Understanding the various ways in which wages are set in the U.S. economy is crucial to analyzing economic activity and worker well-being. Phenomena such as wage and earnings growth, worker mobility, income inequality, and the underlying causes of unemployment all relate back to wage setting and workers’ ability to push for higher pay or better working conditions.

Wages in the United States are typically set either through wage bargaining or wage posting. The former occurs when workers have the ability to negotiate their own compensation, and wages thus respond to workers’ outside options—their ability to find alternative employment. The latter, wage posting, arises when employers set wages that employees must either accept or reject, without holding influence over how much they are paid.

Little evidence exists on the extent to which workers have bargaining power and outside options that could affect their wages. But our new working paper seeks to expand the evidence by looking at dual jobholders—workers who take a second job because the available hours at their primary job (which typically has better wages) are limited by the employer. On average, dual jobholders rely on their secondary jobs for about 20 percent of their total earnings.

Read the full article about negotiating for better wages by Marta Lachowska, Alexandre Mas, Raffaele Saggio, and Stephen Woodbury at the Washington Center for Equitable Growth.