in the context of a period of declining worker power, was an overall decline in blue-collar workers’ real wages.

    For a short summary of some highlights of this research, see “When Managerial Discretion About Compensation Brings Lower Pay,” by Martha Mangelsdorf, August 24, 2023.
     

  • “Who Pays for Unions?” by Samuel Dodini, Anna Stansbury, and Alexander Willén. NHH Dept. of Economics Discussion Paper No. 25, April 28, 2025. 
    “This paper provides a comprehensive assessment of who ultimately bears the cost of unionization by examining how manufacturing firms in Norway respond to increased union density,” Dodini, Stansbury and Willén write. “Despite higher labor costs from the union wage premium, the average manufacturing firm expands employment, scales up production, raises product prices, increases nominal value added per worker, and maintains stable profits. In contrast, the broader private sector sees declining employment, output, and profits, suggesting that in more competitive markets, higher labor costs are absorbed by firm owners and workers through contraction. In manufacturing, however, these costs are largely passed on to consumers through higher prices.”

    For a short overview of these findings, see, “How Norwegian Businesses Respond to Increases in Unionization,” by Martha Mangelsdorf, August 19, 2024.
     

  • For an overview of recent IWER faculty research on worker activism and worker voice, see “Trends in Worker Voice and Worker Activism: An IWER Research Compendium.”


III. How Will AI Affect Upward Economic Mobility?

MIT Sloan Associate Professor Nathan Wilmers

What effect is generative artificial intelligence likely to have on economic opportunity for low-wage workers? It’s too early to tell definitively, but scholars affiliated with MIT IWER offer interesting analyses.

  • “Generative AI and the Future of Inequality,” by Nathan Wilmers. An MIT Exploration of Generative AI (March 2024). While no one can say for sure yet, it’s possible generative AI might reduce the contemporary societal problem of income inequality. That’s one of the conclusions reached by MIT Sloan School Associate Professor Nathan Wilmers in this 2024 working paper.

    For brief highlights of this working paper, see: “Exploring the Effects of Generative AI on Inequality,” by Martha Mangelsdorf, March 29, 2024.
     

  • “Applying AI to Rebuild Middle Class Jobs,” by David Autor. National Bureau of Economic Research (NBER) working paper 32140 (February 2024).
    “My thesis is not a forecast but an argument about what is possible,” wrote MIT Ford Professor of Economics David Autor, who is also a faculty affiliate of IWER, in this working paper. “AI, if used well, can assist with restoring the middle-skill, middle-class heart of the US labor market that has been hollowed out by automation and globalization."
     

  • “Bringing Worker Voice into Generative AI,” by Thomas A. Kochan, Ben Armstrong, Julie Shah, Emilio J. Castilla, Ben Likis, and Martha E. Mangelsdorf. An MIT Exploration of Generative AI (March 2024). 
    The authors of this MIT working paper draw on more than fifty interviews about generative AI conducted with experts from the worlds of business, academia, labor, government, and the AI development community. The working paper summarizes the authors' findings and includes recommendations for incorporating employees’ perspectives into AI development.
     

IV: What Policies Can Create Greater Opportunities for Economic Mobility?

MIT Sloan faculty have given extensive consideration to policies that could improve economic opportunity for low-wage workers. Here is a sample of some of their recent work: