What Is A Secondary Labor Market?

A secondary labor market refers to a segment of the labor market characterized by low-wage jobs, limited job security, minimal opportunities for advancement, and often poor working conditions. This concept is part of the dual labor market theory, which divides the labor market into primary and secondary sectors.

Characteristics of the Secondary Labor Market

The secondary labor market is distinguished by several key features:

Low Wages 

Jobs in this market typically offer wages at or near minimum wage levels. These positions often do not provide a living wage, forcing workers to seek multiple jobs or rely on government assistance.

Job Instability

Employment in the secondary market is often temporary, seasonal, or part-time. Workers frequently face layoffs or irregular work schedules, leading to income insecurity.

Limited Benefits

Many jobs in this sector do not offer health insurance, paid time off, retirement plans, or other benefits commonly found in primary labor market positions.

Minimal Skill Requirements

These jobs generally require little formal education or specialized skills, making them more accessible but also more replaceable.

Limited Career Advancement

There are few opportunities for promotion or skill development within these jobs. Workers often find it challenging to move into the primary labor market.

High Turnover

Due to the unfavorable conditions, employees in the secondary market tend to change jobs frequently, either moving between similar positions or occasionally finding opportunities in the primary market.

Examples of Secondary Labor Market Jobs

Common examples of jobs in the secondary labor market include:

• Fast food workers

• Retail salespeople

• Janitorial staff

• Agricultural laborers

• Temporary office workers

• Delivery drivers

• Home health aides

Factors Contributing to the Secondary Labor Market

Several factors contribute to the existence and persistence of the secondary labor market:

Economic Structure

The shift towards a service-based economy in many developed countries has led to an increase in low-wage, low-skill jobs.

Globalization

The ability to outsource certain jobs has put downward pressure on wages and job security for low-skill workers in developed countries.

Technology

Automation has reduced the need for certain types of labor, often pushing displaced workers into the secondary market.

Labor Regulations

Weak labor protections or enforcement can allow employers to maintain poor working conditions and low wages.

Education and Skills Gap

Limited access to education and training can trap workers in low-skill, low-wage jobs.

Impact on Workers and Society

The existence of a significant secondary labor market has profound implications for workers and society at large. Workers in this market often struggle with poverty, financial instability, and limited opportunities for social mobility. This can lead to increased reliance on social welfare programs and contribute to widening income inequality

For society, a large secondary labor market can result in decreased economic productivity, as workers are not fully utilizing their potential. It can also lead to social unrest and political polarization as the gap between those in the primary and secondary markets widens.

Policy Considerations

Addressing the challenges posed by the secondary labor market often involves policy interventions such as:

• Increasing minimum wage

• Strengthening labor protections and enforcement

• Investing in education and job training programs

• Encouraging unionization and collective bargaining

• Implementing policies to support job creation in higher-wage industries

Critics of the Dual Labor Market Theory

It's worth noting that not all economists agree with the strict division of labor markets into primary and secondary sectors. Critics argue that the labor market is more complex and fluid than this theory suggests, with many jobs falling somewhere between these two extremes.