Economic Recovery Leaves Low-Income Working Families Behind

By the end of 2011, the official unemployment rate had dropped to 8.5%. The stock market seemed on its way to recovering the huge losses of 2008-9. The housing industry showed signs of life.

But the number of low-income working families rose to 10.4 million — up by 200,000 from 2010, according to a new brief from the Working Poor Families Project.

This means that nearly a third — 32.1% — of all working families struggled to make do with incomes below 200% of the Census Bureau’s applicable poverty threshold.*

The percent of low-income working families has steadily increased since 2007, when the recession set in. In that year, 28% of working families were poor or near-poor.

So we now have about 47.5 million people — 23.5 million of them children — in the group WPFP has carved out, i.e., those in families with children where the members who were at least 15 years old collectively worked a minimum of 39 weeks during the prior 12-month period.

What this tells us, of course, is that high unemployment doesn’t sufficiently account for the high poverty rate — or the more realistic 200% of that rate.

It does account for some part of it. According to the brief, the share of low-income families working dropped a bit between 2009 and 2011 — from 73% to 71%.

A larger part of the story seems to be the types of jobs those low-income family members had. About a fourth of the adults in these families worked in just eight occupations — all of them characteristically low-wage, e.g., cashiers, health aides, restaurant wait servers.

The brief tells us that many were working part-time — not by choice — and often in multiple temporary jobs.

But the data in the source it cites are very old. So we really don’t know how much cobbled-together, on-and-off employment boosted the number of working families who, at best, had barely enough to make ends meet.

We do know, however, that these working arrangements made them even more economically insecure than they would have been otherwise.

The rise in working poor families, as WPFP defines them, is another indicator of growing income inequality in the U.S.

While the poorest fifth were getting 5% of all income earned, the top fifth were getting 48% — not, in many cases, only income earned by the (figurative) sweat of their brows.

Looking at average incomes by education level, WPFP concludes that increasing the portion of workers with at least some postsecondary education “would go a long way toward narrowing the income gap.”

As I’ve written before, I find this doubtful, though it would surely move some of the low-income workers up from the bottom fifth.

We’d still have growth in low-wage occupations that can’t be fully automated or shipped overseas.

Employers won’t pay more merely because they can’t find enough qualified workers who’ve got, at most, a high school diploma or the equivalent. They won’t recreate the mid-wage jobs they’ve eliminated either.

WPFP seems to recognize this, since it also addresses job quality — and in terms that would apply mainly to low-wage occupations.

On the policy front, it recommends raising and indexing the minimum wage, mandating comprehensive paid sick and family leave, enforcing fair labor and other workplace standards and “ensuring that if public job creation expenditures persist, they benefit workers and their communities.”

All but the last would be easier for workers to gain for themselves if we had full employment again, i.e., a labor market with relatively few job seekers for jobs employers want to fill.

Economist Jared Bernstein, who’s long championed full employment as a policy goal, cites, only half in jest, the advantages workers gained when the “black death” plague swept Western Europe in the 14th century.

Well, we’re far from full employment. And happily no one’s predicting a plague. But it doesn’t look like we’re going to get public job creation expenditures.

What looms instead are job losses — at least a million, maybe over twice that — if Congress can’t agree to stop the briefly-delayed across-the-board spending cuts.

Same result — or perhaps worse — if it replaces them with equivalent cuts that shield defense, as the House majority wants.

And undoubtedly a much larger number if the Republicans succeed in forcing additional cuts on top of the $1.2 trillion already enacted the last time they ginned up a debt ceiling crisis.

This, as the WPFP brief indicates, would be a double-whammy for working poor families — not only an even worse labor market, but spending cuts in programs that help them meet basic needs and and become card-carrying members of the working middle class.

* Double the threshold for a two-adult, two-child family is $45,622.

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One Response to Economic Recovery Leaves Low-Income Working Families Behind

  1. […] to ensure that the economic benefits of the recovery reach the very large number of poor and near-poor working families in this country seem a distant […]

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