Working, but still poor

Tuesday, September 13th, 2011 

From the president to Congress to nearly every neighborhood in America, the focus today is on job creation. But for millions of Americans, just having a job doesn’t mean prosperity or anything like it. 

Nearly one in six Americans lived in poverty in 2010,  according to data released today by the Census Bureau. (See our highlights of the Census data.) That’s 46.2 million people, the highest number ever recorded in the 52 years that poverty estimates have been calculated. 

The rise in poverty may be attributable in part to the nation’s persistently high unemployment rate.  “We have an increase in the number of people who did not work at all last year,” said Trudi Renwick, chief of the poverty statistics branch of the Census Bureau. “That might be the single most important factor” behind the higher poverty rate, she said. 

But working people are also struggling, as data from the Bureau of Labor Statistics reveals. 

More are working, and more are 'working poor'

The number of people in the workforce 27 weeks or more grew 30 percent from 1987-2009, but the number in the workforce 27 weeks or more living in poverty grew 65.3 percent.

Source: Bureau of Labor Statistics, Annual Social and Economic Supplement, Current Population Survey

Graphics by Melanie Taube, Investigative Reporting Workshop.

“When you have this type of labor market weakness, you’ve got a reinforcing effect on the working poor," said James Borbely, an economist with the Bureau of Labor Statistics. "Even people just above that would be affected. The middle class certainly hasn’t been without its hardships," he said. "People are just getting by. And I’d say the working poor are barely getting by."

The Investigative Reporting Workshop examined data from the Bureau of Labor Statistics to look at trends among the working poor, going back to 1987. As shown in the accompanying graphics, the number of people in the workforce since then grew by almost 30 percent, but those working and living in poverty grew by more than 65 percent. 

Rate of working poor climbs

The poverty rate has grown, too, from 5.5 percent of the people in the labor force in 1987 to 7 percent in 2009.

Source: Bureau of Labor Statistics, Annual Social and Economic Supplement, Current Population Survey

The "working poor" are those who spent at least 27 weeks in the workforce, working or looking for work, but whose incomes still fell below the official poverty level.   And those incomes are low. The 2009 poverty threshold for a single person is $10,956, and it's just $21,954 for a family of four. 

There were 10.4 million people among the working poor in 2009, according to a Bureau of Labor Statistics' report, "A Profile of the Working Poor," released earlier this year (see report). That's 1.5 million more than in 2008. How can so many people with jobs still be so destitute? Low earnings, unemployment and involuntary part-time work are cited in government reports as three of the labor market's biggest problems. In 2009, 7 percent of the working poor experienced all three.

Many workers work year-round, but in part time jobs. And involuntary part-time work is a major contributor to poverty. The number of people working part-time who want to work full time has tripled in the last 10 years, according to the Bureau of Labor Statistics. In 2001, 3.3 million people Americans worked part time but sought full time jobs. The figure trended upward in 2006 and climbed to 4.6 million in December of 2007.

In the last few years, the number has risen again, hitting a high of 9.5 million in September 2010. It stands now at 8.8 million. "Historically speaking that’s extremely high," Borbely said. 

Twice as many people are now involuntarily part-time as they were before the start of the recession. "That’s something we have to consider a contributing factor to that working poor number," he said.

Who are the working poor?

Minorities are hardest hit  

 

Source:  Bureau of Labor Statistics, Annual Social and Economic Supplement, Current Population Survey

And women are more likely to be among the working poor ...

 

Source:  Bureau of Labor Statistics, Annual Social and Economic Supplement, Current Population Survey

... especially if they are heads of households with children

 

Source:  Bureau of Labor Statistics, Annual Social and Economic Supplement, Current Population Survey

What job a worker has is, not surprisingly, a major factor in determining whether or not his or her income falls below the poverty line. Workers in the service sector are more likely to be poor than any other category of employed person. More than 13 percent of service workers were classified as working poor in 2009, and “service occupations, with 3.2 million working poor, accounted for nearly one-third” of all the working poor in the country.

"The more low-paying jobs are concentrated in the service sector," Borbely said. "Those jobs tend to be available and accessible to people with lower education, and it tends to skew toward lower education in the working poor. The labor force is always growing, but is the number of high-paying jobs keeping pace? It hasn’t been anywhere near where it needs to be to keep pace."

Workers in natural resources, construction, and maintenance occupations also struggled to stay above water, with 9.7 percent of such workers living below the poverty line.

Most of the few jobs created since the start of the recession are low-wage jobs, according to research (pdf) by the National Employment Law Project, a workers' advocacy group. Most of the jobs lost since the recession began were middle-wage jobs, the group found. 

Demographically, black and Hispanic workers were “about twice as likely as white or Asian workers to be poor,” the BLS report notes. Women workers are more likely to be poor than men (7.5 percent vs. 6.6 percent). Young workers are far more likely than older workers to be poor, “in part because their earnings are lower and their unemployment rate is higher,”  according to the report. 

One of the groups most likely to be among the working poor are single women with children.  More than a quarter of families headed by a female worker lived below the poverty line in 2009.  

The Bureau of Labor Statistics report also shows that in 2009: 

• Those with a college education were much less likely to be among the working poor. Among college graduates, 2.1 percent were classified as working poor, but for those with less than a high school diploma, the rate was 20.3 percent. Black women workers with less than a high school diploma are particularly likely to be poor, with 31.8 percent falling below the poverty line. The rate for black male workers with less than a high school degree is 22.5 percent.

• Families with children younger than 18 were four times more likely than those without children to be poor, even with if one family member was working 27 weeks or more. And women who head those households were far more likely to be among the working poor.

• Full-time workers were less likely to be among the working poor than part-timers.  

And even though people who work full time are less likely to be poor than others, there are still people who worked at least 27 weeks or more in full-time wage and salary jobs, and 3.8 percent — 4.2 million — of them were classified in working poor, almost unchanged from 2008 (3.6 percent).

Although the recession ended in December of 2009, wages have not picked up. "We’ve puttered along at an extremely modest pace," Borbely said. 

The slow recovery is unique to the Great Recession. The economy fell in the 1980s, but the sharp downturn that led to a recession was "followed by an equally sharp recovery," he said, unlike recent years. And downturns in the mid-'90s affected employment, but again, recovery was relatively quick. A recession in 2001, after 9/11, was propped up by construction and a housing market that stayed strong.

But even during the growth years, the gains were not shared evenly. Poverty rose in most years between 2001 and 2009, even as the economy was booming.  Median household income has fallen more than 7 percent since its peak in 1999, according to the Center for Budget and Policy Priorities. 

“Even before the recession began, a growing number of Americans were being left behind,” said Robert Greenstein, president of the center. 

 

 

What Went Wrong

Donald Barlett and James Steele are revisiting America: What Went Wrong, their landmark 1991 newspaper series, in a new project with the Investigative Reporting Workshop. Over the next year, the project team will examine how four decades of public policy has shaped America's ongoing economic crisis.

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The Betrayal of the American Dream on Google Books

The Betrayal of the American Dream on Google Books

Check out the first chapter of Barlett and Steele's 2012 book here.