1 in 3 now families now 'working poor'
Friday, February 15th, 2013
Noting long-stagnant wages and the continued lack of job opportunities, President Obama made the case that the key to a stronger economy as a nation is economic security for its individual citizens.
“It is our generation’s task, then, to reignite the true engine of America’s economic growth — a rising, thriving middle-class,” he said Tuesday in his State of the Union address.
“We know our economy’s stronger when we reward an honest day’s work with honest wages,” he said. “But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. That’s why, since the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs even higher.
“Tonight, let’s declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty — and raise the federal minimum wage to $9 an hour."
The number of working families living this reality — classified as "working poor" — increased again in 2011, according to a report by the Working Poor Families Project. More than 32 percent, or 10.4 million families, with at least one working adult and one child in the home, had incomes below 200 percent of the official poverty level.
Low income, using the standard benchmark of a family of four with two children, was defined as income that was less than $45,622 in 2011, according to the Census Bureau. And despite some indicators of economic recovery, this is the third straight year of increases in the number of low-income, working families. The total number of people in these working families stands at 47.5 million, and the Working Poor Families Project says it could climb to 50 million in the next few years.
“When we started this… the share of low-income working families was at 26.7 percent,” said Brandon Roberts, manager of the Working Poor Families Project. “The big news from our perspective was 1 in 4,” he said. “We’ve now evolved, or regressed, to 1 in 3.”
It’s not just unemployment problems but also the difficulty of finding decent wages, he said. According to the report, more than 7 in 10 of low-income families and half of poor families, those living below the poverty line, worked in 2011. And even though the overall number of people returning to work during the recovery has increased, the fastest-growing jobs have been in the lower-wage service sector. These lower-wage jobs represented nearly 60 percent of the jobs gained in the recovery of the past two years, according to a report from the National Employment Law Center. Many middle-wage jobs have disappeared.
“We like to think that people are poor in America because they don’t work,” said Roberts. But, he added, "Even though you are working, you have an increasing chance of being low-income or poor.”
Housing continues to be an issue. The report found 61 percent of low-income working families spent more than a third of their income on housing costs. For working families below the poverty threshold, 81 percent exceeded the recommended spending for housing.
“It ends up being very difficult for people who are low-income or no-income to find a place on their own,” said Nicole Martinez, executive director of Mesilla Valley Community of Hope in Las Cruces, N.M.
New Mexico has the highest percentage of low-income working families, according to the group’s analysis, with 44 percent of the state’s working families falling into the low-income category. And yet this is a state that closed out 2011 with an unemployment rate of 7 percent — lower than the national unemployment rate.
The Community of Hope houses a variety of agencies to serve the homeless population, including housing assistance, a food bank and health-care clinic. Martinez said most who find themselves at the shelter began the downward spiral with a job loss, which, in turn, led to borrowing from friends and family, who eventually could not help anymore.
“They’re spending much more of their take-home pay on just affording to have the shelter. A lot of things get sacrificed because the rents are so high,” said Martinez.
The report acknowledged the role education plays in the mobility and security of working families. Nearly a third of low-income working families had at least one parent who hadn’t finished high school. Increasing educational opportunity among this group is threatened by budget cuts at schools and to student aid.
“We not only have to protect what’s there but look at investing more in allowing those folks who want to go back to school get additional training and credentials to do so,” said Roberts.
Increasing the minimum wage, another policy advocated by the Working Poor Families Project, is sure to be politically difficult and debated by economists, despite the president's push. Florida Sen. Marco Rubio, who delivered the Republican response to the Obama's address, rebuffed the idea of increasing the minimum wage in a CBS-TV interview the day after the president's speech.
“Minimum-wage laws have never worked in terms of helping the middle class attain more prosperity,” he said.
New Mexico’s minimum wage is slightly higher than the federal minimum wage of $7.25. But South Carolina and Mississippi, which also have some of the highest share of low-income working families, have no state minimum wage policy at all.